Assessment of options for allocating available spectrum ... · Annex D: T-DAB mobile and portable multimedia services – benefit analysis1 D.1 Market overview 1 D.2 Alternative supply

3 September 2004

Amended 22 November 2004

Annexes to Final Report for Ofcom

Assessment of options for allocating available spectrum

within VHF Band III (174–230MHz) and L-Band (1452–1492MHz)

Assessment of options for allocating available spectrum within VHF Band III and

L-Band


Contents

Annex A: Private mobile radio - benefit analysis 1 A.1 Market overview and spectrum usage 1 A.2 Demand side developments and spectrum requirements 10 A.3 Economic benefit analysis 23 A.4 Key uncertainties 30 A.5 Implications for allocation options assessment 35

Annex B: Public access mobile radio – benefit analysis 1 B.1 Market overview and spectrum usage 1 B.2 Demand-side developments and spectrum scenarios 2 B.3 Economic benefit analysis 3 B.4 Key uncertainties 4 B.5 Implications for allocation options assessment 5

Annex C: T-DAB – benefit analysis 1 C.1 Market overview and spectrum usage 1 C.2 Potential applications for additional spectrum 4 C.3 Economic benefit analysis 6 C.4 Key uncertainties 23 C.5 Implications for allocation options assessment 27

Annex D: T-DAB mobile and portable multimedia services – benefit analysis1 D.1 Market overview 1 D.2 Alternative supply scenarios 2 D.3 Economic Benefit analysis 3 D.4 Key uncertainties 5 D.5 Implications for allocation options assessment 5


Annex E: PMSE usage of Band III 1 E.1 Categories of use of radio microphone frequencies 1 E.2 Frequencies for TalkBack 3 E.3 Frequencies for audio links 4 E.4 Summary of VHF frequencies affected by Band III allocation options 5 E.5 Number of licences 6 E.6 Cost of equipment 6 E.7 Other relevant information 7 E.8 Conclusions 8 Appendix - JFMG register of frequencies 200-428MHz 10

Annex F: Interference analysis 1 F.1 DAB/PMR assessment 1 F.2 Continental interference assessment 10

Annex A: Private mobile radio - benefit analysis

This Annex discusses our assessment of the net benefit of allocating additional Band III spectrum for PMR services, and is structured as follows:

• Section A.1 – an overview of the PMR market and the usage of Band III spectrum • Section A.2 – our projections for the growth in use of PMR in Band III and the

implications for spectrum requirements • Section A.3 – our analysis of the net economic benefits of allocating additional

spectrum to PMR • Section A.4 – the key sensitivities and uncertainties associated with our demand

forecasts. • Section A.5 – the implications of our analysis for our work in Phases B and C of the

study.

A.1 Market overview and spectrum usage

This section presents an overview of the development of the PMR market in Band III. Within it we:

• discuss general developments in the PMR market (Section A.1.1) • present issues specific to the PMR-based transport communications industry (Section

A.1.2) • discuss the availability of PMR equipment in Band III (Section A.1.3) • highlight alternative options open to PMR users (Section A.1.4).

A.1.1 Introduction

Private Mobile Radio (PMR) spectrum is used by organisations to operate their own mobile communications networks for their own private use (i.e. for internal communications

A-2 | Annexes to Final Report for Ofcom

purposes rather than for offering communications services to the public). The scale of individual PMR systems can be quite varied:

• national/regional systems cover the widest area and require the deployment of an extensive network of radio base stations

• wide area systems typically cover a radius of 30km from a base station1 • onsite systems operate in an area 3km in radius (a base station is not necessarily

required – communications could be directly between mobile terminals) • common base stations (CBS) – in our analysis, we also consider the use of PMR spectrum

for the provision of radio communications services to the ‘public’ (typically small businesses such as a local taxi firm) from a single base station site (with individual users sharing the capacity of the channel). Coverage is typically over a wide area.

Some organisations prefer to operate their own PMR systems rather than utilising a public communications network. Reasons for this include:

• service features – PMR systems can support certain additional features which are not always available on public networks (e.g. fast call set-up, call priority and pre-emption)

• control – the organisation can design and configure the network to more precisely match the needs of users (quality of service – capacity, coverage and availability)

• security – all communications traffic remains on the organisation’s private network • cost – the upfront cost of deploying a PMR system can be more cost effective for

certain users than the on-going charges associated with use of a public network.

PMR users have nonetheless been increasingly migrating to public networks (e.g. cellular networks or PAMR networks – see Section A.2) – primarily in view of the falling cost of services, improved coverage and ease of use/convenience (since many consumers now carry their cellular phones with them in any case). Exhibit A.1 below shows the fall in the number of wide area PMR licences from Ofcom/the Radiocommunications Agency (RA) from 1999 to 2003. Exhibit A.2 also denotes the reduction in number of PMR mobile terminals associated with these licences.

1 Indicative cell radii taken from ‘Private Business Radio Manual’, Ofcom, May 2004.

Assessment of options for allocating available spectrum | A-3

0

5000

10000

15000

20000

25000

Jan-00 Jan-01 Jan-02 Jan-03 Jan-04

Exhibit A.1:

Wide-area PMR

licences [Source:

Ofcom/RA Annual

PBR licensing

statistics reports

2000–2004]

0

50

100

150

200

250

300

350

400

450

500


Thou

sand

s

Exhibit A.2:

Wide-area PMR

mobiles [Source:

Ofcom/RA Annual

PBR licensing

statistics reports

2000–2004]

However, this general trend masks growth in certain areas, for example, the increase in PMR usage :

• by certain types of user – e.g. during 2003, the number of wide area PMR mobiles used by local and regional government rose from 67 581 to 70 349

• for certain types of use – e.g. between January 2000 and January 2004, the number of on-site PMR radios rose from 258 934 to 325 649

• in certain frequency bands – e.g. Band III, as shown in Exhibit A.3 and Exhibit A.4 below).


1634 1692 1650 1551

567 630 620 771

37 25 77

0

500

1000

1500

2000

2500

3000

Jan-01 Jan-02 Jan-03 Jan-04

On-site PMR

Wide area PMR

National & Regional

Exhibit A.3:

Band III

assignments

[Source: Ofcom/RA

Annual PBR

licensing statistics

reports 2000–2004]

32 35 32

42

0.00.1

0.7

1.3

0

5

10

15

20

25

30

35

40

45

50

Jan-01 Jan-02 Jan-03 Jan-04

Thou

sand

s

On-site PMR

Wide area PMR

Exhibit A.4:

Band III mobiles

[Source: Ofcom/RA

Annual PBR


reports 2000–2004]

Industry sectors utilising PMR include:

• local government – vehicular fleets (e.g. refuse disposal, housing repairs) and on-site security services

• public safety/emergency services – many government users (police, fire, ambulance etc) are increasingly migrating to PAMR networks however there is a remaining requirement for certain users such as individual ambulance services

• taxi and courier firms – local firms with a wide area requirement for voice and increasingly data communications

• transport – includes the railways, bus and coach companies etc – this sector is analysed separately in further detail in Section A.1.2 below


• utilities – utilised for wide area coverage e.g. in rural areas for both voice communications and applications such as remote meter reading

• other – other industry sectors e.g. airports, construction, retail, road haulage.

Additional spectrum could be used by the above users to:

• support new PMR users (e.g. new local government users) • to support an increase in the number of mobile terminals used by existing PMR users • improve quality of service experienced by existing users (e.g. by relieving congested

assignments) • to support the deployment of new services (e.g. data services to supplement existing

voice applications) • to support the roll-out of new technologies (e.g. digital PMR technologies).

A.1.2 Transport and passenger information services

This section discusses the specific need of transport communications PMR users including:

• railways e.g. Network Rail • Bus and Coach companies e.g. London Buses • London Underground • trams e.g. Croydon Tramlink and Sheffield Supertram.

As discussed in Section A.1.1, the general decline in interest in PMR services masks growth in certain specific areas. For example, Exhibit A.5 and Exhibit A.6 below highlight the increase in the number of wide-area PMR licences and mobiles for bus and coach operator between 2000 and 2004.


0

20

40

60

80

100

120


Exhibit A.5:

Wide-area PMR

licences for bus

and coach

operators [Source:

Ofcom/RA Annual

PBR licensing

statistics reports

2000–2004]

0

5

10

15

20

25

30


Thou

sand

s

Exhibit A.6:

Wide-area PMR

mobiles for bus and

coach operators

[Source: Ofcom/RA

Annual PBR


reports 2000–2004]

The government’s desire to increase usage of public transport has several impacts on the demand for spectrum from these users:

• growth in services – e.g. increased number of buses in operation by London Buses • extension of services – e.g. new tram schemes/extension plans • real-time passenger information – providing up-to-date and accurate information to

passengers (e.g. accurate estimate of time of arrival of next bus).

Demand will therefore be for enhancing exiting operations and for the introduction of entire new services. The specific requirement for additional spectrum for different transport user categories is discussed below.


• Network Rail: The national railways are planning to migrate their existing UHF and Band III systems to GSM-R (a customised version of GSM for the European Railways). Spectrum has been reserved for this at frequencies around 900MHz. It has been indicated that although GSM-R is likely to be delayed to beyond 2010, Network Rail is unlikely to make any alternative investments in new UHF or VHF systems in the meantime.

• Buses and coaches: London Buses in particular is currently in the middle of a tender process to procure a replacement system for their existing Band III network. This could be in the form of a new dedicated network or a public communications service. The new system/service will be used for existing operations (including growth in the number of buses that are operated as well as for real-time passenger information systems). We understand that any decision taken by London Buses could influence the direction taken by other bus operators in the country.

• London Underground: London Underground is currently seeking to deploy an advanced TETRA communications network throughout the underground (Project Connect). This will utilise UHF spectrum. Additionally the London Underground operators have deployed/are seeking to deploy advanced radio systems for rolling block signalling – 10 x Band III Sub-band 1 channels have been assigned to London Underground for this purpose. We understand from Ofcom that it has not received any requests for additional spectrum from London Underground – though it has received requests for Ofcom to provide security of tenure in relation to the spectrum assignments.

• Trams: Various extensions to the newly deployed tramways are being considered e.g. extensions to the Croydon scheme, a new West London scheme, and extensions to Midland Metro in the West Midlands.

