vodafone by ashrafp


									Use of the 1781.7-1785/1876.7-1880 MHz Bands for the Provision of GSM 1800
                       Telecommunications Services

                               Response of:
                           Summary of Vodafone’s position

   1.1.    The RA has identified three basic scenarios for the use of 2X3.3MHz of
1800MHz spectrum that currently serves as a guard band between GSM and DECT
services. Vodafone believes that any decision on the use of the 2x3.3MHz is
premature because:

   (a)   Future policy decisions on the introduction and form of spectrum trading will
         fundamentally affect the value of spectrum. Premature assignment in the
         absence of clarity on the policy environment may result in inefficient
         assignment and unhappy winners (and losers) because prospective purchases
         are unable to value accurately the spectrum. Vodafone therefore suggests that
         a decision about the guard band between GSM and DECT is postponed until
         there is sufficient clarity about the introduction and form of spectrum trading;

   (b)   The level of future availability of 1800MHz spectrum will be considered
         when determining the band plan for the 2.5GHz 3G extension band. The UK
         should not take any action now that might restrict its ability to implement the
         3G band plan. The introduction of spectrum trading that permits change of
         use and/or technology will significantly meet Vodafone's concerns on this
         point by allowing industry to acquire the spectrum dynamically and use it in a
         way       consistent       with        its      preferred       band       plan.


   1.2.    Vodafone is a strong advocate of spectrum reform. The RA has also
indicated a strong desire to reduce rigidity in the spectrum market. In the near future
Vodafone hopes that Ofcom will take the first steps in the introduction of a secondary
market in spectrum. The effect will be to change the dynamics of supply and demand
for spectrum in a manner that will be determined by the nature of trading permitted.
Until that time, Government and industry operates in an environment of
administrative allocation and assignment of spectrum, which has been effective in the
management of interference although it has not necessarily put spectrum in the hands
of those who value it the most.
   1.3.   Vodafone's approach to spectrum regulation is to emphasise the need for
change while supporting the symmetric application of current rules. This means that
while we support the introduction of secondary markets, until that time we would
expect the current administrative system to be implemented properly and without
favour to any one player. It is important, however, that regulators remain cognisant of
intended or expected changes in spectrum policy and endeavour to smooth the
passage of new spectrum management mechanisms.
Vodafone answers to specific questions

       Question 1      Given the other potential uses outlined in this document, do you
                       consider it most appropriate to make the spectrum available for
                       wide-area public use?

       Question 2      If your answer to question 1 is yes, do you consider it most
                       appropriate for the spectrum to be used to supplement the
                       spectrum of the existing GSM operators, or to be made
                       available for potential new GSM operators on a regional or
                       national basis?

       Question 3      If your answers to questions 1 and 2 are yes, do you consider it
                       most appropriate for the spectrum to be awarded via an
                       auction process?

   1.4.    Vodafone believes that it would be entirely appropriate to make the
spectrum available, in due course, for wide-area public use. Spectrum in the same
band is already used by mobile operators for this purpose.

   1.5.    The critical issue is the timing of any allocation and assignment process.
Vodafone believes that it is premature to consider allocation and assignment matters
until a decision is reached on spectrum trading as it will have an important function in
shaping the future spectrum market. In the absence of any decision on trading,
valuation is difficult and prone to significant "error cost".

       Question 4      Given the other potential uses outlined in this document, do you
                       consider it most appropriate to make the spectrum available for
                       short-range, low-power GSM use on a licence-exempt basis?

       Question 5      If your answer to question 4 is yes, what kinds of application do
                       you anticipate will develop? Estimates of potential market size
                       and anticipated penetration would also be useful.

   1.6.    Vodafone does not consider it appropriate to assign the spectrum to low-
powered, licence-exempt use except where an economic evaluation suggests that this
is the most efficient use of the spectrum. It is far from clear that there is a need for
more licence-exempt spectrum.        The WRC-03 has just allocated 450MHz of
additional licence-exempt spectrum for short-range services, such as W-LAN. The
cost of licence-exempt spectrum is effectively paid for by licensed users as they face
higher charges for their spectrum as a consequence of overall reduced supply of
individually licensed frequencies.

