ADMINISTERED INCENTIVE PRICING UK Update

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ADMINISTERED INCENTIVE PRICINGUK Update

• Andy Knill
• Head
• Surveillance and Spectrum Management

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Background

• 2005 Chancellor of the Exchequer Independent
  Audit of Public Sector Spectrum Cave Report.
• Recommendation that use of market mechanisms to
  deliver increased spectrum efficiency should be
  considered where appropriate.
• Working Groups set up to progress Governments
  Action Plan to progress recommendations where
  feasible.
• 2008 Ofcom publish consultation proposing the
  introduction of AIP for Aeronautical and Maritime
  Spectrum.

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Current Status

• Since consultation closed in Oct 08, Ofcom have
  been reviewing responses.
• Recognition that there are still significant
  issues to be resolved in respect of 2.7-3.1GHz.
• Ofcom published a consultation on aeronautical
  and maritime spectrum management excluding VHF
  Comms 13 Aug.
• Ofcom have focused on VHF for initial application
  of AIP.
• Helios has conducted studies into VHF pricing
  based on Business Radio Model which form basis of
  revised Ofcom proposals.
• Ofcom intend publishing next consultation on
  aeronautical spectrum pricing Dec 09
• 12 week consultation period.

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VHF AIP Proposals

• Information based on what has been presented at
  Ofcom/DfT/CAA meetings so subject to confirmation
  in final consultation document.
• AIP for VHF to be introduced in 2010 but charges
  phased over 3-5 years.
• Tiered structure within price range of 75-9900
  per frequency (currently 25-250) based on
  classes of service.
• Use of Business Radio model may introduce factors
  such as population density and congestion into
  price model.
• Picing may include differentials to reflect
  8.33kHz implementation.

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Illustrative Costs

• En-Route ANSP currently lt50000 will rise to
  gt1.2M.
• Airports
• Large International currently 3000 will rise to
  gt27000 .
• Regional Airport currently lt1000 will rise to
  gt32000.
• Small airport/Busjet currently lt1200 will rise
  to gt40000.
• GA airfield currently 150 will rise to gt2000.
• Across the range of airfields this could lead to
  a price increase per movement of between 15p
  2.40 (approx).

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AIP Consultation

• Consultation will continue to assert that the
  proposed pricing structure will provide an
  important incentive to manage this valuable asset
  to the advantage of all citizens and consumers.
• Pricing based per licence/assignment not per MHz.
• From the illustrative pricing examples quoted,
  there are perceived anomalies between airports
  due to the individual nature of their operation,
  airspace arrangements and facilities.

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Initial Issues

• Inability of stakeholders to change behaviours
  due to safety requirements, operational needs and
  international obligations.
• Potential for unintended consequences on safety
  e.g GA community and voluntary use of VHF.
• Economic impact on the industry in an extremely
  difficult and challenging climate.
• Inappropriate use of Business Radio Model.
• Per licence/assignment charge means the more
  efficient we are, the more the income to Treasury
  increases.
• Although price impact per movement/passenger is
  low, this is only initial phase for what is a
  small of aeronautical spectrum cumulative
  impact is likely to be much more significant.

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Way Forward

• Once VHF consultation published we will advise
  all interested stakeholders.
• Ofcom will be holding workshops to discuss
  issues.
• Encourage all parties to respond in their own
  right