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Last Updated: Wednesday, 13 February 2008, 13:57 GMT
Airwaves sale must 'prove worth'
Jane Wakefield
Technology reporter, BBC News

Digital UK's logo
Digital switchover has freed up spectrum
Ofcom has been accused by union leaders of "betraying the nation" over the sell-off of the airwaves

The regulator is currently working on plans to auction off the spectrum freed up by the digital switchover process.

The auction starts in 2009 and lobbying for how it should be conducted is already fierce.

Tony Lennon, president of union BECTU, believes a public-value test to determine how best to use such a valuable national resource is crucial.

Social benefit

Speaking at a recent Westminster eForum on the issue of switchover, Tony Lennon, the president of BECTU - UK union for broadcasting, film, theatre, entertainment, leisure, interactive media and allied sectors - said he was "appalled" at the way the auction was happening.

"I am stunned that public property is being packaged up and sold off in this way. If Ofcom gets it wrong it will be a massive act of treachery," he said.

"Effectively what Ofcom is doing is selling it off to the highest bidder. Allowing the people with the biggest cheque-books to decide is not the best way."

BECTU - which represents about 27,000 workers across the audio-visual and cultural industries in the UK - is lobbying for a public value test to be applied to bidders in the auction, to ensure that citizens gain the services they most need.

"As well as economic tests, each bid should be assessed on social criteria as well," he said.

Philip Rutnam, one of the keynote speakers at the recent Westminster eForum, moved to reassure delegates of Ofcom's intentions.

"We are not here to raise money for the exchequer but for the greatest benefit of society and citizens," he said.

Risky strategy

Advert launching Freeview platform
Freeview launched to much fanfare in 2003 but what does future hold?

One of the biggest controversies hinges on Ofcom's decision not to allocate any of the spectrum freed up by switch-over - about 30% of the valuable UHF band - to the development of high definition TV services for the digital terrestrial platform.

"The future of the Freeview platform depends on being able to develop high definition. If it doesn't have the necessary capacity it will waste on the vine, forcing people to pay subscriptions in order to watch the BBC," said Mr Lennon.

Ofcom has just closed a consultation on the future of high definition on digital terrestrial TV and is due to report back in the next few months.

It believes capacity for HD channels can be squeezed out of existing spectrum, although detractors argue that it will limit the number of channels available to four, making it the poor relation to services on satellite or cable platforms.

"BBC engineers are working on a new standard which might allow us to put services on existing platforms but it is a risky strategy and we cannot gamble with the future of HD on Digital Terrestrial TV," said Catherine Smadja, head of strategy at the BBC.

Mr Lennon pointed out that incorporating the new technologies necessary for HD on Freeview would require both new set-top boxes and new aerials.

Campaigners forming The Digital TV Group are still lobbying Ofcom to make some of the new spectrum available temporarily while the new technologies are incorporated onto existing spectrum.

Smaller wallets

Viviane Reding, EU Commissioner
Viviane Reding wants to see spectrum ring-fenced for broadband

Ofcom is currently consulting on the details for the auction process and is expected to complete this in March and release the final details in July.

Interested parties are keen to avoid a repeat of the 3G auctions where the use of the spectrum was pre-allocated for mobile use only.

But Ofcom does intend to package up the spectrum to make it suitable for particular uses, although it stressed that other uses would also be possible.

Dr Daniel Kirk from consultancy firm Spectrum Value Partners thinks this might be too prescriptive.

"Packaging it could prejudice who will bid. Bidders should be able to mix and match as they see fit," he said.

Lawyer Roderick Kirwan, a partner with law firm Denton Wilde Sapte, believes there are ways of making the process more appealing to those with smaller wallets than the mobile operators, who are seen by most as the obvious candidates to win.

"It could be that Ofcom compensates those who bid or act as match-maker, putting the best bid groups together.

Although some have accused the digital switchover process of being too slow, others are concerned that the auction could be premature.

Hand holding mobile
Most think spectrum will fall into hands of mobile operators

"There needs to be international co-ordination. It is important to know what our neighbours are doing," said Mike Short, vice president of research and development at 02.

Lack of harmony could lead to problems, including interference, and already a conflict of interests seems to be developing.

Viviane Reding, European Commissioner for Information Society and Media, has expressed a preference for the spectrum to be used for broadband internet access and to help bridge the digital divide especially in rural areas.

But not all are convinced of the business case for broadband.

"If all the newly available channels at 700-800 MHz were bought for broadband access in rural areas it would mean at best about 250Mbps (megabits per second) of capacity consumed by possibly many hundreds or even several thousand users.

So it won't go very far and it has precious little future for system upgrade," said Matthew Howett, an analyst at research firm Ovum.

What spectrum use will best serve the public and how the auction will play out in the UK are yet to be decided but all eyes are currently on the US where auctions are happening right now.

Economically they are judged to be a success - it is estimated the US government has already well exceeded its $10bn target - but the winning bidders and the services they intend to provide will offer insights into whether citizens can also reap dividends from the digital sell-off.

Graphic showing how spectrum is divided

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