Home > Consultations > Consultation Documents > Spectrum Framework Review > Statement

Spectrum Framework Review for the Public Sector

Extending market mechanisms to improve how spectrum is managed and used

Summary

Introduction

1.1 This statement describes our conclusions, following a public consultation last year^(-1-), on a new framework designed to enable public bodies to manage their radio spectrum holdings better. For the purposes of this document, “public sector spectrum holdings” include spectrum used by civil aviation and maritime operators, even though these are predominantly in the private sector.

1.2 We received over 50 responses and are grateful to all who commented^(-2-). There was broad support for the objective of improving public sector spectrum efficiency and for allowing public bodies to trade their spectrum holdings, although this support was qualified in some important respects, in particular in relation to national security, public safety and compliance with international obligations. We plan to consult later in the year on regulations to enable public bodies to trade spectrum and, in doing so, will take full account of the caveats that were expressed. We will proceed with the further consultation once the Government, which has stated that national security and public safety will remain paramount, has defined the detailed arrangements for public bodies to hold, manage and release spectrum.

1.3 The Ministry of Defence (MOD), which holds about a third of the spectrum below 15 GHz, has said that it will consult by May 2008 on its plans to release a significant proportion of its spectrum holdings.

New opportunities – sharper incentives

1.4 The theme of the new framework is the creation of opportunities for public bodies to release or share public sector spectrum holdings and the introduction of sharper, more effective incentives for them to take advantage of these. This has the potential to deliver substantial benefits for citizens and consumers. The reforms are central to a wider programme to implement the findings of the Independent Review of Spectrum Holdings (the ‘Independent Audit’) led by Professor Martin Cave. The Audit, the Government’s response and other information can be found at www.spectrumaudit.org.uk .

Radio spectrum is a valuable and finite resource

1.5 Spectrum underpins 3% of UK GDP and its value to the economy has grown by 50% in real terms since 2002 to over £40bn a year^(-3-). Demand from commercial operators for certain frequencies, especially those suitable for mobile applications, already exceeds availability and this trend is forecast to continue into the medium term^(-4-). There is also demand from the public sector as described in the Government’s Forward Look: A Strategy for Management of Major Public Sector Spectrum Holdings (the “Forward Look”)^(-5-).

1.6 Public sector spectrum holdings amount to nearly half of the total spectrum below 15 GHz. Although valuing these holdings is difficult, the Audit estimated that they could have a market value between £3bn and over £20bn^(-6-). Their more effective management could generate substantial benefits for citizens and consumers.

Market mechanisms are generally to be preferred ……

1.7 Our general approach to managing spectrum has been set out in our 2005 Spectrum Framework Review^(-7-) and earlier documents on spectrum trading and liberalisation. One of our statutory duties is to secure optimal use of the radio spectrum to promote the interests of citizens and consumers. We consider that market mechanisms, such as spectrum trading, liberalisation, administered incentive pricing (AIP) and auctions, are in most cases more likely to achieve this than ‘command and control’ based on regulation and administrative decisions. We are progressively applying market mechanisms in the commercial sector.

… but do not yet apply very widely in the public sector

1.8 Public sector users such as the MOD and emergency services already pay charges for spectrum that are comparable to fees charged to commercial users. However, public sector spectrum holdings are not currently tradable; and aviation and maritime spectrum licence fees are not based on AIP.

We sought views on introducing spectrum trading for public bodies

1.9 The Independent Audit recommended, and the Government and Ofcom agreed, that market mechanisms should be extended more widely to public sector spectrum holdings in line with our policy in the commercial sector. The consultation proposed the introduction of tradable spectrum holdings for public bodies in the form of recognised spectrum access (RSA)^(-8-) in order to promote spectrum efficiency and encourage spectrum release and sharing.

We will proceed with the new framework taking account of your comments

1.10 Spectrum trading by the public sector is expected to generate substantial benefits for citizens and consumers and we see no reason in principle why public bodies should not acquire and dispose of spectrum through the market. Having considered the responses to the consultation, we have concluded that we should proceed with our proposals. Accordingly, we will consult on regulations to introduce tradable RSA for public sector holdings taking full account of the comments that were made.

1.11 Respondents supported our proposal that the reforms should be introduced on a phased basis and broadly agreed with our initial assessment of the bands (406.1 - 430 MHz, 2.7 - 3.4 GHz and 3.4 - 3.6 GHz) that are likely to prove most attractive for alternative uses. These bands are likely to be given priority. The MOD is committed to releasing a “significant proportion” of its spectrum holdings beginning during 2008 and opportunities for spectrum release and sharing are expected to become clearer when it consults on its plans, which it expects to do in May 2008.

1.12 Complementary initiatives include:

adoption of the presumption that public bodies will acquire spectrum through the market save in exceptional circumstances;
consultation on applying AIP to selected frequency bands used for aeronautical and maritime applications;
ongoing work to recommend safety criteria for radar to share spectrum and to assess the advantages and disadvantages of replanning certain radar bands before introducing trading;
a review by the Civil Aviation Authority (CAA) and MOD, with Ofcom support, of aeronautical navigation aids including radar and landing systems;
a review of arrangements for managing spectrum used by emergency and public safety services;
proposals to make radio astronomy RSA tradable.

Footnotes:

1.- Spectrum Framework Review: the Public Sector http://www.ofcom.org.uk/consult/condocs/sfrps/

2.- The responses may be found at http://www.ofcom.org.uk/consult/condocs/sfrps/responses/.

3.- Economic Impact of the Use of Radio Spectrum in the UK by Europe Economics for Ofcom http://www.ofcom.org.uk/research/radiocomms/reports/economic_spectrum_use/

4.- Demand for Spectrum from Non-Government Services 2005-2025 at http://www.spectrumaudit.org.uk/010905.htm

5.- http://www.spectrumaudit.org.uk/pdf/Forward_Look_2007.pdf

6.- Independent Audit of Spectrum Holdings final report, page 2: http://www.spectrumaudit.org.uk/pdf/20051118%20Final%20Formatted%20v9.pdf

7.- http://www.ofcom.org.uk/consult/condocs/sfr/

8.- RSA provides a vehicle to enable Crown and certain other bodies to engage in spectrum trading.

The full document is available below:

Spectrum Framework Review for the Public Sector [pdf]
Full print version