A.1.3 Equipment availability

Equipment availability is a key consideration for Band III. As the band is not available for use for PMR in most other parts of Europe, manufacturers are generally unwilling to make significant investment in developing equipment for this band. Analogue technologies (e.g. MPT1327) have been adapted by manufacturers to work in Sub-bands 1 and 2 of Band III. Whilst sub-Band III has a different duplex spacing (3.35MHz rather than 8MHz), our


discussions with existing Band III manufacturers have indicated that they are willing to adapt analogue equipment to work in Sub-band 3.

Major manufacturers have not (so far) committed to developing network equipment and mobiles for advanced digital PMR technologies (e.g. TETRA, TETRAPOL). In fact, in its response to the RA’s consultation, Motorola indicated that since the band is UK specific, it cannot ‘provide a quality [digital] product at a price that users might wish to pay’.2 Motorola goes on to say that it expects that the number of suppliers of equipment for the band to diminish over time since ‘the business case for developing or maintaining any products in this UK-specific band being very challenging already and getting worse.’

ETSI is however in the process of developing a new digital PMR standard – Digital Mobile Radio (DMR). The aim is to provide a cost-effective digital PMR solution for smaller users, operating across a wide range of frequency bands. The standardisation process is currently in process and equipment is not expected to be available until 2006/2007 at the earliest. Following the failure of a previous attempt to standardise a new PMR technology for smaller users, there appears to be determination to ensure DMR succeeds. However there are still considerable risks in that (a) DMR may never reach the manufacturing stage and (b) DMR equipment may not be made available for Band III. In the case of the latter issue, smaller manufacturers who currently produce analogue equipment for Band III have indicated that they anticipate producing DMR equipment for Band III whilst larger manufacturers have expressed their concerns about Band III being non-standard.

Regarding existing digital PMR technologies (for larger systems), it is also possible that one or more large potential customers (e.g. from the transport sector) may stimulate one or more of the manufacturers to develop digital PMR equipment for Band III .

Industry commentators have also indicated that analogue systems (e.g. based on the MPT 1327 trunking protocol) can provide many of the features of the advanced digital technologies (including reliable speech encryption and data messaging).3

2 See Ofcom’s web site for ‘Response of Motorola Ltd to Consultation, Motorola, 3 December 2003.

3 See, for example, ‘MPT1327: dead duck or phoenix?’, Land Mobile, May 2004.


A.1.4 Alternative options open to PMR users

There are two principal alternative options open to Band III PMR users – use of an alternative frequency band or use of a public network. We discuss each of these in turn below.

Use of an alternative frequency band

A number of other frequency bands have been allocated in the UK for PMR – primarily in the UHF range (410–470MHz) and other VHF bands (68–88MHz, 138–165MHz and 165–173MHz).

As indicated in Ofcom’s latest ‘Business Radio Licensing and Channel Statistics Report’4, the greatest interest is for spectrum in the UHF bands and VHF High Band (165–173MHz). The UHF bands provide a good compromise between coverage and mobile design (antenna height). Furthermore digital technologies are available at these frequencies (although Ofcom has yet to set aside an allocation for PMR digital use). High Band provides good wide area coverage (similar to Band III) at a cost of a longer antenna.

This spectrum is generally in high demand, particularly in London and the South East. As a consequence many organisations are making using of Band III as a substitute as they are more readily able to obtain exclusive channels for trunking purposes, despite the poorer availability of equipment.

In considering both demand for Band III spectrum and alternative options open to PMR users, the future availability of alternative PMR spectrum must be considered:

• High Band and UHF1 band – this band is currently congested in certain areas and there are no immediate prospects for new spectrum becoming available

• UHF2 band – the gradual migration of emergency service PMR users to a PAMR system (Airwave) will free up spectrum in this band. However Ofcom plans to use this free spectrum to migrate existing users to a new channel plan.5 Consequently the

4 Source: Business Radio Licensing and Channel Statistics Report for 2004, Ofcom.

5 The proposed 450-470MHz re-alignment project aims to standardise the channelisation in the UK with the rest of Europe (in accordance with CEPT Recommendation TR25-06). In particular at present UK base transmit bands are at the same frequency as European mobile transmit bands (and vice versa) increasing the likelihood of harmful interference being caused. Furthermore digital technologies such as TETRA have been developed to work with the standard CEPT channelisation.


spectrum freed up by the emergency services is unlikely to become available until 2010.

In London and other major urban areas, Band III is likely to continue to be the ‘spillover’ band for UHF and High Band users rather than these bands being an alternative option for meeting future Band III demand.

Use of a public communications network

As discussed above, PMR users are increasingly starting to make use of public networks (primarily cellular networks but also some use of national or regional PAMR networks). The principal advantage of PAMR networks over cellular networks is that they typically provide a wider feature set (e.g. call priority, ‘push-to-talk’ functionality). Nonetheless public networks do not provide the full features, degree of control, reliability and in some cases cost-effectiveness that certain PMR users require. One further consideration for PMR users is the degree of stability/longevity of the PAMR providers. National Band III, a provider of a national PAMR network, decided to close its network at the end of 2002. The UK’s only national digital PMR provider, Dolphin, has recently entered into voluntary administration for the second time; we understand the receivers have recently written to customers indicating that the service will be terminated at the end of July 2004.

A.2 Demand side developments and spectrum requirements

This section presents details of our approach to assessing the future requirement for Band III spectrum for PMR services, together with the results of our analysis. We have structured our analysis into two components (as shown in Exhibit A.7 below):

• analysis of spectrum requirements for growth in existing services (increase in mobile terminals, new users, service enhancements etc)

• analysis of spectrum requirements for new services (e.g. real-time passenger information systems, public safety requirements).


Growth in existing areas New services

• Real-time passenger information systems

• Public safety

Transport

• Network Rail

• Bus and coach

• Tram

• London Underground

Other PMR

• Local government

• Taxi

• Other commercial

• On-site usage

• Common base stations



• Public safety

Transport

• Network Rail

• Bus and coach

• Tram


Other PMR


• Taxi


• On-site usage




• Public safety

Transport

• Network Rail

• Bus and coach

• Tram


Other PMR


• Taxi


• On-site usage




• Public safety

Transport

• Network Rail

• Bus and coach

• Tram


Other PMR


• Taxi


• On-site usage


Exhibit A.7: PMR demand assessment [Source: Analysys, 2004]

A.2.1 Existing services – future spectrum requirements

Methodology

The methodology used to analyse future spectrum requirements for existing services is shown in Exhibit A.8 below. In summary the key steps are:

• analysis of existing usage – review of existing usage of Band III PMR spectrum include the number of assignments, number of mobiles operating in the band in different areas (we divide the UK into ‘London’, ‘Major Urban’ and ‘Other’ areas – see below for further details)

• existing spectrum requirements/usage – based on licensing data from Ofcom, we have estimated the amount of spectrum in use by the various categories of PMR user in different areas

• forecast growth in mobile terminal numbers – we project future demand for spectrum resources by projecting future mobile terminal numbers. This growth encompasses the


aggregate effect of changes in mobile terminal numbers of existing users of the band as well as new users making use of the band6

• future spectrum requirement (pre-efficiency improvements) – we model the likely future total requirement for spectrum by considering the existing spectrum assignments and projecting these forward to reflect changes in mobile numbers

• spectral efficiency improvements – we consider the additional efficiency benefits that could arise from the deployment of new technologies (e.g. DMR) over time

• future spectrum requirement (post-efficiency improvements) – the total spectrum required to support traffic from the mobile terminals, after taking account of spectral efficiency gains

• additional spectrum requirement – this is simply the increase in spectrum required in the future over the current spectrum that it utilised in each area

• net additional spectrum requirement – this factors in the spectrum which has already been allocated to PMR but is currently under-utilised/unutilised in certain areas of the country, leading to an overall increase in spectrum requirement for each area.

Growth in mobiles (existing users and new users)

Spectrum requirement (pre-efficiency improvements)

Spectral efficiency improvements

Additional spectrum requirement over existing use

Existing usage (mobiles, spectrum assignments)

Estimate existingspectrum requirements (user type & area

type)

Existing unutilised/underutilised spectrum

Net additional spectrum requirement (by area type)

Spectrum requirement (post-efficiency improvements)

Growth in mobiles (existing users and new users)

Spectrum requirement (pre-efficiency improvements)

Spectral efficiency improvements

Additional spectrum requirement over existing use

Existing usage (mobiles, spectrum assignments)

Estimate existingspectrum requirements (user type & area

type)

Existing unutilised/underutilised spectrum


Spectrum requirement (post-efficiency improvements)

Exhibit A.8:

PMR spectrum

assessment

methodology

[Source: Analysys,

2004]

6 There may also be changes in traffic volumes associated with each mobile terminal – for modelling purposes, we have considered

this as part of our subscriber growth projections.


Principal assumptions

► Current usage of spectrum

Based on an analysis of the density of existing assignments in Band III (see Exhibit A.9), we have divided the country into three geographic regions, namely:

• London – this covers the Greater London area and has the highest density of assignments

• Major urban – this comprises nine principal regions with high Band III assignment densities – in view of the radio propagation characteristics of VHF, overall spectrum in use/sterilised in some of these areas (e.g. Liverpool-Manchester) may actually be approaching London levels.

• Other regions – the remainder of the country.


Exhibit A.9:

Band III

assignment density

[Source: Analysys,

Ofcom, 2004]

Based on analysis of the current Band III licensing data and discussions with Ofcom staff regarding the current availability of spectrum in Sub-bands 1 and 2, we have estimated that of the total Band III spectrum currently in use for the provision of wide-area and on-site PMR, common base stations and regional PAMR services (our estimate is 15.875MHz in total), 100% is currently utilised in London, 75% of this spectrum is utilised in other major urban areas and 50% is currently utilised in other parts of the UK. Please note that these numbers are estimates, based on our conversations with Ofcom – it is impractical to determine a precise answer in view of:


• the sharing of individual channels between different uses and users (including on-site, wide area and national/regional usage)

• consideration of other areas that are ‘sterilised’ by use of a radio channel in one area – which is heavily dependent on local topography

• consideration of areas where the potential for interference with the continent arises – thereby limiting use.

Our overall initial assessment of current usage of Band III in each of these areas is summarises in Exhibit A.10 below.

