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Executive Summary

1.1 This statement presents Ofcom’s conclusions on taking forward reforms in the Business Radio (BR) sector following a public consultation published on 6 July 2006 and available at http://www.ofcom.org.uk/consult/condocs/brtrading/.

1.2 Ofcom is setting out its conclusions on changes to wireless telegraphy licence fees for a range of sectors, including BR, in a separate statement available at: http://www.ofcom.org.uk/consult/condocs/pricing06/statement/.

1.3 The main features of the proposals were a simplification of the BR licensing structure based on 5 licence products in place of the current 21 and an extension of spectrum trading.

1.4 At present, there are 21 different BR licence products for different types of business. For example, there are different licences for paging or for data. Consequently, a firm wishing to change the nature of its business or to diversify may well have to apply to Ofcom for a new licence or a variation of its existing licence. This can hold back desirable changes in spectrum use to the detriment of consumers and businesses and constitutes a regulatory burden on businesses. The changes described in this Statement will streamline the product range into just 5 separate licence products, which will give licensees greater flexibility to use radio for a wide range of business activities without the need to seek Ofcom’s permission for change of use and will also bring about improvements in the efficiency with which spectrum is utilised.

1.5 In addition, more BR licences will be made tradable and the permitted ways of trading will be widened making it easier to transfer spectrum rights to those who can make use of them to generate greater value. This will also make it easier and simpler for businesses to re-structure without having to apply for a new licence in the name of a new corporate entity.

1.6 Liberalisation and trading are at the heart of Ofcom’s drive to secure optimal use of the radio spectrum and promote innovation and competition by giving users greater freedom to decide how best to use the spectrum to generate higher benefits for consumers. The rationale for this approach has been set out in Ofcom’s Spectrum Framework Review (http://www.ofcom.org.uk/consult/condocs/sfr/) and numerous other publications. Ofcom has already begun to apply these principles in the BR sector; the planned introduction of new spectrum assignment tools will make possible a significant further advance as described in this Statement.

1.7 The consultation sought views on the following proposals.

• Simplifying current BR licensing arrangements. It was proposed to replace the current 21 licence classes with just 5 licence products in 3 generic licence classes according to the degree of technical planning and coordination involved in making assignments. The proposed licence products were Area Defined, Technically Assigned and 3 Light Licensing products. This will remove much of the current usage-based segmentation of Business Radio spectrum and allow users far greater choice as to the purpose to which they use spectrum without the need to seek permission from Ofcom.
• Making more licences tradable. It was proposed to make a wider range of licence classes in the Business Radio sector tradable.
• Publication of information. In order to support the extension of spectrum trading, it was proposed to publish similar information in the register of licences about the BR licences that Ofcom intends to make tradable as is currently published about licences that are already tradable.
• Introducing greater security of tenure for licensees. It was proposed to extend the notice period for licence revocation for spectrum management reasons to 5 years for all BR licences. At present, there is no formal notice period.

1.8 Ofcom received 13 responses, 2 of which were confidential. Respondents are listed in Annex 1 and the non-confidential responses are published on Ofcom’s website at http://www.ofcom.org.uk/consult/condocs/brtrading/responses/. Ofcom is grateful for these responses and has carefully considered them in reaching the conclusions set out in this Statement.

1.9 The majority of respondents broadly supported Ofcom’s proposals. However, several stakeholders felt that the technical nature of the proposals and their complexity made it difficult to assess the implications for spectrum users. In response to these comments, we held a number of bilateral meetings with industry representatives and organised two further workshops to clarify the proposals and discuss the issues raised. The presentations given at these workshops are available at: http://www.ofcom.org.uk/consult/condocs/brtrading/.

1.10 In light of the responses to the consultation and the further dialogue with stakeholders, Ofcom has modified its original proposals. This Statement describes the modifications, clarifies various aspects of Ofcom’s proposals and discusses issues raised in the responses.

