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ADMINISTERED INCENTIVE PRICING UK Update

ADMINISTERED INCENTIVE PRICING UK Update. Andy Knill Head Surveillance and Spectrum Management. Background. 2005 – Chancellor of the Exchequer Independent Audit of Public Sector Spectrum – “Cave Report”.

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ADMINISTERED INCENTIVE PRICING UK Update

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  1. ADMINISTERED INCENTIVE PRICINGUK Update Andy Knill Head Surveillance and Spectrum Management

  2. 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 Government’s Action Plan to progress recommendations where feasible. • 2008 Ofcom publish consultation proposing the introduction of AIP for Aeronautical and Maritime Spectrum.

  3. 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.

  4. 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.

  5. Illustrative Costs • En-Route ANSP currently <£50000 will rise to >£1.2M. • Airports: • Large International currently £3000 will rise to >£27000 . • Regional Airport currently <£1000 will rise to >£32000. • Small airport/Busjet currently <£1200 will rise to >£40000. • GA airfield currently £150 will rise to >£2000. • Across the range of airfields this could lead to a price increase per movement of between 15p – £2.40 (approx).

  6. 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.

  7. 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.

  8. 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

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