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3.3MHz of GSM Spectrum – Going, Going…
By Chris Cox, Marketing Manager, ip.access
Communications regulator Ofcom says it is on track to release at auction what used to be the GSM/DECT guard band. The coveted 3.3MHz slice of GSM spectrum will be issued by the end of March 2006 as originally planned.
The auction of new spectrum will have a profound impact on the telecoms industry in the UK, creating exciting new opportunities for both operators and vendors, and offering the potential to usher in a host of innovative low-power applications, such as the use of picocells to enhance cellular coverage and capacity.
It's Happening… For a few years now, there has been demand for ‘liberalisation' of spectrum at the top end of the GSM 1800MHz band. This demand became apparent as soon as the spectrum was deemed unnecessary as a guard band between DECT and cellular networks. The Radiocommunications Agency set out to address this demand by commissioning a paper in 2003, titled ‘Use of the 1781.7-1785/1876.7-1880.0 MHz Bands for the provision of GSM 1800 Telecommunications Services'. Image courtesy of OFCOM
Then, once Ofcom had assumed the Radiocommunications Agency's duties, it commissioned NERA (National Economic Research Associates) to study various economic and market options for the guard band spectrum. In April 2004, NERA concluded that the guard band release would have a very positive impact on the UK economy, so Ofcom issued a set of proposals for how licenses to use the spectrum should be allocated.
The Auction Matrix Ofcom issued its final proposals on 28 July 2005, outlining in detail the process for releasing a limited number of low-power licenses for use of the DECT/GSM guard band spectrum. The July Consultation, titled ‘Award of available spectrum: 1781.7-1785 MHz paired with 1876.7-1880 MHz', has now closed, and interested parties are planning their bidding strategies for the auction.
Almost anything could happen at the auction as a result of its unusual pro-competitive format. In fact, it has not yet been decided how many licenses will be awarded. This will be determined through the auction process itself. Bidders will bid to determine whether Ofcom will award five, six, seven, eight, nine or ten licenses. This means that, if they bid enough, they can choose the level of competition that they face.
At the same time, in the one and only round of bidding, each bidder must also declare how much they bid for a license in each option. “How much would we pay if five licenses were up for grabs?” they will ask themselves. “How much would we pay if six were available… or ten?” All of these separate but parallel bids will be submitted on the single bid form. Bidders can choose the number of options they want to bid in.
At the end of the auction, to decide who has won the licenses, Ofcom will check which option (five, six, seven, eight, nine or ten) received the highest aggregate bid. Then, when it has been established how many licenses will be awarded, Ofcom will check which parties bid the highest within that option. So, if the aggregate bid for, say, eight licenses was higher than that for five, six, seven, nine and ten, Ofcom will award eight licenses to the eight parties who bid the highest amount within the eight-license option… providing, of course, that eight parties bid for licenses within that option in the first place.
If these new unconventional auction mechanisms sound complicated, then that it is a testament to Ofcom's in-depth analysis of what will be pro-competitive, what will benefit citizen-consumers, and what will benefit the UK economy as a whole. No bidder will be awarded more than one license – right from the outset, this measure prevents hoarding of spectrum and effectively encourages competition from interested parties. Each license is valid for an indefinite term, for a minimum of ten years where Ofcom's powers to revoke are limited.
The Code of Practice Ofcom says that all licensees will have equal rights and obligations to use equipment for transmissions in the new spectrum, that no licensee will have priority over another. To this end, it proposed that the licensees develop and agree to an industry Code of Practice, so that the same frequencies can be used on a shared basis throughout the UK.
Providing the objectives of the Code of Practice are met, Ofcom will not interfere with engineering coordination or impose its own procedure. In fact, it has stated a preference for the licensees to generate their own consensus document and self-regulate their use of the spectrum. An independent group called Mobile200 was created in July 2005 to facilitate this. Mobile200 allows interested parties to meet and discuss engineering coordination issues for the Code of Practice.
The early start to the Mobile200 initiative contributes to the chances of an early network rollout for potential licensees. First, it facilitates licensee control over engineering coordination. If licensees left the Code of Practice until much later, Ofcom would have to assume this responsibility six months after the auction. Also, the existence of Mobile200 means that there is no risk of going into new ventures blindly. The meetings help potential licensees to anticipate how best to roll out networks with regard to the stringencies of engineering coordination. This means that nobody should have to redeploy infrastructure upon realising that previous locations, channels or power levels cause interference with neighbouring networks.
Mobile200 aims to establish a working code that provides guidelines for a simple and cost-effective coordination process, including the use of site surveys, positioning of basestations, and use of channels. The exchange of information is a central concern, and Mobile200 also aims to establish a procedure through which disputes can be resolved. Naturally, the guidelines eventually outlined in the final Code of Practice document will be shaped and agreed by the license winners, and customised to their specific interests.
While the aim of Mobile200 is to establish the Code of Practice, the remit of working groups formed at its meetings may extend to other issues raised by attendees, providing they have nothing to do with the auction or the way the market is shaped. For example, attendees may take the opportunity to plan how roaming can be managed between the license holders, despite this not being a requirement for engineering coordination.
Low Power to the People So what sort of products and services could the auction winners roll out? Ofcom's July Consultation sheds some light on this in spite of its neutrality towards different technologies and applications. It outlines that, because license winners need to avoid interference caused by other license winners transmitting on the shared frequencies, use of the spectrum bands will be restricted to low-power applications. The EIRP (equivalent isotropically radiated power) limit posited is 23 dBm per carrier, and the bandwidths posited are 200 kHz or greater. Ofcom has also proposed an out-of-block emissions mask, based on GSM specifications, and has stated that outdoor antenna systems cannot be higher than 10 metres above the ground.
