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					5 December 2003

Martin Fenton
Public Wireless Networks Unit
Radiocommunications Agency
Wyndham House
189 Marsh Wall
London
E14 9SX



Dear Martin,

O2 Response to RA Consultation Document “Use of the 2010 to 2025MHz Band for the
Provision of 3G Telecommunications Services” October 2003

O2 welcomes the RA Consultation that asks a number of questions related to the options for the use
of the 2010 to 2025MHz band to provide 3G telecommunications services based on UTRA TDD
technology. As a mobile network operator leading in the development and delivery of mobile
communication services in the UK, we provide our views in response to the issues raised in the
Consultation, the questions posed and the draft Regulatory Impact Assessment.

O2 appreciates the RA giving interested parties the opportunity to assess the issues at this time,
particularly because of the timing of the associated Consultation “Consideration of Possible
Frequency Plans for the 3G Expansion Spectrum, 2500 to 2690MHz” highlighted in this
Consultation, and we encourage the RA to continue with its open and considered approach to inter-
related issues, such as the use of this and the 3G expansion spectrum, as it moves into OFCOM. As
stated in the associated Consultation regarding the 3G expansion spectrum at 2500 to 2690MHz, the
debate of possible frequency plans for that band will develop in Europe during 2004, and within the
International Telecommunications Union (ITU), and since we anticipate that further consultation
will be required on the 2500 to 2690MHz band to ensure that the UK administration reflects the
interests of UK companies and consumers when negotiating in Europe and beyond, we also
anticipate that any initial conclusions of this Consultation might need to be reviewed again during
the coming months to ensure consistency in approach.

O2 believes that the potential benefits of making this spectrum available must be viewed in a long-
term and wide context, since long term investments have been made by existing 3G licensees (and it
would be detrimental to the UK economy for these to be undermined), and since there are a number
of other associated issues that will need to be examined prior to the assignment of any spectrum in
this band. For example, if the Government were minded to make the 2010 to 2025MHz band
available for licensed wide area, high power use, we believe that it would be essential for the
industry to have a clear sight and understanding of Government policies relating to the 3G
expansion band, to re-farming of 2G spectrum and to spectrum trading before proceeding with such
                                                   1
                           Technology Wellington Street
                             Slough Berkshire SL1 1YP
                                      United Kingdom                          www.O2.co.uk
                    O2 (UK) Limited Registered in England no. 1743099 Registered Office 260 Bath Road Slough SL1 4DX
an assignment of spectrum in this band. An understanding of the benefits of a stable regulatory
environment, a clear picture of businesses supported by current licences, and clarity of future
opportunities are all required when considering any new spectrum assignments, and we believe that
great care should be taken when assessing the relative impact and benefits of the different options
discussed.

Overall comments on options

Our comments covering the overall approach to the use of this band are as follows:
    A number of inter-related issues are affected by some of the options discussed in this
       Consultation, and some of the decisions relating to the development of spectrum
       arrangements for 3G are inter-dependent. O2 believes that it is not possible at this time to
       decide what the final use of the 2010 to 2025MHz band should be and have therefore taken
       the opportunity of this Consultation to state our current preferences and thinking on the
       issues involved. As more information becomes available, particularly in terms of the
       frequency arrangements in the 2500 to 2690MHz band, we are sure that our preferences
       will become clearer, and we believe that further consultation might therefore be required to
       ensure that the UK administration reflects the interests of UK companies and consumers
       when negotiating in Europe and beyond.
    Whilst we believe that it is not possible at this time to decide what the final use should be,
       O2 considers that it should be possible to narrow down the list of options and to identify
       more clearly what the inter-dependencies, risks and benefits might be.
    We conclude that, although any initial conclusions of this Consultation might need to be
       reviewed again during the coming months to ensure consistency with the approach taken in
       response to other Consultations, demand for the 2010 to 2025MHz band would be
       stimulated by the early release of the spectrum for self-provided applications. O2 therefore
       encourages the RA to favour this option when arriving at its initial conclusions.

Answers to Consultation questions

Our answers to the questions posed in the Consultation follow as an Annex to this response.

