Government Response to the
Independent Review of Radio Spectrum Management
Executive Summary
1
The radio spectrum is a key resource for communications in the private and
public sectors. Its effective management is essential if we are to make the UK the
most dynamic and competitive communications market in the world while at the same
time making spectrum available for defence purposes, essential public services and
scientific applications.
2
We agree with the underlying analysis of the review that market-based
spectrum management tools have an important role to play in making the best
possible use of the finite spectrum resource. As described below, we broadly accept
the review’s recommendations for extending and developing our policies on auctions,
incentive pricing and spectrum trading within a regulatory framework that ensures
that sufficient spectrum is available for essential public services, safeguards
competition, minimises harmful interference and ensures compliance with
international obligations. The review has mapped out a substantial programme of
work. The Radiocommunications Agency will pursue this purposefully and
progressively. There will be full consultation with spectrum users, manufacturers and
other interested parties throughout the process and changes will be phased in to give
time to adapt.
International Regulatory Framework
3
International harmonisation brings many benefits. However, it can also restrict
national administrations’ ability to make spectrum available for new services in
response to convergence and other developments. We will work towards ensuring that
international harmonisation proceeds in a way that best meets the interests of
equipment manufacturers, service providers and consumers while striking the right
balance between stability to encourage investment and flexibility to adapt to change.
Interference Management
4
We will look carefully at the scope to transfer more responsibility to those
users able to do more to resolve interference while ensuring that all users have access
to a credible and impartial service. There will be greater openness about assignment
information but legitimate concerns about security and confidentiality will be met.
Legislative Framework
5
Ofcom will have a separate spectrum management duty. The draft
Communications Bill contains provisions to enable the Secretary of State to direct
Ofcom in the specifics of spectrum management in order to ensure the wider public
interest is taken into account but only if Parliament expressly agrees. Licensing will
be made as flexible and technology-neutral as possible and will be complemented by
a new system of Recognised Spectrum Access.
Market Mechanisms for Managing the Spectrum
6
With limited exceptions, all spectrum users will face incentives to use
spectrum more efficiently. Auctions remain our preferred method of assigning new
1
spectrum but are not appropriate in all circumstances. We will apply administrative
incentive pricing where spectrum has not been auctioned. Fees will continue to be no
higher than justified by spectrum management considerations. We will
comprehensively review the current pricing methodology, re-examine licence
conditions to remove any unnecessary restrictions and introduce spectrum trading.
There will be full consultation throughout.
Commercial Spectrum Use
7
The above general principles will be applied in particular to public
telecommunications, licence-exempt spectrum, private mobile radio, fixed terrestrial
services and satellite systems. There will be full consultation on the details.
Defence
8
Our armed forces use spectrum for various purposes, including
communication and radar. The Ministry of Defence has already made considerable
efforts to release spectrum for non-military use and these efforts will continue. We
will take various further steps to ensure that decision-makers have the information
they need to use spectrum as efficiently as possible and face effective incentives to do
so. These will include an audit of defence spectrum, the continued application of
pricing in parallel with non-military users on a comparable basis and the introduction
of trading to provide incentives. Nothing will be done that would compromise
national security or the armed forces’ operational effectiveness.
Broadcasting
9
Broadcasting is a major user of spectrum that is increasingly overlapping and
competing with telecommunications services. We agree that broadcasters should pay
for spectrum but that the introduction of spectrum pricing for television and its timing
should be linked to digital switchover as the main spectrum efficiency gain will come
from the move to digital-only broadcasting of television programmes. Incentive
pricing for analogue television spectrum will be implemented after full consultation,
but not before 2006, in a way that demonstrably provides an additional incentive for
the broadcasters to do what they can to achieve the switchover conditions. We also
envisage applying incentive pricing to digital television but not before 2010. For
sound radio, we recognise that further work needs to be carried out on the scope for
spectrum pricing to apply given the constraints that the regulatory framework imposes
on broadcasters' use of spectrum.
Aeronautical and Maritime
10
Aviation and shipping rely on spectrum for essential safety purposes. In many
cases, international agreements limit the scope to improve spectrum efficiency.
However, for other applications, administrative incentive pricing would provide
incentives to improve efficiency. Nothing will be done to compromise safety; and
incentive pricing will be phased in over a period of years after full consultation.
Public Safety
11
Effective and efficient communication between public safety services is one of
the most important and recognisable benefits society derives from the use of the radio
spectrum. We will do nothing to compromise this. However, in some cases, more
extensive application of spectrum management tools, such as pricing, will provide
2
incentives for this resource to be used more efficiently, delivering better public safety
services while freeing up spectrum for other users.
Space Science
12
We will continue to support space science in the UK. Some radio astronomy
bands are protected internationally but others could be used commercially and there is
scope to apply incentive pricing and leasing. However, we do not intend to reduce the
overall resource currently devoted to radio astronomy.
3
1
Introduction
1.1
The independent review of radio spectrum management was commissioned by
the Chancellor of the Exchequer and the Secretary of State for Trade and Industry to
advise on the principles that should govern spectrum management and what more
needs to be done to ensure that commercial and non-commercial users are focused on
using spectrum as efficiently as possible. Professor Martin Cave published his report
on 6 March 2002.
1.2
The review consulted extensively in producing its report and further comments
were invited by 10 May. The report itself, the responses to the review’s consultation
and the additional comments received after the report was published are all available
electronically through the website of the Radiocommunications Agency
www.radio.gov.uk, except where confidentiality was requested.
1.3
The Government would like to express its appreciation to Professor Cave and
the review team for the comprehensive nature of its report, which makes a total of 47
wide-ranging recommendations, and for its cogent and rigorous analysis.
1.4
The review underscores the importance of spectrum management to the
Government’s goal of making the UK the most dynamic and competitive
communications market in the world. The main themes of its conclusions may be
summarised as follows.

The radio spectrum is a finite resource of considerable importance for national
security, public services, the economy and future UK competitiveness. Effective
management of this resource is crucial if we are to maximise the economic and
social benefits of its use. Rapid and unpredictable change is both increasing the
importance of spectrum and making its management more challenging.

Centrally planned regulation alone cannot meet this challenge. Market-based
mechanisms, such as incentive pricing, auctions and trading, can deliver clear
benefits by putting spectrum into the hands of those who can use it best. In
particular, they allow continuous dynamic adjustment as markets and technology
change.

Where, for reasons of public policy or welfare, spectrum is reserved for noncommercial purposes, there should be effective incentives on policy-makers and
spectrum managers to use it as efficiently as possible.

In the interests of maximising the economic and social value of the spectrum,
internationally agreed frequency allocations and national frequency assignments1
should make spectrum available for commercial use subject to a minimum of
restrictions on technology and services.
1
Allocation refers to the division of the spectrum into bands for particular services, such as fixed links,
mobile communications and broadcasting. Assignment is the authorisation given to an individual users
to use a specific frequency or frequencies under specified conditions.
4
1.5
The Government agrees with this analysis, which underpins reforms in
spectrum management policy over the last 5 years.

Under the Wireless Telegraphy Act 1998, the Radiocommunications Agency has
progressively rolled out administrative incentive pricing and auctioned spectrum
for Third Generation (3G) mobile telecommunications and broadband fixed
wireless access.

The Government is committed to introduce spectrum trading and, following
changes to European Community law, has included the necessary provisions in the
draft Communications Bill.
1.6
The Government welcomes the review’s endorsement of these reforms. As
described in this document, it accepts the report’s recommendations for taking them
further. Accordingly, the Government will continue purposefully and progressively to
pursue the development of market-based spectrum management tools to complement
regulation.
1.7
In addition, the Government will pursue opportunities to enhance flexibility in
both allocation and assignment. This will involve removing any unnecessary
restrictions on the services that may be offered or the technology that may be used. In
doing so, it will recognise the benefits harmonisation can bring consumers and
industry while ensuring that it does not become a straitjacket for innovation and
competition.
1.8
The review recognises that the programme it recommends will take some time
to complete. Some of the key recommendations require further technical and
economic studies to determine details of how they should be implemented. However,
it is essential that the momentum of reform is maintained to create a spectrum
management regime for the 21st century to make the UK the most dynamic and
competitive communications industry in the world. The Government has already
taken steps to implement a number of the review’s recommendations. The
Radiocommunications Agency has published consultative documents on spectrum
trading and Recognised Spectrum Access, opened exempt bands to public services
and commenced a comprehensive audit of defence frequency assignments.
Membership of the Public Safety Spectrum Management Group (PSSMG) has been
broadened, guidance has been published on a more rational basis for public safety
spectrum assignments and a process agreed to transfer management of Home Office
spectrum to the PSSMG. In addition, the draft Communications Bill reflects the
review’s recommendations in several areas. The following Action Plan covering the
next few years details key milestones in further progressing the review’s
recommendations. Note that some of the dates are approximate as they depend on
progress of the Communications Bill and decisions that will fall to be taken by
Ofcom.
1.9
It is envisaged that incentive pricing will be progressively extended to
radionavigation, radiolocation and broadcasting in line with detailed proposals
presented later in this document. There will be full consultation on detailed
implementation with users and others affected throughout the process.
5
Milestones in Implementing Recommendations of the Review
2002
Late 2002

Expressions of interest invited for economic and technical studies on
international harmonisation and review of administrative incentive
pricing methodology
Report on study of civil radar deployment
End of initial consultation period on spectrum trading and RSA
Consultation on 2003 fees
Publication of UK Peacetime Frequency Allocation Table
Completion of first phase of audit of defence spectrum assignments
Finalise proposals to charge emergency service spectrum users not
migrating to Airwave for spectrum
Exemption of 5 GHz spectrum for public services
Consultation on removing licence restrictions for Broadband Fixed
Wireless Access at 28 GHz
Consultation on restrictions on PMR

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2003
Early 2003
Mid-2003

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
Late 2003


Commission review of administrative incentive pricing methodology
Consultation on removing unnecessary licence conditions as part of
implementing the electronics communications Directives for
implementation by 25 July
Further consultations on trading and RSA implementation
Review of constitution and resourcing of the UK Spectrum Strategy
Committee
Possible further audits of defence spectrum
Development of appraisal methods for factoring spectrum efficiency
into defence procurement decisions
2004