Total assignments

Number of mobiles

Estimated spectrum

(MHz)

Total assignments

Number of mobiles

Estimated spectrum

(MHz)

Total assignments

Number of mobiles

Estimated spectrum

(MHz)Network Rail 113 N/A 0.8 196 N/A 0.8 1305 N/A 0.8Bus and coach 70 7960 4.6 166 7981 4.5 90 4102 1.0Tram 21 100 1.4 51 168 1.4 0 0 0.0Underground 10 124 0.7 0 0 0.0 0 0 0.0Taxi 23 1740 1.5 11 720 0.3 0 0 0.0Local Govt 16 460 1.1 73 4272 2.0 301 13285 3.5Other Wide Area PMR 12 430 0.8 7 190 0.2 3 70 0.0On-site 15 600 0.0 71 690 0.1 3 25 0.0CBS 9 N/A 0.6 9 N/A 0.2 33 N/A 0.4PAMR 78 N/A 5.2 116 N/A 3.2 261 N/A 3.0

London Major urban Other

User category

Exhibit A.10: Assignments in Band III [Source: Analysys, Ofcom, 2004]

We have also assumed that restrictions arising from interference to/from other countries use of Band III spectrum are similar in the unutilised Sub-band 2 spectrum (both the contiguous and non-contiguous spectrum) as for the spectrum that is currently assigned to PMR and PAMR in Sub-bands 1 and 2. This implies that the number of assignments/number of mobiles that can be supported per MHz of spectrum is broadly even across Sub-bands 1, 2 and 3 of Band III. In view of the importance of this assumption to the final results of the study, Ofcom has subsequently undertaken an analysis of the Continental use of Band III, particularly in respect of constraints on the use of spectrum in London and the South East. This assessment indicated that there are several TV transmitters operating across the North of France across Sub-bands 1 and 2 and consequently “interference into Southern England will therefore be spread across both Sub-band 1 and 2 fairly evenly”.

► Future demand

Our projections for growth in demand for Band III PMR are summarised in the exhibits below.


Growth in mobile terminals 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Network Rail 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Bus and coach 5.0% 5.0% 5.0% 5.0% 5.0% 2.0% 2.0% 2.0% 2.0% 2.0%Tram 10.0% 10.0% 10.0% 10.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%Underground 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Taxi 15.0% 15.0% 10.0% 5.0% 2.0% 2.0% -10.0% -10.0% -10.0% -10.0%Local Govt 35.0% 45.0% 35.0% 30.0% 20.0% 15.0% 5.0% 2.0% 2.0% 2.0%Other Wide Area PMR 35.0% 35.0% 30.0% 25.0% 15.0% 5.0% -10.0% -10.0% -10.0% -10.0%On-site 20.0% 15.0% 10.0% 5.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%CBS 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Exhibit A.11: Estimated annual growth in PMR terminals in London [Source: Analysys, 2004]

Growth in mobile terminals 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Network Rail 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Bus and coach 5.0% 5.0% 5.0% 5.0% 5.0% 2.0% 2.0% 2.0% 2.0% 2.0%Tram 10.0% 10.0% 10.0% 10.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%Underground 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Taxi 10.0% 10.0% 5.0% 5.0% 2.0% 2.0% -10.0% -10.0% -10.0% -10.0%Local Govt 20.0% 30.0% 20.0% 15.0% 10.0% 5.0% 2.0% 2.0% 2.0% 2.0%Other Wide Area PMR 20.0% 20.0% 15.0% 10.0% 5.0% 5.0% -10.0% -10.0% -10.0% -10.0%On-site 20.0% 15.0% 10.0% 5.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%CBS 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Exhibit A.12: Estimated annual growth in PMR terminals in major urban areas [Source:

Analysys, 2004]

Growth in mobile terminals 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Network Rail 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Bus and coach 5.0% 5.0% 5.0% 5.0% 5.0% 2.0% 2.0% 2.0% 2.0% 2.0%Tram 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Underground 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Taxi 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%Local Govt 10.0% 10.0% 5.0% 5.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%Other Wide Area PMR 5.0% 5.0% 5.0% 5.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%On-site 20.0% 15.0% 10.0% 5.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%CBS 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Exhibit A.13: Estimated annual growth in PMR terminals in other areas [Source: Analysys,

2004]

Our projections are based on the following assumptions about demand by user group.

• Network Rail. As indicated in Section A.1.2 above, national railways are planning to migrate to GSM-R (in dedicated spectrum) and we therefore do not envisage them making significant investments/upgrades in the interim period.

• Bus and coach. The government’s drive to improve usage of public transport services will continue to lead to increasing bus numbers thereby increasing demand for radio resources. Although almost all of the recent growth in passenger numbers has been in London, it is likely that there will be a drive to increase bus usage in other parts of the country as well.

• Tram. As discussed above, there are plans to extend existing tram systems. We expect that this will be limited to the principal urban centres.


• Underground. As discussed above, we understand that London Underground has no specific further needs for spectrum – the main issue is security of tenure.

• Taxi and courier. Increasing usage is being made of Band III in London and certain other major urban centres as a consequence of lack of available spectrum in High Band and the UHF bands. We therefore expect this demand to continue until the release of additional spectrum in UHF2 following band re-alignment.

• Local government. Increasing usage is being made of PMR systems for data applications (e.g. automated job scheduling, dispatch). The recent increase in demand for spectrum has primarily been in non-urban regions – we do however believe that London and other major urban authorities may wish to consider a Band III solution and have prudently assumed this area will continue to experience considerable growth in the short to mid-term.

• Other wide area PMR. Demand for Band III spectrum from other commercial organisations has arisen in London (and major urban areas) as a consequence of limited availability of spectrum in alternative PMR bands. We expect this demand to grow considerably until additional UHF2 spectrum is released following band re-alignment.

• Onsite. We expect the rapid growth in on-site system usage to continue, however we expect that Band III will be one of a number of bands which is used to support on-site systems.

• Common base stations. There are a variety of opinions on the development of the CBS market. On balance, in an environment where PMR usage continues, we expect the demand for Common Base Stations to be relatively flat over time.

Please note that the development of our assumptions have assumed (i) that organisations continue to make use of PMR rather than migrating to public networks and (ii) data services such as automatic vehicle location can be supported using PMR technologies. Both of these factors are far from certain – as a consequence we also model alternative scenarios as discussed in Section A.4.2 below.


► Spectral efficiency

The development of digital PMR technologies can lead to significant increase in spectral efficiency. For example, DMR has two time slots whilst utilising a 12.5kHz channel, effectively doubling the channel throughout.

We have therefore assumed that the efficiency of use of the radio spectrum increases over time, as users start to deploy such new technologies. Exhibit A.14 below shows the spectral efficiency factor we have assumed for each of the user groups – where the factor defines the proportion (%) of spectrum required for a given service in comparison with current analogue technologies in operation in Band III. Note that we have assumed that the efficiency improvements will be deployed faster in certain sectors than others and new technologies will not be deployed in certain sectors (e.g. by Network Rail in view of plans for migration to GSM-R). Spectral efficiency factor 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Network Rail 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%Bus and coach 100% 100% 100% 95% 90% 80% 70% 60% 60% 60%Tram 100% 100% 100% 95% 90% 80% 70% 60% 60% 60%Underground 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%Taxi 100% 100% 100% 97% 94% 91% 88% 85% 82% 79%Local Govt 100% 100% 100% 95% 90% 80% 70% 60% 60% 60%Other Wide Area PMR 100% 100% 100% 97% 94% 91% 88% 85% 82% 79%On-site 100% 100% 100% 97% 94% 91% 88% 85% 82% 79%CBS 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

Exhibit A.14: Assumed spectral efficiency factor [Source: Analysys, 2004]

Note that the existence of spectrally efficient technologies (such as DMR) for Band III is not a certainty. We therefore take account of this when modelling alternative market development scenarios, as discussed in Section A.4.2 below.

Results

The exhibits below show our projected total spectrum requirement for PMR services in Band III – prior to taking account of future spectral efficiency savings.


0

5

10

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25

2004

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Tota

l req

uire

d sp

ectru

m (M

Hz) CBS

On-siteOther Wide Area PMRLocal GovtTaxiUndergroundTramBus and coachNetwork Rail

Exhibit A.15: Requirement for PMR spectrum (pre-spectral efficiency savings) in London

[Source: Analysys, 2004]

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ectru

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Exhibit A.16: Requirement for PMR spectrum (pre-spectral efficiency savings) in other major

urban areas [Source: Analysys, 2004]


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ectru

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Hz) CBS


Exhibit A.17: Requirement for PMR spectrum (pre-spectral efficiency savings) in other areas


The exhibits below show our projected total spectrum requirement for PMR services in Band III after accounting for spectral efficiency spectrum savings.

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Hz) CBS


Exhibit A.18: Requirement for PMR spectrum in London [Source: Analysys, 2004]


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Hz) CBS


Exhibit A.19: Requirement for PMR spectrum in other major urban areas [Source: Analysys,

2004]

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6

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8

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Exhibit A.20: Requirement for PMR spectrum in other areas [Source: Analysys, 2004]


Taking account of the existing spectrum available, the overall net (peak) requirement for additional spectrum is summarised in Exhibit A.21 below. It can be seen that approx 2 x 3.3MHz of additional spectrum is required in the London area whilst we project that the increase in demand in other regions of the country can be met from the existing Band III allocation to PMR. As seen from the charts above, we forecast that the spectrum requirement in London will peak in 2009 – we expect that spectrum will be gradually released following this date.

Region

Net additional spectrum

(MHz)London 6.5Major urban areas -0.3Other -6.8

Exhibit A.21:

Net additional

spectrum

requirement for

PMR services

[Source: Analysys,

2004]

A.2.2 New services – future spectrum requirements

Our research and interviews have identified two current main drivers of additional demand for Band III PMR spectrum:

• initiatives to be taken by local bus and coach operators for the implementation of real-time passenger information systems. London Buses, for example, anticipates providing passenger information on buses, at bus stops and ultimately through the Internet, digital TV and mobile devices

• public safety requirements – Ofcom has indicated that this is a request from the Government but details of the use of the spectrum are unspecified. We understand that 2 x 5MHz of spectrum is estimated to be required for this.