1.11 Ofcom has decided to modify its proposals in two respects.

• Firstly, some respondents pointed out that holders of Technically Assigned licences for multi-site systems with overlapping coverage will be charged higher fees because Technically Assigned licence fees depend on the number of base stations. Such systems can be more spectrally efficient than systems that do not have overlapping coverage and it would be contrary to the aims of AIP to charge them more. Ofcom has therefore decided to modify its proposals to allow users to convert, subject to certain conditions, from Technically Assigned to Area Defined licences, fees for which do not depend on the number of base stations deployed.
• Secondly, some respondents raised concerns that allowing spectrum segmentation for Technically Assigned licences through a partial trade could lead to interference between assignments with different channel spacings. To protect against this, Ofcom will assess the interference potential of all such proposals by using the new Mobile Assignment Technical System (MASTS) modelling tool before deciding whether to allow them to proceed.

Next steps and timetable

1.12 To implement the measures described in this Statement, Ofcom will need to make various regulations to introduce the new licence products, to extend spectrum trading, to provide for publication about assignments and to introduce the new licence fees. Ofcom plans to consult on all these regulations during the course of 2007.

1.13 There are three key milestones in the implementation of the measures described in this Statement:

• The implementation date, at which the regulations on BR licensing and trading will enter into effect. After this date, new applicants will be able to apply for one of the new licence products. Until that date, new licences that are issued will continue to be in one of the existing 21 licence classes.
• The conversion date, from which licences that have already been issued will be converted to new licence products. This date will be in the months following the implementation date, on which the new regulations take effect. A notice will be sent to each individual licensee affected.
• The fee change date, at which the new fees come into effect for existing licensees. This date might not be until some time after the conversion date.

1.14 Ofcom will be making available further information on the dates and timeline for implementing the BR reforms throughout 2007. Because of the dependence of the reforms on the development and implementation of major new IT systems, the implementation date, when the regulations take effect, is not expected to be before early 2008.

Summary of changes to Business Radio licensing products

1.15 As described in the consultation document and elsewhere in this Statement, the new BR licence products will substantially streamline the BR licensing product range and give users considerable added flexibility as to the type of business they can carry out or the use they can make of the spectrum without having to apply to Ofcom for licence variations. The changes are summarised in the following tables.

• Table 1.1 summarises the main characteristics of the radio systems covered by each of the new licence products.
• Table 1.2 summarises the changes in terms of the increased flexibility from this liberalisation, the extent to which licence rights and obligations may be traded and the application process.
• Table 1.3 maps how existing licences will migrate to the new types.
• Table 1.4 summarises the effects of the changes.

Table 1.1: Summary of characteristics of new licence products

Licence class and product		Description of licence
BR Area Defined		Covers whole of UK, one or more Nations (ie England, Scotland, Wales or Northern Ireland) or a region down to 50 km grid squares. Spectrum mask, boundary conditions, exclusive use of frequencies in the licensed geographical area, no technical assignment by Ofcom of individual base stations. No limit on base station deployments or mobile numbers within the licence area.
BR Technically Assigned		On-site to wide area coverage but less than a Nation. Shared or exclusive spectrum within the geographical area with technical assignment and coordination undertaken by Ofcom. Application-neutral, technical specification of base station defines coverage. Base station position(s) specified, no limit on number of mobiles.
Light Licensing	BR Simple UK	Set of frequencies available for mobile to mobile use only, anywhere in UK, no technical coordination by Ofcom. Standard technical conditions. No limit on number of mobiles.
	BR Simple Site	Set of frequencies available for on-site, shared spectrum, fixed location, no technical coordination by Ofcom. Standard technical conditions. No limit on number of mobiles.
	BR Suppliers	Set of frequencies for on-site to wide area coverage, shared spectrum, no technical coordination by Ofcom. Standard technical conditions. No limit on number of mobiles.

