Summary of Responses to Consultation Document "Spectrum Pricing : Implementing the Second Stage "Issued by the Radiocommunications Agency in September 1998 |
Contents :
Section 2 : Questions arising from responses to the proposals
Section 3 : Longer Term Strategies for Spectrum Pricing
The Wireless Telegraphy Act 1998 came into force in the UK and the Channel Islands and Isle of Man last year. The Act has enabled the Secretary of State for Trade and Industry to set fees for licences issued under Section 1 of the Wireless Telegraphy Act 1949 to take into account the value of radio spectrum. Announcements were made to introduce spectrum pricing in three stages:
Proposals for the Second Wave were issued in the consultation document "Implementing Spectrum Pricing, the Second Stage", which was published in September 1998 and the document requested comments by 31 December 1998. This summary addresses the responses and seeks to answer some of the issues raised.
The proposals were widely circulated to RA’s customers, Trade Associations and Public Organisations. In addition to many reactions given at the RA’s road shows with customers and at other meetings, a total of 23 written responses were received that are available on the RA web site at :
www.radio.gov.uk
and other written comments were submitted, but with the specific request that they be treated in confidence and are not therefore publicly available.
Section 1 : Overview Summary
Continuation of the evolution of a new fee regime
When the concept of charging for spectrum on the basis of its economic value was first discussed, the proposals were widely recognised to be a logical and fair means of increasing the efficient use of the radio spectrum. The proposals contained in the second stage consultation document takes the initial proposals a stage further by ;
The first wave resulted in many PBR radio users paying less for their services, and the proposals in the current consultation takes this readjustment of fees further.
The responses covered a wide area of issues with the vast majority strongly supporting the general principles raised. The detailed questions raised most often concerned:
- the definitions of congestion;
- the use of any additional revenue generated as a result of spectrum pricing;
- the use of modifiers and escalators; and
- the longer term strategy with regard to future spectrum pricing policies.
As detailed below, the RA have noted these comments and will take them into account in setting the further stages of implementation. With its working groups it will look at setting the criteria for introducing further congestion criteria in future years, and at how modifications and escalators are applied.
The Agency is now considering how the power to make grants to promote efficiency, under Section 5 of the 1998 Act, might be used . In doing this, it will consult the Spectrum Management Advisory Group appointed by the Secretary of State to advise on strategic spectrum management policies.
Apart from these detailed issues, the strong consensus of public support is a strong basis on which to prepare the next stage of spectrum pricing implementation.
Section 2 : Questions arising from Respondents
Several of the responses requested clarification of the methodology of congestion and sought guidance about the introduction of coverage factors when determining congestion levels.
RA agree that coverage could be used as a factor for determining congestion, but this proposal would have to be examined in some detail and would therefore take place after the wave 2 implementation. The initial proposals being implemented only tackle the worst congestion levels.
The question was raised whether modifiers other than for congestion could be appropriate for PBR.
RA consider that, except for those private services that may suffer from continental interference or are congested, other modifiers would not be appropriate. Most fees are being decreased, and it is only an issue for those exclusive channel users who face interference or restriction, and there is heavy demand for most private exclusive channels.
It was also suggested that escalators for new large private systems (e.g. TETRA), be introduced to assist with the large start up costs.
RA concede that they may be appropriate depending on the size of the system and efficiency of the system, and have made additional proposals for including an escalator scale in the new regulations at the Secretary of State’s discretion.
In relation to public mobile networks, further discussions have been taking place about the use of modifiers to the eventual fee levels. The range of modifiers being supported now include choice and diversity, fragmentation of channel use and propagation.
In response to a number of representations about the infrastructure and roll-out costs on new networks, the RA has agreed to extend the implementation period from three years to four, and each year’s increase takes into further account the degree to which the RA considers modifiers apply. Thus the increase in 1999 will be rather less than suggested in the consultative document.
Questions had been raised on the pricing of converged technologies, primarily in the fixed / mobile area, and also the method for defining pricing for data services.
These will not affect the 1999 Regulations, but will be addressed in a new fixed-mobile working group that has been established by the RA.
Some of the responses suggested that excess revenue generated under spectrum pricing should be used for research and training schemes in the use of spectrum, as well as selective grants. The Agency and its advisors are currently considering how the powers in Section 5 of the WT Act 1998, which enables the Secretary of State to make grants to promote the efficient use or management of the radio spectrum, could be used.
As Ministers explained during the passage of the Wireless Telegraphy Bill, there can be no question of hypothecation of the proceeds of spectrum pricing or any automatic entitlement to financial assistance. In any event, any expenditure will need to be agreed with the Treasury and will need to meet the requirements of value for money and additionality.
RA would be happy to consider any proposals put forward provided that they meet the criteria in Section 5 of the Act and the requirements set out above, and also that they comply with EC law..
The issue of part payment for licences where additional services are requested to be added to the licence after the renewal date was raised.
The Agency propose that in future where new charges would lead to an increase in the fee calculated for a special licence, that fee will be chargeable from the next licence renewable date. However a new facility will allow the fee for many licences to be apportioned on a basis of one twelfth of the annual fee for each complete month or part thereof and this will assist renewal dates for different licences to be harmonised for common billing purposes and it will permit short period licences to be issued.
If a licence is surrendered part way through its life, the Agency will not refund for the outstanding period, as the spectrum released does not become immediately available for other use.
Section 3 : Longer Term Pricing Strategy
Several of the responses requested further information on longer term spectrum pricing strategies. It was noted that the use of the spectrum would need to be continually monitored and relevant factors be taken into account when considering future changes to fee structures. This would apply in the case of the congestion definitions either increasing or reducing.
The Agency does not see spectrum pricing ending after the implementation of the third wave, but rather as an ongoing and evolving tool for effectively managing the spectrum. Should there be a need for further fee changes, a further consultation will be undertaken. The RA intends to convene further meetings with its industry and user working groups to devise final implementation and post implementation pricing proposals, but agree that in principle it would be desirable to have a measure of stability.
Where respondents have raised particular issues, they will receive formal responses from RA over and above this published response.
LIST OF RESPONDENTS TO CONSULTATION DOCUMENT
B.T.
Civil Aviation Authority
Cellnet
Cognito
CSS Spectrum Management Services Ltd
Federation of Electrical Engineers
Hi - Tec Communications Ltd
Institute of Electrical Engineers
Isle of Man Government
JRC
Motorola
NATS
National Farmers Union
NTL
OFTEL
On - Site Communications Association
PPARC
RAM Mobile Data
Simoco Country Landowners Association
Southern Electric
United Kingdom Major Ports Group
Vodafone
| Radiocommunications Agency May 1999 |
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