1. Introduction

SMAG believes that the availability of wireless spectrum is key to the ‘next wave’ of the Information Age, and is pivotal towards UK competitiveness in the Advanced Digital Economy.

The Advanced Digital Economy will require much greater consideration of:

Wireless technologies can play a huge part in all of these, against an international backdrop of standards, low cost economies of scale, and UK competitiveness. The e-world will cover far more than e-commerce, e-experience and e-government for the few – perhaps e-knowledge, e-learning, e-experience everywhere, under the individual’s personal control.

This paper covers principally the question of objectives, principals and system for spectrum management, as raised in the joint DTI – DCMS invitation for comments, but will relate to the other key policy questions in brief.

2. Background

SMAG was established in 1997 and formalised in the Wireless Telegraphy Act 1998 – only the 3^rd piece of UK Spectrum related legislation in over 100 years. Details on SMAG role and membership are attached (alternatively see SMAG page at www.radio.gov.uk)

There are many spectrum matters that do not need to be incorporated formally into statutes. In this context we welcome the opportunity to respond to the DTI – DCMS invitation for comments on policy formulation.

3. UK Competitiveness

Spectrum-based industries have for over 100 years been very strong in the UK, and SMAG would like to ensure that this continues. Spectrum is the key ena

bler for historically-strong UK industries such as Broadcasting and Mobile Communications. However, there are now signs that with the speeding up of technology and market changes, regulation in this area will need to change to maintain UK competitiveness. Early licensing of 3^rd generation mobile system and broadband wireless services will help this process, but much remains to be done to maintain this momentum.

SMAG believes UK competitiveness and associated efficiency of spectrum use, should be the primary driver for spectrum management. Remarks related to this are based around the following headings:

4. UK Benchmarking

SMAG recommends that spectrum policy should be the subject of a routine competitiveness international benchmarking activity.

It is clear that the opportunities for spectrum release must involve an international dimension, as with many enablers in the Advanced Digital Economy, whether through global standards, R + D, economies of scale or export opportunities.

However, with the imminent release via auction of broadcast spectrum in the USA for no predetermined service (within or beyond broadcast), it is clear they are seeing the benefits of the analogue to digital transition and spectrum release as an economy ‘multiplier’. It may be time to disconnect new spectrum releases from technology and also from potential applications.

The high presence of the defence forces in spectrum relates largely to international agreements, but the ‘peace dividend’ could also provide opportunities for spectrum release and the adoption of more spectrum efficient digital technologies.

Against this backdrop SMAG recommends that UK Spectrum policy is compared via a benchmarking process, every 2 years, with leading Group of 7 countries in terms of:

5. Regulatory Convergence

The Communications White Paper provides an opportunity to address regulatory convergence. Spectrum is more directly related to ‘transport’ or infrastructure regulation than ‘content’ regulation, but it does also play a part in the latter.

In ‘transport’ regulation there are many bodies besides the Radiocommunications Agency (RA), who have influence over spectrum. These include DCMS, ITC (Broadcasting), Radio Authority, DTI, Radio Communications Agency, OFTEL, Home Office (Emergency Services), M.O.D (Defence Forces). In spectrum terms, the balance of public / private interests is invariably interlinked. It is very important to have a single UK view on Spectrum Policy as it is such a key ingredient to UK competitiveness.

It is SMAG’s view that a single ‘voice’ or focus should be identified and a review of the public / private licensing boundaries be undertaken.

In content regulation the laws of privacy, copyright and taste / decency rarely touch on the spectrum matters. It is SMAG’s view that all UK spectrum policy should come under a single regulator for clarity and optimal spectrum use.

It is clear today that the UK Radiocommunications Agency have international policy leadership on UK spectrum matters (e.g. World Radio Conference Policy input and treaty signatures) but do not have equivalence to the US FCC, who would claim to implement more in broadcasting spectrum policies and wider spectrum licensing matters. SMAG recommends that an equivalent role to the FCC should be examined in more detail.

6. Supply and Demand for Spectrum

To optimise the evolution of the Advanced Digital Economy, spectrum should be viewed as a key ingredient. The demand for access to the wireless spectrum is likely to rise significantly in the next four years. SMAG recommends that the use of recent RA 2010 scenario work be used as key inputs to the DTI / DCMS call for comments, in support of the projected demand.

