Mobile prices could fall after new spectrum release

The UK telecoms regulator will sell off more spectrum that could result in lower 3G and mobile phone prices. Ofcom will consult on plans to release three spectrum bands which could put new entrants in competition with existing 3G operators.

Orange, 3, T-Mobile, Vodafone and O2 between them paid £22.5 billion for 3G licences in 2000 and much of that investment has been written down as networks struggled to recoup their investment. The new spectrum is likely to be sold off at much lower prices.

"The award of this spectrum will play a key role in the implementation of Ofcom’s strategy of spectrum release," said the Ofcom report announcing the sale. Three bands of spectrum will be made available, one at 2500 to 2690 MHz, one at 2010 MHz to 2025 MHz and a third at 2290 to 2300 MHz. The first band, referred to as the 2.6 GHz band, is the biggest and most important, Ofcom said.

The spectrum should be made available by the end of 2007, though the regulator believes that that date could slip to early 2008. Consultation is now open on the process.

Ofcom has said that the spectrum could be used for anything, but has identified the four most likely uses: 3G mobile phone telephony; wireless broadband using the still-developing WiMAX standards; mobile television broadcast to handsets, and special one-off uses, such as event communication or video transmission.

The release of spectrum would create opportunities for new entrants into the 3G market "offering services in competition with the existing operators which could result in price reductions and more consumer choice for services," said Ofcom.

Spectrum used to be auctioned for specific purposes, but Ofcom now makes it available without specifying what it should be used for, and its list of possible uses is simply a list of suggestions.

Its technology neutral approach puts it in conflict with some European regulators, though, who want the 2.6 GHz band used specifically for IMT-2000 services, which is the International Telecommunications Union's standard for 3G technology.

The European Conference of Postal and Telecommunications Administrations (CEPT) and the Radio Spectrum Committee (RSC) are the two relevant regulators, and Ofcom says that CEPT is leaning towards a technology-specific view, but that the UK can, and has, opted out of its recommendations.

Should the RSC decide to opt for a similar view, though, the UK could not opt out, and its decision is expected in July 2007. Ofcom says that it does not believe that regulators should specify the use of spectrum.

"A key issue for the design of the award concerns the degree of flexibility in the way that the 2.6 GHz band can be used and the amount of unpaired spectrum and paired spectrum there should be in the band," it said. "Ofcom considers that regulators are ill-placed to judge the appropriate balance between these alternative uses of spectrum. Moreover, this is a decision that can be left to the market."