TELECOMMUNICATION ASSOCIATION OF THE UK WATER INDUSTRY - TAUWI - RESPONSE TO OFCOM CONSULTATION on

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1 Supported by CSS Spectrum Management Services Ltd., Canvin Court, Somerton Business Park, Somerton, Somerset, TA11 6SB. Tel: TELECOMMUNICATION ASSOCIATION OF THE UK WATER INDUSTRY - TAUWI - RESPONSE TO OFCOM CONSULTATION on MODIFICATIONS TO SPECTRUM PRICING INTRODUCTION This response is provided by CSS Spectrum Management Services Ltd., on behalf of the Telecommunication Association of the UK Water Industry (TAUWI). CSS act as the main point of contact for TAUWI members and represent the members interests on a range of topics including regulatory issues. This response has the option to be reviewed by each of the 26 member organisations that form TAUWI and thus avoids the need to provide 26 separate submissions. The Association was formed in April 2004 and replaces the Telecommunications Advisory Committee (TAC) which for the last 14 years had acted as the central point of focus for the UK Water Industry in relation to Fixed and Mobile communications and Scanning Telemetry from the technical and regulatory aspects. TAUWI is Chaired by Mr Pete Easey, of Anglian Water Services Ltd. The scope of TAUWI is broader than that of TAC and aims to capitalise on new opportunities resulting from emerging technologies and regulatory changes. In addition more emphasis is being put on strategic issues in relation to other sectors of an organisation s operation, such as IT, general communications infrastructure and changing business needs. The membership is drawn from representatives from the following Industry Groups: 10 Water Service Companies 13 Water Supply Companies Scottish Water Environment Agency 1

2 Dept of Regional Development -Water Service, Northern Ireland Jersey Public Services Department Land Drainage Boards The Water Industry has been a major user of Private Business Radio systems. They now operate a limited number of analogue trunked, and stand alone PBR radio systems. In addition, increasing use is being made of Public Cellular, provided by the UK Service Providers on the 2G, 2.5G and 3G systems for voice and data communications. It also uses a range of technologies to provide alternative communications in case of limited radio coverage or emergencies. The Water Industry is also a major user of licensed Radio Scanning Telemetry systems which are designed and assigned to the IR 2037, VNS 2111, RA375 (previously the MPT 1411) specification. The Industry makes considerable use of data and information in the provision of its core services and also when dealing with its many millions of Supply and Recovery domestic and business customers. The Environment Agency also make use of telemetry data as part of their flood defence management schemes. The previous Committee provided input into a wide range of Public and Industry Consultations. Since the formation of Ofcom the members of TAUWI have provided input to a considerable number of Consultations and related Workshops. Management and support for matters related to Water Industry mobile communications and Scanning Telemetry are provided by CSS Spectrum Management Services Ltd. This relationship provides the RF engineering and planning necessary to ensure that the most effective use is made of the radio spectrum. It also acts as a focus for the Industry and deals with engineering, licensing and financial matters related to the DTI and Ofcom. CSS also acts as the main point of contact for the Equipment Manufacturers and Service Providers. The Water Industry has access to radio spectrum in the VHF and UHF bands. This is managed on a National Licensing basis by CSS Spectrum Management Services who act as the Spectrum Management Organisation for the UK Water Industry and all other non Utility Organisations using the UHF Licensed Scanning Telemetry Spectrum. In addition the Industry Members have the option to have the benefit of the Electronic Code. The Water Industry use Communications and Telemetry to support the various aspects of the Supply and Recovery of Water, Control and Monitoring of Quality, Flood Defences and Water Management. The Industry is regulated by the Water Industry Regulator, OFWAT. 2

3 Part of the telecommunications and telemetry systems used by the Industry are mission critical and as such it is important that the services they provide remain available. GENERAL COMMENTS The Water Industry welcomes the opportunity to provide their input into the Consultation process on Modifications to Spectrum Pricing. The Industry supports the opportunities that could arise as a result of changes to the way in which spectrum is allocated, managed and licensed. It also recognises that a more flexible approach to licences can offer considerable benefit to a wide range of radio spectrum users. There are however a number of issues that should be taken on board while introducing further Business Radio Trading and Liberalisation and the Modifications to Spectrum Pricing. The Industry is keen to support change subject to ensuring that the needs and future requirements for current licensees are recognised and considered. This response is linked to the TAUWI response to the consultation document on Business Radio Trading and Liberalisation. RESPONSES Question1 Do you agree with Ofcom proposals to simplify the fees charged for Business Radio Light Licence Class? The introduction of the Business Radio light fee would appear to provide considerable flexibility at a very reasonable cost to the licensee. An issue which you might wish to consider is the low cost of this license when amortised over a 5 year period could in effect undercut some sectors of the tradable license spectrum. The key issue is to ensure that the technical restrictions can be enforced and can be seen to be enforced in order to ensure that light touch does not become interpreted as light regulation and perhaps lead to the use of non compliant accessories or installations which could cause long range interference. Question 2 Do you agree with Ofcom s fee proposals for the Business Radio Area Defined Licence Class? A concern with this proposal is that there is no equivalent area coverage for England compared to that of Scotland, Northern Ireland or Wales. Many of the existing Private Business Radio Systems were designed to operate over relatively wide areas and as such would have had the benefit of regional licenses. The current proposal is an all or nothing approach for England and is not equitable as there is not an equivalent to a regional license. In so much that the fee for a channel to cover England is already population related it is suggested that the coverage for England 3

