Consultation: Proposal to apply Administered Incentive Pricing for the 412–414 MHz, paired with 422–424 MHz, frequency bands

  • Start: 03 June 2021
  • Status: Open
  • End: 16 July 2021

This consultation details our proposed annual licence fee for the 2 x 2 MHz of spectrum at 412– 414 MHz paired with 422–424 MHz, which is currently held by Arqiva and Airwave.

We propose that the fee for the 2 x 2 MHz be set at £1,584,000 per year.

We auctioned the 412 MHz spectrum in October 2006. Arqiva was awarded all available lots and was granted a national, indefinite licence with a 15-year initial licence term. Arqiva then traded the licence in 2008 to include Airwave as a co-licensee. The initial 15-year licence period comes to an end in October 2021, from which date an annual licence fee becomes payable.

We usually set fees for spectrum licences in one of two ways. If there is excess demand for the spectrum (i.e. there is more demand for those frequencies than there is supply) we set the fee by reference to the market value of the spectrum. We call this an AIP fee (administered incentive pricing). If there is not excess demand, we set a fee which reflects our spectrum management costs for those frequencies. This policy is intended to give best effect to our statutory duties, including our duty to secure the optimal use of spectrum.

We have assessed whether there is likely to be excess demand for this spectrum in future, and have come to the provisional view that this is likely. We are therefore proposing to set an AIP fee. Our assessment is that Business Radio users are likely to be the highest value alternative users, and therefore this fee should reflect the opportunity cost to Business Radio users of not being able to use the spectrum. We have also considered whether, in light of our statutory duties, fees should be set not at the market value we identify but at some other level. Our provisional conclusion is that setting fees based on our estimate of the market value of the relevant spectrum will best meet our statutory duties.

Taking all the above into account, we propose that the fee for the 412 MHz spectrum be set at £396,000 per MHz per year, therefore totaling £1,584,000 per year for the 2 x 2 MHz. We are also consulting on draft regulations to give effect to these proposed fees. We invite any comments on the proposals in this document by 5pm on 16 July 2021.

We expect to publish our conclusions later this year (and in advance of 5 October).

Responding to this consultation

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