Proposal by the Radiocommunications Agency (RA) for the Introduction of the On-site Private Business Radio Licence ("OSPBR") to the Channel Islands and Isle of Man

1. Introduction

1.1 The OSPBR licence was introduced int the UK on 20 July 1998. It is proposed that OSPBR licences be introduced into the Islands in either September or October 1998. Existing on - site services will be transferred from Private Mobile Radio (Standard) licences to OSPBR licences. An on -site service is a radio system with a limited operating area normally up to 3 km in radius from a specified location.

1.2 The reason for introducing the new licence is that it is part of the first wave of spectrum pricing, using powers granted under the Wireless Telegraphy Act 1998 ("the 1998 Act"), to change the way fees are charged, to provide incentives to use spectrum more efficiently and to remove distortions in pricing. Orders in Council (which entered into force on 24 July) have extended the 1998 Act to the Islands. It was not possible to introduce the OSPBR licence to the Islands until the 1998 Act entered into force there. By rationalising licence class structures RA, acting on behalf of the Secretary of State, is helping to meet the commitment for better regulation by developing a range of licence classes which are easier for customers to use.

1.3 The effect of the changes will be to encourage more efficient use of the radio spectrum, encourage migration from the most congested to less congested spectrum and encourage the use of more spectrally - efficient equipment. The most marked distortion arises from the fact that some on-site users of private business systems pay many times more for equivalent amounts of spectrum than others. There has been wide consultation with representatives of the mobile radio industry and user groups about these and other, longer term proposals. A consultation paper specifically addressing the implications of spectrum pricing was issued by RA in March 1997. None of the respondents challenged the principles of spectrum pricing.

2. Extent of Change

For PMR (Standard) licences, the fee was levied on a sliding scale, based on the number of mobiles in use, starting at £140 per 10 mobiles. This scale covered any type of use and any number of systems, irrespective of being on-site or wide area. This long established method has resulted in a considerable distortion in that single on -site users of Private Business Radio (e.g. high street shops) were in effect paying many times more for an equivalent amount of spectrum than users of wide area (e.g. taxi companies). The new On -Site class will have a simple flat rate fee of £100.00 per system per site. In future Regulations, more differentials may be included (e.g. congestion factors) and other new classes of Private Business Radio licence will be introduced to replace the current range of classes.

3. Implications for OSPBR Users

3.1 OSPBR will be used in a variety of areas, such as industrial or commercial sites, leisure or amenity complexes as well as certain charities and some health authorities. It is estimated that 75 % of OSPBR licensees will benefit from at least a £40.00 reduction in fee, with some having larger savings.

3.2 For any licensee with multiple on - site systems or a mix of on - site and wide area (currently charged together in one licence fee), it is estimated that just under half of them would benefit from a reduction in fees and the remainder (i.e. 14 % of all licensees) would face an increase. The increases will, for smaller multiple sites (i.e. those licensees with two or three sites), range from £60 - £160. This reflects the new rationale of Spectrum Pricing that those who use the most spectrum pay most for its value and quantity.

4. For further information on these proposals, please contact :

Graham Noyce
Radiocommunications Agency
Wyndham House
189 Marsh Wall
London E14 9SX
England

Tel: 020 7211 0198

July 1998