Established by the Office of Communications Act in 2002 Ofcom is, among other things, responsible for issuing, policing and importantly, costing spectrum space in the UK. It is often accused of being inefficient and overly costly with accusations of a “top heavy salary bill” and “extravagant offices” being levied at it continuously. More importantly though, it can be argued that it is inefficient and high-cost spectrum licensing is stifling competition, innovation and growth in the UK’s telecommunications market – something that with the impending cloud of Brexit and an increasingly skills-based economy is an even more concerning situation. Ofcom reports that, for the year 2014/15, total spectrum management costs totalled just under £51.5 million, whilst fees totalled just over £267.9 million (Source: Ofcom: Spectrum management costs and fees 2014-15). Removing the MoD’s contribution from this (as this is essentially just public money moving hands) Ofcom brought in a spectrum licensing surplus of a little over £61.5m. Two questions arise from this: Firstly, it is hard to see how the costs of managing such a fundamentally intangible asset can be so high. Spectrum is, after all, not a physical asset that has to be maintained. Applications for frequency use require a comparatively binary decision as to whether or not the requested assignment is (or should be) available within an area. Applying for a licence at the moment, however is not a straight-forward process. Fixed wireless link licence details still largely have to be submitted in paper form (albeit though PDFs) and are manually processed by Ofcom’s spectrum licensing team. This paper-pushing exercise is slow, ineffective and one directional, often incurring a high opportunity-cost loss to businesses. A self-administered, truly digital, solution with instant licence approval and payment would be an obvious solution to this problem. Secondly, these surplus generating licence fees are simply a tax on business, equivalent to the rates / “fibre tax” paid on traditional infrastructure. As with any…
Inefficient and high-cost spectrum licensing is stifling competition, innovation and growth in the UK’s telecommunications market