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
Completion of review of administrative incentive pricing and
consultation on application to 2004 fees round
Depending on progress of the Communications Bill and subject to
further consultation, commencement of phased introduction of
spectrum trading and RSA
Completion of studies of licence conditions and international
harmonisation
Subject to outcome of consultation, commencement of phased
implementation of conclusions of incentive pricing review and
consequential changes to public sector spectrum charges
Subject to further consultation, possible application of incentive
pricing to on-board navigation and communications systems
2005 onwards
Continuation of implementation of conclusions of incentive pricing
review and consequential changes to public sector spectrum charges
Continuing phased introduction of spectrum trading and RSA
Subject to outcome of further consultation, introduction of incentive
pricing for broadcasting
Publication of value of NATO spectrum
Subject to further consultation, application of incentive pricing to
radionavigation and radiolocation equipment
6
1.10 The following sections of this document give the Government’s detailed
response to each of the review’s recommendations.
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2
International Regulatory Framework
Recommendation 4.1
The Government should, wherever technically and operationally feasible,
facilitate greater flexibility in the use of a given frequency band. This can be
achieved by a broader interpretation of the internationally agreed radio
communications service definitions, or by adding additional services to a given
frequency band through negotiations at ITU and CEPT level.
2.1
The Government agrees with the review’s analysis that increasing
convergence of broadcasting, telecommunications and computing makes it desirable
to draw international service definitions as flexibly as possible. As digital technology
facilitates convergence, rigid demarcations, such as between broadcasting and
telecommunications, become less meaningful and relevant. The result is an erosion of
boundaries between services such as broadcasting, voice communications and data
transmission. The new EC Directives, for example, refer generically to electronic
communications. At the same time, point-to-multipoint fixed services are taking on
many of the characteristics of mobile communications.
2.2
To reflect this convergence, spectrum allocations should, as far as possible, be
based on spectrum management considerations, not content. Otherwise, there is a risk,
already identified in work by the Radiocommunications Agency on future scenarios
for convergence2, that a new service could be denied access to spectrum because it
does not come within a particular service definition even though it could share with
existing services without causing interference.
2.3
As recognised in paragraph 4.9 of the report, there is already considerable
flexibility within the general international allocative framework. So far, no cases have
been identified where service definitions in the ITU’s Radio Regulations or ITU
procedures have been a constraint in practice but the Radiocommunications Agency
will continue to be alert to the possibility.
2.4
The Government agrees with the review about the importance of technical and
operational considerations. The overriding treaty constraint in the International Radio
Regulations is to ensure that there is sufficient protection from interference between
services operating in different countries. Greater allocative flexibility is likely to
result in more complex sharing situations between different services sharing the same
spectrum in different countries. This implies a need to develop mutually acceptable
technical coordination procedures and sharing criteria.
2.5
A technical study carried out by Aegis Systems and Indepen Consulting for
the review3 suggests that there is already considerable national flexibility within the
existing international allocative framework. However, national allocations that are
outside the ITU framework are on a ‘non-interference – no protection’ basis in
2
Mapping the Future of Convergence and Spectrum Management, May 2000 with a 2001 update,
available through the Agency’s website www.radio.gov.uk.
3
Implications of International Regulation and Technical Considerations on Market mechanisms in
Spectrum Management, Aegis Systems and Indepen Consulting, November 2001, available through the
Agency’s website www.radio.gov.uk.
8
relation to services in other countries, which constrains the use of spectrum near
national boundaries. This effect will tend to be greater at lower frequencies.
2.6
There is therefore a trade-off between national flexibility and the intensity
with which the spectrum can be used and the benefits that are derived from it. Further
studies are necessary to define the technical limits of this flexibility, which will differ
from service to service and with frequency, and also of the economic trade-off
between the benefits of harmonisation and the advantages that might accrue from
greater national flexibility.
2.7
The Radiocommunications Agency is commissioning substantive technical
and economic studies to assess how to strike the optimal balance. These are expected
to be completed by early 2004. Meanwhile, the Agency plans further discussion at the
forthcoming World Radio Conference next year about making the uhf broadcasting
allocation more flexible. It will also take a pragmatic approach to applications for
spectrum for new services that balances the benefits of mandatory harmonisation and
the advantages of the national flexibility allowed within the present international
framework (see recommendation 4.2 below) and review its regime for Test and
Development licences for testing new technology. In so doing, it will comply in full
with all international, including EC, obligations and continue to take a positive and
constructive approach to discussions in the ITU, CEPT and EU.
Recommendation 4.2
Where proposals are made for harmonisation at the European Community level,
the UK should encourage the Commission and Member States to assess carefully
the economic costs and benefits of this approach. Proposals should be tested
against the European Commission’s technical and single market criteria for
harmonisation.
2.8
International harmonisation can deliver substantial benefits. Harmonisation
allows international roaming by consumers, facilitates the roll-out of innovative
services as operators have greater certainty about spectrum availability and provides
scope for economies of scale in equipment manufacture. Manufacturers have argued
that, for major commercial services, the guarantee of a harmonised European and
preferably global market place for their products is a necessary prerequisite to justify
investment on the scale required.
2.9
EC spectrum decisions and directives mandating harmonisation have had
some notable successes, for example, in case of GSM. Nonetheless, mandated
harmonisation can also impose costs and hold back spectrum efficiency as spectrum
that has been allocated internationally to a particular service cannot normally be used
for other services and will, in effect, be sterilised if the harmonised application fails to
become commercially viable. This has been the case, for example, with ERMES, the
European paging system, and also the Terrestrial Flight Telecommunications System
(TFTS), for which 10MHz of spectrum was reserved in 1992 by the CEPT. Neither
has ever been developed as a commercial service.
2.10 In certain cases, a purely national allocation might deliver greater benefits,
although industry has consistently argued that, for major services, an individual
9
national market does not offer efficient economies of scale. Inappropriate
harmonisation can hold back European progress on desirable developments. Each
case needs to be considered on its merits and the principle of subsidiarity rigorously
applied. The Government agrees that an analysis of the costs and benefits should be a
key part of the decision-making process.
2.11 The European Commission is generally required to publish an assessment of
the regulatory impact of its proposals and the Government will continue to press
strongly, as it did during the EU communications review, that proposals for spectrum
harmonisation should demonstrate clear economic benefits. It also agrees that EC
proposals should be tested against technical and single market criteria. New
arrangements for spectrum management within the EU have been established by the
Radio Spectrum Decision (676/2002/EC), which was formally adopted in March
2002. Under the Decision, the Commission may submit to a Radio Spectrum
Committee of Member States proposals for technical implementing measures for
spectrum harmonisation. In addition, the Commission adopted on 26 July 2002
Commission Decision 2002/622/EC establishing a high level Radio Spectrum Policy
Group, which will provide strategic advice to the Commission on spectrum
management priorities. The UK will seek to use its influence within these new
structures to argue strongly that future binding harmonisation measures adopted at the
EU level should be based on a thorough analysis of the costs and benefits involved.
Recommendation 4.3
Where the UK agrees with a collective European decision to harmonise spectrum
to a particular service and/or technology standard, it should seek to ensure that
harmonisation constrains the minimum number of parameters necessary to
achieve the policy goals of economic and technical efficiency. In the medium
term, this implies moving towards harmonisation of broad service categories (e.g.
mobile, fixed, etc) within defined bands, rather than specific technology
descriptions (such as DECT, UMTS etc). This should provide the future spectrum
certainty necessary for large-scale research and development investments, while
allowing scope for technology competition and innovation.
2.12 The pace and unpredictability of convergence developments make it desirable
to maximise flexibility by keeping restrictions on spectrum use to the minimum
necessary. In general, it is now already normal within Europe for harmonisation
measures to be broadly defined, permitting the use of a suite of compatible
technologies rather than one specific technology standard. The economic and
technical studies mentioned in the response to recommendation 4.1 will throw light on
the considerations to be taken into account in determining which restrictions are
necessary to maximise the overall benefits derived from radio spectrum.
Recommendation 4.4
Harmonisation should be time limited and subject to periodic review. Once it
has achieved its goal of enabling manufacturers and operators to deliver a costeffective service to the European market, other developing services and
technologies should be able to contest for access to the spectrum. If, on the other
hand, harmonisation fails to stimulate the development of a commercially viable
market, or the market has plateaued without requiring the full anticipated
spectrum allocation, then the regulatory constraint on use of the spectrum
10
should be freed.
2.13 The Government agrees with the review that it is important to keep
harmonisation under review. The pace of change makes it desirable to review
harmonisation measures periodically and the UK has taken the lead in arguing for this
in the CEPT.
2.14 It is virtually impossible to predict in advance which applications will succeed
in the market place. Where spectrum has been reserved on a harmonised basis for a
purpose that has been overtaken by market developments or that has proved a
commercial failure, it should speedily be made available for other applications.
Otherwise, restrictions on the use of the harmonised spectrum will block re-farming
for new technology with resulting loss of consumer benefits and European
competitiveness in world markets. The in-flight communications system TFTS and
the pan-European paging system ERMES illustrate this risk.
2.15 A process of dynamic review will help maintain and enhance European
competitiveness. This process will need to balance manufacturers’ and operators’
desire for a measure of stability and certainty against the loss of consumer benefits if
innovation is held back. The Detailed Spectrum Investigation (DSI) by the European
Radiocommunications Office provides one mechanism for reviewing harmonised
frequency allocations. Since 1993, the DSI process has reviewed the spectrum from
29 MHz to 105 GHz and, in a number of cases, has recommended a specific timetable
for the CEPT to decide on the future use of harmonised frequency bands where the
relevant service appears not to be materialising. The UK fully supports this aspect of
the DSI.
2.16 Where harmonisation measures are subject to periodic review, the
Government believes that the timeframes should be clearly and publicly defined from
the outset. These should take into account that industry preparedness to invest in new
technology could be undermined without some certainty that harmonised spectrum
would be available during the period in which they would hope to recoup their costs.
Recommendation 4.5
Where harmonisation is proposed, the technology standards developed for
specified bands should be open and led by industry bodies. This should support
innovation and competition in technology throughout the harmonisation
process, and enhance competition in production of equipment.
2.17 The Government agrees that, where harmonisation is proposed, technical
