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Spectrum is an important and finite resource. Many industries such as tourism, entertainment, mobile telephony and mobile data services depend on having access to appropriate spectrum, and its value to the UK economy must not be underestimated. Spectrum is also vital for critical services such as defence, emergency services, maritime navigation and air traffic control where people's lives depend on safe communications.
Ofcom, as spectrum regulator, has a very difficult role to play in striking a balance between the needs of consumers, spectrum users and service providers, and the public purse. On the whole, we have found that Ofcom is doing a good job in striking this balance and is often having to make very difficult and commercially sensitive judgements.
Ofcom's consultation on the rules for the next spectrum auction, which will take place in 2012, has divided opinion among the four mobile network operators, who, we have discovered, rarely agree on matters concerning spectrum allocation.
We have examined the liberalisation of some existing spectrum licences in the 900 MHz bandwidth—originally allocated for second generation mobile use—which has allowed the network operators holding those licences to use them for third generation mobile use. We conclude that this liberalisation has not permanently distorted the market in favour of those licence holders.
We are concerned that the sale by Everything Everywhere of some of its spectrum will result in the company making a substantial profit from a public asset that was granted to it for free. We recommend that the Government and Ofcom look into mechanisms by which at least a significant proportion of the proceeds could be used to benefit consumers.
Ofcom proposes that one of the spectrum licences available at the auction will contain a coverage obligation requiring the successful bidder to offer mobile internet coverage to an area in which at least 95% of the population lives. We believe that this is achievable and, in fact, does not go far enough to hasten the roll-out of mobile broadband. We recommend that the coverage obligation for this licence should be set at 98% and that Ofcom consider applying this obligation to more than one licence.
We agree with Ofcom's proposals to implement spectrum caps and floors at the auction, as we believe that this is the best viable option to ensure a competitive tension in the spectrum market place.
We welcome DCMS's proposal to release public sector spectrum, but emphasise that it is essential that the Government works closely with Ofcom on this matter to ensure its international harmonisation.
We note the concerns of the Programme Making and Special Events sector regarding the relocation of their spectrum allocation and the problems it has faced with interference. While we welcome Ofcom's work in managing interference, we urge it to continue to monitor this area closely and rapidly revoke the spectrum licences of service providers causing significant interference.
It is understandable that spectrum policy has been heavily focussed on mobile services recently because of the advent of 4G services and the forthcoming spectrum auction. However, it is vital that other spectrum users are not overlooked by policy makers and regulators.
We recommend that Ofcom's remit is widened in order that the interests of British businesses, whose spectrum use plays an important part in the UK economy, are best served.
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