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Annual Report & Accounts 1997-98 |
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Annual Report & Accounts 1997-98 |
Wireless Telegraphy
Act 1998
The new Act was one of the most significant developments of the year for the Agency, and one that will have considerable long-term benefits for businesses, consumers and jobs. Shortly after entering office, the Government decided to introduce early legislation to reform the statutory framework for spectrum management. The priority given to this legislation reflected the rapidly increasing contribution made by radio to the economy and the importance of spectrum management in facilitating competition, innovation and growth.
The previous method of setting fees, based on recovering the Agency's costs, had remained substantially unchanged since 1904 and was no longer adequate to tackle the spectrum management challenges of the 21st century. Cost-based fees provide little incentive to use spectrum more efficiently and aggravate spectrum shortages and congestion. They are also unfair with small businesses paying proportionately many times more than large network operators.
Legislation was introduced into Parliament in May 1997 to provide more rational and fairer ways of setting licence fees in support of spectrum management objectives. The Wireless Telegraphy Act 1998, which received Royal Assent on 18 March 1998 and entered into force 3 months later:
The Act marks a milestone in spectrum management. It provides up-to-date tools for the Agency to use, as reported elsewhere in this document, to manage the spectrum resource more effectively and to make available the spectrum that radio-based businesses need to generate increasing wealth, consumer benefits and jobs. The Act also paves the way for further reforms, such as secondary trading of spectrum licences.
Implementing spectrum
pricing
During the year, the Agency continued preparing to implement spectrum pricing.
Administrative pricing
Following publication in May 1997 of the consultative document "Implementing Spectrum
Pricing", joint Agency - industry working groups made considerable progress in
developing pricing algorithms. The Agency plans to introduce administrative spectrum
pricing in three waves. This is being done in full consultation with the industry.
The first wave - July 1998
The first wave, for introduction in July 1998, subject to Parliament passing the necessary fees regulations, will start to address the worst distortions of cost-based pricing. A new on-site private business radio class with a fee based on the number of systems per site should lead to licence fee reductions for over 80% of current service users. This reflects the relatively small amount of spectrum such systems use. At the same time, fee increases will start to be applied to operators of national public radio telephone networks to reflect the value of the extensive spectrum that these occupy.
The second wave - July 1999
Spectrum pricing is planned to begin to be applied to other mobile radio licences and to point-to-point fixed links. These are the licence sectors in which congestion is most serious. A wider set of changes is proposed, including new ways of charging for other private business systems and public network services and for fixed point-to-point links according to use of spectrum. This is likely to involve charging a premium rate for services in congested areas to help achieve spectrum management objectives. A consultation document on the second wave will be issued shortly.
The third wave - July 2000
Consolidation of the changes started in 1998 and 1999 will continue and spectrum pricing will begin to be applied to the remaining sectors of licences, although there may not be a significant effect on the general level of charges as spectrum pricing may be less appropriate as a spectrum management tool in these cases. The Agency plans to issue a consultation document on the third wave later this year.
Auctions
The Government announced in summer 1997 that, in order to maintain the UK's position at
the leading edge of the communications revolution, it intended to achieve early licensing
certainty for Universal Mobile Telecommunications Systems (UMTS) - the so-called Third
Generation of mobile telecommunications that will bring full multi-media communications to
mobile telephones. The Agency set up an Auction Team of ten staff in October 1997 to
prepare the way to auction UMTS licences.
Four teams of external advisers have been appointed: N M Rothschild & Sons Ltd. as financial advisers, Allen & Overy as legal advisers, Quotient Communications Ltd. with Ovum as technical advisers and a team based at University College London as auction design advisers. The UMTS Auction Consultative Group, with a membership of over 40 organisations related to mobile communications, met for the first time in March and will provide a key forum for consultation.
On 18 May 1998, the Minister for Small Firms, Trade and Industry, Mrs. Barbara Roche MP, announced objectives for the auction and the intention to hold it in summer 1999, subject to market developments and to final decisions nearer the time.
Strategic Planning
The UK Spectrum Strategy
The Agency has continued to publish its UK Spectrum Strategy which aims to present a broad
overview of the whole range of spectrum uses - civil and military - and to identify key
future developments both in the UK and at the European and global levels. The third update
of the Strategy was published in June 1998. This will include information on key
developments and technology and on new services and products. It will also summarise work
commissioned by the Agency on the economic impact of radio and the results of three demand
studies covering public mobile communications, private business radio and fixed links.
These studies, which were prepared in close consultation with the industry, and which are
available in full on the Agency's web site, will provide a significant input into the
Agency's spectrum planning in these key areas.
