Spectrum pricing

Since 1998, the Agency has used administrative incentive pricing as one of its tools for promoting optimal use of the radio spectrum. Licence fees are set by reference to the level of congestion, spectrum efficiency, sharing and co-ordination issues, economic benefits, innovation and competition.

In July 2001, the Wireless Telegraphy (Licence Charges) (Amendment) Regulations (SI 2001 No 2265) were laid before Parliament, thereby implementing the fourth stage of a phased programme of spectrum pricing. The regulations were made following a public consultation: Spectrum Pricing: Third Stage Update and Consultation in December 2000 which sought views on the Agency's proposals from customers, trade associations and public organisations.

These regulations:

• continued the programme of licence fee increases for all the major national operators (not just telephony) including the Channel Islands and Isle of Man cellular operators;
• continued the phased introduction of fee increases to Common Base Stations, Fixed Wireless Access, Private Business Radio Road Construction and Fixed Links licences for congested areas;
• extended spectrum pricing principles to some areas of the Satellite Earth Station and Programme Making and Special Events sectors; and
• simplified and rationalised some licence products in the Maritime area.

Fee increases are being focussed on licence classes and users in areas where spectrum congestion is worst and where spectrum pricing has the most scope to influence spectrum use. Under the spectrum pricing regime most users pay no more than their old fees and many have benefited from fee reductions. Significant increases are being phased in over four years to give businesses adequate time to adjust.

Further consultation was undertaken in January 2002, Spectrum Pricing: Year Five, to inform and seek views from customers for Programme Making, Private Business Radio, Satellite Links, Scanning Telemetry and Maritime sectors and on the continuing phased increases in those sectors already subject to spectrum pricing principles.

Broadband Fixed Wireless Access (BFWA) at 28 GHz and 40 GHz

Following the Agency's BFWA auction at 28 GHz in November 2000, through which 16 licences were awarded, the Agency opened an award process on 15 October 2001 for the remaining 26 licences in eight English regions, Scotland and Wales. The award process is open for twelve months to enable companies to plan a targeted and effective market entry. Companies are able to come forward with applications for any available licences when they consider the time is right.

Those winning the licences will be able to deliver Internet and multimedia services over the airwaves, and this will provide competition to fibre, cable links, DSL phone lines and satellite. They will contribute to the broadband coverage provided by these technologies and help to deliver broadband services across the United Kingdom.

The Agency has started to consult with interested operators and suppliers to explore the potential use of 40 GHz, for Multimedia Wireless Systems, as a forerunner to setting up a licensing process that would encourage development of the band. The large amount of bandwidth available at 40 GHz will offer high quality, high speed Internet access, numerous high quality video channels on demand serving large numbers of customers wanting entertainment services in real time, alongside telecommunication services in the residential and business markets.

Sound broadcasting

The demand for spectrum for analogue sound broadcasting services in the FM band remains so strong that it is increasingly difficult to find frequencies for new services. Apart from the range of BBC national and local services, the number of commercial radio licences has doubled since 1990. The FM Review, commissioned jointly by the Agency, the BBC and the Radio Authority, has helped to bring consideration of a new tier of Access Radio into policy-making thinking. The Agency is also examining, with the Radio Authority, the technical practicability of using shortwave spectrum for short distance broadcasting within the UK.

VHF digital transmissions on the BBC national and commercial national multiplexes have begun and the Radio Authority is also licensing sub-national multiplexes at a rate of around one per month. The cost of receivers is still relatively high and is inhibiting the development of digital radio, though prices for both in-home and in-car equipment are falling.

The Agency is considering the future use of spectrum that will become available in L-band by 2007. Some of these blocks have been made available for terrestrial use and the Government is considering the amount required for digital radio to deal with the spectrum limitations at VHF. The UK will also be participating in a CEPT conference in mid-2002 to plan further blocks for terrestrial use but without pre-empting decisions on what the spectrum may be used for in terms of satellite and terrestrially-based broadcasting, datacasting, video delivery and other "converged" uses.

Productive work is also taking place in the ITU on recommended standards for digital radio in the HF band. This is likely to generate considerable interest in re-planning not only the shortwave bands, but also the MF and LF bands for digital use, and the Agency is supporting these activities to improve the attractiveness of this spectrum.

Poster and information pack for the auction of Broadband Fixed Wireless Access

Television broadcasting

About a third of UK households now access digital TV over cable, satellite and terrestrial platforms.

The Independent Television Commission (ITC), in consultation with broadcasters, including the BBC, is considering the planning of frequencies and power levels to extend digital terrestrial television (DTT) coverage and to improve robustness of reception. The Agency is working closely with the other organisations in support of these objectives and in gaining international co-ordination of our DTT networks.