   1.7.   If the Government believes that there is a value to be derived from licence-
exempt use, it should make the spectrum available for licensed use. The Government
could use an auction, setting the reserve price at a level commensurate with the
Government's estimation of the value of the spectrum if assigned for licence-exempt
use. If no individual licensee outbid the reserve price, then the Government could
assign the spectrum to licence-exempt use.

       Question 6     If your answer to question 4 is yes, should the use of this
                      spectrum for the provision of public services be allowed?

       Question 7     If your answer to question 6 is yes, specifically what kinds of
                      public-service offerings do you anticipate will develop?
                      Estimates of potential market size and anticipated penetration
                      would also be useful.

   1.8.   Vodafone does not believe there is a case for further additional licence-
exempt spectrum. Should a case be adequately made, it would seem to be overly
proscriptive to impose different rules on one licence-exempt band from another. This
suggests that public use should be permitted, which would be consistent with the
current treatment of the 2.4GHz licence-exempt spectrum.

   1.9.   Submissions will doubtless be made to the RA, some more extravagant
than others, to suggest that licence-exempt use will bring forth many varied and
successful new services.      Vodafone would stress the need for caution when
considering these cases. Costless access to an important resource is always likely to
encourage fanciful prognostications.      W-LAN at 2.4GHz is a well developed
technology and yet there is only limited market penetration and real service usage at
the moment. Voice-related offerings, such as DECT, have not been a great success
because viability is not solely dependent on technology. Management, distribution,
branding and development are also critically important.

       Question 8      Do you consider it prudent not to release the spectrum at this
                       stage but to keep it unassigned, thus assisting future migration
                       to 3G and facilitating T&D work?


   1.10.   Vodafone has already explained its concern that assignment of spectrum
ahead of a decision on spectrum trading will create substantial error cost risk.
Vodafone is also concerned that a premature decision on the use of 1800MHz
spectrum may adversely effect the migration of the band to 3G. A band plan for the
3G extension band at 2.5GHz is under discussion now and unlikely to be resolved
before the end of next year. The speed at which any decision will be taken reflects the
difficulty of assessing future demand for 3G spectrum and predicting the asymmetry
of services to be provided when the 3G market is still nascent. However, it is
possible, under some proposals, that the 1800MHz band could be linked to the
2.5GHz band.      While administrative management of the radio spectrum is still
practised, Vodafone cautions against early assignment of the 2x3MHz of spectrum
available lest this create a rigidity in the supply of spectrum for 3G in the future.

   1.11.   The implementation of spectrum trading – particularly where change of use
is permitted – will substantially reduce our concerns in this area.

       Question 9      Do you consider it necessary to limit future use of the spectrum
                       for a set period, to ensure that future migration to 3G is not

       Question 10     If your answer to question 9 is yes, what period do you
                       consider is appropriate?

   1.12.   Vodafone does not support the concept of time limited use in the way
described by the consultation paper. It will be nigh on impossible for the RA to
enforce any switch-off date where the band has been used for licence-exempt GSM
use. The consultation paper seems to be confused when it suggests that migration of
licensed operators to 3G service provision will create a natural limitation on the life of
licensed-exempt 2G use. A private licence-exempt operator may still operate its own
2G network for internal voice calls, relying on wide-area, outdoor coverage to be
provided by public 3G operators. The presence of dual-mode handsets will make this
a practical proposition for some years after 3G public operators have turned-off their
2G networks. (The handset market is international. While UK consumers may be
expected to adopt 3G relatively quickly, other markets will require dual-mode
handsets for many years longer so licence-exempt users will still be able to source
handsets and network infrastructure).

   Question 11         Is it desirable and practical to make the spectrum available in
   a technology-neutral way, either for wide-area public use or for short-range, low-
   power, licence-exempt use?

   1.13.   It is desirable for the economically efficient use of spectrum that allocation
is technology-neutral.       The extent that technology-neutrality is possible is a
fundamental question for the spectrum trading consultation and not one that should be
addressed separately here.

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