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The economic value of spectrum use in the UK has increased to more than GBP50 billion (EUR60 billion) per year

Philip Bates Principal

Analysys Mason's new report estimates economic welfare benefits from the use of radio spectrum and offers insights on future priorities for policy makers.

Spectrum

The UK Department for Business, Innovation and Skills (BIS) and the Department for Culture, Media and Sport (DCMS) recently published Analysys Mason’s study Impact of radio spectrum on the UK economy and factors influencing future spectrum demand. The study was carried out, in part, to validate the UK government’s plan to make more spectrum available for key uses by increasing efficiency in public sector use.

The study found that the economic value of spectrum use has increased by 25% in real terms since 2006 (the last time that a similar study was undertaken) to GBP52 billion (EUR62 billion) in 2011 (see Figure 1). The public mobile communications sector accounts for nearly 60% of this value, while broadcasting accounts for a further 20%. Other sectors considered include the use of Wi-Fi as a substitute for mobile broadband, microwave links, satellite links and private mobile radio. The study did not attempt to calculate the value of spectrum in public sector use but acknowledges that this is likely to be significant.

Figure 1: Estimated value of spectrum use in the UK, by sector, 2006 and 2011 [Source: Analysys Mason, 2013]

Spectrum use

2006
(GBP billion)

2011
(GBP billion)
 

Real percentage change
2006–2011

10-year NPV
2012–2021
(GBP billion)

Public mobile communications

21.8

30.2

16%

273

Wi-Fi

1.8

25.6

TV broadcasting

3.6

7.7

79%

86.0

Radio broadcasting

1.9

3.1

35%

28.6

Microwave links

3.9

3.3

-29%

22.1

Satellite links

2.8

3.6

7%

31.3

Private mobile radio

1.2

2.3

55%

19.2

Total

35.2

52.0

25%

486

 

The study also found that the public mobile communications sector supports a supply chain of infrastructure, equipment, applications and content providers, generating annual revenue of around GBP20 billion (EUR24 billion) and supporting 75 000 jobs, while the broadcasting services sector supports a supply chain worth around GBP16 billion (EUR19 billion) per year and supports 40 000 jobs.

Market, technical and commercial trends all point towards continued growth in the public mobile sector, suggesting its importance to the UK economy will continue to increase. We also note that the licence-exempt sector (including Wi-Fi, RFID and M2M applications and many more uses of short-range devices) is becoming increasingly diverse, and innovators are emerging in the UK offering new ways to deliver licence-exempt services. The report suggests that now that the digital switchover is completed, further consideration should be given to when and how the digital terrestrial TV (DTT) platform can be upgraded to deliver more HD content, while network improvements could also be made to digital audio broadcasting (DAB) radio platforms.

The report concludes with a series of comments on the implications of our findings in five key areas.

  • Supporting the future growth of the public mobile sector. Releasing spectrum for public mobile communications is likely to create the most value. However, the value will be much higher if the spectrum has been harmonised internationally. A programme of release therefore needs to go hand in hand with international efforts to agree on future mobile bands.
  • Supporting growth in other sectors that will be influenced by the growth in mobile data. Growth in demand for mobile broadband services will have implications for Wi-Fi (which is increasingly used to offload data traffic from mobile networks and to stream content in the home and elsewhere). There is potential for congestion in the bands used for Wi-Fi and there is a need to explore future expansion options, including the use of TV white spaces.
  • DTT and DAB technology upgrades. Upgrading all DTT multiplexes to the DVB-T2 standards would create capacity for additional HD channels, while upgrading the DAB platform to DAB+ (or an alternative) would improve sound quality, and reception in weak signal areas, although the consumer migration issues need to be carefully considered.
  • Better sharing of under-utilised spectrum. Technologies that enable more-dynamic access to spectrum through situational awareness have been identified as a key area for future wireless technology and policy focus. Although we believe that cognitive radio is still some years away from commercial implementation, spectrum policy should consider new licensing models for shared spectrum use, and enable better shared access to under-utilised spectrum while protecting users.
  • Release of public sector spectrum. In addition to ensuring international harmonisation, the value of public sector spectrum releases is likely to be increased if it is available in larger contiguous blocks. This supports an approach to rationalise spectrum use by planning across the boundaries between government departments.

The full text of our report can be downloaded from: http://www.culture.gov.uk/publications/9498.aspx.