Nil Karaibrahimgil, popular Turkish singer known simply as Nil
In our blog Will European MSS get off the ground? we discussed the Ofcom proposals for the setting of the licence fees for the UK 2GHz spectrum required for the complementary ground components of the European Union mobile satellite systems authorised to Inmarsat Ventures and Solaris Mobile by Commission Decision 2009/449/EC. We thought that perhaps the fee Ofcom was proposing of £554,000 per 2 x 1 MHz nationwide, being the Administered Incentive Pricing of the GSM mobile operators’ spectrum, was a little high, given that each of the mobile satellite systems operators requires 2 x 15 MHz bandwidth (15 x £554,000 = £8,310,000 each).
However, without any consultation that we are aware of, one of the last acts of Stephen Timms as Minister for Digital Britain appears to have been to conduct the spectrum bargain sale of the decade. Instead of setting a licence fee of the order of hundreds of thousands of pounnds or more, the outgoing Labour Government passed the Authorisation of Frequency Use for the Provision of Mobile Satellite Services (European Union) Regulations 2010, which, at Regulation 4(5) includes the following amazing provision:
OFCOM shall not charge the selected applicants for the granting of an authorisation.
Yes, you read that right. No charge. According to Regulation 4(2), the authorisations shall be granted for 18 years from 14 May 2009.
So what happened to Administered Incentive Pricing? What did the outgoing administration read into Commission Decision 2009/449/EC or the earlier EU Decision 626/2008/EC that made them think that the UK could not charge for the spectrum authorisations that it and all member states are required to make in connection with the EU authorisaton of mobile satellite systems operators and forego over £16 million in authorisation/spectrum licence fees? What can the 2G and 3G operators do to challenge this give away?
In our blog European Space War? we noted that the European Commission and the ITU may have a difference of opinion about the EU’s allocation of spectrum to 2 mobile satellite services’ (MSS) operators. Inmarsat and Solaris Mobile were announced as the the lucky winners in the Official Journal on 12 June 2009.
Our earlier blog was really concerned about the issue of setting national spectrum licence fees for these MSS operators. Set too low and the terrestrial mobile operators could easily get upset at being put to a significant disadvantage. Too high and the whole project gets killed off or delayed, as happened to 3G.
So has Ofcom got the level right? In their statement on licensing the complementary ground components, they have set the licence fee at £554,000 per 2 x 1 MHz nationwide, being the Administered Incentive Pricing of the GSM mobile operators’ spectrum first described in their January 2008 consultation paper (which has a very straight forward explanation of the 2GHz mobile satellite system, including the use at this spectum by complementary ground components).
Our gut instinct is that this is too high, given the overall costs of the infrastructure of mobile satellite systems complementary ground components AND the manufacture, launch and operation of the satellites themselves, particularly if this level of licence fees are set in all other member states. Maybe that’s why we’re lawyers, and not regulatory economists?
Thanks to a Tweet from Guardian Tech, we were alerted to a story about trouble brewing between the European Commission and the ITU: here.
Frankly, we are surprised it has taken this long. In short, the European Commission has decided to sort out the selection and authorisation of S-Band mobile satellite services operators in the EU: see Decision 626/2008/EC.
What still hasn’t been sorted out, as far as we can see, is the issue of national licence fees. The operators selected by the Commission will still need to get national spectrum licences (or even recognised spectrum access licences). At what cost? Article 7 of the Decision is silent on this, only requiring member states to grant authorisations to the selected operators in accordance with Community and national laws.
If the cost set in some member states is low, expect the existing mobile phone operators, in particular the 3G operators who paid fortunes in the 3G licence auctions, to come out fighting.