standards should be industry-led and also that they should, wherever possible, be
open. This is the basis on which ETSI operates, with UK support. However, it should
be noted that the development of standards to avoid harmful interference requires
input from regulators in order to balance all interests fairly.
Recommendation 4.6
Any proposals for harmonisation within Europe of licensing procedures should be
subject to a clear demonstration of the benefits this would bring to the single
European market. Otherwise, the UK should retain autonomy over the manner in
which it assigns spectrum to particular users, which will need to take account of
the balance of supply and demand for particular frequencies and the state of
competition in the relevant markets.
11
2.18 The Government agrees that the use of the various spectrum management
tools available to NRAs needs to be judged according to national conditions and
policy priorities. For example, patterns of spectrum demand and congestion can be
expected to differ between countries according to the state of the national market for
communications services, consumer preferences and other characteristics. There are
also likely to be differences in the balance between social and economic
considerations and in public policy priorities and objectives. On the principle of
subsidiarity, the UK believes that national authorities should have flexibility to select
the combination of regulation, incentive pricing, auctions and trading that best suits
their national circumstances and requirements. A ‘one size fits all’ policy on the
details of spectrum management is unlikely to be optimal for all countries and risks
causing inefficient use of spectrum in many.
2.19 Nonetheless, the Government agrees that there needs to be a harmonised
framework to ensure that national policies are implemented in accordance with basic
principles of fairness, transparency and proportionality and have as their core purpose
the optimal use of the spectrum resource. The new suite of Directives on electronic
communications strikes the right balance between high-level principles, which are
appropriately set at the Community level, and detailed implementation, for example
on assignment and licensing, which remain a matter for national authorities. The UK
would oppose further harmonisation of assignment methods unless there was clear
demonstration that the benefits would outweigh the loss of national flexibility.
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3
Interference Management
Recommendation 5.1
The RA should explore fully the scope for, and means of, transferring more
responsibility to operators for interference management, in support of wider
moves towards using market mechanisms for spectrum management.
3.1
The Government agrees that a move to more market-based spectrum
management may provide scope for licensees to assume greater responsibility for
interference management. For example, the introduction of spectrum trading will
provide more scope for licensees to resolve interference problems by negotiating
mutually acceptable solutions to interference problems. Where mutual resolution is
not possible, the move to greater flexibility could increase the demand for Ofcom to
arbitrate and there will continue to be a need to maintain a credible and impartial
service responsible for monitoring and enforcement. It follows that the
Radiocommunications Agency and Ofcom should continue to meet this demand.
3.2
As the report explains, the Radiocommunications Agency currently adopts a
variety of approaches to interference management depending on the circumstances of
the service in question. In line with the general trend to more market-based and
decentralised approaches, the Government is in favour of devolving interference
management where practicable and where users are willing to take this on and will
continue to explore the scope to do so. In so doing, it will seek to ensure that all
spectrum users have confidence in the effectiveness, impartiality and competence of
whatever arrangements are in place and that those arrangements meet their needs. For
example, where users are able themselves to resolve in-band disputes, the
Government would encourage them to do so. However, the Government recognises
that smaller users may be unwilling or unable to undertake this role to the same
extent. Moreover, dealing with out-of-band interference between different services,
interference from unauthorised transmitters and interference from another country
through the international procedures of the ITU will continue to require the
involvement of the Radiocommunications Agency or Ofcom.
3.3
The details of interference management will be considered further in the
course of consulting on the introduction of spectrum trading and in implementing the
Government’s response to the recommendations in chapter 7 of the report.
Recommendation 5.2
The RA should seek to implement an on-line frequency register covering all the
civil radiocommunications bands and the radio systems utilising them. The
frequency register should contain a core set of technical and location-based
information which would form the basis for operators to carry out the necessary
interference co-ordinations associated with any proposed change of use and/or
trade within a given band. The RA should also, in conjunction with industry,
agree a common understanding of the technical criteria for calculating
interference levels.
3.4
The Government agrees it would be desirable to publish more information
about frequency assignments, provided this can be done in a way that meets legitimate
13
concerns about national security, law enforcement and commercial confidentiality.
The Radiocommunications Agency consulted earlier this year on plans to publish
such information. The response to the consultation indicated considerable support
while also expressing concerns about security and confidentiality.
3.5
As the review points out, greater openness will be an important pre-condition
for spectrum trading and will also help meet the transparency requirement set out in
the EC Authorisation Directive and the Radio Spectrum Decision. Accordingly, the
Radiocommunications Agency will proceed to consult on detailed plans to publish
more assignment information, including on-line, while taking full account of the need
for appropriate and effective safeguards.
3.6
The Government also agrees on the importance of consulting with industry on
the interference levels that should be specified in licences and will take this forward in
the course of the work mentioned in connection with recommendation 7.2 on
removing unnecessary restrictions from licences.
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4
Legislative Framework
Recommendation 6.1
Ofcom should operate under a distinct spectrum management duty, which should
provide an ongoing requirement on the regulator to maximise the value of
benefits derived by UK society from spectrum use. One potential formulation for
such a duty would be: ‘to maximise, by ensuring the efficient allocation and use
of the spectrum, the overall public benefit derived from using the radio
frequency spectrum’.
4.1
The Government notes the recommendation that Ofcom should have a distinct
spectrum management duty. The draft Communications Bill includes in the list of
Ofcom’s primary duties, which are all of equal status, the duty, “to encourage, in the
interests of all persons, the optimal use for wireless telegraphy of the electro-magnetic
spectrum”. The Joint Committee on the draft Communications Bill4 recommended
some changes to the wording of Ofcom’s duty but not to the principle that there
should be a separate duty on spectrum. The precise wording of this duty will be
considered further in the Government’s response to the Joint Committee.
Recommendation 6.2
With the transfer of spectrum management functions from the RA to Ofcom, the
constitution and resourcing of the Cabinet Office UK Spectrum Strategy
Committee should be reviewed to ensure that it can continue to balance the
competing requirements of civil and military, public and private sector spectrum
users.
4.2
The transfer of spectrum management to Ofcom will not change the need for a
high-level inter-departmental body to bring together managers of civil, military and
public service spectrum with authority to coordinate and agree national and
international spectrum policy. The UK Spectrum Strategy Committee currently plays
this role and the Government intends that it should continue to do so. However, the
Government agrees with the review that, with the prospective transfer of the
Radiocommunications Agency’s functions to Ofcom, it would be sensible to review
the Committee’s constitution and resourcing and will make arrangements to do so
before Ofcom assumes responsibility for spectrum management.
Recommendation 6.3
The Government should limit its powers to intervene in the details of spectrum
licensing. Ministers should retain powers to intervene with Ofcom over the
distribution of radio spectrum, in order to make essentially political judgements
about: the allocation of spectrum between different classes of use; and the
reservation of spectrum for specified uses (such as defence) or for specified
users (such as the BBC to enable it to meet its current universal terrestrial
coverage requirement). Ministers should also retain a power to specify other
4
Report published by The Stationery Office Ltd by authority of the House of Lords and House of
Commons, 31 July 2002, HL Paper 169-I and HC 876-I, available electronically from
http://www.publications.parliament.uk/pa/jt200102/jtselect/jtcom/169/169.pdf. See paragraphs 25-27 and 175-176
and recommendations 4 and 67 on Ofcom’s duty on spectrum.
15
public policy objectives and criteria which Ofcom should take into account in
regulating spectrum access. Such powers should be clearly defined, transparent
and limited in scope in order not to compromise Ofcom’s responsibilities for
efficient spectrum management. Ministers should refrain from taking powers to
direct Ofcom in the specifics of spectrum management tools, such as assignment
methods, auction design, administrative incentive pricing, and exemptions from
licensing.
4.3
The review rightly recognises the significant public interest concerns
surrounding the management of the radio spectrum. The spectrum is a finite resource,
and the Government is best placed to be the final judge of whether its overall
allocation between different classes of use is in line with its economic and social
objectives. Not only is the radio spectrum an indispensable resource necessary for the
provision of essential public services, but there is a need to protect wider public
policy where decisions about spectrum management made independently from
government might affect this. In particular there is a clear need for the Government to
retain powers that allow it to make decisions about the use of the radio spectrum that
affect national security, public safety or health and international obligations or
relations.
4.4
The Government agrees with the review that where Ministers intervene in
spectrum management decisions, this intervention should be clearly defined,
transparent and limited in scope. The draft Communications Bill, therefore, contains
provisions that would empower Ministers to give directions on spectrum
management, subject to affirmative confirmation by Parliament. The requirement for
express Parliamentary approval would safeguard Ofcom's independence while
striking an appropriate balance with Ministers' ability to intervene in the public
interest.
4.5
The Joint Committee on the draft Communications Bill too has considered the
scope of powers of direction on spectrum. The Committee recognised that there is a
wider public interest in the allocation, assignment and management of spectrum that
Ofcom may not be best placed to judge. It went on to recommend that the
Government should consider amending the draft Bill to require directions to
concentrate on the ends to be achieved rather than on details of the means; and that
directions should be approved in draft by both Houses instead of retrospectively5. The
Government will set out its views on these recommendations in its response to the
Committee.
Recommendation 6.4
The Government should introduce, in the Communications Bill, a power for
Ofcom to regulate spectrum use via a complementary form of spectrum access
licensing, which could be applied as an alternative to a traditional apparatus
licence for certain frequency bands. This new form of licence should grant the
licensee some exclusivity and protection from interference for transmission
and/or reception of radio signals within specified frequencies and geographical
See footnote 4 above for report reference. Paragraph 179 of the Committee’s report and
recommendation 68 relate to powers of direction.
5
16
areas. Spectrum access licences should be capable of being cast in neutral terms
with respect to the type and coverage of the service deployed in the band and the
technology used.
4.6
The draft Communications Bill includes provisions on Recognised Spectrum
Access to complement licensing and with many of the characteristics of the
complementary spectrum management tool recommended by the review. In addition,
the draft Bill includes minor amendments to enhance ability to develop licences that
are technology- and service-neutral and facilitate a more flexible approach to
licensing. Defining exclusivity and acceptable levels of interference that may be
