Spectrum auction ignores delivery, quality, timescale issues

David Harrington of the Communications Management Association (CMA) gives his views on the Ofcom 4G auction

Ofcom's proposed design for the 2012 spectrum auction seems to have met by the operators with the sort of gratitude and relief that might be expressed by a double amputee on finding that only one leg was removed after all.

The CMA protested, at the time of the infamous 3G auction, that the academic notion of selling spectrum by auction was flawed in the real world.

There are so many externalities that should be allowed to influence the award of this resource, yet they are largely ignored or played down in the race to assign a monetary value.

The impending auction of frequencies in the 800MHz and 2.6GHz bands, designed to introduce high speed mobile broadband to the UK, is no exception. Ofcom's attempt to apply modifiers such as caps and floors, while admirable, do not go far enough to alleviate the inevitable impact on future policy.

Just two examples will suffice: the French regulator is to auction four lots in the 800MHz band. Accumulating lots is to be allowed, but the owner must then provide national roaming.

Ofcom has consistently set its face against mandating national roaming in the UK, yet this is the one act that would massively leverage national coverage in pursuit of the universal service commitment (USC) to provide all citizens with an acceptable minimum basic service, currently 2Mbps.

The paradoxical argument from Ofcom is that any similar imposition embedded in the 2012 auction would militate against any incentive to maximise coverage.

Secondly, the fixed line industry is moving quite quickly towards a very clear separation of services and infrastructure. Yet the mobile sector, touted by many as the only possible solution to the provision of broadband to rural areas, sticks firmly to its vertical model.

The proposed auction process does nothing to encourage the emergence of a mobile infrastructure that is fully open, on a fair and equitable basis, to all content and service providers. Indeed, Ofcom's design could well turn out to foster the opposite.

In short, CMA reiterates that a spectrum auction can only be wholly successful in meeting the needs of the "citizen-consumer" if it incorporates elements of a beauty contest approach that pays proper heed to consumer-orientated issues such as price, quality of service (QoS), timescale and coverage.

If such impositions depress the price paid at auction, then so be it; Ofcom has repeatedly said that generation of cash for Mr Osborne's coffers is not an issue.

So maybe it would be best for Ofcom to stop trying to compromise in an attempt to please everyone and make sure that whoever owns the spectrum can still afford to invest in infrastructure.

If that in turn means creating a utility access infrastructure with competitive services running across it, then at least we'd get some efficiency in spectrum use and non-duplication of cell sites.

David Harrington is leader, regulatory affairs at the Communications Management Association (CMA).

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