The kind of sums being spoken about for the
UK are of the order of GBP 32 - 48 million (USD 60 - 90 million)
for the BBC digital TV services; around GBP 8 - 12 million
(USD 15 - 22 million) for the ITV and Channel 4 public service
digital multiplexes and GBP 10 - 20 million (USD 19 - 37 million)
for the commercial multiplex operated by ITV; and a further
GBP 20 to 40 million (USD 37 - 75 million) for the remaining
UK multiplexes- a grand total of GBP 70-120 million (Radio
on a pro-rata basis for the spectrum used - see below - would
be liable for around GBP 5.3 - 9.2 million (USD 9.9 - 17.1
We have concentrated on TV in the examples above because it
is more demanding of spectrum - at the time of digital switchover
planned for 2012 Ofcom estimates that TV will be using around
256 MHz of spectrum in the UHF Bands IV and V, down from its
current 368 MHz whilst digital radio will be using around
9.5 MHz, up from the current 12.5 MHZ.
The figures above are certainly manageable but they could
dent profits significantly and they raise a further question,
that of the degree that there should be a discount to normal
prices because of the constraints faced by broadcasters in
their use of the spectrum they lease and also because of the
value generated for society by the broadcasters, particularly
by public service broadcasters.
In the UK public service broadcasters argued that they should
be exempt from AIP because it would be less efficient to charge
it and then have to provide additional funding for public
service broadcasts but they lost this argument.
Ofcom claims that its policies in regard
to AIP have already had some success with the release by users
of some 28MHz of more valuable spectrum (<3GHz) and 160MHz
of second-tier spectrum (3-10GHz) including 12MHz of spectrum
from the Ministry of Defence - saving it GBP 3 million (USD
5,6 million) a year; 76MHz of spectrum returned by private
sector licensees and a reduction of a half in the number of
fixed links in the 11GHz band reflecting a move to more efficient
But what of public
Ofcom's view of this is a market one.
It takes the view: "There is no economic merit in discounting
the level of AIP applied to broadcasting uses of spectrum,
notwithstanding that broadcasting delivers societal value
in excess of the private value enjoyed by its providers"
and says that it has provisionally conclude "
it is both practical and appropriate to apply AIP to the spectrum
used for terrestrial broadcasting
It then says the "most significant issue with applying
AIP to spectrum used for broadcasting is its potential impact
on the financial capacity of broadcasters to deliver PSB and
other socially desirable, but perhaps commercially non-viable,
broadcasting services. This raises the challenge of how to
maintain the desirable level of such services once AIP has
On that latter matter Ofcom is not specific, commenting that
"there is plenty of opportunity, between now and when
we propose to introduce AIP for other policy reviews to reflect
upon the likely impact of our proposals and to make appropriate
provision to maintain the desired level of services or make
alternative policy choices."
The overall result
Looking at the manner in which Ofcom
has proceeded so far, it would seem that much will depend
on changes in technology but that there will be a general
tendency to move towards pricing spectrum according to its
market value rather than its traditional use. This seems likely
to increase the costs to broadcasters as spectrum is finite
and thus its value is almost certain to increase as technology
increases demand for it.
Certainly charging for spectrum will provide incentives to
develop technology to use it more efficiently but this has
limited potential for broadcasters - very little for those
using analogue spectrum and not much more for digital broadcasts
except perhaps through the development of software-defined
systems that allow a broadcaster to change frequencies according
to where spectrum is available and receivers to switch accordingly.
We therefore see a potential for significant pressures on
broadcaster at a time when other developments are already
making things difficult.
As a result while on the one hand we go along with Ofcom in
agreeing that setting a price for spectrum, whoever uses it,
is likely to increase the economic efficiency of allocation
on the other we are concerned that due value be assigned by
society in general to broadcasters.
That indicates to us that broadcasters need to think hard
about how far they can justify their use of airwaves, a use
that of necessity means it cannot be available to others.
We do think however that the emergency value of radio needs
to be an essential part of any such calculations. After all
it may not matter that much in the ultimate analysis that
someone can't watch MTV or listen to the latest hip-hop but
it could be a matter of life or death when there is no power
because of a catastrophe - at which time people wouldn't be
watching the former or sensibly be listening to the latter
-that there is information available to a battery-powered
On that basis alone some radio spectrum needs to be reserved
for emergencies whatever the cost: How it is done is a matter
for discussion - it could be subvention of the spectrum cost
for a station on the basis that its programming can be pre-empted
without warning or a number of other ways - but that radio
be regarded as essential for information in such cases seems
to us self-evident.