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27|11|06

Economic impact of spectrum use increases by 50% in just over three years

Business activity that is largely dependent on the radio spectrum contributed £37bn, or 3%, to the UK’s GDP in 2005/6. This means that users of spectrum account for nearly one pound in every thirty generated by the UK economy.

A report published today by Ofcom also shows that businesses whose activity is largely dependent on spectrum employed 240,000 people in 2005/6, which is 0.8% of the total UK workforce.

Spectrum is a finite natural resource that underpins broadcasting, fixed and wireless telecommunications as well as essential services such as defence, transport, the emergency services and healthcare. Consumers are demanding and using more wireless services; and communications companies are responding to that demand with new products and services.

Increasing contribution to the economy

Today’s report also highlights the growing value that consumers and businesses derive from spectrum.

As well as demonstrating the wider economic significance of commercial and civil radio spectrum use, the report contains a second calculation – the economic benefit from the use of spectrum to both producers and consumers.

The report shows that in 2005/6 the economic benefit from the use of spectrum was £42bn; this is a 50% increase on 2002 which was £28bn (expressed in 2006 prices).

The increase in the economic benefit from the use of spectrum was due to growth in mobile phone subscribers; the launch of new mobile data services, such as 3G; and the growth and availability of digital television and radio.

For the full report, go to:

http://www.ofcom.org.uk/research/radiocomms/reports/economic_spectrum_use/

Ends.

1. The calculation of net economic benefit from the use of the radio spectrum is based on consumer and producer surplus. Consumer surplus is the value that consumers derive from the use of the spectrum. This is calculated by subtracting what people actually pay for a service from what they are prepared to pay. Producer surplus is calculated by subtracting the actual cost of producing a good or service from the revenue the company receives from the sale of the service (i.e. profit).

2. The report was produced by Europe Economics on behalf of Ofcom.

3. The last report into the net economic benefit arising from the use of the radio spectrum was published in 2002 by the Radiocommunications Agency.

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