 |
Spectrum Management: Into the 21st Century
|
4.1 The Government agrees with the majority of responses to the consultative document that spectrum pricing reform is necessary and desirable and intends to introduce legislation to remove the link between spectrum management costs and spectrum charges as represented by licence fees. This will enable economic spectrum management tools to be introduced to complement existing regulatory methods. The proposed legislation will include enabling powers to permit both auctions and administrative pricing of radio spectrum. The details, including fee levels and auction procedures, will be contained in secondary legislation to be made under the Bill. Detailed proposals are put forward for comment in this and following chapters.
4.2 The choice between auctions and administrative pricing will depend on the characteristics of the service in question. The Bill will enable the Secretary of State to make the most appropriate selection of administrative pricing or auctions, coupled with regulation, for each use of spectrum or frequency band.
4.3 The Government takes very seriously the concerns expressed about the impact of spectrum prices on businesses, especially small firms. The Government confirms its commitment that spectrum pricing will be driven by spectrum management needs, not revenue raising. The impact of spectrum pricing will be focused on parts of the spectrum and geographical regions where there are problems in meeting demand. Charges will be set at the lowest level judged sufficient to achieve spectrum management objectives. Auctions will be used selectively. The question of how the proceeds of spectrum pricing will be deployed is dealt with later in this White Paper.
4.4 In setting spectrum prices, the Secretary of State will have regard to a number of aims including:
· efficient use of spectrum. This could involve users relinquishing unused or underused spectrum or greater sharing of channels;
· planned migration to less congested frequencies;
· the introduction of new spectrum-efficient technology, such as trunking or more efficient coverage through more intensive frequency re-use;
· use of alternative media, such as cable or optical fibre where this makes economic and spectrum management sense and is consistent with telecommunications policy.
4.5 Pricing policy will also aim to:
· ensure that radio continues to be used by businesses of all sizes to generate wealth and jobs and to improve competitiveness. Spectrum pricing at the levels proposed will help ensure fairer and more open access;
· promote wider Government policies, for example in telecommunications and broadcasting, that enhance competition and further widen choice;
· safeguard continuing access to spectrum by the armed forces and essential public services, such as police, fire and ambulance, for their operational requirements whilst providing suitable incentives for spectrum efficiency;
· take account of the special role and reliance on radio of charities providing safety-of-life services;
· place due weight on scientific, social and cultural applications of radio and protect the continuing diversity of radio use within the community.
4.6 A framework of progressive spectrum pricing will be put in place that is:
· predictable in order to help users plan ahead. There will be transitional arrangements to avoid disrupting existing business plans and investment already committed to by users;
· transparent so that users can see that it is fair and non-discriminatory, irrespective of the user's size or status, and in accordance with applicable international and EU obligations;
· easy to understand so that users can make appropriate economic choices guided by clear market signals. It would be counter-productive if pricing were excessively complex;
· workable so that it is reasonably straightforward to administer.
4.7 The legislation will not specify the detail of spectrum pricing. As at present, there will be a broad power to set fees. Details of charges to be paid will be contained in, and updated from time to time by, regulations subject to Parliamentary approval. There will also be an express power to auction spectrum in accordance with procedures to be set out in regulations or published in notices. This will provide flexibility to respond to future trends in the pattern of demand for spectrum and future technical innovation, the exact nature of which cannot be foreseen at this time.
4.8 The Government accepts that Parliament, radio users and others who may be affected have a legitimate interest in its detailed plans for spectrum pricing, which services are planned to be subject to administrative pricing, as opposed to auctions, and the likely scope, nature and level of administrative charges. As a contribution to its thinking on these important matters, the RA commissioned an in-depth study into the design of a spectrum pricing regime having the aims and characteristics set out above. The study is being published by the RA at the same time as this White Paper and forms the basis for the detailed pricing proposals summarised in following chapters. The Government would welcome views on these.
