ELECTRONIC COMMUNICATIONS PART 1 INTRODUCTORY Citation, commencement and extent 1 1 These Regulations may be cited as the Wireless Telegraphy (Licence Award) Regulations 2006 and shall come into force on 10th March 2006. 2 These Regulations shall not extend to the Channel Islands or to the Isle of Man. Interpretation 2 In these Regulations — a “associate” means, in relation to an applicant or bidder, a person who has a material interest in that applicant or bidder; b “authorised person” means a person specified by an applicant in its application as authorised to bind that applicant for all purposes relating to the award process; c “bid” has the meaning given in regulation 17(1); d “bid deposit” has the meaning given in regulation 19(3); e “bidder” means an applicant who has qualified to bid in the award process and who has not withdrawn from the award process before the last day for withdrawal; f “bidder group” means, in relation to an applicant or bidder — i that applicant or bidder; ii each associate of that applicant or bidder; and iii each person in respect of whom, the applicant or bidder delivers to OFCOM a completed document in the form set out in Schedule 4; g “bidding menu document” has the meaning given in regulation 16(a); h “confidential information” means, in relation to any applicant or bidder, any information which is not in the public domain and which if it were made public, or disclosed to another applicant (or potential applicant) or bidder or a member of their respective bidder groups, would be likely to affect the decisions that such other applicant (or potential applicant) or bidder may make in relation to the award process; i “last day for withdrawal” has the meaning given in regulation 8(2)(b); j “licence” means a wireless telegraphy licence to establish or use stations for wireless telegraphy or install or use apparatus for wireless telegraphy in the United Kingdom at the frequency bands 1781.7 megahertz to 1785.0 megahertz and 1876.7 megahertz to 1880.0 megahertz to be granted pursuant to these Regulations; k “licence option” means one of a total of seven, eight, nine, ten, eleven, or twelve licences; l “material interest” means, whether held directly or indirectly — i any interest (construed in accordance with sections 208 and 209 of the Companies Act 1985 ) in — aa shares carrying more than twenty five percent. of the votes entitled to be cast at a general meeting of the applicant or bidder; or bb shares, where the consent of the holder of those shares is required for the conduct of any business of the applicant or bidder; or ii the right to appoint or remove a majority of the applicant’s or bidder’s board of directors; m “OFCOM’s bank account” means the bank account nominated by OFCOM for the purposes of the award process and published on their internet website; n “pounds” means pounds sterling; o “sealed bid” has the meaning given in regulation 18(2); p “sealed bid delivery period” has the meaning given in regulation 15(1)(a); q “valid bids” has the meaning given in regulation 23(1); r “winning bid” shall be construed in accordance with regulation 25; s “winning bidder” has the meaning given in regulation 26(1); and t “winning licence option” shall be construed in accordance with regulation 24. PART 2 APPLICATION STAGE Applications for the grant of licences 3 Applications for the grant of licences shall only be made in accordance with the procedure set out in these Regulations. Application 4 1 Only a body corporate may apply to OFCOM for a licence. 2 A body corporate may only apply for one licence. 3 To apply for a licence, a body corporate must, on the day specified by OFCOM and within the time on that day specified by OFCOM for receipt of applications — a deliver to OFCOM at Riverside House, 2a Southwark Bridge Road, London SE1 9HA in a sealed envelope — i a document containing the application information required by Schedule 2, completed in respect of the applicant and signed on its behalf; ii a document, in the form set out in Schedule 3, completed in respect of the applicant and signed on its behalf; iii for each person who is not an associate of the applicant which the applicant wishes to join its bidder group, a document in the form set out in Schedule 4, completed by the applicant (and signed on its behalf) and completed by and signed by or on behalf of the person in respect of whom that document is completed; and b pay into OFCOM’s bank account by a same day electronic transfer, with accompanying information which identifies the applicant, an initial deposit of twenty five thousand pounds. 4 OFCOM shall provide notification of the day and times mentioned in paragraph (3) by publication of that information on their internet website. PART 3 QUALIFICATION STAGE Assessment of bidder groups 5 1 OFCOM shall give notice to each applicant of — a the name of each other applicant and the names of their associates; and b the latest time by which each applicant must notify OFCOM under paragraphs (3) and (4). 