Please note that the above list only includes those applications which are due to be newly implemented, provided sufficient additional spectrum can be made available. The previous analysis of existing uses also includes a wide variety of innovative uses of the spectrum. For example, some local authorities’ use of Band III spectrum includes ensuring that when a tenant of a council home calls in with a maintenance request, the request is automatically passed on to the nearest maintenance engineer (whose physical location is automatically sent back to base using a short data message over PMR) by means of a short data message. Implementation of this and other similar services by other local authorities has been incorporated within our growth forecasts in the previous section.


In its submission to the RA’s consultation on Band III, London Buses estimated that it would require 80 channels (i.e. 1MHz of spectrum) to facilitate the delivery of passenger information to bus stops.7 Our discussions with staff from London Buses have clarified that this estimate is based on the use of existing technology – potential spectral efficiency gains could be realised resulting in a reduced requirement for additional spectrum.

Our discussions indicate that other local bus regions/companies are likely to ultimately follow a similar approach to that taken by London Buses. We therefore project that the combination of spectral efficiency savings and the need for additional spectrum in surrounding regions leads to a maximum requirement of 1MHz of spectrum. This estimate is arguably high, considering the short-burst nature of many of the radio transmissions, however given that London Buses in the earliest stages of a tender process and the technology solutions are not specified, we have taken a prudent approach to the spectrum requirement.

A.3 Economic benefit analysis

This section provides details of the methodology we have adopted to undertake an economic benefit analysis of providing additional spectrum for use for PMR services, together with details of the key assumptions used and results of our assessment.

A.3.1 Existing user groups and services

We have focused our assessment of the net benefits arising from the allocation of additional spectrum to PMR on the evaluation of the consumer surplus associated with the use of additional spectrum.

The principal producer surplus benefit arising from PMR is likely to be associated with UK-based manufacturing organisations – our assessment of the current state of the PMR equipment industry suggests that the current surplus is likely to be minimal or non-existent. In 2002, the RA assessed the producer surplus for PMR as being marginally negative8. Furthermore, additional equipment volumes arising from the allocation of additional band

7 ‘Response to Ofcom/RA consultation Document – Opportunities for future use of spectrum within VHF Band III and in the 1.5GHz

band’, Issue 1, London Buses – Technical Services group, 12 January 2004.

8 ‘Economic value of the radio spectrum – 2002 update’, Radiocommunications Agency, April 2002.


III PMR spectrum will be modest in comparison with the overall PMR equipment market and we do not believe the impact to be material in comparison with the consumer surplus estimates.

Consumer surplus estimate – methodology

Our approach to assessing the consumer surplus is shown in Exhibit A.22 below. The number of mobile terminals actually utilising the net additional spectrum in each area estimated in Section A.2.1 is determined. This is then multiplied by the consumer surplus per mobile terminal to yield the overall consumer surplus. We then assess the net present value (NPV) of the additional spectrum over the period 2005 to 2014 finally resulting in an overall benefit assessment in NPV per MHz.


Total spectrum requirement (post-efficiency improvements)

Total number of mobiles (existing users and new users)

Number of mobiles utilising net additional spectrum

Consumer surplus per mobile terminal Total consumer surplus per year

NPV of consumer surplus (2005-2014)

Maximum net additional spectrum required 2005-2014

Net benefit of allocating additional spectrum (NPV per MHz)


Total spectrum requirement (post-efficiency improvements)

Total number of mobiles (existing users and new users)

Number of mobiles utilising net additional spectrum

Consumer surplus per mobile terminal Total consumer surplus per year

NPV of consumer surplus (2005-2014)

Maximum net additional spectrum required 2005-2014

Net benefit of allocating additional spectrum (NPV per MHz)

Exhibit A.22: Estimation of consumer surplus for PMR users [Source: Analysys, 2004]

Consumer surplus estimate – key assumptions

We have utilised the consumer surplus estimates per mobile terminal developed by the RA as part of the economic value of the radio spectrum assessment undertaken in 2000,


suitably adjusted for inflation.9 There are various reasons why this factor may under or over estimate the consumer surplus associated with additional use of Band III spectrum:

• the figure is inherently four years out-of-date – and is therefore unlikely to be an exact reflection of the consumer surplus for 2004

• the mobile terminals which we are seeking to derive the economic benefit for includes marginal users within an organisation which may therefore not value PMR usage as highly as for the initial users i.e. the 2000 consumer surplus may be an overestimate of the 2004 user base

• given the migration to use of public services by some PMR users, arguably those users who have continued to use PMR may value it more highly i.e. the 2000 consumer surplus could be an underestimate in comparison with the 2004 user base

• the qualitative (and sometimes quantitative e.g. in the case of London Buses) explanations we have been given of the value of PMR by current Band III spectrum users suggests that the 2000 consumer surplus may be understating (sometimes significantly) the overall benefit to organisations – and hence the consumer surplus.

Our desk research has not identified an alternative source of reliable data on the consumer surplus associated with PMR. We therefore feel that, despite its limitations, the 2000 economic value figures are the best available data. In Section A.4.1 below, we undertake a sensitivity analysis of our consumer surplus assumptions.

Exhibit A.23 below summarises the consumer surplus figures per terminal which we have used to undertake our baseline assessments. Consumer surplus per mobile terminal

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

National and regional 434 441 450 459 468 477 486 496 506 516 527Wide area 1,206 1,228 1,251 1,276 1,300 1,326 1,353 1,380 1,407 1,436 1,464On-site 128 130 132 135 138 140 143 146 149 152 155

Exhibit A.23: Consumer surplus estimate per PMR terminal [Source: Radiocommunications

Agency, 2000 and Analysys, 2004]

9 ‘The Economic impact of radio’, Radiocommunications Agency, February 2001.


Our NPV calculations are based on a standard discount rate of 5.5% – in line with UK Treasury guidelines on investment appraisal and target inflation rates. This discount rate has been used for our NPV calculations across all services.

Consumer surplus estimate – results

Exhibit A.24 below summarises the results of our consumer surplus estimates, for each of the three types of geographic area. As no net additional spectrum is required in regions outside London, the overall consumer surplus in these areas is 0.

Area NPV to 2014 (GBP)


(MHz)NPV/MHz (GBP)

London 25,078,718 6.5 3,845,433Major urban 0 -0.3 0Other 0 -6.8 0Nationwide 25,078,718 6.5 3,845,433

Exhibit A.24:

PMR consumer

surplus

assessment results

[Source: Analysys,

2004]

Exhibit A.25 shows our projections for the consumer surplus generated in the London region over time. It can be seen that the surplus falls post 2009 as the requirement for additional spectrum falls.


0

1

2

3

4

5

6

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Con

sum

er s

urpl

us (G

BP m

illion

s)

Exhibit A.25: Consumer surplus generated from net additional PMR spectrum in London


A.3.2 New services

This section discusses our assessment of the economic benefits arising from allocating additional PMR spectrum to be used for the new services described above.

In the case of public safety, it is impractical for us to undertake a net benefits assessment since the use of the spectrum is unknown. Instead we recommend that Ofcom evaluates the ‘value’ of this spectrum in terms of the opportunity cost arising from not allocating the spectrum to other services (e.g. other PMR use, T-DAB etc).

For the real-time passenger information services, London Buses has provided Analysys and Ofcom with additional data which we have used to develop an estimate of the net economic benefits for London buses, and by a process of extrapolation, to the country as a whole.

Real-time passenger information services net economic benefits assessment

Exhibit A.26 summarises the approach we have used to assess the overall net economic benefit of allocating additional radio spectrum for the provision of real-time passenger information services. Based on confidential data from London Buses, we have determined


an economic surplus estimate for London and have also extrapolated values for other regions of the UK. Our approach involves the quantification of the overall benefits of real-time passenger information by considering the number of bus journeys per annum and the ‘value’ of this information to passengers in the form of the additional amount they would be willing to pay per journey. London Buses has undertaken market research to assess the latter – please note however that we have not been able to review the methodology underlying this market research to come to a view on its validity. London Buses has also provided indicative information on the costs of operating and installing the system. For reasons of confidentiality, we have not reproduced details of the key information from London Buses in this report.

Number of bus journeys per annum

‘Value’ of real-time passenger

information per journey

Total benefits Total costs

Depreciation of capital expenditure

Annual operating costs of system

Annual surplus

NPV (2005-2014)

Net benefit of allocating additional spectrum (NPV per

MHz)

Additional spectrum required

Exhibit A.26: Methodology for assessment of economic benefit of allocating additional

spectrum for PMR based real-time passenger information services [Source:

Analysys, 2004]

We have extrapolated the results for London to other parts of the UK – taking account that systems are likely to be deployed in London in advance of the rest of the UK.


The surplus that is generated could either be in the form of consumer surplus (in that customers are charged the full value of the benefit) or producer surplus (savings for bus companies). The final outcome may depend on whether the organisation deploying the system is public (e.g. Transport for London) or private (e.g. local bus company) – as public organisations are non-profit-making, any surplus is likely to be invested in other areas of service provision.

Exhibit A.27 and Exhibit A.28 below present the results of our assessment for the three areas of the country. It can be seen that the value of this application is considerably greater than that of general PMR in terms of value generated per unit spectrum (NPV per MHz).

0

20

40

60

80

100

120

140

160

180

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Surp

lus

(GBP

milli

ons)

Other regions

Major urban

London

Exhibit A.27: Economic surplus from real-time bus passenger information systems [Source:

Analysys, 2004]




(MHz)NPV/MHz (GBP)

London 321,788,693 1.0 321,788,693Major urban 273,090,831 1.0 273,090,831Other 257,221,714 1.0 257,221,714Nationwide 852,101,238 1.0 852,101,238

Exhibit A.28:

NPV per MHz from

real-time bus

passenger

information

systems [Source:

Analysys, 2004]

As discussed above, please note that this assessment is based on underlying data from London Buses. We have not had sufficient information from London Buses regarding the methodology used for its market research to assess the validity of this data. This should be considered when reviewing the results of our assessment.

A.4 Key uncertainties

There are two specific sources of uncertainty in respect of our market forecasts:

• uncertainty over key parameters in our quantitative models (e.g. consumer surplus assumptions) – to analyse this, we propose to undertake a sensitivity analysis of key variables

• uncertainty over key market/industry developments – to analyse this, we propose to undertake a scenario-based analysis.

A.4.1 Sensitivity analysis of key variables

Existing services spectrum requirement

We have identified two key variables (consumer surplus estimates and demand growth rates) which have the main impacts on our assessments of the value of allocating additional spectrum to PMR.

