Spectrum pricing for terrestrial broadcasting

13 March 2013

1.1 This Statement sets out our decision to proceed with proposals made in our Consultation on 'Spectrum pricing for terrestrial broadcasting' (the 'Consultation'), which was published on 13 March 2013 and which closed on 23 May 2013.

1.2 The Consultation referred back to a statement published in 2007 which set out the principle that charges should apply to spectrum used for broadcasting in the same way as for other spectrum uses. The statement said that a fee based on the opportunity cost of using the spectrum - i.e. Administered Incentive Pricing (AIP) - would provide an appropriate pricing mechanism. We said in 2007 that AIP should be introduced for terrestrial broadcasters from the end of 2014.

1.3 However, our Consultation proposed delaying the introduction of AIP for digital terrestrial television (DTT) until material progress had been made on the implementation of our strategy for UHF spectrum, implying that AIP might be introduced in around 2020. We proposed that fees reflecting the cost of spectrum management should apply instead i.e. 'cost-based fees'.

1.4 In addition, we said that AIP was not applicable to spectrum used for DAB radio or for local TV because there was no excess demand for the frequencies used by these licensees. As for DTT, we proposed that cost-based fees should apply.

1.5 We asked stakeholders whether they agreed with our conclusions. After careful consideration of the responses we have decided that:

  • We will introduce charges for the use of spectrum for broadcasting from the end of 2014;
  • However, in relation to national digital terrestrial television (DTT) we will not - for now - introduce charges based on the opportunity cost of using the spectrum (AIP). Instead, we will apply a pricing mechanism to reflect our spectrum management costs (cost-based fees);
  • We will apply this pricing regime until we have materially progressed our proposals for the future use of the UHF spectrum. We intend spectrum charges for DTT broadcasting to be adjusted to AIP, based on the true opportunity cost of the spectrum at that time, and therefore expect AIP to be in place by around 2020;
  • AIP will not be applied to the use of spectrum by either DAB radio or local TV broadcasting. As for DTT, we will instead apply cost-based fees.

1.6 We will consult later this year (2013) on how cost-based fees will be introduced for DTT and local TV. In relation to DAB radio, we do not expect to consider how charges will be introduced until after the Government has announced its decisions on digital radio switchover.