1-2 Berkeley Square T 0141 567 1234
99 Berkeley Street F 0141 566 3010
Glasgow G3 7HR www.thus.net
25 July 2003
Public Wireless Networks Unit
11R/2A Wyndham House
189 Marsh Wall
Dear Mr Fenton
Use of the 1781.7-1785.0 / 1876.7-1880.0 MHz bands for the provision of GSM 1800
THUS plc welcomes the opportunity to comment on the above consultation.
The subject of this consultation is of great importance for the development of competition in the
mobile voice and data markets. We urge the RA/Ofcom to take full account of the potential
economic benefits of increased competition and innovation when reaching a view on the most
appropriate use for this spectrum.
It has recently become clear that the mobile market – one of the largest and most important
communications markets – suffers from lack of competition. For example, the Competition
Commission has recently supported Oftel‟s findings that existing mobile operators were abusing
their dominance in the call termination market to charge excessive prices. Oftel has recently
opened an own-initiative investigation of anti-competitive exclusionary behaviour by the mobile
operators which seeks to exclude fixed line operators from part of the business market.
The long-term interests of the consumer should be the key criterion in making the decision on use
of the spectrum, and we believe these are best served by uses which will promote increased
competition and stimulate innovation.
Our responses to the questions in the document are set out below.
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?
No. Although the four GSM operators may be experiencing a shortage of spectrum in certain „hot-
spots‟, it is likely that 3G spectrum will alleviate this pressure over the next few years. Once a
reasonably high penetration of dual mode GSM/3G phones has been achieved in the population,
Registered Office: 1/2 Berkeley Square
99 Berkeley Street Glasgow G3 7HR
Registered in Scotland No: SC192666
operators will have no need of extra GSM spectrum to for hot-spots. Instead of incurring the cost
of expensive micro and pico cellular overlay networks, operators can instead invest in shifting
their user base onto 3G.
Even if this use were to result in worthwhile cost savings for mobile operators (which we doubt for
the reasons above), this application would do nothing to increase competition and innovation, and
would therefore have far less benefit for the consumer than other applications.
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?
We do not believe wide area public use is the most appropriate use of the spectrum. But if this
option is selected, an auction process would be the most appropriate method of assigning the
spectrum, for the reasons given in the RA‟s document.
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-
Yes, we believe that this is by far the most appropriate use. The explosive growth in use of the
2.4GHz band over the last few years has been largely driven by the availability of licence-exempt
spectrum. A November 2002 Demos report “The Politics of Bandwidth” highlighted the potential of
such spectrum to stimulate „grass-roots‟ innovation and concluded:
“The recent report by Professor Martin Cave on spectrum allocation proposes a trading
system to ensure that spectrum is used efficiently and the market attains some degree of
fluidity. Our analysis leads towards a clear proposal. Alongside the spectrum trading
scheme that is now being developed, it is vital that Ofcom reserves a modest share of
spectrum as a common resource, which can be used for grassroots innovations such as
WiFi. We are not suggesting that that the entire range of spectrum frequencies are
suddenly deregulated into an anarchistic free-for-all. For large swathes of spectrum,
trading will be by far the most effective means of allocation, and will indeed serve to
improve efficiency and innovation. But it is perfectly possible to imagine a mixed system,
in which the bulk of spectrum is auctioned off to the highest bidder, whilst smaller slices of
spectrum are preserved as common resources on public interest grounds.”
Previous work by the RA on spectrum pricing has highlighted the vastly higher value of spectrum
(£ per MHz) in areas of the spectrum such as the GSM band where international standardisation
has led to huge investment in equipment development and deployment. Use of this spectrum for
licence-exempt purposes provides an opportunity to harness the exceptional intrinsic value of
GSM spectrum with the scope for stimulating innovation highlighted in the Demos report.
If this option is adopted, we would suggest that only fully approved GSM/GPRS equipment should
be allowable. This would ensure that GSM operators in adjacent bands are protected from
leakage and other radio issues.
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.
We believe that all three applications cited in the consultation document (wireless office, retail,
and museums and galleries) could potentially emerge, plus others such as use in public transport.
We believe that wireless office applications will probably be the most significant single application,
with a number of obvious benefits:
ability for office workers to use a single mobile handset in place of mobile and fixed;
alternative to WiFi for mobile data within the office;
potential to enable new players to enter the market on a commercial basis and introduce
further competitive pressures
Question 6 If your answer to question 4 is yes, should the use of this spectrum for the
provision of public services be allowed?
Yes, it is vital the spectrum is allocated in a way that allows it to be used for public services, ie for
services provided on a commercial basis for members of the public. This is because:
there is no reason why provision of public services should not coexist with private use;
provision of public services is likely to yield the greatest economic return to UK plc;
preventing use of the spectrum for commercial services would be difficult to police, and
(based on experience at 2.4GHz) would lead to inefficient regulatory work-arounds.
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.
It is impossible at this stage to predict more than a few of the possible public service offerings that
may emerge. However, we believe that a significant offering will be the provision of in-building
GSM services to the corporate and SME markets independently from the mobile network
operators. These services could either be provided by fixed network operators („altnets‟) as an
adjunct to their existing portfolio of services to the corporate market; or alternatively, it is possible
that a new tier of „wireless office service providers” (WOSPs) will emerge. These WOSPs might
sell directly to business customers or re-sell through the MNOs and altnets.
Although the structure of the market is difficult to predict, it is clear that there is potentially a huge
market to be addressed in the form of business voice and data services. One of the main benefits
for the consumer will be introducing further competition into a market which, as noted above, is
subject to imperfect competition. The degree of penetration by new entrants will depend to some
extent on the competitive response of the MNOs, but in either case the interests of the consumer
will have been served.
If the band is released then Ofcom should also work towards a solution of mandated roaming
without the use of dual-SIM cards etc. It is technically viable that the band could be used for in-
building GSM/GPRS (and even EDGE) use, however the existing mobile operators are unlikely to
cooperate in this, unless they are required to do so by the regulator. Regulatory action may also
be needed to make available appropriate mobile number ranges to service providers using this
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?
No. This would be wasteful of the spectrum.
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 hindered?
No. As pointed out in the consultation document, this spectrum will be closely linked to the rest of
the GSM band because both will make use of the same mobile terminals. Phasing out GSM will
automatically lead to a decline in the use of this band. Rather than limit use for a set period, it
would be more appropriate to state that this spectrum will be re-farmed at the same time as the
main GSM spectrum.
Question 10 If your answer to question 9 is yes, what period do you consider is appropriate?
Head of Regulation & Interconnect
T 0141 566 3188