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Spectrum Award for FWA at 3.4 GHz PFWACC Meeting 7 th May 2002

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Spectrum Award for FWA at 3.4 GHz PFWACC Meeting 7 th May 2002. The Team. Radiocommunications Agency WS Atkins Management Consultants Schema Professor Ian Jewitt Denton Wilde Sapte. Presentation structure. What is on offer? Where are we in the award process? Licence Packaging

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Presentation Transcript
slide1
Spectrum Award for FWA at 3.4 GHz

PFWACC Meeting

7th May 2002

the team
The Team
  • Radiocommunications Agency
  • WS Atkins Management Consultants
  • Schema
  • Professor Ian Jewitt
  • Denton Wilde Sapte
presentation structure
Presentation structure
  • What is on offer?
  • Where are we in the award process?
  • Licence Packaging
  • Award process
    • Payment mechanism
    • BIOLI
  • Auction details
  • What happens next?
what is the process about
What is the process about?

Award of radio spectrum licences at 3.4 GHz for Fixed Wireless Access or Radio in the Local Loop…

… suitable for providing a range of broadband services; typically up to 2Mbps to the end user

available spectrum new arrangement
Available Spectrum - new arrangement

Uplink

Downlink

100 MHz Duplex

20 MHz

FWA

20 MHz

FWA

3580

3500

3480

3600

  • CEPT Rec. 14-03 Compliant
  • 6 MHz extra
  • Compatiblewith other EU
analysis carried out so far
Analysis carried out so far….
  • Market research
  • Market modelling
  • Technology review
  • Network and cost modelling
  • Economic value analysis
  • Business case valuation
  • Award process design
  • Spectrum re-alignment
slide7
…the calendar ahead
  • Consultation process
  • One-to-one presentations
  • Regional road-shows

Award

Process

Applications

Notice/

Regulations

Information

Memorandum

July

July

May / June

Sept

Oct

objectives of licence packaging design and award process
Objectives of licence packaging design and award process
  • To ensure efficient and effective use of the available spectrum
  • To promote competition and innovation
  • To avoid spectrum sterilisation
  • To allow operators with viable business cases to bid
principles in determination of licence regions 1
Principles in determination of licence regions (1)
  • Iterative process
  • Segmentation of market at post-code level
    • Subscriber density
    • Propensity to purchase
      • analysis of SMEs and consumers
    • Types of services
      • Pricing – driven by market prices
    • Levels of competition from other service providers

….yields potential market share for the FWA operator

principles in determination of licence regions 2
Principles in determination of licence regions (2)
  • Engineering considerations:
    • Spectrum and Capacity
    • RF Performance and Range
    • Interference and Co-ordination
    • Products and Technologies
  • Trade-off: bandwidth requirements, QoS required, customer numbers and amount of spectrum (service contention ratio)
  • Modelling of network deployment
  • Financing assumptions

….to analysis of the business case

  • NPV
  • Sensitivity analysis
licence packaging
Licence packaging
  • UK split into 8 areas: ‘hot spots’ + contiguous ‘provincial’ areas
  • 15 licence areas:
    • 7 “Metro” Licences
      • cover main metropolitan areas
    • 7 “Provincial” Licences
      • cover less densely populated areas, include smaller towns
    • 1 “combined” for Northern Ireland
slide12
Map
  • Scotland
    • Central Scotland Metro
    • Scotland Province
  • North
    • Tyne-Tees Metro
    • North of England Province
  • North West & Yorks
    • Northern Metro
    • North West, Yorks and North Wales Province
  • Midlands
    • Midlands Metro
    • Midlands and Mid Wales Province
  • South West
    • Severnside Metro
    • South West and South Wales Province
  • South
    • South Coast Metro
    • Southern Province
  • South East
    • Greater London Metro
    • South East Province
  • Northern Ireland
subscriber data highlights metro
Subscriber Data Highlights (Metro)

Licence

Business Sites

(by employees)

Land Area (km2)

Households

1-49

50+

70% Coverage

Greater London

South Coast

Severnside

Midlands

North West

& Yorks

Tyne-Tees

Central Scotland

4,800,000

950,000

500,000

2,160,000

3,900,000

1,000,000

1,100,000

351,500

65,600

38,300

136,800

228,000

51,100

64,000

16,700

2,500

1,750

6,900

10,500

2,500

3,300

1,750

650

350

1,300

2,900

800

950

Sources : PAF, Yellow Pages

subscriber data highlights provinces
Subscriber Data Highlights (Provinces)

Licence

Business Sites

(by employees)

Land Area (km2)

