Mobile Phones And Spectrum Trading

In this short article brought to you by we introduce you to the practice of Mobile Spectrum Trading.

First, perhaps, a little introduction to what we mean by Spectrum.

What is the spectrum?

The spectrum, in the context of and this article, is a range of frequencies regulated by OfCom - the Office of Communications.

Mobile Network Operators, and hence mobile phones, operate over a set band of radio frequencies.

For Mobile Network Operators these bands are often referred to as the 900MHz band, 1800MHz (1.8Ghz) band, and 2100MHz (2.1Ghz) band.

At intervals OfCom sells, typically by means of auction, ranges of each of the Mobile Radio Frequency Bands (or Spectrum) to bidding Mobile Network Operators.

As an auction the highest bidder (at close of auction) for a range of frequencies within these bands wins the license to operate mobile phone networks using their winning ranges.

A Mobile Network Operator may bid on, and win, more than one range of frequencies within the overall mobile radio frequency bands.

The cost of winning can, and does, vary from auction to auction.

For example, in the year 2000 combined winning bids were believed to be in excess of £22billion (22 Billion Pounds Sterling).

Research has indicated that in 2012 winning bids may go to "only" £1 billion (1 Billion Pounds Sterling) - however the bidding, and winning, has not yet taken place.

It is always impossible to pre-empt the exact closing price of  an auction, or even the vicinity of the closing price, so the above figure could either be too low, or even too high.

Watch this space!

Although Spectrum Trading has been phased in since 2004, perhaps 2012 will see an increased level of Spectrum Trading.

What is Spectrum Trading?

As mentioned above, a Mobile Network Operator may win more than one auction, leaving the Network Operator with perhaps several licenses to use specific frequencies that are spread out through the overall frequency range available.

The options to the Network Operator in the above case are several:

  • Use the frequencies won;
  • Maybe issue un-needed frequencies to Mobile Virtual Network Operators; (Read more about Virtual Networks )

Or, utilise a relatively new technique being phased in by OfCom since about 2004 - which is Spectrum Trading

Spectrum Trading is regulated by OfCom and Trading of specific frequencies will be scrutinised by OfCom before the trade is permitted to take place.

When Spectrum Trading takes place a Mobile Network Operator will be able to assign their own rights and obligations to a frequency range to another Mobile Network Operator.

Why would a Network Operator want to trade spectrum?

The reasons are many.

For a specific Mobile Network Operator to Trade Spectrum their own reason(s) may be one or two of the overall number of reasons.

Reasons might include the following scenarios:

Two separate Mobile Networks (for simplicity, let us call them Network 1 and Network 2) may have won licenses for several ranges of frequencies within the mobile spectrum - each Network Operator may have, for example 3 ranges - these individual ranges may be over completely different parts of the Radio Frequency band.

Network 1 may have a range that really they weren't too bothered whether or not they won, but they won and have a license for this range.

Network 2 also won a range that they weren't too bothered about.

For operational reasons, Network 1 wanted the range that Network 2 won but doesn't really want.

Maybe, for different reasons, Network 2 would have preferred the range that Network 1 won but doesn't want.

Here we have two networks - each has what the other wants but does not really want to keep.

The solution?

Network 1 and Network 2 talk to each other, initially by mobile phone of course, and ultimately agree a Trade (the agreement is most likely in writing at this stage).

Network 1 then assigns their Rights and Obligations for their unwanted range to Network 2.

Likewise, Network 2 assigns their Rights and Obligations for their own unwanted range to Network 1.

Both networks are now content for two reasons:

They have each:

  • Off-loaded an unwanted spectrum range;
  • Acquired a wanted spectrum range.

2012's auctions are believed to also include spectrum frequencies that will allow for the implementation of 4G (fourth generation) services that can provide speeds of 100Mps and more.

Also, 2012's auctions are believed to be also including frequencies in the 2600Mhz (2.6Ghz) frequency range.

We hope that this article gives a little insight into what goes on behind the scenes by the Mobile Network Operators to provide, and promote, their own version of "The Best Mobile Service" to their subscribers - you and I.

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Tim Austin writes articles about various aspects of the Mobile Phone industry.

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