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13|12|07

Digital Dividend Review statement: media briefing, 13 December 2007

Introduction

Good morning,

It is my pleasure to welcome you here today to the publication of this very important statement.

I am joined today by our Partner, Spectrum Policy, Philip Rutnam, who has been leading our work on this project.

Philip will shortly take you through the details of the proposals we are publishing today.

But before that I would like to spend a few minutes setting the context for this statement.

Importance of the Digital Dividend

This statement is one of the most important that Ofcom has ever made.

As we all know, radio spectrum is an essential but finite resource. Its use accounts for nearly one pound in every thirty in the UK economy and it delivers a plethora of services to UK citizens and consumers.

And the spectrum we are talking about today, the Digital Dividend released by digital switchover, is prime spectrum.

This spectrum- in the sought after UHF band- is capable of penetrating buildings and covering large geographical areas with relatively few transmitters.

And that makes it suitable for a huge range of uses: wireless broadband, mobile television, more digital terrestrial television in either standard or high definition, local television, wireless microphones and low power applications such as wi-fi or similar technologies.

This is the most important spectrum to be released in the last 40 years and likely to be the most important spectrum release in the UK in the next 20 years.

The process to date

And because of the importance of this spectrum, we have spent a long time listening to the responses to the publication of our proposals in December 2006. But we also made a commitment to deliver a decision on the release of the spectrum before the end of 2007.

The responses we have received have been wide ranging indeed we received more than 750. There has been significant support for a market-led approach, but there has also been many calling for intervention in various forms and for different reasons and services.

And in two particular areas, the responses raised concerns that were sufficiently significant that we have already taken steps to address the issues raised and arguments made.

Firstly, programming-making and special events services - devices like wireless microphones - which make a very important contribution to the UK’s social, cultural and economic life.

When we published our initial consultation late last year, programming-making and special events quickly emerged as a critical issue which divided opinion.

So we listened to people’s concerns and have proposed significant additional safeguards.

Secondly, the provision of more services on the digital terrestrial television platform, in particular the role of HD services and their potential future significance in free-to-air broadcasting.

So, last month we published proposals to clear one of the multiplexes that already exist of existing services and to upgrade that using two new technologies. The proposals will increase the capacity of one multiplex by up to 160%, equivalent to raising the number of existing channels carried on that multiplex from around 8 to between 15 and 20 over time or, of delivering a single DTT multiplex offering by 2012 at least four HD channels and three HD channels by as early as 2009/2010.

And at the same time we can ensure that viewers with existing DTT set-top boxes or integrated-TVs will still be able to access the Freeview services that they currently enjoy.

So, those initiatives allow us to draw the threads together with the statement we are publishing on the digital dividend today.

Our duties in relation to spectrum

Let me be clear about our key duties in relation to this work.

They are:

Firstly, our principal duty under the Communications Act, to further the interests of citizens and consumers.

Secondly, our principal duty in relation to spectrum, to secure the optimal use of spectrum.

Those duties give us a clear objective: to ensure that the digital dividend is used to deliver the maximum benefit for citizens and consumers of the UK.

Our duties do not include, nor have we given any weight at all, to the amount of money that may or may not be raised by auctioning some or all of the spectrum.

Maximising benefits for citizens and consumers

We have concluded that a market-led approach to awarding the digital dividend is most likely to meet our objective for the Digital Dividend Review.

We believe that a market-led, technology-neutral auction is the fairest, most transparent and most efficient way of assigning this spectrum, in the face of many, many conflicting demands for its use.

• It maximises flexibility in a fast changing media environment;
• It promotes awarding spectrum to those that will make the most of it and value it most, allowing them to trade their licences and deliver benefits to society;
• It will create new opportunities for new technologies and services; and
• It will empower users and companies willing to be entrepreneurial and to take risks rather than trust a regulator try to pick winners, something that regulators and Governments have a pretty mixed record on.

We believe that this approach will provide significant benefits:

For industry the opportunity to launch innovative services and technologies.

For consumers, more competition in wireless services, leading to the potential for new and exciting products, greater choice and lower prices.

And for the UK economy, an overall benefit that is likely to be worth between £5 billion to £10 billion over 20 years. (This is benefit in the form of producer and consumer surplus arising from the new economic activity – it is not an estimate of revenues from an auction).

We plan to auction much of the digital dividend in 2009, so there is still much work to be done, in particular in designing the award.

But this statement marks a key milestone in the Digital Dividend Review.

One that delivers maximum benefit to citizens and consumers of the UK by deploying market mechanisms for the release and use of the spectrum; alongside particular protection for programme-makers and special events organisers; a considered approach to packaging of the release which will ensure a fair opportunity for potential participants; and of course alongside the changes that will permit additional capacity on existing digital terrestrial television spectrum, enabling HD free-to-air services.

I will now pass over to Philip, who will take you through the detail.

Thank you.

ENDS

• Digital Dividend Review statement: media briefing, 13 December 2007 [pdf]

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