2 On receipt of that notice, each applicant shall examine the names of the other applicants and their associates and determine if any member of its bidder group is also an associate of another applicant or an applicant. 3 Where an applicant determines that a member of its bidder group is also an associate of another applicant or an applicant, it must notify the other applicant and OFCOM by the time specified in the notice given by OFCOM under paragraph (1), and OFCOM shall specify a further time by which each applicant concerned must — a notify OFCOM of any change in circumstances the effect of which is that no member of its bidder group is an associate of another applicant or an applicant; and b where changes have occurred to its bidder group, provide OFCOM with revised versions of the documents provided under regulation 4(3)(a)(i) and (ii). 4 Where an applicant determines that no member of its bidder group is an associate of another applicant or an applicant it must notify OFCOM by the time specified in the notice given by OFCOM under paragraph (1). 5 If it appears to OFCOM from any application, that a member of one bidder group is also a member of another bidder group, OFCOM shall give notice of that fact to each of the applicants concerned and specify a date by which each applicant concerned must — a notify OFCOM of any change in circumstances the effect of which is that no member of its bidder group is also a member of another bidder group; and b where changes have occurred to its bidder group provide OFCOM with revised versions of the documents provided under regulation 4(3)(a)(i) and, (ii). 6 After the last date specified by OFCOM under paragraphs (3) and (5), OFCOM shall record the members of each applicant’s bidder group. Subsequent changes to bidder groups 6 1 After the recording by OFCOM of the members of each applicant’s bidder group, an applicant may change its bidder group but, in relation to the award process, the applicant shall be subject to regulations 7(2) and 31 if they apply to any such change. 2 Where the change involves the addition or removal of an associate, that applicant must notify OFCOM of the change and submit revised versions of the documents provided under regulation 4(3)(a)(i) and (ii). 3 To add a person who is not an associate of the applicant to its bidder group, an applicant must deliver to OFCOM a document in the form set out in Schedule 4 completed by the applicant (and signed on its behalf) and completed by and signed by or on behalf of the person in respect of whom that document is completed. Determination of applicants who are qualified to bid 7 1 OFCOM shall determine whether each applicant who has submitted an application in accordance with regulation 4 is qualified to bid in the award process. 2 An applicant shall not be qualified to bid in the award process where a member of its bidder group is also a member of another applicant’s bidder group. 3 In making their determination under paragraph (1) OFCOM shall take into account whether — a the grant of a licence to the applicant would be prejudicial to the interests of national security; b the applicant is a fit and proper person to hold a licence having regard to the probity of — i the applicant; ii each member of the applicant’s bidder group; and iii any director of any member of the applicant’s bidder group; c any of the information submitted to OFCOM by the applicant in connection with the award process is false or misleading; d any member of the applicant’s bidder group has colluded, or attempted to collude, or is colluding or attempting to collude, with another person to distort the outcome of the award process; e any member of the applicant’s bidder group has acted or is acting in a way which is likely to distort the outcome of the award process; f any member of the applicant’s bidder group, or any person to whom confidential information has been disclosed, has disclosed confidential information, whether directly or indirectly, to any person except where the disclosure — i was to a member of the applicant’s bidder group; ii was to OFCOM; iii was for the purpose of raising finance for the applicant’s application and was to a provider of finance; or iv was for the purpose of enabling the recipient to decide whether to participate as a member of the applicant’s bidder group; g any member of the applicant’s bidder group has obtained or is obtaining or attempting to obtain confidential information relating to another applicant; h any member of that applicant’s bidder group is receiving or is attempting to receive services in relation to the award process from any person who has provided or is providing services to OFCOM in relation to the award process; and i any person who is a director or employee of a member of that applicant’s bidder group and also a director or employee of a member of another bidder group is — i taking part in the preparation of both bidder groups for participation in the award process; or ii receiving confidential information relating to both bidder groups. 