The DTI and DCMS have published a Digital TV Action Plan and an ongoing strategy for delivering an all-digital environment for TV involving a range of stakeholders including broadcasters, regulators, the Government, manufacturers, retailers and viewer organisations. In December 2001, the two departments issued a consultation document: Digital Television: the Principles for Spectrum Planning on how the spectrum currently used for analogue television broadcasting should be planned once analogue transmissions cease. Responses to the questions asked in the consultation will inform the way in which detailed plans are developed and agreed by the Government.

The Agency is also in the early stages of preparation for a Regional Radio Conference of the ITU in 2004/5 that will revise the 1961 Stockholm Agreement. This will set out the way that the spectrum for broadcasting in the VHF and UHF bands will be shared and planned between administrations. In parallel with seeking to understand the amount of spectrum required for digital television after switchover, the Government is also considering the demand for spectrum released by the closure of analogue transmissions from other users including mobile television, programme-making, and for the delivery of data, telecommunications and other converged services.

Fixed Wireless Access

Fixed Wireless Access (FWA) services have been operational in the UK since October 1996. Tele-2 is the only operator currently providing commercial services.

The Agency has previously consulted on the availability of spectrum at 3.4 GHz and 10 GHz for always-on Internet and data services. A consultation finalising the arrangements at 3.4 GHz will be published in April 2002 and we anticipate that spectrum at 3.4 GHz will be released in late autumn 2002. Further work is ongoing prior to a final consultation on the award of licences at 10 GHz.

Additionally, a consultation document will be published in April 2002 concerning the licence arrangements at 2GHz, where Zipcom is licensed to provide narrowband FWA services to remote rural areas in the UK. The consultation invites views on proposals to make spectrum available for urban areas as well.

DTI's FutureFocus immersive theatre

Fixed terrestrial and satellite links

The Agency's Fixed Terrestrial and Satellite Links Unit has been working in several areas to ensure the maximum availability of spectrum for fixed link operators. These actions are aimed at meeting anticipated future requirements such as Third Generation Mobile operations, permitting the expansion and completion of existing infrastructure networks, and adopting the most appropriate management arrangements for the fixed services spectrum allocations:

• discussions are under way to agree close-down dates for the four remaining 2 GHz trans-horizon systems operating between Scotland and North Sea oil rigs, so removing a constraint on the future use of this spectrum by potential mobile services;
• the phased programme to bring under Agency control those fixed link frequency bands currently self-managed by major operators is nearing completion, and discussions are ongoing on the last major band (18 GHz) to clear the way for RA to take over management in 2003;
• a coherent medium-term plan covering fair and equitable access to the general pool of fixed links spectrum has been discussed and agreed with industry in the Fixed Link Co-ordination Committee. Two-thirds of the new 32 GHz and 52 GHz frequency bands have been held back to allow consideration of innovative assignment/allocation processes to supplement the traditional "mixed bathing" approach; and
• plans to deregulate the 58 GHz unco-ordinated frequency band have been finalised, and future management arrangements for scanning telemetry spectrum are being discussed with interested parties.

The spectrum pricing algorithms for Permanent and Transportable Earth Stations were implemented by the July 2001 Fees Regulations, and with assistance from industry representatives, a further algorithm for the spectrum pricing of Terminal Networks has been evolved for inclusion in the 2002 Fees Regulations. There has been continuing discussion on possible future enhancements to the terrestrial fixed links pricing regime for implementation in 2003.

Demand for new terrestrial point-to-point links has averaged around 350 fixed links per month. The total number of current licensees and licensed links is shown on table 1 below and Table 5.

Table 1: Fixed links/Space service licences

Licence-exempt public telecommunications

In October 2001 the Agency published a national consultation setting out proposals to allow public telecommunications services to be provided in licence-exempt bands. Currently, Regulations only permit private use of certain types of short-range low power radio devices without a licence. The consultation proposed a relaxation or removal of the present constraints on public access systems so that existing and potential new operators could provide short-range broadband wireless Internet connections in public areas such as airport lounges. The consultation, which closed in February, showed that operators and potential operators believe that there is a strong demand for this type of service, particularly in the 2.4 GHz and 5.8 GHz bands.

