New Consultation to Further Breakdown Distortions in Radio Spectrum Pricing

DTI press release - 25 September 1998

The Radiocommunications Agency today launched a consultation on proposals for implementing the second wave of radio spectrum pricing under the Wireless Telegraphy Act 1998.

Today's proposals build on principles set out in the Act which seek to redress the price distortions caused where radio licence fees are calculated on the basis of recovery cost for issuing the license, rather the value and amount of radio spectrum used. This caused smaller radio users to pay comparatively more for their licenced radio spectrum than larger users.

The new proposals set out to develop new pricing mechanisms for licensing public telecommunications, fixed point-to-point links and private business radio.

Commenting on the proposals Telecoms Minister Barbara Roche said:

"The principles which we established in the Wireless Telegraphy Act 1998 have already started reducing charges for many small business radio uses. I want to continue to remove distortions in radio licence costs so that users pay the economic value for the radio spectrum that they use. These principles will also promote the quicker introduction of new technologies which use the radio spectrum more efficiently."

Changes introduced in the first wave of administrative pricing, which came into force on 18 July 1998, resulted in lower licence charges to on-site private business radio users which benefited many smaller companies.

The second wave proposals are planned to apply from July 1999, with some fees being phased in over at least three years. They are based on detailed ideas worked out with representative industry and user consultative working groups, following responses to an earlier consultation paper issued in May 1997, which set out general principles for administrative spectrum pricing based on spectrum management considerations. The consultation paper seeks the views of business radio users to this detailed approach.

Notes for editors:

1. Under the Wireless Telegraphy Act 1998, the level of licence fee set must have particular regard to promoting:

use and management of the radio spectrum;
any economic benefits, including to consumers;
innovation and new technologies;
competition in telecommunication services.

2. Radio services which use spectrum efficiently may see licences fees reduce (this has already started for on-site private business radio from July 1998). Most fees would also reduce for use of non congested bands and locations.

3. For services in congested areas, or for operators with multiple services, there would be some increase, depending on degree of use or exclusivity of channel assignment. For example, a taxi service in London might see an increase of licence fee of 20 pence per week per taxi, whilst those in other areas where there is less demand for radio services might see a similar decrease.

4. The major changes for public services would be phased in over at least three years and be based on the mechanisms agreed with the working groups, representing the major licensees. However, such increases should only have a minimum impact on subscribers of public services.

5. Views on the proposals must be submitted to the Radiocommunications Agency Licensing Policy Unit at the Radiocommunications Agency, New King's Beam House, 22 Upper Ground, London SE1 9SA, by 31 December 1998. e-mail: des.daly@ra.gsi.gov.uk

Copies of the proposals are available from the same address, or here.

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