4 Applicants must, by a time notified by OFCOM, provide to OFCOM any information or documentation which OFCOM require to make their determination. 5 If an applicant does not provide such information or documentation within the notified time, OFCOM shall also take that fact into account in making their determination. 6 Where OFCOM determine that an applicant is not qualified to bid in the award process, that applicant’s initial deposit shall not be forfeited for that reason. Publication of determination 8 1 OFCOM shall notify each applicant of their determination under regulation 7(1). 2 OFCOM shall also notify each applicant qualified to bid of— a the identity of the other applicants who are so qualified; and b the last day for withdrawal from the award process (“last day for withdrawal”). 3 OFCOM shall publish the identity of the applicants who are qualified to bid in the award process and the last day for withdrawal on their internet website. Withdrawal of an application 9 1 If, on or before the last day for withdrawal, OFCOM receive notice of an applicant’s intention to withdraw its application, signed by an authorised person of that applicant, the application shall be withdrawn and the applicant shall be excluded from the award process and OFCOM shall — a notify all other applicants of the withdrawal; and b refund, on completion of the award process, the applicant’s initial deposit except where the initial deposit has been forfeited under regulation 31. 2 Once an applicant withdraws its application, that applicant shall not be re-admitted to the award process. Determination of number of bidders 10 1 After the last day for withdrawal, OFCOM shall determine the number of bidders. 2 Where the number of bidders is seven or fewer, OFCOM shall grant licences in accordance with the procedure set out in Part 4 of these Regulations. 3 Where the number of bidders is more than seven, OFCOM shall grant licences in accordance with the procedure set out in Part 5 of these Regulations. 4 OFCOM shall publish the identity of the bidders on their internet website along with a statement of whether OFCOM will proceed to grant licences in accordance with Part 4 or Part 5 of these Regulations. PART 4 PROCEDURE WHERE THERE ARE SEVEN OR FEWER BIDDERS Provisional award notice and sums payable 11 1 Where the number of bidders is seven or fewer, OFCOM shall give a provisional award notice to each bidder containing — a a draft of the licence which the bidder is provisionally awarded; b a statement of the licence fee; c the sum which the bidder shall pay to OFCOM; and d the latest time by which the bidder must pay that sum. 2 The licence fee in respect of each licence shall be fifty thousand pounds; 3 The sum which each bidder shall pay to OFCOM shall — a where its initial deposit has not been forfeited in accordance with regulation 31, be a sum equal to the licence fee less the initial deposit; and b where its initial deposit has been so forfeited, be a sum equal to the licence fee. 4 OFCOM shall publish on their internet website the identity of the bidders to whom licences have been provisionally awarded. Payment 12 1 Each bidder shall pay to OFCOM the sum specified in its provisional award notice by the time specified in that notice. 2 That sum shall be paid into OFCOM’s bank account by a same day electronic transfer, with accompanying information which identifies the bidder. 3 If a bidder fails to make payment in accordance with this regulation it shall — a not be entitled to the grant of a licence; and b not receive a refund of its initial deposit, which shall (where it has not already been forfeited under regulation 31) be forfeited. Grant of licences 13 Where OFCOM have received from a bidder the sum specified in its provisional award notice by the time specified in that notice, OFCOM shall grant that bidder a licence. Completion of the award process 14 After the grant of licences, OFCOM shall complete the award process by — a publishing on their internet website the identity of the persons to whom licences were granted and the licence fees paid; and b refunding to applicants who were not qualified, or withdrew in accordance with regulation 9, the initial deposits (where such deposits have not already been forfeited under regulation 31) but not any interest which has accrued on the deposits. PART 5 PROCEDURE WHERE THERE ARE MORE THAN SEVEN BIDDERS Notice to bidders 15 1 Where the number of bidders is more than seven, OFCOM shall give notice to each of the bidders of — a the day on which and the times on that day within which sealed bids must be delivered to OFCOM (the “sealed bid delivery period”); b the identity of all bidders; and c a password which the bidder must specify on its bidding menu document to confirm that it has originated from that bidder. 