spectrum award for fwa at 3.4 ghz pfwacc meeting 7 th may 2002
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Spectrum Award for FWA Spectrum Award for FWA at 3.4 GHzat 3.4 GHz
PFWACC MeetingPFWACC Meeting
77thth May 2002 May 2002
The TeamThe TeamThe TeamThe Team
Radiocommunications AgencyWS Atkins Management ConsultantsSchemaProfessor Ian JewittDenton Wilde Sapte
Radiocommunications AgencyWS Atkins Management ConsultantsSchemaProfessor Ian JewittDenton Wilde Sapte
Presentation structurePresentation structurePresentation structurePresentation structure
What is on offer?Where are we in the award process?Licence PackagingAward process
– Payment mechanism– BIOLI
Auction detailsWhat happens next?
What is on offer?Where are we in the award process?Licence PackagingAward process
– Payment mechanism– BIOLI
Auction detailsWhat happens next?
What is the process about?What is the process about?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
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
3480 3500 3580 3600
100 MHz Duplex
20 MHzFWA
Uplink
20 MHzFWA
Downlink
Available Spectrum - new arrangementAvailable Spectrum - new arrangementAvailable Spectrum - new arrangementAvailable Spectrum - new arrangement
CEPT Rec. 14-03 Compliant 6 MHz extraCompatible with other EU
Analysis carried out so far….Analysis carried out so far….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
– Market research– Market modelling– Technology review– Network and cost modelling– Economic value analysis– Business case valuation– Award process design– Spectrum re-alignment
……the calendar aheadthe calendar ahead……the calendar aheadthe calendar ahead
May / June July Oct
Consultation process One-to-one presentations Regional road-shows
Notice/ Regulations
Information Memorandum
Applications
July
AwardProcess
Sept
Objectives of licence packaging design Objectives of licence packaging design and award process and award process Objectives of licence packaging design Objectives of licence packaging design and award process 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
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 Principles in determination of licence regions (1)regions (1)Principles in determination of licence Principles in determination of licence regions (1)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
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 Principles in determination of licence regions (2)regions (2)Principles in determination of licence Principles in determination of licence regions (2)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
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 packagingLicence packagingLicence packagingLicence 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
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
MapMapMapMap– 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
– 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
– 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)Subscriber Data Highlights (Metro)Subscriber Data Highlights (Metro)
Licence Households Business Sites(by employees)
1-49 50+
Land Area (km2)
70% Coverage
Sources : PAF, Yellow Pages
Greater LondonSouth CoastSevernsideMidlandsNorth West
& YorksTyne-TeesCentral Scotland
4,800,000 950,000 500,0002,160,000
3,900,0001,000,0001,100,000
1,750 650 3501,300
2,900 800 950
351,500 65,600 38,300136,800
228,000 51,100 64,000
16,700 2,500 1,750 6,900
10,500 2,500 3,300
Subscriber Data Highlights Subscriber Data Highlights (Provinces)(Provinces)Subscriber Data Highlights Subscriber Data Highlights (Provinces)(Provinces)
Licence Households Business Sites(by employees)
1-49 50+
Land Area (km2)
70% Coverage
Sources : PAF, Yellow Pages
ScotlandNorthern EnglandNW, Yorks &
N WalesMidlands &
Mid WalesSouth West
& S WalesSouthernSouth EastNorthern Ireland
1,130,000 400,000 1,370,000
1,460,000
2,150,000 580,0002,670,000 660,000
10,900 3,600
5,750
5,100
7,250 2,350 9,300 6,544
2,000 200
1,750
2,350
950 600 2,800 2,250
60,30017,500
63,300
87,100
30,20024,00089,40043,900
The Award Process (1) The Award Process (1) The Award Process (1) The Award Process (1)
Auction 1Simultaneous multi-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)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
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 mechanismPayment mechanismPayment mechanismPayment 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
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?Why staged payments?Why staged payments?
Lower up-front costs for operatorsOption to return the licence:
– greater flexibility to operators– “unwanted” spectrum can be
reallocatedEncourage participation
Lower up-front costs for operatorsOption to return the licence:
– greater flexibility to operators– “unwanted” spectrum can be
reallocatedEncourage participation
BIOLI (1)BIOLI (1)BIOLI (1)BIOLI (1)
Build-It-Or-Lose-It requirementMinimum number of base stations to
be deployed by the end of year 5Equivalent mesh technology access
points Connectivity to core network
Build-It-Or-Lose-It requirementMinimum number of base stations to
be deployed by the end of year 5Equivalent mesh technology access
points Connectivity to core network
BIOLI (2)BIOLI (2)BIOLI (2)BIOLI (2)
Metro Provincial
Greater London 15 South East 5 Midlands 10 Midlands and Mid
Wales 3
Northern 15 N.West, Yorks. and North Wales
3
Cent. Scotland 5 Scotland 5 South Coast 5 Southern 5 Severnside 5 South West and
South Wales 3
Tyne-Tees 5 North of England 5 Northern Ireland 5
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
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 (1)SMRA auction details (1)SMRA auction details (1)SMRA auction details (1)
SMRA auction details (2)SMRA auction details (2)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)
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)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
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)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
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 roundSMRA bidding roundSMRA bidding roundSMRA bidding round
waive not waive
Proceed to next round
•No loss of eligibility
•With loss of 1 waiver
hold Withdraw bid
bid not bid
Licences on which current high bidder
Licences on which NOT current high bidder
Start of auction round
SMRA round (cont’d)SMRA round (cont’d)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
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
Begin next roundPay winning bid
Pay withdrawal penalty if no further higher bid
No penalty if subsequent higher bid
Unsold Licences?Unsold Licences?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
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?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
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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