Ofcom Award Convergence Licenses

Colt Telecom, Cable & Wireless and BT are all planning to launch new converged’services, combining the functionality of mobile telephony with the cheapness of a fixed line phone, after yesterday winning licenses in the first sale of mobile phone spectrum since the dotcom boom.

The three companies are among a dozen awarded licenses by Ofcom in the first auction of parts of the UK’s airwaves since the sale of 3G spectrum six years ago.

In stark contrast to the £22.5bn paid by five mobile operators in the summer of 2000 to run 3G services, the 12 successful applicants in the one-round bidding process are expected to have paid just a few million pounds.

The spectrum sold is about a tenth the size of the 3G band and is ideally suited to the deployment of existing mobile phone technology, called GSM, in local areas.
Ofcom had suggested the spectrum, which until now had been cordoned off in case any service run over it interfered with cordless phones, could be used to set up mobile phone services on university or corporate campuses.

Colt Telecom’s commercial director, Robin Saphra, said yesterday the company is looking to partner with a mobile phone operator and offer a one-phone solution to its corporate customers.

When a corporate client is in their office, for instance, the phone will connect, using this new piece of spectrum, to Colt’s fixed line network and calls will be cheaper than on a mobile; when out and about the phone will work over the network of Colt’s partner.

“This spectrum offers us an ideal opportunity to offer a mixture of fixed-to-mobile converged solutions,” explained Mr Saphra. “And we will work with a mobile partner network to produce coverage outside the office.”

Similarly, a spokeswoman for Cable & Wireless said its customers want “the convenience” of one handset, one bill and one supplier. “We’ll use this licence to enhance our propositions to our target customers through fixed-mobile convergence solutions,” she added.

So far there is only one such ‘converged’ application in the UK market, BT’s Fusion product. Outside a customer’s home the handset acts just like a mobile, using Vodafone’s network. At home it uses bluetooth short range wireless technology to connect to BT’s fixed line network, also at cheaper rates than using a mobile.
BT is hoping to have a range of handsets that use another wireless technology, wi-fi later this year. BT intends to use the new spectrum it has been awarded to create a new range of converged products aimed at residential customers rather than business users.

“This spectrum is very effective for producing GSM-type services,” he said. “It does not provide high speed broadband but it is complementary to what we are doing with convergence. It’s a good piece of spectrum for us to have to produce complementary services to Fusion.”

In fact the only mobile phone operator to be awarded any of the new spectrum – called the GSM/DECT Guard Band – was O2. While Vodafone, 3 and T-Mobile all declined to bid, Orange was interested in the process but appears to have backed off at the last minute.

Opal Telecom, owned by Carphone Warehouse, also succeeded in getting part of the new spectrum raising the possibility that its Talktalk brand will also set up a competitor service to BT Fusion.