4.9 It should be stressed that there may have to be changes to reflect developments between the study, which was carried out in late 1995, and the introduction of spectrum pricing.
4.10 The Government hopes that this White Paper will promote wide-ranging discussion of how spectrum pricing should be applied and especially on the extent to which licences fees need to change. The Government will take into account, and be guided by, the response to this White Paper in framing the legislation and the secondary legislation to be made under it. There will also be further opportunities in due course to comment on detailed fee proposals through the RA's normal consultative procedures.
4.11 The consultative document stated that public sector users would pay for spectrum on a comparable basis to the private sector, but that safeguards would be put in place to ensure that the essential users, such as the armed forces and the emergency services, continued to have access to sufficient spectrum for their operational requirements.
4.12 The Government continues to believe that the public sector, which is a major user of radio, should have the same incentives for spectrum efficiency as the private sector. Accordingly, public sector users will pay administrative prices on a comparable basis to the private sector but will not be required to bid for spectrum in auctions. In order to provide the safeguards mentioned above, the Government’s control of spectrum allocation will ensure that the bodies concerned continue to have access to sufficient spectrum to fulfil their operational needs. Account will also need to be taken by both the Department concerned and HM Treasury during the Public Expenditure Survey of the increased spectrum prices that will be paid by the armed forces, emergency services and certain local authority services that have safety-of-life responsibilities. Such bodies should release any spectrum they do not require as this will increase the efficient use of the spectrum and result in financial savings.
4.13 The Government recognises that certain charities which provide safety-of-life services and make extensive use of radio, such as the Red Cross, St John's Ambulance Brigade and the RNLI, are a special case. At present, such charities benefit from concessionary licence fees. The legislation will provide for such concessions to continue to be granted under the new regime.
4.14 The Government understands the concerns in some responses to the consultation that greater reliance on market forces might lead to anti-competitive practices. Apprehension was expressed that major players in the market might hoard spectrum to exclude competitors or acquire a monopoly of spectrum for a particular service.
4.15 Regulatory powers will continue to be available and will be used to guard against this. The RA is committed to developing competition and maintaining diversity in radio use. For example, it stated in its first spectrum strategic plan that, in any new market, it would endeavour to provide sufficient spectrum to permit the sustainable operation of at least three separate competing operators. Licensing powers could be exercised against a user that was hoarding spectrum (so-called ‘use it or lose it’ policy) or that acquired an undue concentration of licences for a particular service. In addition, licensing policy will be complemented by the provisions of general competition legislation.
4.16 Against this background, the Government believes that pricing will actively promote competition by making spectrum available for additional users.
4.17 Although the aim of spectrum pricing is not to generate revenue, it is likely to produce licence fee income in excess of the administrative costs of spectrum management. In order to reinforce the effects of pricing, it is intended that provision will be made through legislation to give financial assistance to radio users in order to accelerate desirable changes in spectrum usage. For example, payments could be made to assist users to move to alternative frequencies in order to clear a band for a new application or higher value service. Payments could also encourage users to re-equip with more spectrum-efficient technology before existing equipment is fully depreciated. There would be criteria to ensure that payments were justified on value for money grounds.
4.18 This scheme will reinforce the effects of spectrum pricing by accelerating band clearing, planned migration and re-equipment. It will enable the substantial economic benefits that can flow from new services to be realised sooner than they would otherwise be. Funding could also be used to promote spectrum changes that might not be achievable, or achievable as quickly, by market forces alone. An example would be the band reversal in pbr spectrum to align frequency use in the UK with the rest of Europe in order to avoid serious interference, or where operators have large sunk costs and need extra incentives.
4.19 Another possibility is for higher levels of investment by the RA in:
· programmes of research into improved spectrum management tools and methods;
· enhancing enforcement and monitoring techniques;
· other related areas of the RA's activities that would be beneficial for radio users and others.
4.20 Such proposals will have to offer value for money. They will be considered by Ministers and assessed against relevant performance criteria in the context of the RA's annual corporate plan.
|
