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Summary of Responses to the consultation document "Spectrum Pricing: Implementing The Third Stage And Beyond" |
Section 1: Overview Introduction
Section
2: Responses and issues arising
Continuation of the evolution of a spectrum pricing
Private Business Radio
Fixed Links
Public Telecommunications, including CBS
Aeronautical
Amateur &Citizens Band
Maritime
Technology Development
Responses for 2001 Fees and Beyond and general points
Broadcasting
Programme making
Satellite earth stations
Other Links
Longer Term Review
List of Respondents
| 1.1 | The Wireless Telegraphy Act 1998 came into force in the UK and the Channel Islands and Isle of Man in the summer of 1998. The Act 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 radio spectrum management and economic factors into account. It was announced spectrum pricing would initially be implemented in three annual stages: | |
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The first stage, commenced in July 1998, focused on the worst distortions of moving from the previous cost-based fee structure. Fees were increased for the four national mobile telephone networks, who were paying far less pro rata than private business radio (PBR) users, and a new licence class was introduced for on-site private use with lower fees for thousands of small businesses; | |
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The Wireless Telegraphy (Licence Charges) Regulations 1999 entered into force in July 1999 to form the second stage. This stage continued the introduction of charging licence fees on a spectrum priced basis for national operators (not just telephony) and extended spectrum pricing principles to PBR generally, and point-to-point links, such as are used in the telecommunication network infrastructure. These were the licences classes where spectrum congestion was worst and where spectrum pricing had most scope to be used as a spectrum management tool. As a consequence most users who share spectrum paid no more than previous fees and many benefited from fee reductions. The increases were focussed on national networks, exclusive users, and those users in areas and channels affected by spectrum congestion. Significant increases were set to be phased in over 4 years (in response to views expressed in consultation that had taken place) to give businesses an adequate transitional period to adjust. | |
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The third stage, which is now the subject of this consultation exercise, would continue fee increases for the national operators (not just telephony), including extending spectrum pricing to the Channel Islands and the Isle of Man, Common Base Stations and Radio Fixed Access. Increase fees for fixed links in congested areas for inefficient links and decrease fees for efficient links in uncongested areas. Extend spectrum pricing principles to all of the PBR sector, many users in this sector will see reductions in fees and in some cases reducing the regulatory burden by replacing annual licences with 3 yearly licences. | |
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The proposed consultation also included a rationalisation and simplification of the licence classes for the Aeronautical, Maritime, Citizens Band and Technology Development. These sectors are where administrative pricing (ie based on cost recovery) is considered the most appropriate method of managing the spectrum due to international spectrum allocations or to encourage the development and use of radio. | |
| 1.2 | Proposals for the Third Wave were issued in the consultation document "Spectrum Pricing: Implementing the Third Stage and Beyond", which was published in September 1999 and the document requested comments by 31 December 1999. This summary addresses the responses and seeks to answer some of the issues raised. | |
| 1.3 | The proposals were widely circulated to RA's customers, trade Associations and Public Organisations. In addition to reactions given at the RA Roadshows with customers and at other meetings, a total of 22 written responses were received, where specifically requested comments have been treated in confidence. | |
Continuation of the evolution of a spectrum pricing
| 2.1 | When the concept of charging for spectrum on the basis of its economic value and spectrum management was first discussed, the proposals were widely recognised by most respondents to be a logical and fair means of increasing the efficient use of the radio spectrum. The proposals contained in the third stage consultation document takes the initial proposals a stage further by the following proposals and comments have been received as follows; |
| Private Business Radio | |
| 2.2 | Further restructuring of this sector and implementation of spectrum pricing for most of the remaining classes. This included placing these remaining classes within the defined non-congested, congested and heavily congested areas, including further rationalisation to distinguish use between on-site (5km radius) and wider area uses (15-25km radius). We also proposed some deregulatory measures where hospital and emergency paging licences will change from an annual licence to a 3 year licence, with fee reductions accordingly. A new "self select" private business radio class attracting lower prices but lesser protected, shared spectrum has subsequently been proposed. |
| 2.3 | As the proposals for July 2000 mostly affect private paging, we have completed our final details in discussion with the relevant paging trade associations, including the UK Paging Industry Association. They suggested differentiating our products and also suggested three year licences. We have modified some of our proposals accordingly and they have supported the final proposals. No other specific comments were made about this sector, but several respondents voiced their overall agreement to our approach being made being consistent for all land mobile use. |