 

Table 1.2: Summary of liberalisation, trading and application process

Licence class and product	Liberalisation	Trading	Application process
Area Defined	Wider flexibility to change use and application without reference to Ofcom. Single set of flexible application-neutral technical requirements.	Full transfers Outright transfers of all rights and obligations. Extension of trading to UHF1 (420-450 MHz). Partial transfers Geographical segmentation possible down to a minimum trading unit (50 km grid square). Spectrum segmentation to a minimum channel width of 6.25 kHz.	On-line Annual fee payments
Technically Assigned	Introduction of MASTS tool to make assignments allowing wider flexibility to change use, application and number of mobiles without reference to Ofcom. Technical parameter changes are allowed through licence variation. Changing Technically Assigned licence to Area Defined licence allowed through licence variation. Single set of flexible application-neutral technical requirements.	Full transfers Outright transfers of all rights and obligations. Extension of trading to UHF1 (420-450 MHz). Partial transfers Spectrum segmentation to a minimum channel width of 6.25 kHz (subject to clearance by Ofcom and prior licence variation). Transfers of individual assignments where licence covers more than one assignment.	On-line Annual fee payments
Light Licensing comprising Simple UK Simple Site Suppliers	Single set of application-neutral equipment requirements.	Not applicable. These licence products are not being made tradable as there is no limit on how many can be granted and tradability would confer no advantage.	On-line application Fee payment every 5 years

 

Table 1.3: Mapping of conversion from current to new liberalised licence products

Current licence products	Liberalised licence products
Business Radio (Public Wide Area Paging) Business Radio (Public Mobile Data, Non-Voice) Business Radio (National and Regional) Business Radio (Tetra Digital PAMR) Business Radio (CDMA Asset Tracker) Business Radio (Remote Meter Reading Operator) - Exclusive channel	BR Area Defined
Business Radio (Analogue PAMR) Business Radio (Common Base Stations) Business Radio (Remote Meter Reading Operator) - Shared channels Business Radio (Wide Area Speech and Data Systems) Business Radio (Wide Area One-Way Paging and Speech Systems) Business Radio (Wide Area Distress Alarms) Business Radio (Band 1 and Band III CBS) Business Radio (IR2008 Data) Business Radio (On-Site Speech and Data Systems) Business Radio (On Site Hospital Paging and Emergencies Speech Systems	BR Technically Assigned
	Light Licensing comprising
Business Radio (UK General)	BR Simple UK
Business Radio (On-Site Local Communications) Business Radio (On-Site One-Way Paging and Speech) Business Radio (Self-Select)	BR Simple Site
Business Radio (Suppliers)	BR Suppliers

The Business Radio (Standard) licence product is to be withdrawn from July 2007. Licensees in that class have been given the opportunity to transfer to a corresponding licence product.

Table 1.4: Summary of Business Radio changes

Benefits of trading and liberalisation measures

Simplification and rationalisation of licence classes from 21 different licence types to 5: Technically Assigned Area Defined 3 Light Licensing products (Simple UK, Simple Site, Suppliers) New, consistent and more transparent technical assignment process with: more efficient use of spectrum than is possible with our current approach (in many cases, a greater number of assignments will be possible within a given area while maintaining spectrum quality benchmarks); automated and faster assignment process for Technically Assigned licences; extended on-line application and management of licences. Greater flexibility to change the application or use of spectrum (eg change of business from taxi to haulier or from paging to data) within technical parameters of the licence. Enhanced opportunities to buy and sell spectrum Rights to trade extended to all BR licences (except Light Licensing classes for which trading is not relevant); Greater flexibility in ways spectrum can be traded.

Implications for licence holders

New licences to replace existing licence with benefits outlined above. Enhanced security: licences of indefinite duration with 5 year minimum notice period in most cases. Re-balancing of fees with same or lower fees for about 90% of licences. Those facing fee increases will have opportunities to mitigate them in most cases. Licence technical parameters and conditions remain broadly similar to current licences with no changes to existing technical assignments. Interference management and enforcement unaffected.

The full document is available below

• Business Radio Trading & Liberalisation [pdf]
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