Comments on draft Regulatory Impact Assessment

The draft Regulatory Impact Assessment (RIA), in our view, does not demonstrate clearly enough
the implications of potential changes to the mobile market that are inherent in some of the options,
and we urge the RA to give wider consideration to those businesses supported by current licences
when assessing the benefits, costs and risks of the options. For example:
     O2 believes that the early release of the 2010 to 2025MHz spectrum will help to stimulate
        the development of more cost effective UMTS (UTRA TDD) solutions than there are
        currently available. This in turn should help to ensure that demand for use of both UTRA
        TDD bands in the core 3G spectrum (at 1900 to 1920MHz and 2010 to 2025MHz)
        develops, and will therefore bring additional benefit to the UK economy.
     We consider that it would be inappropriate for the UK to release the 2010 to 2025MHz
        band whilst there remains the possibility of it being paired with spectrum in the 3G

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                            Technology Wellington Street
                              Slough Berkshire SL1 1YP
                                       United Kingdom                          www.O2.co.uk
                     O2 (UK) Limited Registered in England no. 1743099 Registered Office 260 Bath Road Slough SL1 4DX
        expansion band 2500 to 2690MHz. Since the frequency arrangements for that band are
        expected to become clear within 12 to 15 months, based on the timescales associated with
        the 5th Mandate on UMTS, any cost of a delay in deciding the use of the 2010 to 2025MHz
        band is likely to be outweighed significantly by the potential cost of retrieving the spectrum
        if the 2010 to 2025MHz band does become part of a paired arrangement with 2500 to
        2690MHz. We note that the cost of a delay in making a final decision is not included in the draft
        RIA.
       O2 believes that the potential benefits of making this spectrum available must be viewed in
        a long-term and wide context, since long term investments have been made by existing 3G
        licensees (and it would be detrimental to the UK economy for these to be undermined), and
        since there are a number of other associated issues that will need to be examined prior to
        the assignment of any spectrum in this band. For example, if the Government were minded
        to make the 2010 to 2025MHz band available for licensed wide area, high power use
        (Scenario 2 in the draft RIA), we believe that it would be essential for the industry to have a
        clear sight and understanding of Government policies relating to the 3G expansion band, to
        re-farming of 2G spectrum and to spectrum trading before proceeding with such an
        assignment of spectrum in this band. This increases the cost of this scenario, due to both the
        need for further delay in a decision until such time as other supply-side policies are decided,
        as well as the possibility of significant licence costs, depending on the manner in which the
        spectrum would be assigned.
       There is also a potential risk that has not been included in the draft RIA, related to the
        undermining of the significant investments made by existing 3G licensees, if either of the
        options not explicitly considered in the UK 3G Auction Information Memorandum (IM)
        (i.e. Scenarios 2 and 4 in the draft RIA) were to be pursued. We also consider that Scenario
        3 is insufficiently defined in the Consultation for us to judge whether this potential risk also
        applies in this case. The IM stated that this spectrum would not be made available in the
        auction, but that, “if little or no demand develops for the spectrum set aside for licence-
        exempt use, it may be auctioned in due course”. We consider that demand for the 2010 to
        2025MHz band would be stimulated by the early release of the spectrum for self-provided
        applications, and that there is insufficient justification to conclude at this stage that “little or
        no demand” has developed when the encouragement for equipment development given by
        spectrum assignment decisions has not yet been apparent.

We look forward to seeing the views of all stakeholders in response to this Consultation published
on the RA website at the earliest opportunity, and would be happy to discuss our response in further
detail at an appropriate time, such as at the meeting of UK WP8F scheduled for 16 December 2003.

Yours sincerely,




Simon Wilson
Spectrum Policy Manager


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                             Technology Wellington Street
                               Slough Berkshire SL1 1YP
                                        United Kingdom                          www.O2.co.uk
                      O2 (UK) Limited Registered in England no. 1743099 Registered Office 260 Bath Road Slough SL1 4DX
Annex to O2 Response to RA Consultation Document “Use of the 2010 to 2025MHz Band for
the Provision of 3G Telecommunications Services” October 2003

Question 1      Should the 2010 to 2025MHz band be retained for UTRA TDD self-provided
applications operating in self-coordinating mode?

O2 agrees with the RA that the utilisation of this band has been delayed by a number of
factors. Manufacturers and operators have been fully engaged in developing the 3G
equipment necessary for the rollout of networks to meet regulatory obligations, using UTRA
FDD equipment, and the vast majority of standardisation effort has gone into meeting this
goal. With the rollout of the first major 3G networks in Europe during 2003, we also expect
that the standardisation of licensed UMTS equipment will reach a level of maturity that could
enable more effort to be put into developing self-provided UTRA TDD equipment. We
therefore support the earliest possible release of the 2010 to 2025MHz spectrum for self-
provided applications, which we believe will further help to stimulate the development of
more cost effective UMTS (UTRA TDD) solutions than there are currently available. This in
turn should also help to ensure that demand for use of both UTRA TDD bands in the core 3G
spectrum (at 1900 to 1920MHz and 2010 to 2025MHz) develops, bringing larger benefits to
the UK economy than those purely derived from the 2010 to 2025MHz band.