Exhibit A.29 and Exhibit A.30 show the impact on total consumer surplus and spectrum requirement of +/-25% variations in the above two parameters.


-25% 0 +25%

-25% 12,206,624 16,275,498 20,344,373

0 18,809,038 25,078,718 31,348,397

+25% 27,399,806 36,533,074 45,666,343

Consumer surplus per terminalNationwide NPV (GBP)

Dem

and

leve

l

Exhibit A.29:

Sensitivity of

overall consumer

surplus to per

terminal consumer

surplus estimates

and growth

projections

[Source: Analysys,

2004]

-25% 0 +25%

-25% 4.7 4.7 4.7

0 6.5 6.5 6.5

+25% 8.4 8.4 8.4

Spectrum requirement (MHz)

Consumer surplus per terminal

Dem

and

leve

l

Exhibit A.30:

Sensitivity of

overall spectrum

requirement to per

terminal consumer

surplus estimates

and growth

projections

[Source: Analysys,

2004]

New services

The principal variable is the value placed on real-time passenger information per passenger journey. Exhibit A.31 shows the sensitivity of the economic surplus estimate to this parameter.


Nationwide NPV (GBP)

-50% 348,473,8150 852,101,238

+50% 1,355,728,662Valu

e pe

r jo

urne

y

Exhibit A.31:

Sensitivity of net

surplus to value per

passenger journey

assumptions

[Source: Analysys,

2004]

We have also undertaken an assessment of the sensitivity of the economic consumer surplus estimates to the number of bus journeys. The results of this analysis are shown in Exhibit A.32 below.

Nationwide NPV (GBP)

-30% 549,924,7840 852,101,238

+30% 1,154,277,692No

of

jour

ney

s

Exhibit A.32:

Sensitivity of net

surplus to number

of bus journeys

[Source: Analysys,

2004]

A.4.2 Scenario analysis of market developments

As discussed above, there is considerable uncertainty over whether:

• organisations will continue to migrate over to using public communications services (cellular, PAMR)

• digital PMR equipment will become available for Band III, particularly from major manufacturers.

In view of this uncertainty, in addition to our baseline scenario, we have modelled two alternative scenarios for the demand for Band III PMR spectrum:

• Baseline scenario: Organisations continue to self-provide networks and the potential for a modest number of major equipment contracts stimulates the availability of advanced digital equipment for Band III from manufacturers resulting in users taking advantage of advanced communications facilities and considerable improvements in spectral efficiency.

• Scenario A: Organisations prefer to self-provide but the limited availability of digital equipment for Band III means that advanced data applications (e.g. real-time passenger


information systems) migrates to public networks. Existing users continue to use less efficient analogue technologies (but with small improvements in spectral efficiency).

• Scenario B: Migration to public networks generally occurs as lack of UHF and High Band spectrum in key areas, poor equipment availability, and improved offerings from cellular providers (e.g. quality of service guarantees, advanced data service availability) make many organisations decide to migrate to public networks.

Exhibit A.33 summarises the impact of the three scenarios in terms of the additional spectrum required for existing PMR services in Band III and the net economic benefits arising from this spectrum. In the case of Scenario A, it can be seen that poor equipment availability and the loss of improvements in spectral efficiency mean that the additional spectrum requirement is greater than for the baseline scenario – resulting in additional benefits being derived from this spectrum. In the case of Scenario B, there is a short-term requirement for additional spectrum in London – otherwise spectrum is generally released for use for other purposes.

Baseline scenario



(MHz)NPV/MHz (GBP)


Scenario A: Moderate PMR growth, limited availabiloity of digital equipment



(MHz)NPV/MHz (GBP)

London 38,306,223 8.3 4,599,857Major urban 6,651,183 0.8 8,049,477Other 0 -6.4 0Nationwide 44,957,406 8.3 5,398,539

Scenario B: Migration to public networks



(MHz)NPV/MHz (GBP)

London 95,390 0.2 460,998Major urban 0 -3.7 0Other 0 -7.8 0Nationwide 95,390 0.2 460,998

Exhibit A.33:

Scenario analysis

results [Source:

Analysys, 2004]


For the case of new services, it is assumed that these benefits (and spectrum requirement) only occur in the case of the baseline scenario.

We have also modelled the demand for spectrum in the event that band re-alignment in UHF Band 2 does not go ahead. Ofcom has indicated that if this were to be the case, only 50% of the spectrum that would otherwise be available for PMR services in this band would be released. In such a scenario, we have therefore assumed that additional demand arises for Band III spectrum from 2010 onwards (in particular we have assumed that there is only partial migration to UHF by those users who have a preference for UHF spectrum).

The results of our analysis are shown in Exhibit A.34 below. Generally there is a small additional requirement for Band III spectrum overall, however the principal impact is in terms of the timescale over which this extra spectrum can be released – i.e. the additional spectrum continues to be required beyond 2010. As a consequence, the economic value derived from the additional spectrum increases, in comparison with the other scenarios. The greatest demand for additional spectrum occurs in Scenario A – in the baseline scenario significant spectrum efficiency savings are realised by 2010, limiting the overall demand for additional spectrum.

Baseline scenario



(MHz)NPV/MHz (GBP)


Scenario A: Moderate PMR growth, limited availabiloity of digital equipment



(MHz)NPV/MHz (GBP)

London 42,625,676 9.1 4,678,468Major urban 8,214,617 1.2 6,878,887Other 0 -6.4 0Nationwide 50,840,294 9.1 5,580,080

Scenario B: Migration to public networks



(MHz)NPV/MHz (GBP)

London 95,390 0.2 460,998Major urban 0 -3.7 0Other 0 -7.8 0Nationwide 95,390 0.2 460,998

Exhibit A.34:

Demand and

economic benefits

from additional

PMR spectrum

under scenario

where UHF2 band

realignment does

not occur [Source:

Analysys, 2004]


A.5 Implications for allocation options assessment

Key issues for consideration during the allocation/ assignment options assessment include:

• Scope for use of the same frequencies for PMR and other services (e.g. T-DAB) in different geographic areas – since demand for PMR spectrum is generally highest in London, and one of the uses of allocating spectrum to T-DAB would be for providing local stations to certain communities, an assessment will need to be made of the scope for sharing frequencies between the various services in different parts of the country.

• Flexibility for revising allocation at a later date – the baseline demand forecasts indicate a peak in net additional spectrum requirements in 2009 – subsequently some of this spectrum can be farmed out to alternative services.

• Scope for reviewing initial/provisional allocation decisions in three years time – a better view of some of the key uncertainties associated with the demand for PMR spectrum (e.g. availability of digital technologies) is likely to be available in the 2007–2008 timeframe.

• Risk of market failure if market mechanisms are used for allocation decisions – a ‘broker’ for PMR spectrum which can compete with other potential bidders for the spectrum would be required and it is not clear whether one will emerge.

Annex B: Public access mobile radio – benefit analysis

B.1 Market overview and spectrum usage

B.1.3 Introduction

Public access mobile radio (PAMR) is a commercial radio offering – a PAMR operator deploys a regional or national radio communications network which other organisations can then utilise. The concept is similar to cellular (in fact PAMR was the precursor of the cellular model), though there are several differences between the two.

The primary difference is that PAMR networks tend to offer specific features which are designed to appeal to organisations which deploy PMR networks – for example, PAMR facilities can include push-to-talk, group calling, call priority and call pre-emption. PAMR users are also sometimes limited to only being able to call within a closed user group, even if the underlying network supports interconnection with the PSTN.

A further difference between cellular and PAMR is the pricing model. PAMR services are typically priced on a flat fee per month basis rather than the subscription and usage model typically used by cellular operators for their business customers.

There are a variety of PAMR networks in the UK – national and regional analogue networks based on MPT1327 technology utilise frequencies in Band III Sub-bands 1 and 2. A national digital network (Dolphin) which utilises TETRA technology and operates in UHF spectrum (410–430MHz) has recently voluntarily entered into administration (for the second time). We also understand that the administrators have written to customers indicating that they plan to discontinue service from 31 July 2004.

B-2 | Annexes to Final Report for Ofcom

The PAMR market has been in general decline over the last few years, with users increasingly migrating to cellular networks. For example, we understand that Dolphin had 272 000 customers on its network when it first filed for administration in August 2001 – it now has 24 000.10 At that time Dolphin also owned two analogue Band III PAMR operators (National Band Three and Fleetcomm). National Band Three was closed down at the end of 2002 and Fleetcomm’s operations have been scaled down considerably.

B.1.4 Use of additional spectrum

In view of the decline in the PAMR market, there has been little demand for PAMR spectrum in Band III – in fact the demise of National Band Three and the scaling down of operations of other operators means that spectrum has been released for use by other services. A significant proportion of the spectrum in Sub-band 2 that is the subject of this study was previously allocated to PAMR.

An increase in the operations of current PAMR operators (e.g. increased number of mobile terminals, desire to widen coverage) may mean that additional spectrum could be required. We explore this further in Section B.3 below.

As for PMR, a further issue is whether digital equipment will become available for use in this band. It is possible that one or more major PMR contracts may lead to digital technology such as TETRA or Tetrapol being made available for use in this band – however this is a possibility rather than a certainty.

B.2 Demand-side developments and spectrum scenarios

B.2.1 Potential scenarios

We have identified three potential scenarios for the requirement for PAMR spectrum in Band III.

• Scenario 1: Gradual closedown – this assumes the current migration from PAMR continues, resulting in all Band III operations eventually closing down by the end of 2008.

10 See http://crn.vnunet.com/News/1125174 and http://business-sale.com/ntechn.html

Assessment of options for allocating available spectrum | B-3

• Scenario 2: Continuation of operations – the current PAMR businesses continue to operate, utilising legacy equipment/technology – customer base remains steady (users who have remained on the service are likely to be those who will continue to value it highly).

• Scenario 3: Partial Dolphin migration – as a consequence of the impending closedown of Dolphin’s network, a proportion of the existing customers migrate to analogue Band III networks.

B.2.2 Spectrum requirement

The spectrum requirement varies between the three scenarios:

• Scenario 1: Gradual closedown – PAMR spectrum would gradually be released between 2005 and 2008. We estimate that around 5MHz of spectrum would be released for other uses in London from 2009 and around 3MHz of spectrum would be released in other parts of the country.

