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Digital Dividend Review: band manager award

Executive Summary

Introduction

1.1 This consultation document sets out proposals for the award of part of the spectrum freed up for new uses by digital switchover (DSO). We call the spectrum made available by DSO the “digital dividend.” The UK’s digital dividend has been the focus of our Digital Dividend Review (DDR) since we launched it in 2005 (-1-).

1.2 There are two distinct categories of spectrum in the digital dividend: the spectrum that will be cleared of terrestrial television by the end of 2012 (cleared spectrum) and capacity available within the spectrum that will be used to carry the six digital terrestrial television (DTT) multiplexes after DSO (interleaved spectrum). This document is concerned with the interleaved spectrum, so called because not all of the spectrum in any particular location will be used for DTT and so is available for other services on a shared (or interleaved) basis.

1.3 This document is one of three separate consultations on implementing the digital dividend awards. Two other consultation documents set out our proposals for the detailed design of the award of the cleared spectrum (-2-) and of the award of geographic packages of interleaved spectrum suitable for local television (-3-).

1.4 Our objective for the DDR is to maximise the total value to society that using the digital dividend is likely to generate over time. It is not our objective to raise revenue for the Exchequer, nor is this a consideration that we can take into account given our statutory duties.

Programme-making and special events

1.5 Users of spectrum for programme-making and special events (PMSE) comprise a wide variety of organisations and individuals, including many thousands of business and professional users in broadcasting and entertainment. We recognise the contribution that PMSE users make to the interests of both citizens and consumers.

1.6 The way in which PMSE users access spectrum is therefore a very important issue. This document makes proposals for how PMSE users can continue to access spectrum while allowing other important uses to emerge and flourish.

1.7 Our general approach to spectrum management is to rely more on the market and less on regulation as the way to promote the best use of spectrum. This is because we want to give users the flexibility to decide how spectrum should be used and to change that use as technologies and consumers’ interests change. But we also recognise that PMSE is in a different position to other potential uses of spectrum. PMSE users are disparate and fragmented and currently face difficulties coming together to aggregate their demand for spectrum. This problem of coordination means that any attempt to move to a market-based approach to spectrum access in the short term could lead to significant disruption for PMSE users and possibly market failure.

1.8 Our view remains that it is right to move to a market-based approach and that this is very much in the interest of citizens and consumers. But we must achieve this in a way that both avoids significant disruption and helps to increase PMSE users’ own ability to participate in a more market-based world.

1.9 We must also be mindful of the risk that regulation leads to unintended consequences and does not achieve the desired outcome. This means that we need to be careful to intervene only where necessary and to be mindful of the potential for our decisions to have negative as well as positive consequences.

1.10 We set out how we would approach this in the DDR statement published on 13 December 2007 (-4-). We decided that we would award a single package of interleaved spectrum via a comparative selection process (also known as a beauty contest) to a licensee that would act as a band manager. To help PMSE users with the transition to market mechanisms, we would use criteria designed to ensure that the band manager’s interests were aligned with those of PMSE users. The band manager would pay a charge for the spectrum based on Administered Incentive Pricing (AIP) and would be able to earn revenue by charging its customers for access. But regulation would ensure that it had to meet reasonable demand from PMSE users on fair, reasonable and non-discriminatory (FRND) terms. So long as these obligations were met, the band manager would be able to allow others to make use of its spectrum. We also decided that channel 69 should continue to be available for PMSE use throughout the UK on a licensed basis and that we would promote greater licence-exempt use of channel 70 for PMSE, in the interests of community users.

1.11 The proposals set out in this document provide for the detailed implementation of our approach. We have no doubt that they will stimulate further debate. We look forward to continued dialogue with PMSE users and other stakeholders in order to refine our plans as we move toward implementation.

1.12 In formulating our proposals, we have been mindful of the impact they could have on PMSE users. This recognises our desire to avoid significant disruption. Nonetheless, our proposals will lead to change, and PMSE users will need to adapt to these changes. In part, this will involve migrating from higher to lower-cost spectrum. Where this is the case, we will work with PMSE users to help them identify suitable alternatives and ways to minimise disruption to their ongoing activities. We welcome views on how best we can do this.

Availability of interleaved spectrum for PMSE after DSO

1.13 We are aware that professional users of wireless microphones are concerned about the amount of interleaved spectrum they will be able to access in certain locations after DSO. These users also argue that the post-DSO configuration of interleaved spectrum may require investment in new equipment, particularly for touring productions.

1.14 We do not address this specific issue in this document, which is concerned with the future institutional arrangements for all PMSE access to all spectrum. But we continue to work on the basis that there should be broadly sufficient capacity in the interleaved spectrum to be awarded to the band manager to allow existing PMSE use to be accommodated. We will continue to work with affected stakeholders to address their concerns and help them to identify ways to manage the transition through DSO.

