Economic Impact Study - Update July 2000

In 1995 and 1997 the Radiocommunications Agency commissioned studies to ascertain the contribution of the radio industry to the UK economy. This work is now being updated and extended.

The 1995 and 1997 studies made some use of economic measures of benefits to producers and consumers called producer and consumer surplus. Current work is aimed at using these measures to estimate the size and benefits to the businesses and individuals who make up the UK economy.

Producer Surplus

Producer surplus is an economic measure of company profits. It differs from accounting measures chiefly in that it includes as a cost the returns that could have been earned by the company if it had invested its money in the next most profitable use, what is called the "opportunity cost" of capital.

To measure producer surplus RA, with help from DTI, has selected a sample of over 1,500 companies in the radio industry. Published financial accounts and estimates of producer surplus are being provided to the Agency by Jordan & Sons Limited of Bristol.

Consumer Surplus

There are two types of radio consumers: companies that use radio to help conduct business, and individuals who use radio services for their own intrinsic value. In each case consumer surplus is the total value that consumers place on the services they receive less what they pay. The Agency has commissioned six surveys to estimate consumer surplus with respect to:

Amateur radio and citizen’s band (MVA with Aegis)
Cellular mobile and paging (Hague Consulting Group and Accent Marketing & Research)
Fixed links and satellite links (steer davies gleave)
Maritime and private aviation (steer davies gleave)
Private mobile radio and common base stations (MVA with Aegis)
TV viewers and radio listeners (MVA with Aegis)

Interviewers will approach companies and individuals to help with the survey. Where interviews are face-to-face the interviewer will carry a letter of authorisation saying the interview is on behalf of the Agency, identifying the interviewer and giving details of how to contact the market research company if there are any questions. The interview itself will last about 10 to 15 minutes. The interviewer will ask a number of general questions and will then invite the person interviewed to choose between a number of alternative radio services.

Results from the interviews with individuals will be strictly in confidence and the RA will not receive the names of individuals, nor any other information that would enable the Agency to ascribe any results to an individual.

Neither will the survey company identify individual company results for the RA unless the company agrees.

Dissemination of Results

It is the intention of the Agency to publish the results of the current work on the economic value of the radio industry when it is finished. Company representatives and individuals will also have the opportunity to comment at public meetings.