• Scenario 2: Continuation of operations – this will result in no net change to the overall spectrum position

• Scenario 3: Partial Dolphin migration – a modest amount of additional spectrum will be required to increase capacity of the existing networks. On the assumption that 30% of Dolphin’s current customer base migrates to Band III PAMR networks, we estimate that an additional 1.2MHz of spectrum will be required in London.

B.3 Economic benefit analysis

Only Scenario 3 above involves the allocation of additional spectrum to PAMR. To model this scenario, we have estimated the number of new mobile terminals that will utilise the additional PAMR spectrum (taking account of existing ‘capacity’ within the existing spectrum assignments).

We subsequently estimated the consumer surplus associated with this use. We are not aware of any studies to estimate the specific consumer surplus attributable to PAMR that have recently been undertaken. However PAMR can be viewed as a cellular service with some of the additional benefits from PAMR – we have therefore used a mid-range value between the consumer surplus estimates for cellular business customers and PMR users as

B-4 | Annexes to Final Report for Ofcom

contained in the RA’s economic value studies.11 Our PAMR consumer surplus estimates per terminal are shown in Exhibit B.1. We recognise this is a major source of uncertainty and have therefore undertaken a sensitivity analysis of this variable.

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

870 886 903 921 938 957 976 996 1016 1036 1057

Exhibit B.1: Assumed consumer surplus per PAMR terminal

The overall results of our assessment indicate a GBP12.6 million NPV of consumer surplus between 2005 and 2014 for use of an additional 1.2MHz of spectrum in London. This implies an NPV/MHz of GBP10.5 million.

B.4 Key uncertainties

B.4.1 Sensitivity analysis

As discussed above, we have undertaken a sensitivity analysis in view of the considerable uncertainty in respect of our assessment of the consumer surplus per PAMR terminal (see Exhibit B.2).

London NPV (GBP)

-50% 6,296,661

0 12,593,321

+50% 18,889,982

Con

sum

er

surp

lus

per

term

inal

Exhibit B.2:

Sensitivity of net

surplus to

consumer surplus

per terminal

estimates [Source:

Analysys, 2004]

B.4.2 Scenario analysis

As indicated above, we have identified three potential scenarios for the future development of the PAMR market.

11 See ‘The Economic impact of radio’, Radiocommunications Agency, February 2001 and ‘Economic value of the radio spectrum –

2002 update’, Radiocommunications Agency, April 2002.

Assessment of options for allocating available spectrum | B-5

A key indicator of the future demand for PAMR spectrum is in respect of the plans of existing Dolphin customers. If virtually all customers migrate to cellular networks, then this is a good indicator that Scenario 1 is the most likely market development. If a number of Dolphin customers migrate to existing Band III PAMR networks, then additional spectrum for PAMR may be required (as for Scenario 3).

B.5 Implications for allocation options assessment

Key issues for consideration during the allocation/ assignment options assessment include:

• scope for assigning a block of spectrum to both PMR and PAMR and leaving it to the market to determine the optimum mix

• ascertaining any new information into the future plans of Dolphin’s existing customer base.

Annex C: T-DAB – benefit analysis

C.1 Market overview and spectrum usage

C.1.1 Introduction to T-DAB

The T-DAB standard was developed by the Eureka 147 working group and was adopted as a world standard in 1994. The standard was defined as a replacement for analogue AM and FM radio and has the following advantages.

Error correction The use of error coding enables the receiver to correct errors introduced by noise after it has been broadcast. Until the noise exceeds a certain threshold, the receiver should be able to fully correct all errors and reproduce the audio stream as it was broadcast. Different levels of noise protection are defined in the standard but a higher level of protection requires more capacity on the multiplex.

Sound quality The quality of the audio stream which is broadcast is chosen by the broadcaster and is dependent on the bit rate used. Encoding at a high bit rate results in a higher quality audio stream but uses more capacity on the multiplex, reducing the quantity or quality of the other stations carried. When assigning the capacity of a multiplex, a trade-off must be made between the level of noise protection, the audio quality and the number of stations.

Spectral efficiency The deployment of FM radio over a large area required adjacent transmitters to use different frequencies to prevent interference. T-DAB allows the deployment of single frequency networks (SFN) increasing the spectral efficiency of the broadcast. This also removes the need for in-car listeners to retune their radios as they

C-2 | Annexes to Final Report for Ofcom

travel between transmitter areas.

Data capability Small amounts of data can be broadcast with a channel’s audio stream similar to the Radio Data Service (RDS) for FM radio. This can be used to display additional information about the broadcast such as the station name, the song name or a play list.

T-DAB also allows some of the capacity of the multiplex to be allocated for data broadcasting (‘datacasting’). This is discussed further in 0.

C.1.2 Current market position

The first digital multiplex in the UK was launched by the BBC in September 1995 and broadcast its existing analogue services. In 2002, the BBC added five new digital-only services to its offering – 1 XTRA, 5 Live Sports Extra, 6 Music, BBC 7 and the Asian network. According to figures from Radio Audience Joint Research (RAJAR), these services accounted for 0.7% of all radio listening in the first quarter of 2004.12

A licence for a national commercial digital multiplex was awarded to Digital One in 1998. It broadcasts three services already available on analogue radio, Virgin Radio, Classic FM and Talk Sport, in addition to five new commercial radio services which are broadcast on digital only. Four of these have sufficiently large audiences to be recorded by RAJAR and together account for 0.2% of listening.

46 licences for the operation of local and regional digital multiplexes were awarded by the Radio Authority between 2000 and 2003. These allow existing BBC and commercial local stations to broadcast their services using DAB. A number of analogue regional stations, such as Kiss 100 and XFM in London, have used these local and regional multiplexes to expand beyond their analogue coverage area and reach near national audiences using DAB.

Cumulative sales figures for DAB receivers are shown in Exhibit C.1 below. Until recently, DAB receivers’ sales have been sluggish due to the limited availability of receivers and their high price relative to analogue equivalents. Over the summer of 2003, large marketing campaigns were run by the BBC and commercial broadcasters to promote

12 Figures from RAJAR include those who listen to the services on digital television and the Internet as well as those who use DAB

receivers.

Assessment of options for allocating available spectrum | C-3

digital radio. This increase in awareness in addition to the launch of new products in the mass market sub-GBP100 price range and increased marketing by retailers meant that the industry enjoyed unprecedented sales over Christmas 2003. It remains to be seen whether these increased sales will be sustained, marking the beginning of mass adoption of DAB sets or whether the observed effect is seasonal.

0

100

200

300

400

500

600

Dec-02 Mar-03 Apr-03 Jun-03 Aug-03 Oct-03 Dec-03 Feb-04

Exhibit C.1:

Cumulative DAB

receiver sales in

thousands [Source:

GfK, DRDB]

C.1.3 Existing spectrum usage

At present, T-DAB in the UK operates in 12.5MHz of spectrum in VHF Band III. This corresponds to seven DAB frequency blocks (11B to 12D). One block is in use by the national BBC multiplex (12B) while another has been assigned for the national commercial multiplex operated by Digital One (11D in England in Wales and 12A in Scotland). The remaining five frequency blocks have been used to create a layer of regional and local multiplexes. It has been the aim to ensure close matching between the new local multiplex areas and ‘heritage’ independent local radio (ILR) areas to ease migration of local radio stations to digital.

The Digital One national multiplex reaches over 85% of the population at present while the reach of the BBC national multiplex is expected to reach 85% by mid 2004. The barrier for extending coverage to all of the population is primarily economic, as it is more expensive to cover areas of low population density or with difficult terrain. Of the local and regional multiplexes, 63% of the population are able to receive signals from two or more


multiplexes while a further 13% can receive only one. Coverage of local and regional multiplexes is limited in part by the economics of network roll-out but also by a lack of an available spectrum for new multiplexes in areas such as Oxford, Lincoln and Derby.

Capacity of the current multiplex network is used for new digital-only services and the rebroadcast of analogue services. All 10 of the national BBC radio services and 26 of its 46 regional and local stations are available on DAB Digital Radio. Of the 272 commercial radio stations in the UK, 118 are broadcasting on DAB Digital Radio. Much of the capacity of the local and regional multiplex network is used for ‘out-of-area’ rebroadcast of formerly local or regional radio services. If all stations currently broadcasting using analogue were to transfer to DAB, a large increase in the capacity of the network of multiplexes would be required.

C.2 Potential applications for additional spectrum

The available spectrum in Band III could allow for up to five new frequency blocks to be allocated to DAB Digital Radio and there are 16 blocks set aside for DAB in L-Band. There are a number of potential applications for this spectrum if it were allocated to DAB Digital Radio.

C.2.1 Additional national multiplexes

At present, there are 19 services available on the BBC and Digital One national multiplexes. An additional national multiplex was requested by many of the respondents to the Ofcom consultation on Band III, this would be to create competition in the national commercial multiplex market and increase capacity for the broadcast of national digital stations. Each additional national multiplex would require a single DAB frequency block. There is evidence of demand for additional national broadcast capacity as there are at least five ‘quasi-national’ radio services broadcasting on a collection of regional and local multiplexes at present which could use the additional capacity to address a national audience.

C.2.2 Additional regional multiplexes

Additional spectrum could also be used for the provision of a layer of ‘super-regional’ multiplexes covering large areas such as Scotland, Wales or Northern England. A single frequency block could be allocated for this purpose although gaps would have left at the


boundaries of each transmission area to prevent interference with neighbouring multiplexes. While the network could be designed to accommodate this restriction by ensuring that the boundary gaps occur in low population density areas such as the border of England and Scotland, it is inevitable that the addressable audience would be less that if the frequency were used for a national multiplex. No consultation respondents expressed a preference for a new layer of regional multiplexes.

C.2.3 Local multiplex coverage completion

As stated in Section C.1.3, there is insufficient spectrum available to extend the layer of local multiplexes to cover some areas such as Oxford, Lincoln, Derby and Luton. Ofcom estimates that 20% of the population will not be able to receive local multiplex services due to limitations of available spectrum. This ‘20% problem’ can be solved to by allocating more VHF Band III or a combination of L-Band and VHF Band III spectrum to local multiplexes. The amount of spectrum allocated will determine the proportion of the remaining population which can be covered by local multiplexes. In practice, this coverage could be using a lesser amount of spectrum by sacrificing the requirement to match local multiplex broadcast areas with those of ‘heritage’ ILR areas. The coverage of adjacent areas using a single local digital multiplex would allow economies to be made in the allocation of spectrum.

