It seems like digital switchover everywhere is coming in for a major rethink. In the US Obama wants a delay; in some countries such as Poland there is a chance that only TV companies will get new digital spectrum and never have to give back their analog capacity; while in the UK a government report is expected to suggest that the freed up spectrum from digital switch over should be ‘given away’ in return for spending commitments on broadband.
This is not a novel idea, but it is one that most cellular think tanks would pride themselves on. Think about it, a few hundred MHz of ‘beachfront’ spectrum will be given away as long as it can be used for broadband access. This at a time when every other cellular operator has to both pay for spectrum AND pay for build out costs.
But this approach does work ‘ you only have to look at places like Finland where 3G spectrum was given away, to see that it makes uncompetitive cellular markets extremely well developed.
Right now this detail comes from a leak in the London Times from the new government appointed UK communications minister Lord Carter, put in place by the new Prime Minister to ensure the UK remains at the forefront of the global communications sector. He plans to publish his final Digital Britain report by June but is scheduled to come out with an interim report next week. Lord Carter used to be the CEO of regulator Ofcom, so his word will carry considerable weight in and around that organization as well as in government circles.
This would half the costs for cellular operators, who are currently giddy with the rate of take up in cellular broadband, and who can justify spends on both infrastructure and spectrum on the basis of returns in cellular broadband alone.
And what would it do to the Government’s coffers? The UK expected to gain around £5 billion ($7.5 billion) from the auction of this spectrum and it still has the auction for it massive 400 MHz in the 2.6 GHz spectrum range scheduled for June 2009. Of course the 700 MHz spectrum would be way out in 2012.
Some commentators have suggested that one reason for the change of heart is that during the recession auctions may not garner much interest. You’d have to be an out and out pessimist to think that the UK would still be in a recession in the run up to 2012.
What the imposition of harsh commitment regulations might do is give incumbent BT the incentive to get its act together and put a compelling case for reasons why it should have some spectrum, since it has no cellular operations at present (having spun them off as O2 then sold then to Telefonica). It may choose to use WiMAX which it is experimenting with, or LTE in such an instance. So is this a backdoor way of handling spectrum to the incumbent for free?
Just how many licenses would be on offer is still unclear, and so far official statements from regulator Ofcom have been geared towards a planned auction of the 700 MHz. Whether or not smaller, less well funded companies, will be able to bid for this ‘free’ spectrum is yet to be made clear, since so far this is just a leak to a national newspaper.