While auction winners can use whatever technology they like, providing it poses no obstacles for engineering coordination between license holders, Ofcom used GSM as a working assumption when conducting its interference analysis. The provision of GSM services is the most commercially viable option for licensees, with about 50 million handsets already in use in the UK.
Cost-Effective Picocells With all of this in mind, it is likely that the license winners will be attracted to the significant market potential of GSM picocells. These low-power basestations enable innovative GSM services that generate new voice and data revenues. They are simple to install and economic, making use of existing IP infrastructure for backhaul. In terms of targeting subscribers, they also have the advantage of being compatible with existing GSM handsets.
Picocells can be used to address a number of markets. With a typical range of 50m-200m, they are particularly useful for indoor applications, and lend themselves to in-building coverage in corporate locations. There is a significant market for reliable connectivity in workplaces where steel, metallised glass and reinforced concrete attenuate the cellular signal transmitted by outdoor macrocells. The requirements of this market are better addressed by picocells, which can be quickly deployed to promote complete mobility for businesses. Picocells also provide extended GSM capacity to allow more callers to use spectrum at any given time.
The newly released spectrum could be used very profitably in addressing the lucrative SME market for in-building GSM coverage. The use of picocells means that operators can avoid the disruption to building fabric caused by the installation of antenna-based solutions like DAS (Distributed Antenna Systems) and passive repeaters. It also avoids the capital and operating costs incurred by these traditional solutions. Picocells cost less to install and generate greater ARPU (average revenue per user), so that an installation covering as few as ten users would need to generate under €1 per user per business day of additional revenue to deliver a return on investment. Low-power picocells and the new GSM spectrum bands can also be used to address failure of the macro-network in libraries, train stations, cafés, supermarkets, and so forth.
The industry is currently taking note of low power as being the best way to facilitate 3G coverage. While the new slice of spectrum will not be used for high-speed 3G services, the deployment of innovative GSM picocells with support for GPRS and EDGE is likely to provoke new ideas and approaches for this provision.
New Spectrum for Fixed-Mobile Convergence It is quite possible that the new licensees will focus some of their efforts on the home user market. The opportunity to offer FMC (fixed-mobile convergence) is on the horizon, waiting in the wings to allow mobile phone users to take the same phone with them wherever they go, both at home and on the move. This service, lucrative in its potential to displace fixed line usage, can be offered with low-power picocells, or ‘cellular access points'. This is a cost-effective solution because it uses existing IP infrastructure and allows subscribers to keep their existing GSM phones, so no operator subsidy is required for handsets.
Low-power spectrum is needed in order to confine network coverage to a single building. This allows operators to offer competitive tariffs to phone users within the range of a domestic picocell. Elsewhere, phone users could roam seamlessly onto the GSM macro-network at standard mobile rates. Similar low-power pure cellular FMC solutions could be implemented to allow office workers to roam between PBX-type networks and the macro-network.
This pure cellular approach presents operators with an attractive alternative to VoWiFi-based FMC solutions such as UMA. By deploying picocells, operators can avoid the pitfalls of UMA, which include user interface issues, call transfer issues, packet loss, latency and interference. Pure cellular FMC also avoids the need to subsidise new purpose-built WiFi/GSM hybrid handsets that need to combine and coordinate two radios in one device. Using newly available reserved spectrum, it allows operators to offer their subscribers high-quality voice services using a protocol that was specifically designed for voice.
Extending Reach With low-power picocells, the new licensees will be able to use the spectrum to bring GSM coverage to areas beyond the standard reach of mobile networks: in deep rural communities, underground, in tunnels, on trains, on ships, and on airplanes. Within a year, the OnAir and AeroMobile inflight GSM offerings are expected to be available to mobile phone users. Using low-power technology to prevent interference with navigation systems, these services promise to deliver convenience to air passengers and new revenues to innovative operators.
Spectrum Trading The spectrum bidders may explore a number of innovative business models in order to benefit from the new licenses. Ofcom's proposal that the new spectrum bands should be tradable means that, in the event that any spectrum-related business venture is unsuccessful, the spectrum can be sold to another party to enable further innovative applications. So new market entrants are able to trial new types of deployment in the market, and larger operators may then choose to acquire those that are successful, or replicate their ideas, thus avoiding any capital or market risks.
With innovative new ways of using exciting GSM technologies at their disposal, the services pioneered by the new operators are set to have a remarkable impact on telecommunications in the UK.
For Mobile200 enquiries, contact enquiries@mobile200.org.
About Chris Cox Chris joined ip.access as Marketing Manager in 2004 and is charged with positioning the company to become the world's predominant supplier of in-building GSM picocell coverage and capacity solutions.
Before joining ip.access Chris was head of marketing for 3G Lab where he helped the company become an acknowledged leader in the development and deployment of rich, high quality user interfaces for mobile phones using their Trigenix technology.
Prior to 3G Lab Chris was head of marketing programmes at Geneva Technology where he established the company as the leading billing company for next generation billing systems for mobile and fixed carriers globally. Following the acquisition by Convergys Chris was responsible for the EMEA marketing of the full range of BSS and OSS products.
Chris has over 20 years marketing experience in range of IT and electronics companies and holds an MA in Physics from the University of Cambridge.
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