1.15 Moreover, we wish to reassure PMSE users that we will work with them to ensure a smooth transition toward a market-based approach to spectrum access. In line with our key objective of avoiding significant disruption, we will ensure that there is continuity of service to enable PMSE users to access spectrum suitable for their needs.

Detailed proposals

1.16 Table 1 sets out a summary of our detailed proposals for this award.

Table 1. Summary of proposals for the band manager award
Available spectrum Our proposals for consultation
Spectrum included in the band manager award We propose to include most of the spectrum currently allocated to PMSE in 75 distinct bands between 47.55 MHz and 48.4 GHz
Licence conditions Our proposals
Type of technical licence conditions We propose to define the available spectrum in the form of block-edge masks (BEM)
Multiplex ownership and interoperability

We propose to include certain restrictions on ownership in relation to use of interleaved spectrum to operate new DTT multiplexes. These would reflect the similar regime under the Broadcasting Act 1990 (-5-) as amended (e.g. preventing religious or political bodies from holding licences for this purpose)

We also propose to facilitate technical interoperability between any new DTT services using interleaved spectrum and existing DTT services

These proposals are mirrored in our consultation documents on the detailed design of the cleared and geographic interleaved awards

Licence term We propose that the licence should have an indefinite duration
Period of notice

For bands that are currently used for PMSE, we propose that we would have the right to vary or revoke the licence on spectrum-management grounds subject to giving the band manager one year’s notice

For other bands, where there is no current PMSE use, we propose that we would have the power to vary or revoke the licence on spectrum-management grounds subject to giving the band manager five years’ notice

Licence fees We propose that the band manager should be subject to AIP and pay an annual licence fee based on the economic value of its spectrum. The fee will be calculated on a band-by-band basis
Award process Our proposals
Award process We propose to award a single package of spectrum by means of a beauty contest
Selection criteria

We propose to base the selection on:

  • the extent to which each applicant will secure efficient use of the spectrum to be awarded for both PMSE and other uses;
  • the extent to which each applicant demonstrates an understanding of, and a commitment to, the needs of PMSE users; and
  • the financial, managerial and technical ability of each applicant to establish and maintain efficient systems and procedures to secure efficient use of the spectrum to be awarded for both PMSE and other uses
PMSE protection measures Our proposals
The band manager’s commitment to PMSE users

We propose that each applicant should make specific commitments to PMSE users to be incorporated in the licence awarded:

  • on pricing policy in light of our stated policy that prices to PMSE users should be FRND;
  • on allowing PMSE users to access spectrum for which they are prepared to pay;
  • on the service levels that PMSE users will receive; and
  • on dispute resolution, covering both internal processes and the use of alternative dispute resolution (ADR) where internal processes do not satisfy PMSE users
Annual audit of the band manager’s performance We propose to put in place an independent annual audit of the band manager’s performance, comparing this with the commitments given by the band manager to PMSE users. We will publish the results of each audit on our website
Review of the band manager’s performance We propose to conduct formal reviews of the band manager’s performance, with specific reference to the progress that the PMSE sector has made to a market-based approach for spectrum access. These reviews would probably be held every three years and include a review of the band manager’s AIP-based licence fee
Our powers to revoke or vary the band manager’s licence We consider that it may be appropriate for us to vary or revoke the licence in circumstances where there is clear evidence that the band manager is failing to meet its obligations to PMSE users effectively

Question 1. The executive summary sets out our proposals for the DDR band manager award. Do you agree with these proposals?

Next steps

1.17 This consultation closes on 16 October 2008. We will hold a seminar on our proposals during the consultation period.

1.18 We expect to publish a second consultation document before the end of the year on issues not addressed in detail in this document, namely:

  • the means by which the band manager will authorise PMSE and other users to access its spectrum;
  • detailed technical licence conditions; and
  • the levels of AIP that the band manager will pay.

1.19 More information about next steps is set out in section 10.

Footnotes:

1.- More information about the DDR, including previous publications, is available from our website at www.ofcom.org.uk/radiocomms/ddr/.

2.-www.ofcom.org.uk/consult/condocs/clearedaward/condoc.pdf. Published 6 June 2008. Consultation closes 15 August 2008.

3.-www.ofcom.org.uk/consult/condocs/ddrinterleaved/interleaved.pdf. Published 12 June 2008. Consultation closes 21 August 2008.

4.-www.ofcom.org.uk/consult/condocs/ddr/statement/statement.pdf.

5.-www.opsi.gov.uk/acts/acts1990/Ukpga_19900042_en_1

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