U.K. telecommunications regulator Ofcom released a Consultation Implementation—Spectrum pricing for terrestrial broadcasting that proposes the introduction of charges for the radio spectrum used by terrestrial multiplex operators.
The Consultation begins: “In principle, we believe that all users of spectrum should pay an appropriate charge for access to what is a scarce resource. The use of spectrum for terrestrial broadcasting is one of the few remaining areas where such charges have not yet been applied.”
In the short term, Ofcom said: “we propose to apply a regulatory pricing mechanism to recover our on-going costs in managing the spectrum (including the costs connected to the operation of the licensing regime). In line with the principles set out in the SRSP, we believe it is appropriate that the costs of managing spectrum used for broadcasting are borne by broadcasters benefiting from use of the spectrum, and that non-broadcast users of spectrum do not pay a disproportionate share of management costs.”
This sounds similar to the regulatory fees that U.S. broadcasters and other spectrum users pay the FCC on an annual basis, or at license renewal time.
The Consultation continues:
“Longer term--once there is greater ability for multiplex operators to respond to pricing incentives--we intend to set AIP-based charges. We will do so once we have materially progressed our proposals for the future use of the UHF spectrum. At that time, the charges will be adjusted to AIP, based on the full opportunity cost of the spectrum. We do not currently anticipate that this will occur until after 2018, although we would expect to introduce AIP by around 2020.”
AIP refers to “Administered Incentive Pricing” and would be applied to any spectrum that was allocated instead of being auctioned. The concept is that unless allocated licenses have a financial incentive to reduce their use of spectrum, they won't.
TheRegister.com writer Bill Ray discusses the implications of this policy in his article Freeview telly channels face £240 m[illion]-A-YEAR shakedown by Ofcom—Watchdog keeps death of broadcast TV by 2026 on track. He writes:
“If the communications regulator gets its way, it will extract at least £10 m[illion] for each Freeview multiplex. A multiplex, in simple terms, is a bunch of channels: the BBC spans two multiplexes, while Channel 4, Channel 5 and ITV share one, for example. There are six multiplexes in total in the Freeview spectrum, and the fees are expected to be split between the broadcasters. But that proposed annual charge could jump to £40 m[illion] per multiplex, adding up to £240 m[illion] a year, if the channels can't be shifted out of the way to make more space for 4G mobile broadband.”
Bill Ray notes that the program-making and special events (PMSE) people “won a stay of execution, a new wireless home and some money to cover the cost of the transition, but the reprieve isn't permanent; the spectre of AIP still hangs over the PMSE industry just as it hangs over broadcast TV.”
He concluded:
“Back in 2009 a team working for Ofcom did some crystal ball gazing and predicted that the U.K.'s terrestrial TV network would be switched off in 2026, which now seems surprising prescient until one remembers that it's Ofcom's proposals that will price it out of the market.”
