Spectrum Management: Into the 21st Century Annex A - Details of Administrative Pricing

This Annex gives some illustrative examples of how administrative spectrum pricing might be applied under the new regime discussed in this White Paper, subject to Parliament passing the necessary legislation. The precise figures are subject to review in the light of responses to this White Paper and developments in the period up to the introduction of spectrum pricing.

Basic formula: mobile radio

A1 Charges for pbr would be based on a standard nominal sterilised area of a 60 km radius for a standard 25 watt pbr transmitter using 2x12.5 kHz channels. They would vary pro rata with the area and bandwidth. A standard 1 watt on-site transmitter would be assumed to sterilise a much smaller area (0.1% of that for standard pbr) and priced accordingly.

A2 Prices would also depend on the number of users sharing the channel as measured by the number of mobiles compared to the average number of mobiles occupying a channel in the area. At the end of the initial 3 year period (see paragraph A10 below), an exclusive local channel would be priced accordingly at about £3,950 a year for 2x12.5 kHz in a major city.

Basic formula: point to point fixed links

A3 Charges would vary pro rata with the amount of spectrum used and would also depend on availability in accordance with the table below as a measure of the area within which the frequency cannot be re-used.

Table A1
Variation of fixed link charges with availability

A4 Fixed links charges would also depend on the frequency band. They would be higher for links to or from major population centres and in the bands between 4 GHz and 15 GHz, reflecting the pattern of spectrum congestion. In other bands and for other routes, it is not currently planned to increase charges.

A5 Other factors could be taken into account in setting charges and more sophisticated calculations of the area sterilised could be made. However, these could make the charging structure excessively complicated, difficult to apply and harder to understand.

Geographical variation

A6 Prices would vary with geographical location depending on the degree of spectrum congestion.

A7 For mobile radio, the country would be divided into two zones initially:

· mobile region 1 (major cities: London, Manchester, Birmingham);

· mobile region 2 (the rest of the UK, corresponding to combined categories 2 and 3 of the NERA/Smith study), where fees would remain at or below present levels.

A8 For point to point fixed links, the country would be divided into two zones:

· fixed region 1 (links interconnecting or with one end in major areas of population: Greater London, West Midlands, Greater Manchester, Tyneside, Liverpool, Glasgow or Leeds);

· fixed region 2 (the rest of the UK), where fees would remain at or below present levels.

National channels A9 National channels would be priced according to the number of times the frequency could be re-used throughout the UK and taking account of the fact that they would cover a mix of high and low charge areas. The multiplier has been calculated to be 3 times in the case of mobile radio and 30 times in the case of point to point fixed links. The annual licence fee for a national 2x12.5 kHz pbr channel would, on that basis, be about £16,000 at the end of the initial 3 year period.

A10 Spectrum charges would be phased in over an initial 3 year period to a level halfway between current fees and an indicative ceiling set with reference to the least cost practicable alternative for improving spectrum efficiency. They would be introduced at a level that is the higher of:

· double current charges (provided this is below the level at the end of the 3 year period);

· current charges plus a quarter of the increase over the three year period.

and then increased in equal annual steps. After 3 years, the charging policy would be reviewed to assess whether additional increases up to the indicative ceiling are needed.

A11 Table A2 below gives a number of examples of how spectrum pricing, introduced on the basis proposed in this White Paper, would apply. It shows 1995/96 licence fees, the level at which spectrum prices would be introduced, the annual changes and the charges at the end of the initial 3 year period.

Table A2
Illustrative spectrum charges for mobile radio and point to point fixed links

Bold indicate fee levels that are not expected to increase in real terms and may be lower than the figures shown.

1 For a shared 2x12.5 kHz channel, 10 mobiles, 25 watt transmitter (assumed 60 km radius sterilised area). Charge would vary pro rata with these parameters. See text for definition of regions. 2 For a national 2x12.5 kHz channel. Varies pro rata with bandwidth.
3 For a national 2x200 kHz channel. Varies pro rata with bandwidth.
4 For bandwidth of 2x14 MHz, 140 or 155 MBit/second capacity, duplex channel. Charge would vary pro rata with bandwidth. See text for definition of regions

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