expected will form an important part of this exercise, as suggested by the review.
4.7
The Radiocommunications Agency has a general policy of minimising the
extent to which licences restrict the services to be provided and technologies to be
used. Each licence sector needs to be considered on a case-by-case basis to decide
how far restrictions should be removed in the interests of achieving optimal use of the
spectrum and this issue will be considered further in the context of the work
mentioned in the response to recommendation 7.2.
17
5
Market Mechanisms for Managing the Spectrum
Recommendation 7.1
All classes of users should face incentives to economise on the
spectrum they occupy. For the majority of frequency bands, where
demand exceeds supply, this will entail paying a positive price to obtain
access to spectrum, provided there are potential alternative users or
uses of a block of spectrum (i.e. the opportunity cost is greater than
zero).
5.1
The Government strongly agrees with this general principle, which lay behind
its reform of spectrum pricing in 1998 and its intention to introduce spectrum trading.
The Government has a strong record of applying market-based tools that provide
incentives for more efficient use of the finite spectrum resource.
5.2
The Government intends to continue this policy where use of market
incentives furthers spectrum efficiency. In so doing, it will continue to maintain and
apply the basic principle that, as required by EC and UK law and in line with
assurances given during passage of the Wireless Telegraphy Act 1998, licence fees
will be set on the basis of spectrum management considerations, not revenue-raising.
5.3
The Government believes that market-based tools should, in general, be
applied so that users face the opportunity cost of the spectrum they occupy and that
this principle applies equally to public and private sectors. In some cases, incentive
pricing may not be appropriate. For example where users effectively have no choice
as to the technology they use, they cannot respond to price signals by using different
equipment; and where users are not given individual assignments, there is no limit on
the number that can be accommodated in the band in question. Radio amateurs and
some aeronautical and maritime applications are cases in point.
Recommendation 7.2
The RA should aim to minimise the licence conditions necessary for
efficient spectrum use. Existing licences should be amended to remove
restrictions which are not needed for reasons of international coordination or interference management, and new licences should be
issued with the minimum number of restrictions possible.
5.4
The Government agrees that unnecessary licence conditions should be
removed. This mirrors a requirement of the new EC Directives on electronic
communications services. The Radiocommunications Agency is planning a
comprehensive re-examination of licence conditions to amend them to be compliant
with the Directives and will publish proposals on this in spring 2003 for
implementation by 25 July 2003, the due date under the Directives. It will then
consider which, if any, further restrictions could be removed. Meanwhile, the
Government is minded, subject to consultation with interested parties, to relax
restrictions in existing licences for Broadband Fixed Wireless Access at 28 GHz
concerning purpose of use and coverage obligations and to do likewise in relation to
the further award of licences in this band. The Radiocommunications Agency is
issuing a consultative document with detailed proposals.
18
5.5
In carrying out this programme of work, it will be necessary to bear in mind
that licence conditions serve a number of purposes. For example, some are imposed
for technical reasons to avoid risk of harmful interference. Others are intended to
ensure compliance with international obligations or to promote public policy
objectives. However, the Government recognises that overly restrictive conditions can
act as a barrier to efficient spectrum use.
5.6
On the technical side, it will be necessary to examine licences carefully to
judge which conditions may safely be dispensed with without causing unacceptable
risk of harmful interference. This will require additional research to build on the
technical study carried out for the review by Aegis. It is also necessary to take account
of economic trade-offs. A minimum of regulation may be required in order to define
clearly the rights and obligations that licences bestow and so to avoid a lack of
certainty that could result in less intensive use of spectrum.
Recommendation 7.3
Spectrum trading should be implemented in the UK as soon as possible.
The trading regime should be designed to minimise the transactions
costs of trading, and it should allow operators to change the use of
traded spectrum within international allocations and the national
interference management framework.
5.7
The Government agrees with this recommendation, which supports its
commitment, reaffirmed in the White Paper A New Future for Communications, to
introduce spectrum trading. Trading is an efficient and effective mechanism that will
allow spectrum to be transferred to the users who will make most productive use of it
and value it the most. Effectively deployed, trading should improve speed and
flexibility of access to spectrum and facilitate innovation.
5.8
Following changes to EC law to allow trading to be developed, clauses have
been included in the draft Communications Bill to give Ofcom flexible powers to
introduce and regulate spectrum trading. The Government is aware that, while there is
broad support for spectrum trading, there are also concerns about some aspects of its
implementation. These are addressed in a consultative document that the
Radiocommunications Agency issued in July 20026.
Recommendation 7.4
The general competition regime, relying on an ex post analysis of the
impact of spectrum trading in defined markets, should be the primary
safeguard against any anti-competitive behaviour. Where spectrum is an
input into a market which is subject to sector-specific regulation, then the
objectives of this regulatory regime may be furthered by a more
interventionist approach towards spectrum trading, such as ex ante
6
Implementing Spectrum Trading, published July 2002 by the Radiocommunications Agency and
available electronically at www.radio.gov.uk.
19
approval of specific trades. In all cases, Ofcom will need to monitor and
register trades.
5.9
It is expected that, with wider application of market-based spectrum
management tools, ex-post competition regulation will play an increasing role in the
management and regulation of spectrum use. The Government agrees with this
recommendation, which is reflected in the consultative document on trading. More
detailed analysis, including an assessment of the appropriate balance between ex-post
(after the event) and ex-ante (before the event) regulation, will depend on the outcome
of that consultation.
Recommendation 7.5
There should be greater legal clarity than at present about the tenure of
incumbent licensees. Ofcom should consider, band by band, how best to
provide some certainty for licensees to engage in trading, together with
some ability for Ofcom to retrieve spectrum where necessary for any
future strategic re-planning of frequency bands. Options include
converting the terms of licences to a rolling five to ten year period, or to
perpetual licences with a compulsory purchase provision for Ofcom.
5.10 The Government agrees with this recommendation. The consultative
document on spectrum trading emphasises the importance of certainty and security to
the successful establishment of spectrum trading and seeks views on how to achieve
this. The Government will decide how to proceed in the light of responses to that
consultation.
Recommendation 7.6
Trading rights should be extended to extant commercial licences
regardless of the method of original assignment (auction, comparative
selection, or ‘first come, first served’). These rights should be granted for
free. The Government should assess the case for levying a duty on net
gains from spectrum trades and/or continuing with spectrum pricing for
tradable licences, against its objectives of encouraging efficient use of
spectrum and achieving full economic value for consumers, industry and
the taxpayer.
5.11 The consultative document discusses how trading might be introduced,
including the extension of trading rights to current licences, and also seeks views on
the complex issue of how to treat gains from trading. The Government will consider
these issues further in the light of the responses.
Recommendation 7.7
Auctions should become the default means of assigning spectrum
licences between competing users, to achieve an efficient market-driven
outcome.
20
5.12 The Government believes auctions are the fairest, most transparent and most
efficient way of assigning spectrum to those who value it most and can generate
greatest value from it. The Government’s existing policy is to favour auctions when
considering mechanisms for assigning spectrum.
5.13 However, the Government also recognises that auctions are not always
feasible or appropriate. They are best suited to new national or regional services and
the Government has undertaken not to require existing users to undergo an auction to
continue to provide their existing services in the same frequency assignment. Nor will
broadcasters who have competed for their franchises in a competition under the
Broadcasting Acts be expected to bid separately for the spectrum to exploit those
franchises. Furthermore, auctions are not generally suitable for auctioning large
numbers of low value assignments as transaction costs would be prohibitive.
5.14 The Radiocommunications Agency will continue to consider each case on its
merits with a general preference for auctions while exploring the possibility of
developing innovative auction processes.
Recommendation 7.8
Where licensees are currently granted tailored access to shared
spectrum which is managed by the RA, such as in fixed links and certain
private mobile radio bands, the RA should move progressively to
converting the spectrum to auctionable geographic licence blocks.
Competing commercial licensees would then manage access for their
own and/or third party use of this spectrum.
5.15 The Government agrees with the analysis underlying this recommendation
although it will be necessary to proceed carefully taking views of users into account
and the practicalities of having competing spectrum managers.
5.16 The Radiocommunications Agency already contracts out the issue of over
70% of licences and has a general policy in favour of extending such arrangements to
other bands and services where they deliver benefits for users. In doing so, it aims to
ensure that the contractor delivers a high standard of service and is technically
competent, trusted by users to act impartially and does not suffer from any conflict of
interest.
5.17 Similar principles would apply to auctioning blocks of spectrum to be
administered by third parties. The Government agrees that the concept has attractions
and, in order to explore its feasibility and potential, the Radiocommunications Agency
intends to conduct a pilot scheme when a suitable opportunity arises, possibly in
currently unassigned spectrum in the fixed link bands at 32 GHz and 52 GHz. So far,
one-third of each of these new bands is in the process of being released for
assignment with the remaining two-thirds being held back to give scope for novel
allocation or assignment methods to be tried.
21
Recommendation 7.9
Spectrum pricing should be applied at more realistic levels and more
comprehensively across spectrum uses. Where spectrum pricing has
already been implemented, and where there is evidence of continuing
shortage of spectrum, then incentive prices should be set at the full
opportunity cost level, rather than at the current 50 per cent of the levels
derived from pricing models.
5.18 The Government agrees that, now the initial rolling out of administrative
incentive pricing is advanced, it would be timely to review the effects of incentive
pricing and the model and methodology for valuing spectrum and setting fees.
5.19 This will be a substantial study that the Radiocommunications Agency expects
to complete early in 2004 . Further details and an invitation to tender for an external
study will be published shortly. This study will encompass how incentive pricing can
support spectrum management objectives, how spectrum in specified frequency bands
should be valued for purposes of incentive pricing and the factors that should be taken
into account in setting licence fees for individual users. Before this work is
completed, it would be premature to reach firm conclusions on the relationship
between full opportunity cost and current fees.
5.20 Meanwhile, for any frequency bands and parts of the country where hot-spots
of spectrum congestion are making it difficult to meet demand, incentive pricing fees
will be reviewed as part of the 2003 fees round and may be increased if necessary for
spectrum management purposes to reflect more accurately the opportunity cost of
spectrum use. Equally, if congestion has abated, fees may be reduced. There will
continue to be full consultation in due course about any changes to fee levels.
22
6
Commercial Spectrum Use
Recommendation 8.1
Public telecoms: Auctions should be used to assign spectrum available for
public telecoms use. Where spectrum pricing is currently used, prices should be
raised to the full opportunity cost levels. Once spectrum trading is introduced,