The UK Spectrum Strategy Committee
There have been other significant developments during the year which will enhance the strategic management of the spectrum. Following a recommendation of the Stage 3 Spectrum Review, a new UK Spectrum Strategy Committee has been established to oversee the direction of the UK's spectrum policy, bringing together all those parts of Government with an interest in the management of the radio spectrum, both civil and military.
The Spectrum Management Advisory Group (SMAG)
Ministers also announced the creation of a Spectrum Management Advisory Group (SMAG). The Group has an independent chairman, Dr John Forrest, and ten members drawn from the whole range of users of the radio spectrum, related industries and other representative organisations. The role of the SMAG will be to provide independent strategic advice on spectrum management policy issues, including spectrum pricing, to the responsible DTI Minister and the Agency.
Licensing Activities
With the continuing overall demand for growth in services, licensing and frequency assignment have remained key activities for the Agency's service business units.
Mobile services
Demand for mobile services (Private Business Radio, Public Telecommunication Networks,
Maritime and Aeronautical) has generally continued to be steady, with continued growth for
many licence classes, particularly for public services. The successful devolution of
further licensing activity to the Agency's local offices has allowed closer links to be
built with customers and local knowledge to be applied to making frequency assignments.
This has resulted in a reduction in complaints about frequency sharing and improved
spectrum utilisation.
With the approval of the industry, changes were made in February to the process through which licenses are issued for private paging systems; and a new Private Business Radio Supplier's licence, which rationalised a number of previously separate licence classes, was introduced in April 1998.
Much of the activity in the public telecommunications sector was in preparation for future services and for spectrum pricing, and new licences were issued for public paging services.
Fixed services
There was a strong demand throughout the year for new fixed links from a wide range of
operators wishing to create or develop network infrastructures. With a 57% increase in the
number of assignments in a single year this market has become a significant element of
Agency business, and high priority is being given to bringing new computer tools on stream
to provide the required levels of service.
A new computer system is also being introduced to help cope with the growing demand for coordinating satellites and satellite earth stations. The first phase to facilitate satellite coordination was introduced this year.
Further details of licensing activities in these and other licence sectors will be published in the Radiocommunications Agency Business Review.
European Community Telecommunications Licensing
Directive
The Directive, which was implemented in the new year, is aimed at achieving transparency,
competition and liberalisation in telecommunications services.
The UK implementing regulations set common standards for issuing, varying or revoking licences. Although the Directive focuses on telecommunications, the Agency aims to apply the new standards more widely so as to ensure parity of licensing treatment for all customers. This is being applied more widely as other changes under RULES are introduced.
International Affairs
The Agency continued to play a leading role internationally.
International Telecommunication Union (ITU)
The Agency devoted considerable effort to the preparations for the ITU's 1997 World Radio Conference (WRC-97) and participated in the four-week event, leading a delegation of about fifty people, including fifteen from the Agency. A comprehensive set of European Common Proposals was submitted to the WRC with the UK co-signing all of the proposals. The conference was extremely busy and also very successful. Virtually all of the European proposals succeeded, at least in part.
During the course of the year, the Minister responsible for radiocommunications and telecommunications, Mrs. Barbara Roche MP, agreed to the nomination of Michael Goddard, the Agency's Director of Spectrum Policy, as a candidate for the post of Deputy Secretary-General of the ITU.
Conference of European Postal and Telecommunications Administrations
(CEPT)
The Agency has continued to play a leading role in CEPT. In addition to holding the chairmanship of the Conference Preparatory Group until 1 January 1998, the Agency holds the Chairmanship of the Spectrum Engineering Working Group (Terry Jeacock), held the vice-chairmanship of the Frequency Management Working Group (Graham Dolby) until the end of March 1998 and provides the chairmanship of many project teams.
One particular highlight of the year in CEPT was a special meeting of the Frequency Management Working Group hosted by the Agency in Chester in June 1997. This meeting developed the technical basis to be used in the frequency co-ordination of digital terrestrial television stations.
European Telecommunications Standards Institute (ETSI)
ETSI has created a new Technical Committee on electromagnetic compatibility (EMC) and Radio Spectrum Matters (TC-ERM) and appointed Olly Wheaton of the Agency as its chairman.
CISPR (the international radio interference committee)
The Presidency of CISPR is held by Peter Kerry of the Agency. The need for EMC standards to protect radio services continues to grow. To cope with this demand, the Agency has been pressing for agreement on generic emission standards for both industrial and non-industrial equipment, with considerable success. These standards will form the cornerstones on which future equipment standards will be based.
Research and Development
The Agency spent £2.8m on external research during 1997/98. This expenditure consisted of support for core propagation studies at Rutherford Appleton Laboratory (RAL); propagation research at other locations - e.g. universities; extra-mural research and development looking mainly at emerging areas of technology; and the use of mathematical models for frequency assignment and sharing. Other studies were undertaken in support of international activities.
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