New Legislation on the Right Wavelength for Business, Consumers, Jobs

DTI Press Release - 18 March 1998

Important new legislation that will boost wealth creation, innovation and jobs received Royal Assent today. The Wireless Telegraphy Act will provide a modern framework for management of the radio spectrum - the first major modernisation of the radio licensing framework for almost half a century.

Welcoming the new measure to the statute book, Barbara Roche MP, Minister for Small Firms, Trade and Industry said:

"Radio is one of the most dynamic and successful sectors of the economy. It contributes over £13bn a year to the economy, supports over 400,000 jobs and delivers£12-15bn a year of consumer benefits and competitiveness gains. It is growing at a rate of £1bn a year and 1,000 jobs a week.

"All this depends on the availability of the industry's raw material, radio spectrum. The spectrum is a finite resource. Unless we manage it effectively, we will not realise the full economic benefits and competitiveness gains from this successful and dynamic sector of the economy.

"The Act will provide new tools to manage the spectrum more effectively and so provide wealth, jobs and economic opportunities that will benefit consumers and businesses of all sizes. It will help maintain the UK's lead at the cutting edge of the communications revolution. The process of setting fees will be open and transparent. The Radiocommunications Agency is working closely with users to develop proposals. I am grateful to the industry for its support and constructive approach.

"As I announced in the House, the first regulations under the new regime will reduce fees for over 20,000 localised 'on site' mobile radio systems. This will provide a more level playing field in mobile communications and be fairer for small business users of radio.

"The Act will be good for business, good for consumers, good for jobs."

Notes for Editors

1. The Wireless Telegraphy Act l998 received Royal Assent today - the first day major new DTI legislation has reached the statute book since June 1996.

2. The Act will provide a modern framework for management of the radio spectrum. It substantially revises and updates the arrangements for setting fees under the Wireless Telegraphy Act l949; it thus represents the first major modernisation of the radio licensing framework for almost half a century.

3. Under the l949 Act, charges for Wireless Telegraphy Act licences were based on the administrative costs of the Radiocommunications Agency, (rather than the economic value of the spectrum which is used by licensees.) This provided little or no incentive for licensees to use radio spectrum efficiently and could lead to hoarding. It also distorted the market in favour of large operators. For example, small taxi operators currently pay around thirty times more for an equivalent amount of spectrum than major telecommunications operators.

4. As demand for the radio spectrum continues to grow rapidly, it is important to ensure that users have every incentive to use it as efficiently as possible. The new Act will play a vital role as the new charging powers can be used to balance supply and demand.

5. Business will also benefit from a fairer and more rational fee regime under the new powers. Under the new legislation fees can only be increased where it is necessary for spectrum management reasons. The Secretary of State will be required, in setting fees, to have regard to various factors, including spectrum congestion and the promotion of competition.

6. The Act will come into force in three months times. The first set of fees based on the new powers will be introduced shortly afterwards. The Radiocommunications Agency has already consulted extensively about the fees which it proposes to introduce under the new powers. The Agency issued a consultation document "Implementing Spectrum Pricing" in May 1997 and has been continuing its dialogue with the industry since then.

7. During Report stage of the Wireless Telegraphy Bill on 11 March, Barbara Roche announced that, following discussions with the four main mobile telecommunications operators, new fees have been agreed for l998/99. As a first step towards implementing the new pricing regime, it is proposed that the four operators will pay a single percentage increase of 120% (compared to the fees they would have paid under the current Regulations.) The other change that is proposed in the first Regulations is to introduce reduced fees for users of on-site private business radio systems. There are some 22,000 on-site systems that currently pay on the same basis as systems that cover a wide area. At present the minimum fee is £140, increasing progressively with the number of mobiles used so that, for example, a licensee with 26-60 mobiles would currently pay £500. From July there will be a flat fee of £125 for each on-site system, irrespective of the number of mobiles used. The majority of users will therefore benefit from a significant reduction.

8. The new Act will also give Ministers the power to hold auctions for WT Act licences. During the passage of the Bill through Parliament, Ministers have made clear that existing operators will not be required to enter auctions for the right to provide their current services within their existing spectrum assignment. The Radiocommunications Agency has appointed financial and other advisers to advise on the possible auction of spectrum licences for Universal Mobile Telecommunications Service (UMTS), the third generation of mobile telecommunications. This is a key step towards the Government and industry's shared goal of early licensing certainty for UMTS.

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