The demand will rise in line with new technologies, innovation and competition. It is however, competition that should be viewed with some sensitivity, as many wireline applications will also be served by wireless, and policy options should be viewed in this context. For example, defining markets for competition reasons, as "wireless only" may become erroneous. Also the options to use wireless may need to be constrained if the relevant spectrum is in short supply. Spectrum pricing and trading is covered more fully in the next section.

SMAG recommends that the access to spectrum should be made a more open process as follows: -

SMAG believes that the current supply of spectrum is co-ordinated well by the RA, but there are improvements that could arise if its singular role was restated and reinforced as part of the Communications Reform White Paper. This reinforcement could be coupled with wider industrial participation, particularly from Broadcast and Defence interests, and from other Government departments and industry. There is much duplication of effort between the Radiocommunications Agency, industrial and trade associations.

SMAG would like to see a single ‘transport’ regulator to encourage the release and enhancement of the total supply of spectrum.

SMAG would also like a review of whether current public / private civil licensing boundaries, and unpriced spectrum assignments are appropriate. Without this, distortions are likely to remain or be enhanced in the UK spectrum market.

7. Spectrum Pricing Policy and Trading

At present the spectrum pricing that does occur is subject to market testing. The most obvious example of this is the resultant one-off 3^rd generation mobile licence fees. However, most licence fees are annual. If market testing is to be introduced further SMAG recommends that UK should be benchmarking other countries to ensure that UK policies are not placing this country at a disadvantage in the global environment.

It would also seem reasonable that within 5 years of the Wireless Telegraphy Act 1998 that a summary of ‘before and after’ price movement is considered for publication.

Spectrum pricing has not been fully implemented (e.g. for broadcast services) and these areas ought to be part of a centralised review, with published results.

Spectrum pricing also relates to licence conditions. In this respect SMAG recommends the following principles: -

Spectrum pricing may today have some imbalances, which need further review. Examples are the ISM band and satellite frequencies.

SMAG has appointed the consultants Aegis to examine the risks of congestion in the 2.4 GHz ISM band, access to which today is free, but open to a multiplicity of applications. The consultants are due to report back at the end of June with some policy recommendations. Distortions of the market may occur if this band is used commercially on a large scale.

Satellite frequencies are a matter for international tests and so do not fall within typical pricing mechanisms. Whilst maximising spectrum revenue is not a key issue – the effect of potential lost terrestrial spectrum revenues and services could be.

SMAG recommends a review of spectrum, which currently has free access.SMAG believes a clearer distinction could be generally made between ‘spectrum fees’ and ‘content fees’.

Spectrum efficiency will be encouraged with spectrum trading. The current legal framework does not allow trading, although forms of quasi trading (e.g. through mergers / take-overs and/or distribution arrangements) do occur. It is SMAG’s view that Spectrum Pricing and Trading should be encouraged in a UK and International context.

8. Use of Radio within the UK

This paper would be incomplete without reference to public issues associated with radio infrastructure. The Stewart report on Health Issues Associated with Mobile Telephony is in overall terms very helpful. It does however leave more uncertainty around site implementation issues. This, coupled with growing public environmental concern leads SMAG to suggest the following to DTI / DCMS

9. Conclusion

SMAG believes that a single "transport" regulator should be created, with singular controls over the total supply of UK Spectrum, including a role in co-ordinating spectrum assignments and implementation.

It is also preferable if spectrum pricing is encouraged and pricing structures are implemented, alongside better publication of current assignments and new or planned releases.

For the Advanced Digital Economy to succeed spectrum needs to be used efficiently and creatively, which current designations do not always encourage. The UK needs a new competitive framework to allow wireless to compete with wireline, and not just wireless with wireless (or worse still communications with broadcasting) when market boundaries are blurring very rapidly. Similarly the framework requires consideration of Internet TV competing with Digital Broadcast TV, and the spectrum regulation issues therein.

The rapid developments in wireless technology could easily run ahead of market requirements for greater spectrum use. The challenge DTI – DCMS will have is to ensure that other countries do not adopt more "spectrum friendly" policies first, and thereby adversely affect UK competitiveness.