| Fixed Links | |
| 2.4 | We proposed to continue the plan to increase fees in congested areas but to reward efficient links. In uncongested areas fees were to fall a little further from their 1999 level. In this sector we have continued to refine proposals working with the fixed link representative groups. |
| 2.5 | Only Cable and Wireless commented directly on this sector, and they supported not altering our original plans. No other specific comments were made, but most of the major operators have been kept in touch through our fixed link industry consultation group, which also agreed to pricing additional frequency bands subsequently added on exactly the same basis. |
| Public Telecommunications, including CBS | |
| 2.6 | We proposed to further migrate the levels of
pricing of the wide range of public telecommunications services as the second or third
step change of 4 years of adjusting prices. The proposals reiterated the approach already
addressed in the previous two years towards equivalent relative levels for the amount of
spectrum utilised, adjusted by appropriate modifier scaling factors to address particular
spectrum or sector issues. Additionally, proposals are offered for the pricing of categories not covered in the earlier phases such as cellular telephone services in the Channel Islands and the Isle of Man and some new Band III paging services. |
| 2.7 | Several operators responded in confidence concerning individual aspects of this sector and the Agency has subsequently had private meetings with each major operator to discuss the longer term strategy, the use of modifiers and the use of an average value for all the bands. One operator also requested fees be increased over a longer time period. The most significant issue raised was whether the 1800 and 900 MHz telephony bands should be valued differently. The Agency has responded that this would not be consistent with the policy of averaging values for all land mobile spectrum. This is now a fairly modest value and we propose to complete the fee scale implementation before further consulting with the industry on whether any longer term adjustments are appropriate. One operator also suggested that the fee should only relate to usable channels and not to guard bands. As the guard bands are established by the operators for their own protection the Agency believes all the spectrum allocated should be charged for. On the timescale of implementing changes, we have last year increased this from 3 years to 4, but do not think this is too long a period given the current success of the communications market generally. |
| 2.8 | Further pricing proposals for Radio Fixed Access services were proposed, to start basing prices on spectrum value to be phased in over 4 years. |
| 2.9 | Two responses were received on this point, one from NTL and the other in confidence. Both referred to Government statements given prior to the 1998 Act that changes would not be made immediately and that pricing could impact on development of radio fixed access services. However the Agency checked the statements made and believes that circumstances have now changed and that pricing should now start to be used to encourage efficient utilisation of these bands. |
| 2.10 | On Common Base Stations, it was proposed to continue the next step of implementing differential pricing started in the second stage. |
| 2.11 | No specific comments were received on this class. However the Agency has undertaken further specific consultation with the CBS policy group about keeping to the pricing levels proposed but amending some of the congested areas designated. |
| Aeronautical | |
| 2.12 | Most licence classes involve significant spectrum sharing on an international basis and the Smith Nera study consequently felt there was little scope for the UK to act alone. The overall proposals were therefore to continue to charge the administrative cost of issuing a licence for most classes. The consultation document also noted that the Agency is currently working with the CAA to look at ways to streamline the radio licensing process, with CAA administering the administration of aircraft licensing and collecting fees on behalf of the Secretary of State. |
| 2.13 | Only the CAA and NATS and one private user responded. The Agency has worked with the CAA to further refine class rationalisation and some reductions in fees along the lines introduced in the PBR sector for shared spectrum use. The private user was concerned to ensure a differential is maintained between public and private aircraft radio fees. In fact the result of discussion with the CAA is to maintain the differential proportions but at reduced fees overall. The Agency is however giving some further thought to the less efficient use of some spectrum such as radar, where prices have not been reduced and we may consult further on possible increases for next year. |
| Amateur &Citizens Band | |
| 2.14 | We proposed to retain the radio amateurs fee at current level with the same licence product (at present there are 5 to indicate frequencies and power for different levels of qualification). We also proposed to issue CB licences free to under 21 year olds (in line with amateur) to encourage new interest in the radio industry. |
| 2.15 | Two responses from private individuals raised issues outside the scope of this consultation which have been handled separately. |
| Maritime | |
| 2.16 | As with aeronautical, the scope for the UK to act alone is limited by the international nature of spectrum allocation, except in relation to maritime business radio (CSR). It was proposed to reduce the ships fee from £22 to £20. CSR will remain to be considered as a potential candidate for spectrum pricing in the future, but given the demands on spectrum are not currently acute, no changes are proposed this year. |