2 OFCOM shall publish on their internet website the identity of the bidders to whom OFCOM have given notice and the sealed bid delivery period. Bid documentation 16 The bid documentation shall consist of — a a document in the form set out in Schedule 1, completed by the bidder in accordance with regulation 17, signed on its behalf by two authorised persons and bearing its password (a “bidding menu document”); and b a document in the form set out in Schedule 5, completed in respect of the bidder and signed on its behalf by two authorised persons. Completion of the bidding menu document 17 1 Where a bidder wishes to specify a sum on the bidding menu document which it commits to pay for a licence (a “bid”) it must specify an amount in whole pounds and in words only which must be greater than or equal to fifty thousand pounds. 2 On the bidding menu document a bidder must — a only specify a bid for a licence which is one of a total number which is a licence option; b only specify one bid against any licence option; and c specify a bid against at least one licence option but need not specify a bid against each licence option. Submission of sealed bids to OFCOM 18 1 The completed bid documentation must be placed in a non-transparent envelope and sealed. 2 The sealed non-transparent envelope containing the bid documentation constitutes a sealed bid. 3 Sealed bids must be delivered to OFCOM at Riverside House, 2a Southwark Bridge Road, London SE1 9HA and placed in the box marked for delivery of sealed bids during the sealed bid delivery period. 4 Only a bidder may submit a sealed bid to OFCOM. 5 A bidder may only submit one sealed bid. Bid deposit 19 1 In addition to the initial deposit paid at the time of application, a bidder must, during the sealed bid delivery period, pay into OFCOM’s bank account by a same day electronic transfer, with accompanying information which identifies the bidder, a further sum in pounds as a deposit. 2 The further sum to be paid under paragraph (1) shall — a where the initial deposit has not been forfeited in accordance with regulation 31, be a sum representing the difference between — i the bidder’s initial deposit; and ii half of the highest sum which that bidder has specified on the bidding menu document against any of the licence options; or b where the initial deposit has been forfeited in accordance with regulation 31, be a sum equal to half of the highest sum which that bidder has specified on the bidding menu document against any of the licence options. 3 The total amount on deposit after payment of the further sum constitutes the bid deposit. Opening of sealed bids 20 OFCOM shall only open sealed bids which were submitted to OFCOM in accordance with regulation 18(1) and (3) and shall reject sealed bids which were not so submitted. Incomplete or incorrect completion of bid documents 21 1 Where, due to the manner of completion, bid documentation is incomplete or defective but OFCOM can identify the bidder and ascertain the bidder’s intention in relation to bids, OFCOM shall ask the bidder to confirm in a notice to OFCOM by a specified time that OFCOM have correctly identified the bidder and ascertained its intention in relation to bids. 2 Where the bidder confirms in a notice given to OFCOM by the time required which is signed by an authorised person of that bidder, that OFCOM have correctly identified the bidder and ascertained the bidder’s intention, the sealed bid in its entirety shall be accepted by OFCOM on that basis. 3 Where the bidder does not confirm in a notice given to OFCOM by the time required which is signed by an authorised person of that bidder, that OFCOM have correctly identified the bidder and ascertained the bidder’s intention, the sealed bid in its entirety shall be rejected by OFCOM. Rejection of opened sealed bids from the award process 22 1 OFCOM shall also reject and exclude from the award process the entirety of an opened sealed bid where — a in any case where regulation 21(1) does not apply, the bidder has not completed the bid documentation in accordance with the requirements of these Regulations; b the sealed bid was submitted by a person other than a bidder; c the bidder has submitted more than one sealed bid; or d the entirety of the bid deposit has not been paid into OFCOM’s bank account during the sealed bid delivery period in accordance with regulation 19. 2 OFCOM shall notify any bidder whose sealed bid has been rejected and shall give reasons for the rejection. 3 OFCOM shall also notify any bidder to whom a notice was given under regulation 15(1) but in respect of whom a sealed bid was not opened. Valid bids 23 1 Only bids specified on a bidding menu document in accordance with regulation 17 and contained in a sealed bid which has not been rejected by OFCOM (“valid bids”) shall be taken into consideration for the purpose of determining the winning licence option and the winning bids. 2 Any bidder to which a notice was given under regulation 15(1) which does not submit a valid bid shall be excluded from the award process and shall not receive a refund of its initial deposit, or its bid deposit where a bid deposit has been paid, which shall (where not already forfeited under regulation 31) be forfeited. Determination of the winning licence option 24 1 OFCOM shall calculate the total value of the valid bids made in respect of each licence option as follows — a where the number of valid bids in respect of a licence option is equal to or less than the number of licences under that licence option, OFCOM shall calculate the total value of all the valid bids for that licence option; b where the number of valid bids in respect of any licence option is greater than the number of licences under that licence option, OFCOM shall — i identify the n highest valid bids, where n is the number of licences under that licence option; and ii calculate the total value of the n highest valid bids. 2 The winning licence option shall be the one having the highest total value, determined under paragraph (1). 