Households

1-49

50+

70% Coverage

Scotland

Northern England

NW, Yorks &

N Wales

Midlands &

Mid Wales

South West

& S Wales

Southern

South East

Northern Ireland

1,130,000

400,000

1,370,000

1,460,000

2,150,000

580,000

2,670,000

660,000

60,300

17,500

63,300

87,100

30,200

24,000

89,400

43,900

2,000

200

1,750

2,350

950

600

2,800

2,250

10,900

3,600

5,750

5,100

7,250

2,350

9,300

6,544

Sources : PAF, Yellow Pages

the award process 1
The Award Process (1)
  • Auction 1
  • Simultaneousmulti-round ascending auction
      • 15 available licences
      • 1 licence per area
  • Auction 2 – unsold licences ‘on the table’ for 1 year
  • 1st price sealed-bid auction
      • Same reserve price as with SMRA
      • 30 days from initial bid
the award process 2
The Award Process (2)
  • 15-year term
  • Licences for provision of FWA services
    • to end users
    • wholesale provision to ISPs and Telcos
    • backhaul of own FWA traffic incl. that resulting from wholesale
  • Technology neutral approach
  • No restrictions on number of licences
  • Full transparency on cross-ownership
  • Staged payments
  • BIOLI clause
payment mechanism
Payment mechanism
  • Staged payments with no requirement for bankers’ guarantees
  • 3 equal instalments over 15 years:
    • upon grant of licence
    • 5th anniversary of award
    • 10th anniversary of award
  • Option to return the licence at the end of the 5-year period, no further payments or penalties (12 months’ notice)

… ‘renewable’ licence over 3 five-year periods

why staged payments
Why staged payments?
  • Lower up-front costs for operators
  • Option to return the licence:
    • greater flexibility to operators
    • “unwanted” spectrum can be reallocated
  • Encourage participation
bioli 1
BIOLI (1)
  • Build-It-Or-Lose-It requirement
  • Minimum number of base stations to be deployed by the end of year 5
  • Equivalent mesh technology access points
  • Connectivity to core network
smra auction details 1
SMRA auction details (1)
  • Eligibility depends on activity level previous round (first round = 15)
  • Activity level

= Nr of licences on which current high bidder last round + Nr of licences on which bidder made valid new bid

  • Waivers – instead of valid bid
    • Allows bidder time to regroup
    • 3 waivers allowed
smra auction details 2
SMRA auction details (2)
  • Withdrawals (of a single bid)
    • allows bidders to pursue and change ‘aggregation’ strategies
    • 4 withdrawals
    • Can withdraw current high bid
    • Penalty equal to difference of withdrawn bid and eventual selling price (or reserve if unsold)
    • No penalty if subsequently sold at higher price
    • New current price set by the RA (normally at previous high bid – but RA reserves the right to adjust subsequently)
smra auction details 3
SMRA auction details (3)

Info given to bidders at each round:

  • Current high bid on each licence
  • Identity of each current high bidder
  • Range of admissible bids on each licence
  • Eligibility level (bidding credits) of all bidders
  • Required activity level parameter
smra auction details 4
SMRA auction details (4)

Info given to bidders (cont’d):

  • Details of any withdrawals
  • Details of any waivers
  • Details of any retirements from auction
  • Nr of withdrawals each bidder has left
  • Nr of waivers each bidder has left
smra bidding round
SMRA bidding round

Start of auction round

waive

not waive

Licences on which NOT current high bidder

Licences on which current high bidder

  • Proceed to next round
  • No loss of eligibility
  • With loss of 1 waiver

hold

Withdraw bid

bid

not bid

smra round cont d
SMRA round (cont’d)

hold

withdraw

bid

not bid

Counts for act. level

RA compares with other new bids to determine new high bid

Does not count for act. level

RA takes other new bid or reverts to previous high bid

Counts for act. level

RA compares with other new bids to determine new high bid

Does not count for act. level

RA takes other new bid or reverts to previous high bid

Pay withdrawal penalty if no further higher bid

No penalty if subsequent higher bid

Pay winning bid

Begin next round

unsold licences
Unsold Licences?
  • Left on table until an application is made (1 year)
  • Application triggers:
  • Sale at reserve if no other interested party
  • Simple auction for each licence (not simultaneous) if 2 or more bidders
  • Initiator committed to bid at least reserve price
  • Sealed bid auction (30 days)
  • Straightforward: highest bid wins
  • Winner pays bid
what next
What next?
  • Closing date for comments 30 May 2002
  • Summary to be made available by 10 June
  • Individual presentations by the Consultants to interested operators
  • Regional roadshows
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