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Open Letter to the Secretary of State re rural broadband

To: Patricia Hewitt: Minister - I am writing to you in respect of the Auction for the Public Fixed Wireless Spectrum at 3.4GHz currently taking place.

I would like to protest in the strongest terms at the government's handling of this auction, principally in the implementation of the Terms of Reference given to the Radiocommunications Agency by the Government.

I refer to the objectives for the PFWA auction that you announced (as the then Minister of State for Small Business and E-Commerce) to the House of Commons on 20th October 2000.

It is clear the that final objective (" ... to realise full economic value ... ") has overridden all other objectives. The other objectives including, for example, "to promote early and effective competition for the provision of broadband services", have not been taken into account in any way in the auction process or the qualification of the bidders to the PFWA. This is the exact reverse of the stated aim, where the "full economic value" objective was stated as being subsidiary to the others.

There was a period of industry consultation prior to the auction, and I (in my role as a director of the East of England Telematics Trust) responded formally to the consultation, setting out a number of ways to ensure that the "timely and economically advantageous development and sustained provision of fixed wireless access" could be achieved. None of these were taken up in the final draft of the Information Memorandum, and in fact changes were made to remove the impact of the primary objectives on the process.

In the current auction, no account is being taken of the existing or planned broadband strategy of the bidders, rather, the winners will simply be those with the deepest pockets. As has been shown many times in the past, the highest bidders in the short term do not necessarily deliver any long-term benefit to the country.

For example, there is no requirement to build any broadband network in any timescale within the terms of the licence, or to make spectrum available to other operators on reasonable terms.

In summary, the primary 3 objectives that you outlined have been forgotten or ignored in the implementation of the Auction process to the long-term detriment of the "consumers, UK industry and the taxpayer".

I look forward to your response and hope that my comments will be taken into account in undertaking future auctions of this nature.

Yours faithfully,

Richard Nuttall, Chairman, Albion Wireless.

Editor's note: Our investigation of the case appears on this site. And here are the terms as originally laid out by the Minister:

Appendix 1 – extract from Information Memorandum for the PFWA Auction

1.1.2 UK and European policy background

The Government has decided to allocate WT Act Licences through an auction process. The Regulations and Notice under which the Auction will take place are at Appendices G and H in Volume II. ERC Recommendation T/R 13-04 E identifies a number of preferred frequency bands for Fixed Wireless Access in Europe (FWA). The Government has made spectrum available for this licensing process in a manner consistent with that Recommendation.

The Government attaches great importance to the further promotion of competition in the provision of telecommunications services to end users. It is therefore keen to encourage market entry, sustainable competition and innovation. This is reflected in the objectives for the award of PFWA Licences, as announced to the House of Commons by the then Minister of State for Small Business and E-Commerce, Patricia Hewitt MP, on 20 October 2000:

• to secure the timely and economically advantageous development and sustained provision of fixed wireless access services throughout the UK, for the long-term benefit of UK consumers and the national economy;

• to utilise the available PFWA spectrum efficiently;

• to promote early and effective competition for the provision of broadband access services; and

• subject to the above objectives, to design a licensing award procedure which is best judged to realise the full economic value to consumers, UK industry and the taxpayer of the spectrum.