3 If there is more than one licence option having the highest total value determined under paragraph (1), the winning licence option shall be that with the greater or, as the case may be, the greatest number of licences amongst those licence options having the equal highest total value. Determination of winning bids 25 1 The winning bids shall be those valid bids included in the calculation made under regulation 24(1) for the winning licence option. 2 Where there is more than one bid of equal value included in the calculation made under regulation 24(1) for the winning licence option, and that value is the lowest amount included in that calculation, OFCOM shall employ a method of random selection amongst those bids of equal value to determine which of them shall be treated as a winning bid. Provisional award notice and sums payable 26 1 OFCOM shall give a provisional award notice to each bidder who submitted a winning bid (a “winning bidder”) containing — a a draft of the licence which the winning bidder is provisionally awarded; b a statement of the licence fee; c the sum which the winning bidder shall pay to OFCOM; and d the latest time by which the winning bidder must pay that sum. 2 The licence fee in respect of the winning bidder’s licence shall be a sum equal to the winning bid made by that winning bidder. 3 The sum which each winning bidder shall pay to OFCOM shall — a where its bid deposit has not been forfeited in accordance with regulation 31, be a sum equal to the licence fee less the bid deposit; and b where its bid deposit has been so forfeited, be a sum equal to the licence fee. 4 OFCOM shall also notify each bidder who did not submit a winning bid that it has not been provisionally awarded a licence. 5 OFCOM shall publish on their internet website the identity of the winning bidders to whom licences have been provisionally awarded. Payment 27 1 Each winning bidder shall pay to OFCOM the sum specified in its provisional award notice by the time specified in that notice. 2 That sum shall be paid into OFCOM’s bank account by a same day electronic transfer, with accompanying information which identifies the bidder. 3 If a winning bidder fails to make payment in accordance with this regulation it shall — a not be entitled to the grant of a licence; and b not receive a refund of its bid deposit, which shall (where it has not already been forfeited under regulation 31) be forfeited. Grant of licences 28 Where OFCOM have received from a winning bidder the sum specified in its provisional award notice by the time specified in that notice, OFCOM shall grant that winning bidder a licence. Licences not awarded 29 1 Where OFCOM do not grant a licence to a winning bidder because that winning bidder has failed to make payment in accordance with regulation 27(1), OFCOM shall select the appropriate bidder (among those bidders who made a valid bid for the winning licence option) to which a provisional award notice should next be given in accordance with the order of precedence set out in paragraph (3) and follow the procedures set out in regulations 26 to 28 to give a provisional award notice, receive payment of the licence fee and grant a licence. 2 Should that bidder fail to make payment, OFCOM shall follow the procedures set out in regulations 26 to 28 to give a provisional award notice, receive payment of the licence fee and grant a licence to the next bidder in the order of precedence until the licence is awarded or the list of bidders (among those bidders who made a valid bid for the winning licence option) is exhausted. 