Question 2    In what timescale do you anticipate self-provided, self-coordinating UTRA TDD
equipment becoming available?

We would anticipate more cost effective UTRA TDD solutions becoming available within 2 to
3 years of this additional unpaired spectrum being released. Assuming that the release of the
2010 to 2025MHz spectrum will not be finalised until 2005 (due to the need to review the
initial conclusions of this Consultation during the coming months to ensure consistency in
approach with the development of frequency arrangements at 2500 to 2690MHz), we consider
that this part of the 3G market might have begun to develop by 2007.

Question 3      Do you think that demand for UTRA TDD use in the 2010 to 2025MHz band has
been affected by other licence-exempt spectrum (e.g. 2.4GHz and 5GHz) becoming available?

As suggested by the Consultation, quantifying the demand for UTRA TDD use is difficult
without the spectrum having been made available for licence-exempt use. It is therefore also
difficult to judge whether the potential demand for UTRA TDD equipment in the 2010 to
2025MHz band has been affected by the release of other licence-exempt spectrum.

Question 4   What are your own estimates of demand for UTRA TDD use in the 2010 to
2025MHz band? Please indicate potential products and applications.

As noted above in our response to Questions 1 and 3, it is difficult to quantify the demand
specifically for the spectrum at 2010 to 2025MHz. However, if this additional spectrum is
made available for licence-exempt self-provided applications we believe it would stimulate
demand for both those applications and for licensed services in the 1900 to 1920MHz band,

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                          Technology Wellington Street
                            Slough Berkshire SL1 1YP
                                     United Kingdom                             www.O2.co.uk
                   O2 (UK) Limited Registered in England no. 1743099 Registered Office 260 Bath Road Slough SL1 4DX
extending the range of services developed for 3G by providing additional capacity, bandwidth
and availability in key locations.

Question 5      How long should we wait to evaluate demand for licence-exempt use before
considering auctioning the band or otherwise making it available for licensed UTRA TDD use?

As noted above in response to Question 2, if the release of the 2010 to 2025MHz spectrum
were not finalised until 2005 (due to the need to review the initial conclusions of this
Consultation during the coming months to ensure consistency in approach with the
development of frequency arrangements at 2500 to 2690MHz), we consider that this part of
the 3G market might have begun to develop by 2007. This would be in line with the timescales
associated with the development of Government policies relating to the 3G expansion band,
re-farming of 2G spectrum and of spectrum trading, and might enable a review to be
conducted at that time, since we consider it to be essential for the industry to have a clear
sight and understanding of these associated Government policies before proceeding with any
assignment of spectrum in this band for licensed UTRA TDD use, to ensure clarity of future
opportunities.

Question 6     Should the 2010 to 2025MHz band be considered for the provision of commercial
telecommunications services under a light licensing regime?

O2 considers there to be a high degree of uncertainty caused by the use of the term “light
licensing regime”, since it is not clear to us what the benefits of such a regime might be. The
draft RIA states that the benefits would be in the form of “Economic value of new services”,
yet there is no indication of what these new services might be or how they might differ from
the licence-exempt or licensed services suggested in Scenarios 1 and 2. O2 is greatly concerned
about the potential risk, which has not been included in the draft RIA, relating to the
undermining of the significant investments made by existing 3G licensees. We consider that
the two options not explicitly considered in the UK 3G Auction Information Memorandum
(IM) (i.e. Scenarios 2 and 4 in the draft RIA) have such potential if pursued at this time, and
also consider that Scenario 3 is insufficiently defined in the Consultation for us to judge
whether the potential risk also applies in this case. Without the reassurance that the definition
of services that might be allowed through any light licensing regime would not undermine the
significant investments made, we conclude that the 2010 to 2025MHz band should not be
considered for the provision of commercial telecommunications services under such a regime.

Question 7   If a light licensing regime is introduced, how should this be defined and
implemented?

As noted above in response to Question 6, we believe that the 2010 to 2025MHz band should
not be considered for the provision of commercial telecommunications services under a light
licensing regime and therefore consider this question to be redundant.

Question 8    Is it viable for the 2020 to 2025MHz sub-band to be made available for licensed
(high-power) UTRA TDD use separately from the 2010 to 2020MHz sub-band?