| 2.17 | No responses on this sector were received. It is proposed to implement the slight reduction in the Ships licence fee to encourage compliance. A new class for DGPS has been introduced as proposed in the consultation following its previous temporary introduction. |
| Technology Development | |
| 2.18 | It was proposed to reduce the Test & Development licence to £50 per channel per location from £150 to encourage the development of new radio uses and to ensure the Agency is kept in touch with development. |
2.19 |
No written comments were received although the agency has received support for the proposals at various meetings |
Responses for 2001 Fees and Beyond and general points
| Broadcasting | |
| 2.20 | It was proposed to issue further consultation on spectrum pricing at the end of 1999 but the Government are now considering the most appropriate approach in the context of, interalia, developments concerning analogue switch-over and the convergence of broadcasting and telecommunications. |
| 2.21 | Most respondents from the public mobile sector welcome the principle of applying spectrum pricing to Broadcasting and keenly anticipate the further consultation. NTL made some general points ahead of the consultation asking the Agency not to apply pricing to analogue tv spectrum and to be cautious about other use in the sector. The Radio Authority however felt the approach to pricing is well founded and offered some detailed comments for the consultation. The Government has also received some general lobbying about pricing in broadcasting, Finally, The Isle of Man International Broadcasting Company asked the Agency to consider reducing fees for long wave services which are subject to interference. |
| Programme making | |
| 2.22 | Proposals in this sector have been shelved pending more detailed ideas being considered and the wider development of pricing on Broadcasting. |
| 2.23 | Further work is being carried on in conjunction with the JFMG who manage this spectrum for the Agency but no changes are proposed this year. Around twenty responses were received, we will issue more information and a summary of responses when our proposals are finalised and published for further consultation. |
| Satellite earth stations | |
2.24 |
The consultation suggested that satellite ground stations had a value related to spectrum being denied to terrestrial links. Further consultation was proposed, but the Smith Nera work was published. |
| 2.25 | Some members of the satellite link industry group had raised concerns that they felt the approach suggested by Smith Nera was flawed. This concern was picked up and echoed in responses from NTL and from the FEI. Despite there being a technical error in the work, the Agency does not necessarily agree with the approach being generally flawed. The Agency has agreed with the industry group to look at other methods of valuing the spectrum for satellite stations prior to the next consultation. Further discussions with the industry group are proceeding. |
| Other Links | |
| 2.26 | These primarily concern scanning telemetry and private point to multipoint links. It is proposed to make further proposals based on suggestions by Smith Nera |
| 2.27 | The Joint Radio Company and Transco both representing the fuel and power industries commented that the initial work provides a starting point for scanning telemetry subject to some safeguards about the nature of use. CSS Spectrum management Services, representing the water industry, commented by making some suggestions about pricing by station and congestion. The Agency is preparing to have further dialogue on these points for next year. |
| Longer Term Review | |
| 2.28 | The FEI welcomed the Agency’s proposals to take a longer term look at the effectiveness of pricing. They point out that the figures for UK economic benefit are now out of date and gave suggestions for use of the Spectrum Efficiency fund. The Agency is shortly to commence new studies in several sectors, which will be announced shortly. |
Replies to Respondents
Where respondents have raised particular issues, they received formal responses from RA over above this published response.
List of Respondents
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British Telecom |
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BT Cellnet |
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Cable & Wireless Communications |
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Civil Aviation Authority (CAA) |
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Country Landowners Association |
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CSS Spectrum Management Services Ltd (representing the water industry) |
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Federation of the Electronics Industry |
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Isle of Man International Broadcasting Company Ltd |
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Joint Radio Company Limited |
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National Air Traffic Services Ltd (NATS) |
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NTL Group Ltd |
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OFTEL |
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Particle Physics and Astronomy Council |
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Radio Amatuer Old Timers' Association |
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Radio Authority |
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TRANSCO |
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Vodafone |
5 respondents wished their comments to be treated "In Confidence" and are not listed above.
| May 2000 |  |
