Summary of Licence Fee Changes 2003

The Radiocommunications Agency has today announced that new levels of licence fees for some licence categories will come into force on 16 December 2003.

Setting licence fees is an annual process; the changes to existing fees aim to refine current arrangements and enable the introduction of new licence classes. The changes will apply to the UK, the Channel Islands and the Isle of Man.

More details of the licence fee changes are available here.

Detail of Changes

From 16 December 2003, fees will be amended for the following licence classes:

• Aeronautical Navigation Aids and Radar
• Aircraft
• Programme Making and Special Events Link
• Programme Making and Special Events Low Power
• Public Mobile Operator (for digital TETRA public access mobile radio)
• Scanning Telemetry

and the following new licence classes will be introduced:

• Aeronautical Ground Station (Offshore Platform)
• Aeronautical Ground Station (High Frequency)
• Aeronautical Ground Station (Fire)
• Aeronautical Radar
• GSM-R (Railways)
• Fixed Wireless Access (Guernsey)
• Fixed Wireless Access (Jersey)
• Fixed Wireless Access (Isle of Man)
• Self Co-ordinated Links (in the 65 GHz Band)
• Non-Operational Temporary Use
• Non-Operational Development

We have also introduced a facility enabling licence fees above £100,000 in certain licence classes to be paid in stages; and we have extended the 50% discount for safety-of-human-life charitable organisations to all licence classes in the Aeronautical, Maritime and Private Business Radio categories.

Background

The Wireless Telegraphy Act 1998 came into force in the UK, the Channel Islands and the Isle of Man in the summer of 1998. The Act enables the Secretary of State for Trade and Industry, when setting fees for licences issued under Section 1 of the Wireless Telegraphy Act 1949, to take radio spectrum management and economic factors into account. It was announced that spectrum pricing would be implemented in annual stages from 1998.

Each successive year, RA has issued a consultation document seeking views from those affected by the proposed fee changes. Since 1998 we have gradually increased the scope of spectrum pricing principles to a greater number of licence products, and have reduced fees where there is less congestion, where spectrally efficient equipment is used or where there is dynamic sharing of spectrum. Fees have increased in areas of spectrum congestion; these increases have been phased in over a number of years to allow business time to adjust. We have also rationalised and simplified a number of licence classes.

Proposals for this year were detailed in the consultation document ‘Spectrum Pricing: Year Six’, which was published in March 2003 with comments on its proposals sought by 9 June 2003. This year’s proposals aimed to refine current fee arrangements, including arrangements for the application of market-based or incentive prices.

For more information about spectrum pricing, call RA’s Licensing Policy Unit on 020 7211 0514.

Q&A – Spectrum Pricing: Year Six

Q1. What are the new Wireless Telegraphy Act Fees Regulations?

Setting licence fees for radio spectrum has been an annual process since 1998. The proposed amendments to existing regulations aim to refine current fee arrangements (which follow ‘spectrum pricing principles’ (see Q4) and enable the introduction of new licence classes. The changes apply to the United Kingdom, the Channel Islands and the Isle of Man.

This year’s changes are much less significant than those of previous years, and involve no changes to the majority of licence fees. This is partly because this year represents the final stage of our planned implementation of spectrum pricing. In framing this year’s proposals, we have also been careful to avoid any measure that would in any way prejudice the outcome of the wider review of spectrum pricing that is currently under way (see Q6).

Proposals for this year were set out in the March 2003 consultation ‘Spectrum Pricing: Year Six’. After taking account of the responses to that consultation, we published final proposals for final comment (this is a statutory requirement) in October 2003.

Q2. What are the key changes in this year’s regulations?

The key changes include:

• no changes to the majority of licence fees;
• a new facility enabling the staged payment of larger licence fees;
• the introduction of fees for the new GSM-R railway signalling network – this service forms part of a Europe-wide railway signalling system and operates on harmonised radio frequencies;
• the extension of spectrum pricing principles to Scanning Telemetry, phased in over a three-year period to lessen the impact on users;
• rationalised fees for Programme Making and Special Events, to reflect the reduced administrative costs associated with regular use of this spectrum; and
• the extension of the current 50% discount for registered charities that use radio equipment for safety purposes (currently available under certain licence classes) to cover all licences in the Aeronautical, Maritime and Private Business Radio sectors.

The changes also include elements of ‘housekeeping’ necessary to enable the introduction of new services and to support measures designed to simplify and aid customer understanding of radio licensing.

Q3. Why has the proposed new fee algorithm for fixed links not been included?

The Radiocommunications Agency’s March 2003 consultation document ‘Spectrum Pricing: Year Six’ proposed a new pricing formula for Fixed Links licences. (‘Fixed links’ are radio systems that communicate between two fixed points by the use of radio. A link can be conceptualised as a length of wire or cable, made from radio waves.) The formula was not intended to change the overall pricing level for the sector; instead it aimed to adjust the balance of fees between users, increasing their incentive to use less congested frequencies or more spectrally efficient approaches.

After considering responses to the consultation, and the possible longer-term impact on fee levels from the review of administrative incentive pricing that is currently under way in response to the 'Cave Review’ of Radio Spectrum Management, it has been decided not to include this change until the results of the review become available.

A ll responses received to the March consultation did, however, support the general concept of the algorithm, and RA continues to work with industry to develop and refine possible fee approaches for fixed links.

Q4. What is spectrum pricing?

Spectrum is a finite resource and an essential raw material for the knowledge-driven economy and for increasing competitiveness. ‘Spectrum pricing’ allows licence fee charges to be set at a level that encourages the most efficient use of this resource, by taking account of radio spectrum management and economic factors. This approach was enabled by the Wireless Telegraphy Act 1998 (and is maintained under the new regime implemented by the Communications Act 2003).

The 1998 Act permits the Secretary of State to set fees that:

• achieve a balance between availability of spectrum and present and future likely demand; and promotes
• efficient use and management of the radio spectrum;
• economic benefits from use of radio, including to consumers;
• innovation; and
• competition in telecommunication services (including broadcasting).

Prior to spectrum pricing, Treasury Fees and Charges Regulations required fees to reflect costs within each year. The cost of issuing a licence bore no relationship to the amount of spectrum occupied or its economic value. It encouraged hoarding, exacerbating spectrum shortages and imposed economic costs.
Spectrum pricing is also referred to as ‘administrative incentive pricing’ and ‘administered incentive pricing’.

Q5. Why are there separate regulations for the United Kingdom and for the Channel Islands and the Isle of Man ?

In addition to amending regulations that apply to the UK, separate amending regulations have been made for the Channel Islands and the Isle of Man; these islands operate under separate administrative arrangements, and the Communications Act 2003 (including the amendments it makes to the 1998 Act) currently does not apply to them.

The separate regulations are in accordance with the legislative arrangements that currently exist in the Channel Islands and the Isle of Man. Also in accordance with these arrangements, notice of the RA’s intention to amend the Principal Regulations was published in the island newspapers.

Q6. Isn’t there a wider review of spectrum pricing currently under way?

In its response to the Cave Review (October 2002), the Government announced its intention to review the effects of incentive pricing and the model and methodology for valuing spectrum and setting fees. RA (on behalf of the Secretary of State) is in the process of managing an independent study to support this exercise.

The study will review our current pricing regime, and will formulate a set of guiding principles and a theoretical perspective to guide the setting of administrative prices for radio spectrum in the future. The work will also apply this method to make recommendations to set licence prices in broad use categories.
We expect that the review will be published in the near future, and that any changes to the pricing regime resulting from the study will be subject to public consultation.