                                                                    A.2
                           Technology Wellington Street
                             Slough Berkshire SL1 1YP
                                      United Kingdom                             www.O2.co.uk
                    O2 (UK) Limited Registered in England no. 1743099 Registered Office 260 Bath Road Slough SL1 4DX
As noted above in response to Questions 5 and 6, we consider that Scenario 2 in the draft RIA
has the potential to undermine the significant investments made by existing 3G licensees if
pursued at this time. In addition, we consider that the licence-exempt self-provided part of the
3G market might have begun to develop by 2007 if the 2010 to 2025MHz band were to be
released in 2005. This would be consistent with the timescales associated with the development
of Government policies relating to the 3G expansion band, to re-farming of 2G spectrum and
to spectrum trading. We consider it to be essential for the industry to have a clear sight and
understanding of these associated Government policies before proceeding with any
assignment of spectrum in this band for licensed UTRA TDD use, to ensure clarity of future
opportunities.

Question 9       Should the 2010 to 2025MHz band be considered for applications on a technology-
neutral basis (in particular for technologies outside the 3G/IMT-2000 family), for either licensed
use or licence-exempt, self-provided, self-coordinated use?

O2 believes that it will be important to the future and ongoing success of mobile that
harmonised use, such as that achieved in the core 3G spectrum at 1900 to 1980MHz and 2110
to 2170MHz, should be sought. Decisions have already been taken to assign the 2020 to
2025MHz spectrum for UTRA TDD in other countries, such as Austria, Germany, Italy and
the Netherlands, and O2 considers that the UK should take account of the thinking in other
administrations when considering whether any proposed UK positions are likely to be of
benefit to the UK economy. In addition, we believe that, if this additional spectrum is made
available for UTRA TDD licence-exempt self-provided applications, it would stimulate
demand for both those applications and for licensed services in the 1900 to 1920MHz UTRA
TDD band. We conclude that there will be larger potential benefit to the UK from using the
2010 to 2025MHz band for UMTS (UTRA TDD) applications than for technologies outside
the UMTS/IMT-2000 family.

Question 10 Should decisions on the use of the 2010 to 2025MHz band be postponed until after
the frequency arrangements for the 2500 to 2690MHz band are finalised at the end of 2004, in case
these arrangements encompass use of the 2010 to 2025MHz band as well?

We consider that it would be inappropriate for the UK to release the 2010 to 2025MHz band
whilst there remains the possibility of it being paired with spectrum in the 3G expansion band
2500 to 2690MHz. Since the frequency arrangements for that band are expected to become
clear within 12 to 15 months, based on the timescales associated with the 5 th Mandate on
UMTS, any cost of a delay in deciding the use of the 2010 to 2025MHz band is likely to be
outweighed significantly by the potential cost of retrieving the spectrum if the 2010 to 2025MHz
band does become part of a paired arrangement with 2500 to 2690 MHz.

Question 11 Should alternative spectrum management models, which could be applied under a
spectrum trading regime, be considered for the 2010 to 2025MHz band? If so, which models do you
consider most appropriate?

We have been supportive of the RA’s work in proposing the implementation of spectrum
trading, and are pleased that OFCOM has taken the proposed introduction forward in its
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                           Technology Wellington Street
                             Slough Berkshire SL1 1YP
                                      United Kingdom                             www.O2.co.uk
                    O2 (UK) Limited Registered in England no. 1743099 Registered Office 260 Bath Road Slough SL1 4DX
recently published “Spectrum Trading Consultation”. We believe that the possibilities
facilitated by a more market driven spectrum management model will result in both a more
efficient use of spectrum and more benefit to the UK economy. As such, we consider that an
environment that allows Wireless Telegraphy licence conditions to be changed is, as a general
principle, a desirable one, but emphasise that trading should be restricted to licensed
spectrum allocations only. Therefore, whilst the options on the use of the 2010 to 2025MHz
band allow the possibility of both licence-exempt or licensed use, we need to qualify our
support for allowing the future trading of this spectrum. If, eventually, the spectrum is
licensed, then we would support many of the aspects proposed in the OFCOM Consultation.
However, since we support the earliest possible release of the 2010 to 2025MHz spectrum for
self-provided applications, we emphasise that we would not support that this band should
become tradable if this option is pursued.




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                          Technology Wellington Street
                            Slough Berkshire SL1 1YP
                                     United Kingdom                             www.O2.co.uk
                   O2 (UK) Limited Registered in England no. 1743099 Registered Office 260 Bath Road Slough SL1 4DX

				
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