4 should be subdivided into 8 regional areas and charged at 12.5% of the England license fee. The England regional license could perhaps be for a transition period. It is suggested that England should be divided in 8 regions as follows: South West South East East of England Midlands Yorkshire Northumbria Cumbria The objective of this process is to provide a Regional Licence which is a subdivision of the England License as opposed to a larger form of technically assigned license. If the only option open to the Water Industry PBR users was to move to a technically assigned license some members would be faced with increases ranging from 31% to 421% which is hard to justify, especially to organisations which are regulated and their expenditure reviewed by OFWAT and who have a 5 year capital approval process. It is also recognised that one member could make a considerable saving by switching to an area defined license class and not by the adoption of the Technically Assigned License class which would not provide any notable saving. It is suggested that the England area defined licensed be sub divided in 8 areas for existing license holders for the duration of their current licences. Question 3 Do you agree with Ofcom s fee proposals for the Business Radio Technically Assigned Licence Class? For new systems the move to Technically Assigned License would have an effect on how a system could be engineered and would therefore be designed in such a way that the minimum charge for the license was incurred under the new charging proposals. The proposed Technically Assigned charging approach does not map well on to some existing larger wide area systems, hence the need for a regional approach to licensing as discussed in the response to question 2. Another issue is that in a number of 50km cells one member reuses the same frequency 4 times and under this proposal would have to pay for it 4 times. It would appear that good engineering practice and minimum use of the spectrum is not recognised or rewarded especially as the whole system only uses 4 channels. 4

5 It is suggested that a channel should only be charged for once in any 50km cell regardless of the number of transmitters on that channel in order to reflect efficient use of the spectrum. Ofcom may also wish to consider a reduction in license costs where efficient use of the spectrum can be demonstrated. Question 4 Do you agree with proposed modifications to the algorithms for each satellite earth station licence class? We are not in a position to respond to this question. Question 5 Do you agree with Ofcom s PMSE fee proposals? The members of the Water Industry are aware of the costs associated with managing spectrum. The core spectrum costs appear to be reasonable and as other departments within Ofcom recover substantial amounts of their cost from the license holders or those provided with specific rights, the increase should reflect these costs. Another issue is that in certain sectors of the market, support for welfare related infrastructure is provided and these sectors may need to be priced below AIP in order to deliver certain types of welfare related services. The proposal is therefore supported. Question 6 Do you agree with these proposals for simplifying the fee for community radio? In view of the service that Community Radio provides the proposal is supported Question 7 Do you agree that this proposal will encourage efficient surrender and reassignment of fixed links and with the change for the channel Isles and Isle of Man? The proposal to introduce the concession which will allow organisations to, in effect cease a link partway through a license year is seen as a positive step and is fully supported as are the changes to the pricing formula for the Channel Isles and Isle of Man. Question 8 Do you agree with this proposal for self co-ordinated links in the new bands? 5

6 It is important to deter the blocking of self co-ordinated spectrum and so the proposal is supported. Question 9 Do you agree with the proposed extension of the licence classes for public wireless and fixed wireless access network licences in the Channel Islands and the Isle of Man? The proposal is supported. Question 10 Do you agree with the other proposed amendments to the WT Act licence charges regulations? The proposal is supported. Question 11 Are there any points you want to raise concerning the payment methods proposed? The various options available should meet the needs of the various user groups and is therefore supported. It is stressed that if a license is to be revoked by Ofcom notice of the intent should be given at least 14 days before the action, as is the case form most suppliers of a service. Oversights do occur and there is a need to cater for this situation. SUMMARY The Industry recognises the benefits of Business Trading and Liberalisation as part of the process to implement the Spectrum Framework Review. However it does have some concerns in relation to the financial options open to existing users who have installed and operate large systems. The proposals are far reaching but are not necessarily equitable in their current format for existing users. An increase of over 420% is hard to justify or accept. It is hoped that the proposals put forward can at least provide alternate options for a number of licensees. If Ofcom are unable to incorporate the proposal into the new pricing scheme it is suggested that as a minimum those organisations who suffer an increase in cost of more that 100% or should be entitled to have the increase introduced over a 4 year period. The members are pleased that they can support a considerable part of the consultation and the underlying principles which underpins it, however the Industry 6

7 hopes that the areas of concern can be addressed and an equitable solution found for all Users of the radio spectrum. In line with the ongoing relationship that the Water Industry has with Ofcom, the Members are always willing to meet and discuss with Ofcom staff any issues of mutual interest or concern. David Tripp. C.Eng. MIET. Chairman of the TAUWI Strategy Management Group Managing Director CSS Spectrum Management Services Ltd 30 th August