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Ofcom Consultation: Cave Audit of Spectrum Holdings

INDEPENDENT AUDIT OF SPECTRUM HOLDINGS (IASH)

The Chancellor announced in his December 2004 Pre-Budget Report that Professor Martin Cave would conduct a comprehensive independent Audit of Spectrum Holdings (IASH), with the aim of releasing the maximum amount of spectrum to the market and increasing opportunities for the development of innovative new services.

The public sector is the single biggest user of UK radio spectrum, with many holdings dating back to a time of limited demand and relatively unsophisticated technologies. The IASH has been established to determine the scope for increased commercial access to this spectrum to meet the growing demand for new wireless services. It builds on the principles set out in Martin Cave’s 2002 Review of Radio Spectrum Management, which set out the rationale for allocating the spectrum through market processes but did not examine specific spectrum allocations in any detail. As a result of the 2002 Review Ofcom is currently implementing spectrum liberalisation for private sector spectrum, to increase efficiency and innovation. However in some some cases, especially in the public sector, spectrum liberalisation alone cannot deliver optimal allocation into the future.

See the IASH website here

Announcement

INDEPENDENT AUDIT OF SPECTRUM HOLDINGS: EMERGING ISSUES CONSULTATION DOCUMENT

* See the consultation document here
* see HM Treasury press release here
* Responses should be sent by 1st September to: responses[at]spectrumaudit.org.uk

Extracts from HM Treasury press release

7 July 2005

Professor Martin Cave today invited views on issues that he will address in his Independent Audit of Spectrum Holdings, which focuses primarily on public sector holdings. These issues are set out in a consultation document and interested parties are encouraged to respond to the issues raised, which indicate the proposed direction of the Audit.

The radio spectrum is a valuable, finite resource. In the 2004 Pre-Budget Report, the Chancellor of the Exchequer commissioned an Independent Audit of Spectrum Holdings. The Audit is focusing on bands below 15GHz used by the public sector and fixed links and concentrating on those with the most potential for use by commercial organisations. Professor Martin Cave was asked to investigate whether these frequencies are being used as efficiently as possible and to review the effectiveness of incentives for making efficient use of spectrum.

The consultation document:

* identifies specific bands which may have the potential for more effective use;
* proposes that in the future the public sector will need to meet new spectrum demands through market mechanisms in all but exceptional cases;
* expresses support for public bodies being able to trade spectrum rights– and benefit from doing so – if they wish, and addresses possible barriers to this;
* assesses the need for the public sector to adopt a more strategic approach to spectrum management, suggesting that the UK Spectrum Strategy Committee (UKSSC) should produce a regular forward look of public sector spectrum needs;
* examines possibilities for improving Administrative Incentive Pricing, including extending it in some areas, e.g. in the aeronautical sector, and changes to better reflect band sharing;
* sets out the Audit’s intention to encourage more band sharing, through clarification of the incentive structure and the possibility of engaging a third party to facilitate the process;
* addresses specific organisational issues which may be preventing more efficient use of the spectrum holdings such as procurement processes and information sharing.

Professor Martin Cave said:

“Radio spectrum is a valuable resource. The public sector is the largest user of this resource, for which there has been - and is likely to continue to be – growing commercial demand. It is therefore important to ensure that effective use is being made of these holdings. The introduction of market mechanisms into spectrum management will introduce both challenges and opportunities for the public sector. These need to be addressed, and mechanisms put in place to incentivise efficient use of these major holdings, now and in the future, while safeguarding the operation of essential security and safety of life services. I would encourage all those with an interest in these issues – public sector uses and those commercial users who might benefit from the changes we are suggesting – to contribute to this consultation. ”

The closing date for responses is 1st September 2005. Professor Cave will publish his recommendations and Final Report ahead of the Pre-Budget Report 2005.

NOTES FOR EDITORS

1. The Independent Audit of Spectrum Holdings was commissioned by Gordon Brown, Chancellor of the Exchequer, as part of the Pre-Budget Report in 2004. The remit of the Audit covers public sector use of spectrum, and extends to commercial Fixed Links spectrum use (as an area where the market alone may not deliver an optimal outcome in terms of spectrum efficiency). The public sector is the single biggest user of UK radio spectrum and the Audit will determine the efficiency of use of these holdings and scope for improving this.

2. Professor Martin Cave is Director of the Centre for Management under Regulation at Warwick Business School. He specialises in regulatory economics, especially in the communications sector. He is the author of the Independent Review of Spectrum Management (2002), commissioned by the UK Government to investigate the changing role of regulation in spectrum.

3. Ofcom is the independent regulator and competition authority for the UK communications industries, with responsibilities across television, radio, telecommunications and wireless communications services. It is responsible for spectrum management issues for approximately 70% of the radio spectrum that is used by commercial organisations. In January 2005 it set out a comprehensive programme of potential spectrum awards over a number of years.

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