The consultation also sought views on the ability for public services to operate satisfactorily in de-regulated licence-exempt bands, where there is no central co-ordination of frequencies and the instances of interference may consequently be higher than in licensed spectrum. This may be particularly the case in localised areas when there is a high density of users, many operating simultaneously. Some new radio technologies, such as wireless local area networks (WLANs) are designed to cope to some extent with such situations as they monitor the availability of channels and choose suitable frequencies dynamically before transmitting in an effort to avoid causing interference. Clearly there are still limitations to the effectiveness of this type of technology when the number of users is particularly high. Nevertheless, the Agency also recognises that the types of public services being proposed by operators and potential operators are based on using the Internet; therefore delays in accessing the radio channel may not necessarily be sufficiently significant to alter the user's perception of the service offered. However, the Agency made clear in its consultation that any future decision to allow use of licence-exempt spectrum for public services would not alter the status of these bands, which it would continue to offer without protection from interference.

A decision on whether to proceed with the proposals and the scope of any revised Regulations is expected in mid-2002, subject to Ministerial approval.

© Sky Sports/Kerry Ghais

Sky TV's Digital Suite displays all satellite TV output

Public mobile telephony

Recent estimates put the number of cellular (GSM) subscribers at about 46 million or approximately 78% of the UK population. It is expected that subscriber levels will approach 90% in the medium term (i.e. over the next three to five years).

Introduction of 2.5G services

In 2001 UK operators began offering GPRS (General Packet Radio Service) across their networks. GPRS provides an ‘always on' data service at increased bandwidths, and should encourage an increase in mobile Internet access and e-mail, particularly for business users, as well as the development of data-rich applications as a foretaste of 3G services.

Closure of analogue networks

The 880-890 / 925-935 MHz frequency bands were previously allocated to the analogue mobile system ETACS (Extended Total Access Communications System). There has been a rolling programme by the incumbent operators to migrate the band's spectrum to E-GSM use. This process started in October 1999 and was effectively completed in June 2001.

Systems in the 872-880 / 917-925 MHz frequency bands finally ceased operation in June 2001 and the spectrum has been returned to the Agency for reassignment. The 876-880 / 921-925 MHz band has been allocated in Europe to the international railway network; and will be assigned to the rail industry in the UK for GSM-R. The remainder of the spectrum band, 872-876 / 917-921 MHz, has been identified for use by TETRA. The Agency issued a consultation on future plans for this spectrum in August 2001.

Both the GSM-900 and GSM-1800 bands were identified at WRC2000 as potential expansion spectrum for 3G/IMT-2000.

Future of the GSM frequency bands

Within Europe, operators and manufacturers are concentrating on enabling the roll-out of 3G networks, and consequently it is unclear whether further enhancements to GSM such as EDGE (Enhanced Data rates for GSM Evolution) will be implemented in the UK. The situation should become clearer in the next few years as the 2G/3G operators develop their plans.

With the impending roll-out of 3G networks and the concentration of operators' efforts in this direction it is very unlikely that more spectrum will be made available for GSM use. However, GSM networks will remain a very important part of cellular infrastructure during the early to mid-term days of 3G. It is expected that there will be a great deal of roaming from the 2G to the 3G networks, with the bulk of voice calls still being carried by the 2G networks which will continue to provide coverage in more rural areas, at least in the initial phase, until 3G networks come on stream.

Third generation networks

The successful introduction of 3G technology is seen as important for the UK to maintain its leading position in mobile communications technology. The opportunities it offers, including fast multimedia and Internet access on the move, are expected to be key factors in facilitating the knowledge-driven economy and the growth of e-commerce and m-commerce.

Following the assignment of 3G spectrum by auction in early 2000, operators are now concentrating their efforts on network roll-out. The operators have set up trial systems and the results from these trials should assist in establishing operational networks.

Public TETRA

In the UK, Public Access Mobile Radio (PAMR) using the digital TETRA standard has been implemented within the 410-430 MHz band. Initially only 2x2 MHz was available due to residual incumbent use, particularly the Ministry of Defence (MoD). Over recent years, the Agency has worked closely with the MoD to release additional spectrum for TETRA and to make available more contiguous spectrum. The severely fragmented nature of the original TETRA spectrum reduced effective spectrum utilisation. There has been considerable progress in the past year with 2x5 MHz now available on a relatively contiguous basis. Further migration in the near future will yield further improvements in the quality and utility of the TETRA spectrum.

Private business systems

The PMR into the Future initiative, involving ongoing communication with the PMR industry, has dominated much of this year's work programme. A number of specific projects are gathering momentum. The Digital Project aims to identify digital technologies suitable for PMR and consider ways of making spectrum available.

A technical tool known as MASTS (Mobile Assignment Technical System) is also being developed. This will deliver both more efficient use of the spectrum and also permit online assignments towards the end of 2003. This tool will be fully integrated with the e-licensing programme.

The spectrum requirements for analogue and digital PMR systems are currently being assessed, supported by a PMR demand study. This project uses information from manufacturers, dealers and users as well as historical information held by the Agency.

The next generation of mobile communications