public telecoms operators should be able to trade spectrum subject to
international constraints.
6.1
In line with the response to recommendation 7.7, the Government’s policy is
to favour auctions as the preferred method for assigning spectrum for new national or
regional public telecommunications services. The Government also agrees that
administrative incentive pricing levels for public telecommunications services should
be reviewed and will do so in the context of the study mentioned in the response to
recommendation 7.9.
6.2
The introduction of spectrum trading for public telecommunications is being
addressed in the consultation on the introduction of spectrum trading.
Recommendation 8.2
Licence-exempt spectrum use: The current constraint on the use of licenceexempt bands for the provision of public access communications services should
be removed as soon as possible.
6.3
The Government supports this recommendation and, as announced on 10 June
2002, restrictions on the use of licence-exempt spectrum at 2.4 GHz have been
relaxed to allow the band to be used for public telecommunications services. Parts of
the licence-exempt spectrum at 5 GHz will also be liberalised for public services in
November 2002.
Recommendation 8.3
Private mobile radio: Current restrictions on the use of PMR bands should be
removed, and PMR licences should be made tradable. Area licences should be
auctioned in a number of different bands. This approach could, if successful, be
extended across the majority of PMR spectrum.
6.4
The Government accepts this recommendation in principle. The
Radiocommunications Agency plans to carry out a detailed consultation, commencing
by the end of this year, that may cover amongst other things the merits of a phased
approach to lifting restrictions with evaluation at each stage. This will cover the
extent to which current restrictions should be lifted and the economic and technical
benefits. Removing the current restriction that limits PMR to business use would be a
significant change.
6.5
Introduction of trading of PMR licences will take into account responses to the
consultation on introducing spectrum trading. There will be separate consultation on
the potential for auctioning area licences and this is expected to seek views on the
23
bands that would be suitable for auctions and the circumstances in which auctions
would be appropriate. Full account will be taken of the views and concerns of users.
Recommendation 8.4
Fixed terrestrial services: Current restrictions on the use of fixed wireless
access bands should be removed so as to allow the deployment of any fixed
service. Licences should also be converted to allow spectrum trading. The RA
should begin to auction area licences in fixed bands which would allow the
licensees to deploy any fixed service, or trade the rights to do so.
6.6
The Government accepts that new licences should not generally include
restrictions on use. Existing licences will need to be reviewed on a case-by-case basis,
in particular to avoid compromising spectrum auctions that have taken place or are
running at the time of implementation. It will also be necessary to take account of EC
requirements that apply when licences are varied. Conversion of licences to allow
spectrum trading will be considered in the context of the consultation on introducing
spectrum trading. As stated in the response to recommendation 7.8, the
Radiocommunications Agency is actively considering new approaches to fixed links
assignments in the new fixed links bands, which could involve auctioning blocks of
spectrum.
Recommendation 8.5
Satellite systems: Opportunity cost pricing should be applied to satellite
systems' use of spectrum where such use shares with, and constrains, the
deployment of UK-based terrestrial services. Spectrum pricing should continue
to apply to permanent earth stations but at full opportunity cost levels.
Transmissions from user/interactive terminals should also be licensed with an
appropriate spectrum charge. Spectrum access licensing could be used to
clarify the rights and responsibilities of satellite transmissions into the UK and
where appropriate to apply opportunity cost pricing to such spectrum use.
6.7
The Government accepts this recommendation and has included clauses in the
draft Communications Bill to provide for a new system of Recognised Spectrum
Access (RSA). This would enable opportunity cost pricing to be applied where
necessary for spectrum management purposes, for example where use of spectrum by
satellites contributes to spectrum congestion.
6.8
RSA is a potentially useful spectrum management tool that would fill a gap in
the present spectrum management regime. This could be of particular advantage
where satellite and terrestrial services share spectrum and help provide a level playing
field where they compete in the market. As recommended by the review, RSA would
provide a mechanism for Ofcom to provide spectrum efficiency incentives in certain
of the frequency bands used by satellites.
6.9
In reaching this view, the Government has taken full account of the opinions
expressed on recommendation 8.5. The Government understands the concerns that
have been expressed but believes that these can be met by the way in which RSA is
24
applied and charged for. In particular, it is envisaged that RSA will be introduced
selectively; and fees will be subject to the same safeguards that apply in respect of
licences to ensure that they are no higher than justified by spectrum management
considerations.
6.10 As pointed out by the Joint Committee on the draft Communications Bill, the
draft clauses on RSA provide a framework only: the value and operation of RSA will
depend on regulations to be made by Ofcom. There will be full consultation before
decisions are taken on the services to which RSA should apply, how RSA should be
defined, the level of charges and the arrangements to phase them in. The
Radiocommunications Agency has issued an initial consultative document on
introducing RSA7. Full account will be taken of the views expressed in the responses
and there will be further consultation before RSA is introduced for specific services.
6.11 As recommended by the review, the administrative incentive pricing fees
currently charged for permanent earth stations in the UK will continue to be phased
in, as already announced, pending the wider review mentioned in connection with
recommendation 7.9.
7
Introducing Recognised Spectrum Access, published July 2002 by the Radiocommunications Agency
and available electronically at www.radio.gov.uk.
25
7
Defence
Recommendation 10.1
The RA should publish the (unclassified) UK Peacetime Frequency
Allocation Table, identifying which bands are under MOD management.
7.1
The information in the UK Peacetime Frequency Allocation Table is to a large
extent already incorporated in the Frequency Order table, which forms part of the UK
Spectrum Strategy published by the Radiocommunications Agency and in fact gives
far more detailed information about current spectrum use and proposed changes.
However, the Table itself is the definitive source document and its publication will
help enhance transparency and accountability for the management of the spectrum for
which the Ministry of Defence is responsible. It is anticipated that the table will be
published at the earliest possible opportunity by the end of the year.
Recommendation 10.2
MOD should invest in a comprehensive audit of all frequency
assignments, including patterns of usage by time and location, in order
to inform its own tactical and strategic management of the military
spectrum asset. This data should be periodically updated, and should be
disclosed to RA to improve RA’s own visibility and understanding of
military spectrum use. MOD should combine this data capture with
investment in new frequency management tools, to enable more
sophisticated sharing of military frequencies by time and location.
7.2
The Ministry of Defence has a significant spectrum management function,
managing nearly 30 % of the spectrum below 60 GHz. It has an obligation to make
the best possible use of the spectrum for which it is responsible, both for operational
purposes and through making it available for civil users where this can be done
without compromising operational effectiveness.
7.3
Efficient use requires full and up to date information on how spectrum is
assigned and used. The Ministry of Defence has usage information and management
tools to manage its spectrum in accordance with its operational needs and has a strong
record of using these to make spectrum available for non-military applications.
However, marginal improvements in spectrum efficiency can deliver valuable wider
economic benefits. Identifying such opportunities is likely to require more detailed
data collection and management.
7.4
A more comprehensive audit of defence spectrum will provide valuable
information necessary for the Ministry of Defence to manage its spectrum efficiently
into the future. A prioritised plan starting immediately for auditing the current and
future use of those parts of Ministry of Defence managed spectrum that are most in
demand by civil users has been agreed with the Radiocommunications Agency with
the objective of increasing the scope for spectrum sharing, leasing or release for civil
use. The initial phase is planned to be completed by the end of the year. The audit will
subsequently be extended to other parts of the spectrum where civil demand is lower
but which could nonetheless prove worthwhile in terms of efficient spectrum
utilisation.
26
7.5
The Ministry of Defence is reviewing the resource it devotes to managing the
efficient utilisation of military spectrum, including the development and application
of tools. There could be greater scope for some aspects of military spectrum
management to be contracted out or carried out on behalf of the Ministry by the
Radiocommunications Agency or, in future, Ofcom.
Recommendation 10.3
MOD should, without prejudice to security, disclose to industry those
bands where spectrum sharing may be feasible as a result of the
patterns of military usage. MOD should identify the pre-emption terms
and interference management requirements for military systems, to
enable commercial operators to judge the viability of sharing such
spectrum on a subordinate basis.
7.6
It is already the Government’s practice to identify and publicise defence
spectrum available for use by industry through the UK Spectrum Strategy. As
described in the UK Spectrum Strategy, the Radiocommunications Agency and the
Ministry of Defence have an ongoing dialogue that has done much to identify
opportunities for making military spectrum available for civil use.
7.7
Consideration will be given to publicising the availability to civil users of
military spectrum by other means, possibly through the UK Plan for Frequency
Authorisation that is proposed in the draft Communications Bill. The agreed audit
programme will enable this information to be made more comprehensive.
7.8
Where sharing opportunities are identified, it will be necessary to specify the
terms of the sharing arrangements, particularly concerning interference management.
This is currently done through the Radiocommunications Agency, which acts as the
interface between the Ministry of Defence and commercial users. If appropriate,
further investment in spectrum management tools might allow the Ministry of
Defence to contribute more to this work.
Recommendation 10.4
The value of spectrum effectively given over to NATO for management
should be more clearly and publicly identified, through disclosure of an
annual ‘shadow’ charge which would apply if the bands were MODmanaged.
7.9
The valuation of spectrum internationally reserved for defence purposes will
provide greater clarity when making policy decisions about reserving spectrum
internationally, and ensure consistency with the anticipated treatment of non-military
‘reserved’ spectrum. The valuation methodology will be consistent with that applied
to other areas of civil and military spectrum. The shadow charge level will be made
publicly available, possibly in the next Spectrum Strategy.
27
Recommendation 10.5
MOD should bear the full ‘opportunity cost’ of spectrum which is
currently subject to incentive pricing (fixed and mobile bands subject to
MOD management), with comparable tariffs applying to comparable civil
and military uses. MOD should also be subject to a spectrum charge for
all of its radar bands, with the tariff unit equal to that applied to civil
aeronautical and maritime radar usage. New spectrum charges should
be introduced for MOD as soon as practically possible after the
preparatory technical studies to determine the standard tariff units.
7.10 The Government agrees with the review’s argument that policy makers and
spectrum managers need to be aware of the economic costs of decisions affecting
spectrum use. Spectrum charges are consistent with the regime of resource account
budgeting, which ensures departments take full account of their assets. Pricing is an
effective mechanism for making the value of spectrum more transparent, facilitating
clearer understanding of the costs and benefits of decisions about allocating scarce
resources – spectral, financial and otherwise.
7.11 The Government’s policy is to charge public sector spectrum users on a
comparable basis to private sector users. The Ministry of Defence is currently charged
for bands where equivalent civil users are charged. This consistency of treatment
between civil and military users will be maintained, the level of charges for defence
