LONDON — Ofcom, the British regulator that this week took over from Oftel co-ordination of all media and communications regulation, has commenced consultation on the trading of spectrum for mobile telephony, radio, paging and TV broadcasting.
The proposals, which could be implemented by next summer, will mean that Britain will be the first European country to allow key frequencies to change hands on a commercial basis.
The consultation will be done by the Radiocommunications Agency (RA), part of the Department of Trade and Industry, and follows the passing of the Communications Act last month that included provisions to increase competition in all areas of the media and communications sectors.
At present, spectrum licenses cannot be traded or sold anywhere in Europe, and the aim of the consultation is to devise the best and most appropriate mechanisms to allow spectrum trading.
The government says trading of spectrum will encourage a more open market to operate in wireless services, notably in rural areas. Stephen Timms, e-commerce Minister, said: "This is a milestone in the transfer to Ofcom of its stewardship of the radio spectrum."
The idea, according to Stephen Carter, Ofcom's chief executive, is to "allow innovation", and replace the Government's "centrally-planned, top-down approach of the past".
Until now, commercial organizations were sold or, if lucky, allocated slices of radio spectrum. Now the intention is to allow those who place the highest value on spectrum to get their hands on what they need.
The sector with the biggest interest in the change is the mobile phone companies, which have paid huge amounts of money for third generation licenses. Three years ago, five operators paid £22.5 billion for the rights to offer such services, but to date only one, Hutchinson Whampoa owned 3, has started a commercial service.
Because of problems with handsets, 3 is struggling to attract the number of customers the operator anticipated.
The other license winners, Vodafone, mmO2, T-Mobile and Orange all anticipate starting 3G services sometime next year.
Ofcom's move this week marks the beginning of the final stages of a process that began in March 2001. In response to growing industry pressure, the Government commissioned Professor Martin Cave, of the Warwick Business School, to review how the spectrum is managed. A year later Professor Cave concluded that the Government should "undertake a policy of selective deregulation" and rely on "the market rather than administrative systems for the management of spectrum ". Cave recommended a trading system as the best way to achieve the necessary changes.
New regulations are expected to apply to all commercial owners of spectrum. Public sector users, and in particular the Ministry of Defense - probably the heaviest user of spectrum - are excluded, although Professor Cave argued that they too should be included in the regime in due course.
Ofcom's consultation concludes on February 13 next year.