3 The order of precedence among bidders who made a valid bid for the winning licence option shall be determined by the sums bid by those bidders for the winning licence option such that higher sums shall prevail over lower sums, and, where any two or more bidders bid sums of equal value OFCOM shall employ a method of random selection to determine the precedence among those bidders. Completion of the award process 30 After the grant of licences, OFCOM shall complete the award process by — a publishing on their internet website the details of all bids, the identity of all bidders and the identity of the persons to whom licences were granted and the licence fees paid; and b refunding to applicants who were not qualified or who withdrew in accordance with regulation 9, and unsuccessful bidders, the initial deposits or bid deposits, (where such deposits have not already been forfeited under regulations 23(2), 27(3)(b) or 31) but not any interest which has accrued on the deposits. PART 6 ACTIVITY RULES Forfeit of deposit and exclusion from award process 31 If, in relation to an applicant who is qualified to bid or a bidder, OFCOM are satisfied that any of the events set out in regulation 32 are occurring (or have occurred) and that the occurrence would materially affect the outcome of the award process — a the initial deposit, or the bid deposit where a bid deposit has been paid, shall be forfeited by, and not refunded to, the applicant or bidder concerned; and b that applicant or bidder may also be excluded by OFCOM from the award process by OFCOM giving that applicant or bidder notice in writing. Events 32 The events referred to in regulation 31, in relation to an applicant or bidder, are — a the submission to OFCOM of any information in connection with the award process which is false or misleading; b any member of that applicant’s or bidder’s bidder group is colluding (or attempting to collude) with another person to distort the outcome of the award process; c any member of that applicant’s or bidder’s bidder group is acting in a way which is likely to distort the outcome of the award process; d any member of that applicant’s or bidder’s bidder group, or any person to whom confidential information has been disclosed, is disclosing, or attempting to disclose, or inciting another person to disclose, any confidential information, whether directly or indirectly, to any person except where the disclosure — i is to a member of that applicant’s or bidder’s bidder group; ii is to OFCOM; or iii is for the purpose of raising finance for a bid and is to a provider of finance. e any member of that applicant’s or bidder’s bidder group is obtaining or attempting to obtain confidential information relating to another applicant or bidder; f any member of that applicant’s or bidder’s bidder group is receiving or is attempting to receive services in relation to the award process from any person who has provided or is providing services to OFCOM in relation to the award process; g any person who is a director or employee of a member of that applicant’s or bidder’s bidder group and also a director or employee of a member of another bidder group is — i taking part in the preparation of both bidder groups for participation in the award process; or ii receiving confidential information relating to both bidder groups; h a member of that applicant’s or bidder’s bidder group is or becomes a member of another applicant’s or bidder’s bidder group; i a change is occurring in the membership of that applicant’s or bidder’s bidder group from that notified to OFCOM in its application except as a result of — i a person ceasing to be a member of that bidder group; ii a person joining that bidder group under the procedure in regulation 6(2); iii a person becoming an associate through merger or acquisition activity provided that such activity is not for a purpose related to the award process. PART 7 MISCELLANEOUS General power of exclusion 33 OFCOM may, at any time, notify any applicant or bidder of its exclusion from the award process if, in their opinion, the grant of a licence to that applicant or bidder would be prejudicial to the interests of national security or the applicant or bidder is not a fit and proper person to hold a licence. Notification to OFCOM 34 If, in accordance with any provision of these Regulations, an applicant or bidder is required, or wishes, to notify OFCOM of any fact or circumstance, it must do so by notice in writing which is marked for the attention of the Ofcom personnel which are specified by OFCOM for that purpose on OFCOM’s internet website and must deliver that notice to OFCOM — a by personal delivery to Riverside House, 2a Southwark Bridge Road, London, SE1A 9HA; b by fax to a number dedicated to the award process which is published by OFCOM on their internet website; or c by electronic mail to an electronic mail address dedicated to the award process which is published by OFCOM on their internet website. Delivery of documents 35 If OFCOM determine that it is impractical for any reason for any document which is to be delivered to OFCOM’s premises under these Regulations to be delivered at the place or within the time specified under these Regulations, OFCOM shall take all reasonable steps to notify the persons who must deliver the document concerned and require delivery to be made — a on a different day or within a different time; or b at a different place. Refunds 36 OFCOM may, in such cases as they think fit, refund, in whole or in part, sums which have been paid to them in accordance with any provision of these Regulations or the licences. Stephen Carter Chief Executive of the Office of Communications For and by authority of the Office of Communications 14th February 2006