spectrum being adjusted to reflect the coverage and level of administrative incentive
pricing applied to comparable civil bands. Following recommendations elsewhere in
the review, this will include applying to defence spectrum, at a comparable level and
on the same timetable, any alterations in the level of civil charges to reflect
opportunity cost more accurately and also the application of pricing to a wider range
of bands.
Recommendation 10.6
Decisions on MOD’s departmental budget should made consistent with
the maintenance of credible and enduring incentives on MOD from
spectrum pricing and leasing, to provide positive financial benefit to
MOD from efficient spectrum use over time.
7.12 In determining departmental budgets, a number of considerations are taken
into account, including the objectives and targets in Public Service Agreements and,
in respect to obligations to pay spectrum charges, the scale and timing of their
introduction. The Government agrees that incentives, such as incentive pricing and
leasing, which can produce financial benefits, are effective tools for more efficient
spectrum use.
Recommendation 10.7
The MOD should consider making specific proposals to Treasury for
bringing forward budgeted equipment spending which would enable reequipment and thus an earlier opening of identified military spectrum for
release to, or sharing with, the civil sector. Where MOD has agreed to
vacate spectrum for commercial licensing, RA should enable rapid re-
28
farming through assigning overlay licences which provide for new
licensees to compensate MOD for early departure from the bands.
7.13 Efficient spectrum use is a desirable characteristic of military equipment that
should be given due weight in the defence procurement process. This is for a number
of reasons. Spectrum, like other resources, has a cost attached to it. Military demand
for bandwidth is likely to grow over time as a result of the deployment of new
technologies. More efficient spectrum use resulting from defence procurement
decisions can generate wider economic benefits.
7.14 The cost of spectrum use and the expected wider economic benefits should
therefore be taken into account in procurement decisions and balanced against
operational considerations in the same way as the use of other resources. The
extension of spectrum management mechanisms such as pricing and leasing will
provide further incentives for the Ministry of Defence to take such issues into account
when planning expenditure. The outcome will be more efficient use of overall
resources.
7.15 For those cases where the Ministry of Defence makes equipment procurement
decisions within its delegated authority for expenditure, the Ministry will, in
consultation with the Treasury and the Radiocommunications Agency, develop in the
course of the coming year robust appraisal methods for factoring spectrum efficiency
into those procurement decisions. Equipment proposals above the Ministry’s
delegated authority, including any acceleration of scheduled re-equipment, will be
considered by the Treasury on a case-by-case basis taking into account spectrum
efficiency gains. The Treasury will also consider, on a similar basis, proposals from
the Radiocommunications Agency for expenditure analogous to spectrum efficiency
grants or the use of ‘overlay’ licences to the rationalisation of the Ministry of Defence
spectrum where these are considered to be the most effective method of reallocation.
Recommendation 10.8
MOD should have the ability to retain income generated from arrangements to
lease access to spectrum which remains under active MOD management. Such
spectrum should continue to bear the full spectrum charge, to be paid by MOD
to RA/Ofcom.
7.16 The Recognised Spectrum Access provisions in the draft Communications Bill
will provide a mechanism to introduce leasing. The Government agrees that the
ability to retain income generated by leasing spectrum should usefully reinforce the
incentives generated by spectrum charging.
7.17 Further work will be required to determine the most effective process for
managing the leasing process. In particular the Government is examining whether
spectrum leasing by the Ministry of Defence, and the resulting receipts, is eligible to
fall under the Wider Markets Initiative. But the Government intends to allow retention
of proceeds from leasing on a comparable basis as soon as possible.
29
8
Broadcasting
Recommendation 11.1
Market-based spectrum management tools should be applied to the
broadcasting sector so that usage of spectrum by all broadcasters is exposed to
the full opportunity cost of spectrum use.
8.1
The Government agrees that, as for other sectors, market-based spectrum
management tools, such as spectrum leasing and administrative pricing, can and
should play a role in the management of spectrum for both television and radio
broadcasting. As the pressure on the use of the broadcasting spectrum for more
broadcasting and other uses increases and convergence erodes the traditional
boundaries between broadcasters and telecommunications operators, the Government
believes that market-based spectrum management tools have an increasing role to
incentivise more efficient use of the spectrum
8.2
The Government acknowledges that, in return for certain privileges, some
broadcasters are subject to public broadcasting and other obligations, relating, for
example, to coverage and signal quality, which effectively constrain their ability to
economise on spectrum use. The Government also recognises that broadcasting is
undergoing a fundamental change from analogue to digital transmission. The
introduction of market based spectrum management tools will take account of these
constraints and will be consistent with the Government’s general approach to
encouraging the move to digital broadcasting. It will also take into account any fees
already paid by broadcasters which include an implicit sum for spectrum.
8.3
The Government believes that there is a balance to be struck between ensuring
efficient and effective use of spectrum as a scarce and valuable resource and the
promotion of plurality, diversity and universal accessibility of broadcasting services.
These objectives are not necessarily mutually exclusive. The Government believes
that like other spectrum users, broadcasters should be encouraged to be as efficient as
possible in their use of spectrum, within the constraints set out above. A measured
and reasoned use of incentive pricing and spectrum leasing can help do this, at least in
the longer term.
8.4
Before market-based spectrum management tools are applied, the Government
will consult fully with broadcasters and other interested parties.
Recommendation 11.2
Broadcasters should be given the ability to lease spectrum to other uses and/or
users, once they have met their public service broadcasting commitments and
other obligations. Broadcasters leasing spectrum would be able to keep the
resulting revenues.
8.5
The Government agrees in principle that broadcasters should have the
flexibility to lease spectrum to other users and use the spectrum for non-broadcasting
purposes (as certain broadcasters currently do). The Government further agrees that to
reinforce incentives towards spectrum efficiency, through leasing capacity,
30
broadcasters should be able to keep the proceeds of any spectrum-related commercial
activities.
8.6
Broadcasters will, of course, have to comply with the other obligations they
face. In particular, public service broadcasters (as such term is defined in the draft
Communications Bill) will have to be able to demonstrate to Ofcom (or, in the case of
the BBC and S4C, the Secretary of State) that any arrangement would not diminish
the scope of their service coverage and that viewers and listeners could access their
content, regardless of the communications platform they choose.
8.7
The Government equally recognises that the terms on which broadcasters and
their lessees will be permitted to lease spectrum must be flexible enough to
accommodate commercial objectives. Further exploration with broadcasters and other
interested parties on the appropriate leasing mechanism and the timing of spectrum
leasing will therefore be essential, following the outcome of the valuation exercise
discussed in our response to Recommendation 11.3 below. The terms of any spectrum
leasing arrangements undertaken by the BBC would also need to be agreed between
the Government and the BBC and set out in the BBC Charter.
Recommendation 11.3
The spectrum used for broadcasting should be valued and the valuations
released into the public domain. From the overall valuation, a value for each
national analogue channel and digital multiplex should be derived, based upon
relevant factors such as geographical coverage and bandwidth used.
8.8
The Government agrees that all of the spectrum used for broadcasting should
be valued and that the valuations should be released into the public domain. It
believes that spectrum valuation is the first step in determining when and which
market-based spectrum management tools should be applied to television and radio
broadcasters. It is important for the Government, broadcasters and taxpayers to fully
understand the true value of the spectrum used for broadcasting purposes, so that
these costs can be factored into public debates about spectrum management and
broadcasting policy.
8.9
Determining the value of spectrum in the absence of market data is a difficult
exercise, and the Government will need to identify the appropriate proxy for market
values in the broadcasting sector. Since spectrum pricing was introduced in 1998 for
other spectrum users, the Radiocommunications Agency has valued spectrum on the
basis of the cost of the next best alternative cost of (radio or non-radio)
technology, alternative service or alternative frequency bands. The appropriate
means of valuing broadcasting spectrum will depend on underlying spectrum
management objectives, which include ensuring effective use of the available
spectrum. Broadcasting policy objectives, such as the effective availability of
television and radio services for all, are also relevant.
8.10 Given the complex issues surrounding valuation, the Government will
therefore need to undertake a detailed spectrum valuation exercise. As explained in
our response to Chapter 7, the Radiocommunications Agency will be undertaking this
exercise across all areas of the spectrum. The Department of Culture, Media and
31
Sport and the Radiocommunications Agency together will consider how spectrum in
the frequency bands reserved for broadcasting should be valued, how incentive
pricing can support spectrum management objectives and the factors that should be
taken into account in setting licence fees for individual users. However, previous
economic work considering the costs of providing national coverage for television
using digital television multiplexes suggests that a full annual charge for one
nationwide analogue service (such as BBC1, BBC2 or ITV1) would be of the order of
£10-15 million. Channel 4, Channel 5 and S4C all have less than nationwide
coverage and the charge would be proportionately lower.
8.11 The Government anticipates the valuation exercise will be completed by early
2004. As part of this process the Government will consult fully with industry and
other interested parties.
Recommendation 11.4
Spectrum pricing should be applied to all broadcasters. The timing of the
introduction of spectrum pricing should take account of extant regulatory
agreements between broadcasters and the Government (including commercial
broadcasters’ current franchise fees, which encompass access to spectrum). It
should also take into account the Government’s commitment to promote and
support the take-up of digital TV.
8.12 The Government agrees that spectrum pricing is a tool which should be
applied to all broadcasters to promote the most efficient use of the spectrum. This
should be done within a framework that allows the Government and Parliament to
ensure that wider public policy is taken into account, including in respect to how
spectrum is allocated to broadcasting and assigned between broadcasters.
8.13 However, the way in which spectrum pricing is introduced and the timetable
for its introduction will depend on a number of factors, including practical constraints
- for example, extant regulatory agreements between broadcasters - and policy
considerations, including the take-up of digital TV, competition concerns and the
legitimate expectations of commercial licensees, and other objectives, including
universal availability, of broadcasting policy. Given these factors and the need for
public consultation, the Government anticipates that spectrum pricing for broadcasters
(as for other sectors) will need to be phased in over time. Where necessary and
appropriate, transitional arrangements will also be explored.
Television Broadcasting Spectrum
8.14 Spectrum pricing is a way of encouraging efficient use of the radio spectrum.
For television broadcasters there may be some scope for efficiency at the margins in
analogue frequency channels (eg some limited opportunities to use spectrum for data
casting as well as programme broadcasting) and probably greater scope in relation to
digital multiplexes. The main spectrum efficiency gain, however, will come from the
move to digital-only broadcasting of television programmes.
8.15 The Government has set the criteria that have to be achieved before the
analogue signal is fully switched to digital. These are:
32