C.2.4 Community radio broadcasting

The Community Radio Order introducing community radio was laid in Parliament on 15 June 2004. If approved, it will pave the way for Ofcom to advertise community radio licences. Spectrum could be allocated for community radio services to be broadcast on DAB Digital Radio to allow an alternative broadcast mechanism or, in the longer term, a migration path from analogue broadcasting.

C.2.5 Satellite radio

Ofcom have asked us to consider the potential use of some of the L-Band for satellite radio in the UK by providers such as Worldspace. Satellite radio has been successful in the US where it is hard to achieve terrestrial coverage of large, sparsely populated areas. It would be offered as a subscription service and would appeal to those who want to receive the same stations across all of Europe.


C.3 Economic benefit analysis

C.3.1 Estimation methodology

The consumer surplus generated by spectrum allocation to DAB is estimated in three stages:

• the value of DAB to listeners over time is estimated using an assumption about how the price premium of a DAB set over an equivalent analogue set will evolve over time

• the amount by which the value of DAB is expected to increase with any new spectrum allocation is estimated

• the increase in value is used to estimate the increase in DAB take-up due to the new spectrum allocation and the overall increase in consumer surplus.

Estimated value of DAB

The take-up forecasts predict how listener numbers could evolve over time and the specific assumptions used are discussed in more detail in Section C.4.1. A DAB set will be bought when the buyer perceives the value to be greater than the price that he/she pays for the set. Using estimates of how we expect the price premium of a DAB set to evolve over time and our forecasts of take-up, we can estimate the value of DAB to listeners. This method is illustrated in Exhibit C.2. For a known quantity of listeners, Q, the total value of DAB can be estimated by calculating the area under the demand curve up to the quantity Q.


Q

Price

Listeners

Value to Q listeners

Exhibit C.2:

Estimating current

value to listeners

using a demand

curve (illustrative)

[Source: Analysys,

2004]

The first listeners to adopt DAB will be those who value it the most. As penetration of the DAB increases, the average value per listener is diluted by the adoption of DAB by listeners who value DAB less than the existing listener base.

Value increase due to new spectrum

The increase in value of DAB due to new spectrum being allocated is dependent on the purpose for which the spectrum is used. The specific methodologies used are described in succeeding sections.

Calculation of consumer surplus

The final step of the calculation is to convert the predicted increase in value into a consumer surplus. Existing users, those who would have purchased DAB regardless of the new spectrum allocation, accrue all of the increased value as a consumer surplus. The number of additional listeners, those who purchased DAB only because of the added value resulting from the new spectrum allocation, is estimated using the price-quantity relationship of the demand curve. These additional listeners only accrue a proportion of the value increase as consumer surplus and on average, this will be half of the total value increase.


Expected value of DAB Digital Radio over time

% increase in value due to new spectrum

Surplus to additional listenersElasticity estimates

Surplus to existing listenersExpected value of DAB Digital Radio over time


Surplus to additional listenersElasticity estimates

Surplus to existing listeners

Exhibit C.3: Flow diagram for calculation of consumer surplus [Source: Analysys, 2004]

C.3.2 Key assumptions

Price decline

In order to estimate the value of DAB to users, an estimate is made of how the price premium of DAB sets over analogue sets will evolve over time. A consumer will only buy a DAB set if they perceive its increased value compared to an analogue set as being greater than the price premium that they must pay. Our assumptions about price decline are shown in Exhibit C.4. The average price premium of a DAB set at present is GBP50; we expect this to decline to below GBP10 by 2014. This decline will result from an increase in the number of manufacturers supplying DAB sets and economies of scale available due to increased volumes in the UK and other European countries. Our forecasts regarding take-up of DAB sets allow us to estimate how much DAB listeners value DAB, and how this value evolves over time.


0

5

10

15

20

25

30

35

40

45

50

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Pric

e (G

BP

)

Exhibit C.4:

Estimated decline

of the price

premium of DAB

sets over time

Combining these price assumptions with assumptions about take-up, we obtain the demand curve shown in Exhibit C.5. A choke price premium of GBP100 has been assumed, corresponding approximately to the price premium of DAB sets when they were first launched.

0

10

20

30

40

50

60

70

80

90

100

0 10 20 30 40 50

Listeners (million)

Pric

e (G

BP)

Exhibit C.5:

Implied demand

curve for DAB sets


Composition of radio value

In order to predict the increase in the value of DAB due to the application of new spectrum, it is useful to make an assumption regarding the proportion of the value of DAB which can be attributed to national BBC stations, national commercial stations and local stations on DAB.

The first column in Exhibit C.6 below shows the share of analogue radio listening hours according to the first quarter of 2004 RAJAR estimates, which are attributable to BBC stations, other national stations and other local stations. The second column shows the share of value attributable to the same services according to a stated preference (SP) survey by Aegis Systems Ltd. for the Radiocommunications Agency in 2000, which aimed to measure the value of a proposed digital radio service.

36%25% 29%

10%17%

17%

54% 58% 54%

Share ofanalogue

listenership

SP surveyshare of

value

Analysysassumption

BBC stations

Other national stations

Other local stations

Exhibit C.6:

Composition of

digital radio value

[Source: RAJAR,

Aegis Systems

Ltd., Analysys,

2004]

The SP survey suggests that commercial stations would be of greater value to listeners on a digital radio service than is evidenced by their current share of analogue radio listening time. The three independent national radio (INR) stations are currently at a competitive disadvantage, as they broadcast on AM while most BBC and local stations broadcast on FM with higher quality. This is supported by the evidence from post-purchase survey card


returns by DAB purchasers13. Respondents were asked what radio stations they listen to in a typical week, the proportion of respondents listening to national stations who listen to INR stations was 28%. When the equivalent figure is calculated for analogue stations14, the proportion is 20%.

For the purposes of this calculation, we have used the RAJAR analogue figures adjusted to take into account this expected increase in the share of value of national commercial stations, as shown in the third column of Exhibit C.6. The increase is assumed to be at a cost to local commercial stations who now face more effective competition for the ‘commercial’ audience.

Impacts upon consumer and producer surplus not quantified

The increase in capacity on digital radio multiplexes that would result from an additional spectrum allocation would lead to a reduction in the fees charged to digital radio broadcasters. This effect would be especially significant were an additional national multiplex awarded as this would end the monopoly currently enjoyed by Digital One. As there is no publicly available information regarding the levels of fees charged by multiplex operators, we are not able to predict how these would evolve given any new allocation and hence, we are not able to value the additional surplus generated.

C.3.3 Additional national multiplexes

Application-specific assumptions

For the purposes of this study, we have assumed a proportion of radio value which can be attributed to national commercial radio stations. We can then make an estimate of how the value of national commercial stations would increase, were a new national multiplex licensed. The total proportional increase in the value of digital radio is the product of the two figures.

13 The DAB registration scheme is operated by Claritas. The figures mentioned are from January 2004 and have been supplied by

the Digital Radio Development Board (DRDB).

14 Analogue figure is calculated from RAJAR weekly audience reach figures.



Expected % increase in value of national

commercial stations

% of value attributable to national commercial

stations

Exhibit C.7: Flow

diagram for

estimation of

increase in national

radio value

[Source: Analysys,

2004]

If a new national commercial multiplex is allocated it will increase the value of the DAB national commercial offering as a result of two effects.

Increased differentiation

New stations may target demographics which are currently not well served by existing stations in order to gain market share. This will lead to a more diversified national commercial radio service offering which more closely matches the tastes of the radio audience.

Increased competition

New stations may instead choose to compete on quality – gaining market share by offering a better service to mainstream audiences than those currently on offer. The increased competition for share of listening, and consequently advertising revenues, would lead to an increase in the quality of radio services offered to listeners.

The value added by each new station will in fact be due to a contribution from both of the above effects. Based on this, we estimate that the increase will be of the magnitude of 40%. A second additional national multiplex would then add 40% of the value of the first additional multiplex. This application of this increase is phased over the period from 2005 to 2010 to take into account the delay in establishing the new multiplex and in gaining market share.

It has also been assumed that coverage of the national multiplexes will be increased over time from the present level of 85%, achieving 99% coverage by 2014.


Results

Exhibit C.8 below shows how Analysys forecasts that DAB listener numbers will develop over time. The forecast for existing users, those that would adopt regardless of any new spectrum allocation, is based on industry forecasts of cumulative DAB set sales15 to 2008. This has been extended to 2014 by Analysys, and the associated number of listeners have been estimated. It is forecast that a new national multiplex would attract an additional 3.29 million listeners by 2014.

0

5

10

15

20

25

30

35

40

45

50

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

mill

ion

Additional listeners

Existing listeners

Exhibit C.8:

Forecast DAB

listener numbers

[Source: Industry

forecasts,

Analysys, 2004]

Exhibit C.9 below shows that the increase in yearly consumer surplus owing to a new national multiplex would rise to GBP10.3 million by 2014. The total present value surplus taking into account the effects of inflation is GBP42.9 million over the period from 2004 to 2015.

15 Source: The Market Impact of BBC’s Digital Radio Services, Oliver and Ohlbaum Associates Ltd, March 2004


0

2

4

6

8

10

12

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

GB

P m

illio

n


Existing listeners

Exhibit C.9:

Forecast additional

consumer surplus

per year

[Source: Analysys,

2004]

C.3.4 Additional regional multiplexes

The effects of an additional layer of regional multiplexes is very similar to that of the deployment of an additional national multiplex. A layer of regional multiplexes could add more value to the DAB service offering than a new national multiplex as it would allow for the broadcast of regional radio services, which could fill a market niche between the level of geographic orientation offered by local stations and that offered by national stations.

The added cost of choosing to deploy a layer of regional multiplexes is that if only a single frequency is used, there will be areas between the borders of each of the broadcast regions where no stations can be received due to the effects of interference. This reduces the population coverage achievable by the regional multiplexes. However, although this effect can be minimised by choosing region boundaries which occur in sparely populated areas such as the Scottish borders, it is still likely to be significant in any deployment.