all viewers who can receive free to air analogue television channels now must be
able to receive the same channels free digitally after switchover;

consumers must not face unacceptable switching costs when converting to digital
services. Prices must be within reach of people on low or fixed incomes,
particularly older people;

95% of consumers must have (access to) digital receiving equipment before
switchover is completed.
8.16 The Government has said that full switchover could start to happen as early as
2006 and be completed by 2010. It has already introduced some measures to
encourage analogue broadcasters to promote the take-up of digital TV by consumers –
for example Channel 3 and Channel 5 receive a discount on their Broadcasting Act
licence payments for the proportion of viewers watching via digital TV. Broadcasters
also have their own incentives, such as the reduction in transmission costs that would
be realised when simulcasting in analogue and digital ends.
8.17 The Government believes that spectrum management tools including incentive
spectrum pricing should also be applied to spectrum used for broadcasting. The key
issue for analogue television broadcasting is the digital switchover programme, which
requires actions by a range of stakeholders including Government, broadcasters and
manufacturers. The main spectrum efficiency gain will come from this move to
digital-only broadcasting of television programmes. Incentive pricing for analogue
spectrum should therefore be implemented in a way that demonstrably provides an
additional incentive for the broadcasters to do what they can to achieve the switchover
conditions. It is essential that the mechanism by which such incentives are introduced
is practical and likely to achieve the desired outcome. As a first step, to provide a
common understanding for discussions about the application of pricing in the future,
the Government intends to proceed with the valuation of spectrum used for
broadcasting, as announced in A New Future for Communications (Cm 5010). We
will consult on the methodology to be used. Once the valuation has been made, we
will publish our conclusions and the reasons for them.
8.18 Once we have the outcomes of the statutory review of digital take-up and of
the cost benefit analysis undertaken as part of the Digital Television Action Plan, the
Government will formulate proposals as to how and when incentive spectrum pricing
should be applied to analogue TV spectrum. There will also be consultation on these
proposals before implementation.
8.19
The proposals will take into account in particular:

the effect of the proposals on the actions that broadcasters can take to make
progress towards early achievement of the conditions for digital switchover;

the ability of broadcasters to meet their public service obligations; and

the need for the charging proposals to be based on incentives that work in practice
and are likely to have a material effect on the broadcasters in enhancing spectrum
efficiency.
33
The proposals will set out the date when charging will begin, what is expected of
broadcasters, the transition arrangements between the current cost charging regime to
one based on economic incentives, and the means by which the path towards the
likely full switchover date is reflected in the charge.
8.20 The proposals will take account of the fact that while broadcasters can make a
significant contribution to meeting the switchover conditions, the decision to switch
off analogue transmissions is ultimately a matter for Government, not broadcasters.
The proposals should therefore avoid penalising broadcasters if there is a gap between
meeting the switchover conditions and switching off the analogue signal.
8.21 This process will take some time and so the Government has decided that
charging for analogue TV spectrum will not start before 2006 at the earliest. The
actual date will be part of the consultation, take account of progress made towards
meeting the conditions for switchover and be kept under review. A firm picture of
the level of charging will only be possible when we have first completed the valuation
of the spectrum, and agreed the way in which market tools can best incentivise
switchover. The charges can only be implemented after consultation as required by
the Wireless Telegraphy Act 1998.
8.22 Today all the analogue television broadcasters make some payment for use of
spectrum, but they do so indirectly. Because spectrum fees are applied through the
Wireless Telegraphy Act licences, it is ntl and Crown Castle, the transmission
network operators, who pay the cost recovery charges to the Radiocommunications
Agency. These charges are passed on to the broadcasters through their contracts for
transmission. When introduced, the administrative incentive prices will replace the
cost recovery charges (currently around £2m per annum) applied to ntl and Crown
Castle. In this way, all the broadcasters will face additional incentives to achieve full
switchover. There will be no double charging for use of spectrum. The extent to
which each broadcaster makes any other payments to Government which reflect
directly use of spectrum will also be taken into account in setting the appropriate
administrative incentive price. For example, Channel 3 licensees and Channel 5 were
awarded their Broadcasting Act licences through a competitive process and those
licences, and the payments made for them, implicitly provide for access to spectrum.
8.23 Digital broadcasts of ITV and Channel 4 are carried on a multiplex operated
by Digital 3&4 Ltd (D3&4), while digital broadcasts of S4C and Channel 5 are
carried on a multiplex operated by S4C Digital Networks Ltd (SDN). The first 12year term of these multiplex licences expires in 2010. The Government is committed
to not charging under the Broadcasting Act 1996 until this point. The Government
believes this is a strong incentive for the promotion of digital TV. It also considers
that the waiving of spectrum charges for the same period, whether for recovery of the
costs incurred by the Radiocommunications Agency or in future Ofcom, or
administrative incentive pricing, will recognise the benefits of digital TV and kickstart its take up and availability. By 2010 digital terrestrial TV will have been running
for 12 years, and the multiplex operators (and through them the broadcasters) should
be ready to face incentives to use the spectrum efficiently. We should then be able to
apply the appropriate means of charging to encourage the efficient use of the
spectrum for digital television.
34
8.24 The BBC was awarded its multiplex under its Charter at around the same time.
The Government believes that it is appropriate to introduce spectrum pricing for the
BBC multiplex on the same basis as the other multiplexes awarded at the same time from 2010, 12 years after the award of that multiplex.
8.25 As with the analogue television spectrum, we envisage that spectrum pricing
for these three digital multiplexes will be introduced only after wide consultation,
with charging phased in.
8.26 The licences for three further digital television multiplexes were granted by
the ITC to the BBC and Crown Castle on 16 August 2002. As announced on 22 May
2002, any operator awarded a digital television multiplex licence under the
Broadcasting Act 1996 between 30 May 2002 and the date of this publication will not
be subject to administrative pricing for the use of spectrum to support that multiplex
before the date of renewal of that licence in 2014. Without prejudice to any decision
on future payments under the Broadcasting Act, the Government believes that the
licensees for these three multiplexes should, from 2014, pay for use of spectrum on a
similar basis to the operators of the three other multiplexes.
8.27 The charges levied on broadcasters after switchover will balance the value of
the spectrum used with the ability of broadcasters to meet their public service
obligations and take account of the scope to make more efficient use of the spectrum.
8.28 When introduced, spectrum pricing will be applied to the relevant Wireless
Telegraphy Act licensees. Where these entities are not themselves broadcasters, it is
proposed that they should be able to determine how they pass the spectrum charges on
to the relevant broadcaster, subject to compliance with competition law.
8.29 Valuation of digital spectrum and the methodology for setting incentive
pricing fees will form part of the study mentioned in the response to
Recommendations 7.9 and 11.3 though given the time period before spectrum pricing
may be applied it may be necessary to revisit this data closer to the pricing date.
Sound Broadcasting
8.30 The Government believes that users of spectrum for analogue and digital
sound services should face economic incentives to use spectrum efficiently and that
market-based spectrum management tools are the best way to create these incentives.
As for all broadcasters, the Government will value the radio spectrum as part of the
spectrum valuation exercise referred to in our response to Recommendation 11.3.
8.31 The Government recognises, however, that the regulatory framework for
commercial radio seriously constrains the way in which sound broadcasters may use
spectrum. Further work is needed to assess if there is scope for spectrum pricing to
apply to sound broadcasters. If there is no scope for the application of spectrum
pricing, sound broadcasters will be subject only to such charges as Ofcom is required
to recover from licensees to cover its administrative costs and this will be applied to
digital broadcasters as well as analogue broadcasters. If, however, spectrum pricing is
appropriate, the Government intends that it should be phased in over time. Like other
35
spectrum users, sound broadcasters would be consulted on the details in advance of its
introduction.
Recommendation 11.5
The Government, its agencies and broadcasting regulators should explore
options for using variable spectrum pricing and/or spectrum efficiency grants
to contribute to the Government’s aim of promoting and supporting the take-up
of digital TV. The Government should also consider using overlay licences as a
mechanism for achieving digital switchover.
8.32 The Government acknowledges that achieving the full switchover to digital
TV is the principal way that spectrum efficiency can be improved. As explained in
our response to Recommendation 11.4, the Government is committed to finding
practical ways to implement variable pricing for analogue spectrum to further
encourage industry to enable full digital switchover to happen.
8.33 In collaboration with industry and consumer groups, the Government has
already developed a detailed Digital Television Action Plan to map the way to
meeting the criteria set for digital switchover, and the implementation of variable
spectrum pricing is another measure the Government will take to meet its objectives
for digital television. However, the fundamental tenet of the Action Plan - that digital
switchover should be market-driven - remains in place.
8.34 Spectrum efficiency grants may have a role to play in achieving switchover.
The occurrence of any persistent market failures may, for example, justify such
grants; however, the Government would need clear evidence that the benefits of such
grants would, in fact, encourage digital switchover or would otherwise promote
efficient use and management of the broadcasting spectrum. The benefits of such
grants would also need to outweigh the costs of any grant scheme. The overarching
cost benefit analysis undertaken within the Digital Television Action Plan should
provide any evidence of whether or not such grants may be appropriate. The
Government is also mindful of its obligations concerning state aid under the EC
Treaty and any grant (if awarded) would need to comply fully with those obligations.
8.35 Overlay auctions may also play an important role in maximising spectrum use
and efficiency by accelerating digital switchover. Overlay auctions could allow the
Government to release analogue spectrum that continues to be used for analogue
television purposes to future users earlier than otherwise may be feasible if the
Government waited for the spectrum to be cleared of all analogue television users.
The expectations of analogue broadcasters and their viewers and listeners would need
to be carefully considered before overlay auctions were used. It is premature to
consider any means for reassigning the spectrum that will be freed up by switchover.
Recommendation 11.6
Limits on the proportion of digital broadcasting multiplex capacity which can
be used for non-programme related data services should be relaxed as soon as
possible, and ultimately eliminated. Spectrum released in the future which can
potentially be employed for broadcasting should not be confined to
36
broadcasting use alone, but should be made available for other uses through a
competition auction.
8.36 The Government agrees in principle that the limits on the proportion of digital
broadcasting multiplex capacity use for non-broadcasting purposes, currently set at 10
per cent of the spectrum assigned to each television multiplex licensee and 20 per cent
for sound radio multiplexes, should be relaxed and ultimately eliminated. The draft
Communications Bill provides for a new category of ‘general purpose’ multiplex that
would not be subject to regulation under the Broadcasting Act 1996. These licences
will give the flexibility to use spectrum allocated to them to provide a mix of
programming and non-programming services. Broadcasters will, of course, have to
continue to comply with their obligations under the Broadcasting Act, but the Bill
provides for those obligations to be kept under review.
8.37 The reduction or ultimate elimination of the restrictions on the use of spectrum
for non-programme related services would be predicated on the basis that spectrum
used in excess of 10 percent (for television multiplexes) or 20 per cent (for sound
multiplexes) of the multiplex capacity would be subject to spectrum pricing as
appropriate for non-broadcasting use. The Government believes that application of
spectrum pricing on this basis would be necessary to avoid market distortions.
Recommendation 11.7
Once Ofcom is established, the Government should devolve detailed spectrum
planning to the independent regulator, subject to Ministerial direction where
necessary in particular circumstances, e.g. to reserve spectrum for BBC
services. In order to ensure that the entire volume of spectrum is used in the
most efficient way, Ofcom should be given responsibility to plan all the
broadcasting spectrum, including that currently used by the BBC.
8.38 The Government agrees that detailed spectrum planning should be devolved to
Ofcom, subject to Ministerial powers of direction to ensure that the mechanisms used
to select terrestrial broadcasters may ultimately be decided by the Government and
Parliament, in order to meet agreed broadcasting policy objectives. The Government
also agrees that Ofcom should have overall responsibility for the planning of all
broadcasting spectrum, including that currently used by the BBC. The draft
Communications Bill published on 7 May incorporates the legislative changes that
will empower Ofcom accordingly. Detailed arrangements for putting this into effect
will be discussed with the broadcasters in due course, including their continuing role.
Our response on the scope of Ministers’ powers of direction is set out at
Recommendation 6.3.
37
9
Aeronautical and Maritime
Recommendation 12.1
For spectrum reserved for on-board navigation and communications systems,
the opportunity cost to individual users is, in most cases, effectively zero, since
use of this spectrum is mandated internationally, and users are required to
adopt specific technologies. But where UK-based users face some technology
choice for their on-board systems, then the RA, working with the CAA and
MCA, should apply differential licence fees to encourage moves to more
spectrally efficient equipment, thus easing congestion over time.
9.1
The Government agrees with the review’s analysis. Where spectrum is
mandated internationally and users effectively have no scope to economise on their
use of spectrum, it is not appropriate to apply incentive pricing. However, where there
is scope to adopt more efficient equipment, failure by users of UK-based systems to
do so is a hindrance to making better use of the spectrum and pricing can help
promote spectrum efficiency.
9.2
In these cases, the Government agrees that differential licence fees should be
applied selectively where users face technology choices that can affect spectrum
efficiency. This will provide a mechanism through which users can take account of
the value of spectrum as an input cost. Differential fees could also deliver benefits in
terms of airspace use if they encourage greater technical interoperability.
9.3
The Radiocommunications Agency will work with the CAA and MCA to
identify where it would be sensible to apply administrative incentive pricing; and
there will be full consultation with users of aeronautical and maritime equipment
before differential fees are introduced, both on the level of the fees and the timing of
their introduction. This work will be conducted in the context of the overall review of
administrative incentive pricing that is mentioned in the response to recommendation
7.9.
9.4
Because of the need to complete this detailed work and in order to allow
sufficient time to consult users, it is likely that implementation of this
recommendation will take about two years.
Recommendation 12.2
In light of the current study for RA of the UK’s civil radar deployment and the
technical scope for reducing spectrum consumption, the RA should develop a
pricing regime, in conjunction with CAA and MCA, for the spectrum used by
UK-based radionavigation and radiolocation equipment. This should be phased
in over the next five to seven years, consistent with outstanding economic
regulation agreements in the aviation sector between companies and the CAA.
9.5
The study is due to report by the end of 2002. The Radiocommunications
Agency will then consider, together with the CAA and MCA, how administrative
incentive pricing should be implemented for civil radar and the timescale for its
introduction, which may be extended in some cases. There will be full consultation
with users and the need to ensure safety will be paramount.
38
10
Public Safety Services
Recommendation 13.1
Public safety users should continue to benefit from guaranteed access to radio
spectrum, subject to full spectrum pricing applicable to comparable private
mobile radio uses.
10.1 The Government believes that provision of guaranteed access to sufficient
bandwidth of interference-free spectrum necessary to secure essential emergency
services is an important principle of policy. However, it is important to emphasise that
this guaranteed access is limited to spectrum that is shown to be essential for
emergency service operations. The continued and wider application of spectrum
pricing, on a comparable basis to commercial users, will provide an important
incentive for policy-makers to use this spectrum efficiently and economically, taking
account of the costs of their decisions.
10.2 The Radiocommunications Agency and the Home Office are discussing plans
to charge Home Office users for services not migrating to Airwave. It is hoped to
finalise these plans this year.
Recommendation 13.2
The RA should rationalise disparate assignments and widen the pool of
spectrum reserved specifically for the delivery of public safety services, under
the management of the Public Safety Spectrum Management Group. Wherever
possible, a technology neutral approach should be taken to the systems adopted
for use to allow for competition.
10.3 The Government agrees that rationalisation of assignments would be desirable
and this is already in hand. The Radiocommunications Agency has agreed with the
Home Office plans for amalgamating the Home Office bands with spectrum managed
by the Agency and making other blocks available to users not going into Airwave,
thus widening the available pool.
10.4 This rationalisation is not expected to result in any overall increase in
spectrum in the short term although it is recognised that the need for emergency
service spectrum is not static. The Public Safety Spectrum Policy Group, which is the
successor to the PSSMG (see response to next recommendation), has published a
guidance note detailing the available spectrum.
10.5 The Government agrees in principle that a technology-neutral approach would
be preferable. It will be necessary to consider how far this principle is applied in
practice, balancing the need for spectrum-efficient solutions with the advantages of
open commercial competition.
Recommendation 13.3
The remit of the Public Safety Spectrum Management Group should be
broadened to encompass an expanded group of approved users, including:
commercial and local government organisations with a public safety remit; and
specialist users whose spectrum needs are currently met from within Home
39
Office managed bands. Bands currently managed by the Home Office which
provide access for users not migrating to Airwave should be placed under the
control of PSSMG.
10.6 The Government agrees with this recommendation. The PSSMG has been
reconstituted as the Public Safety Spectrum Policy Group (PSSPG) with a broader
membership to include a wider range of services and Government departments. A
process has been agreed to transfer management of Home Office spectrum to the
PSSPG.
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11
Science Services
Recommendation 14.1
UK-based radio astronomy sites should be subject to an administratively set
spectrum charge for those bands it uses where the UK has scope, under ITU
regulations, to deploy other actively transmitting radio services on a coprimary basis in the band. The charge should be directly related, as elsewhere,
to the geographic area and bandwidth sterilised, and should be based on the
spectrum pricing which would apply to the active use of the band in that region.
Where radio astronomers allow other services to deploy within their defined
spectrum access, they should be compensated, for example, by the RA passing
on the spectrum fee levied on fixed links which it assigns within the protection
zones around observatories.
11.1 The Government wishes to reaffirm its commitment to supporting world-class
radio astronomy in the UK. Radio astronomers have little choice which frequencies to
observe as these are determined by fundamental properties of matter. This is reflected
in the fact that many frequencies used in radio astronomy are protected internationally
under ITU Radio Regulations.
11.2 The Joint Committee on the draft Communications Bill states in its report that
there is no effective scope for gains in spectrum efficiency or the application of
incentives in radio astronomy bands8. While this is true in some bands, it is not the
case in others. As stated by the review, there is scope under international rules to
allow commercial services to share with radio astronomy in some bands as already
happens, for example by reducing constraints placed on other potential users; and the
Government believes that radio astronomers, like others, should face incentives to use
spectrum efficiently. A combination of pricing and trading in those bands would do
this and could also provide a mechanism for radio astronomers to acquire access to
frequencies beyond the limits of the designated radio astronomy bands.
11.3 The review helpfully divides the radio astronomy bands into four categories
ranging from primary exclusive allocation, which are fully protected under ITU Radio
Regulations, through regional and local protection to completely unprotected. Where
international obligations preclude alternative use or radio astronomy is unprotected,
incentive pricing or leasing would serve little purpose. The Government therefore
proposes to focus spectrum pricing on bands in which radio astronomy is protected
but international rules allow alternative uses.
11.4 In determining departmental budgets, a number of considerations are taken
into account, including the objectives and targets in Public Service Agreements and,
in respect to obligations to pay spectrum charges, the scale and timing of their
introduction. As elsewhere, the Government’s intention is that spectrum pricing
should act as an incentive to efficient spectrum use. It is not the Government’s
intention that spectrum pricing should reduce the resource currently devoted to radio
astronomy.
8
See footnote 4 above for reference to the report. Paragraph 189 mentions radio astronomy.
41
11.5 The Government agrees with the review that any financial benefit that arises
from arrangements that allow greater commercial use of radio astronomy bands
should be retained for supporting astronomy or other areas of scientific research. It is
recognised, however, that, at least in the short to medium term, radio astronomers will
continue to make research using these bands their first priority.
11.6 In introducing spectrum pricing, account will be taken of the long-term nature
of radio astronomy research and the need to ensure security of access to spectrum and
financial certainty. The Radiocommunications Agency will discuss with PPARC how
these requirements might be met. One option would be to grant Recognised Spectrum
Access for an extended period of years in return for a single one-off payment.
42
Glossary
3G Third Generation mobile system
BBC British Broadcasting Corporation
CAA Civil Aviation Authority
CEPT European Conference of Postal and Telecommunications Administrations
DECT Digital Enhanced Cordless Telecommunications
DSI Detailed Spectrum Investigation
EC European Commission
ERMES European Radio Messaging System
ETSI European Telecommunications Standards Institute
EU European Union
GHz GigaHertz – A frequency of one thousand million Hertz (cycles
per second)
GSM Global system for mobile communications
ITC Independent Television Commission
ITU International Telecommunications Union
ITV Independent Television
MCA Maritime and Coastguard Agency
MHz MegaHertz – A frequency of one million Hertz (cycles per
second)
MOD Ministry of Defence
NATO North Atlantic Treaty Organisation
NRA National Regulatory Authority
OFCOM Office of Communications
PMR Private Mobile radio
PPARC Particle Physics and Astronomy Research Council
PSSMG Public Safety Spectrum Management Group
RA Radiocommunications Agency
RSA Recognised Spectrum Access
TFTS Terrestrial Flight Telecommunications System
UMTS Universal Mobile Telecommunications System - 3G mobile standard
43