0%

5%

10%

15%

20%

25%

30%

35%

0% 5% 10% 15% 20% 25%Reduction in coverage

Com

pens

atin

g in

crea

se in

val

ue re

quire

d

Exhibit C.10:

Coverage-value

trade-off for

regional

multiplexes

[Source: Analysys,

2004]

Exhibit C.10 above illustrates the added value which regional services would require over national to justify the associated loss in coverage. The decision to deploy a layer of regional multiplexes instead of a national multiplex depends upon the assessment of this trade-off which is in turn dependent on the way in which broadcasters intend to position themselves competitively in the radio marketplace. As such, it is better, if possible, to leave this national versus regional decision to the market.

C.3.5 Local multiplex coverage completion

Application-specific assumptions

The increase in value to due to new spectrum is calculated from the estimate of the value attributed to local stations and the proportion of the population to which local multiplex coverage will be extended. For this application, a separate assumption was made with regard to the difference in listener numbers due to the new allocation as it constituted a large proportion of the total listener base. It was assumed that, in the case where local coverage was not available, that listener numbers would be reduced by 60%. The impairment reduces to 40% over time. This estimate is based upon the proportion of value of radio which is attributable to radio and the effect that the loss of this value would have on purchasing behaviour.



Expected % increase in value of national commercial stations

% of value attributable to national commercial stations


Expected % increase in value of national commercial stations

% of value attributable to national commercial stations

Exhibit C.11: Flow

diagram for

estimation of

increase in radio

value

[Source: Analysys,

2004]

We considered four possible ways of using additional spectrum to expand local multiplex coverage:

• Completing the roll-out of the layer of local multiplexes using five VHF Band III DAB frequency blocks, ensuring as close a match as feasible between DAB local multiplex coverage areas and ‘heritage’ ILR areas.

• Completing the layer using only three VHF Band III DAB frequency blocks, by aggregating some of the multiplex areas used in the previous option.

• Completing the layer using only two VHF Band III DAB frequency blocks, by further aggregating some of the above multiplex areas.

• Completing the roll-out using three VHF Band III DAB frequency blocks supplemented by L-band allocations, where feasible. This would allow a similar level of area matching to the first option.

Each of these methods produce the same increase in population coverage (12.7%), but vary in the amount and type of spectrum used and the matching between new digital local multiplex areas and ‘heritage’ ILR areas. Exhibit C.12 shows the additional percentage of the population who are covered by a local multiplex with each allocation of spectrum. These assumptions are based upon guidance that Analysys received from Ofcom.


6.4%

5.2%

4.6%

3.2%

6.4%

4.9%

3.8%

2.2%2.

6% 3.0%

2.1%

1.1%

0.2%

5.1%

0%

1%

2%

3%

4%

5%

6%

7%

2 VHF blocks 3 VHF blocks 5 VHF blocks 3 VHF blocks &L-band

Spectrum usage option

Incr

ease

in lo

cal m

ultip

lex

popu

latio

n co

vera

ge

First VHF block

Second VHF block

Third VHF block

Fourth VHF block

Fifth VHF block

L-band

Exhibit C.12: Local multiplex coverage methods [Source: Analysys, Ofcom]

There is an additional benefit to allocating additional VHF band III spectrum to expand the coverage of the existing layer of local multiplexes that has not yet been considered. It is expected that each VHF block could be reused elsewhere in the country to provide coverage by a second layer of local multiplexes. A detailed frequency planning and multiplex area definition exercise was not conducted but some assumptions were made in an effort to quantify this additional benefit. Exhibit C.13 below shows possible transmission areas for new local multiplexes which would cover areas not currently serviced by local multiplexes. Using these estimates of transmission areas and areas of sterilisation around them, we have formulated the assumptions in Exhibit C.14 for the percentage of the population which could be covered by a second local multiplex.


Exhibit C.13:

Potential areas of

sterilisation around

new local multiplex

transmitters

[Source: Masons]

Allocation method used Potential coverage by a layer of second local multiplexes

2 VHF blocks 30%

3 VHF blocks 40%

5 VHF blocks 80%

3 VHF blocks & L-band 45%

Exhibit C.14:

Second local

multiplex

assumptions

[Source: Analysys]

The potential coverage is highest for 5 VHF blocks as there will be a greater potential for frequency reuse. The value of these second local multiplexes is estimated using a methodology similar to that used for the second national multiplex. A more conservative estimate for the increase in value parameter (30%) as there is potentially more limited demand for additional local services when compared to national services.

Results

The results shown here are for the case where almost all of the areas currently uncovered by the layer of local multiplexes are covered using a new allocation of spectrum. This corresponds to 12.7% of the population. These results scale proportionally with the proportion of the population which is covered by the new multiplexes. Exhibit C.15 below


shows how DAB listener numbers would grow over time in the case where new spectrum is not allocated and the additional listeners which completing local multiplex coverage would attract. By 2014, it is estimated the new spectrum allocation would attract an additional 1.7 million people.

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

mill

ion


Existing listeners

Exhibit C.15:

Forecast DAB

listener numbers

[Source: Analysys,

2004]

Exhibit C.16 below shows the increase in consumer surplus which would result from the new spectrum allocation. The yearly consumer surplus would reach GBP5.9 million by 2014. The total present value consumer surplus, taking into account the effects of inflation, would be GBP25.2 million over the period from 2004 to 2014.


0

1

2

3

4

5

6

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

GB

P m

illio

n


Existing listeners

Exhibit C.16:

Forecast additional

consumer surplus

per year

[Source: Analysys,

2004]]

As stated previously, the consumer surplus is proportional to the proportion of population covered by local multiplexes. Exhibit C.22 shows resulting increase in present value consumer surplus for each portion of spectrum for each of the different allocations considered.


0

2

4

6

8

10

12

14

FirstVHFblock

SecondVHFblock

ThirdVHFblock

FourthVHFblock

Fifth VHFblock

L-band

Ben

efit

(GB

P m

illio

n

2 VHF blocks3 VHF blocks

5 VHF blocks

3 VHF blocks & L-band

Spectrum allocation

Exhibit C.17: Consumer surplus associated with each portion of spectrum for different

allocations [Source: Analysys]

Exhibit C.17 above shows the benefit accruing from the provision of local multiplexes to areas not already covered only. The additional benefit from covering areas already served with a second layer of local multiplexes has also been considered and Exhibit C.18 shows how the benefit from each block increases as a result of this effect.


0

2

4

6

8

10

12

14

16

18

20

FirstVHFblock

SecondVHFblock

ThirdVHFblock

FourthVHFblock

Fifth VHFblock

L-band

Ben

efit

(GB

P m

illio

n

5 VHF blocks3 VHF blocks

2 VHF blocks

3 VHF blocks & L-band

Spectrum allocation

Exhibit C.18: Consumer surplus associated with each portion of spectrum for different

allocations schemes including second local multiplex benefit [Source: Analysys]

C.3.6 Community radio broadcasting

The draft community radio order, establishing a system for the licensing of community radio, was published in a consultation by Ofcom which ran from 10 February 2004 to 20 April 2004. The community radio order was laid before parliament on 15 June and if approved, will allow Ofcom to begin issuing licences for community radio in the UK.

Analysys was asked to consider community radio within our study and specifically to examine if any of the spectrum under consideration could be used for the provision of community radio services on DAB.

L-Band, due to its propagation characteristics, would be well suited for community radio services which have a small broadcast area. A single block could be allocated for the use by small-scale community radio services around the country. Ofcom has asked us to consider that the benefits from community radio are in the area of public interest and the economic benefits for the purpose of this study can be considered to be limited. The economic cost of using this spectrum for community radio services is the net benefit that would arise from the usage which it would replace.


C.3.7 Satellite radio

Satellite radio has been a successful proposition in the US for the following reasons:

• There are no national terrestrial radio stations in the US. Subscribing to satellite radio allows customer to receive the same stations throughout the country.

• There are large areas of sparsely populated areas in the US, particularly along road routes. This helps the business case for coverage by satellite instead of by terrestrial means.

• The US shares a common culture and a common language which enables stations to target large audience segments.

A European satellite radio provider would enjoy none of the above benefits. The UK is densely populated in comparison with the US and has a vibrant national radio market. Culture and language differ greatly across Europe and it is hard to see how stations could target both an UK and continental European audience. Given the listening choice already available to consumers and the need to purchase new receiving equipment, it is unlikely that a subscription satellite service will attract many users and contribute a sizeable consumer or producer surplus. In any case, a market allocation/assignment mechanism would give any potential satellite radio operator the opportunity to acquire spectrum to offer their service.

C.4 Key uncertainties

C.4.1 Demand side variables

The main uncertainty which governs the amount of additional consumer surplus generated by any new spectrum allocation to DAB is the extent to which DAB sets will become a mass market commodity over the next decade. The take-up forecasts used in producing the above results assume that DAB sets will gain mass market acceptance but there are a number of prerequisite conditions required to be met in order for these forecasts to be achieved.

Wide range of DAB sets

The number of DAB products available rose from 29 to 63 over the course of 2003.16 The main focus of the industry was to offer a

16 Source: DRDB


DAB sets range of products in each of the different form factors (kitchen radio, portable, ‘boombox’…). The first sets retailing for under GBP100 targeted at the mass market also went on sale.

However, most audio devices with analogue radio purchased at present are multi-functional. Analogue radios have been integrated into CD/cassette players in all form factors for quite some time and most recently have been added to mobile phones. DAB will need to achieve this level of integration if it is to penetrate the mass market.

Production volumes

The high premium of DAB digital radios over equivalent analogue sets has been a key inhibitor in DAB take-up. The recent increase in sales suggests that this is being overcome but it is important that economies of scale are reached by manufacturers to reduce this premium even further. The UK DAB market is the most developed in Europe but European markets are now beginning to turn the corner. This increases the addressable market for DAB set manufacturers and if the growth in demand for DAB sets across Europe is sustained, the premium consumers pay for choosing DAB sets will decrease.

Consumer acceptance of DAB

It is important that consumers see DAB digital radios as providing significant benefits relative to analogue radio. The natural replacement cycle for radios relative to other consumer electronic products is relatively long and cannot be relied upon for driving DAB adoption. In order to achieve and sustain levels of sales above this, a significant marketing effort will be required to convince consumers of the benefits of digital radio.

Another key uncertainty to consider is the effect that an increased number of radio services has on consumer surplus. A new national multiplex could accommodate eight to ten new radio services. The value added by new national stations is difficult to measure without knowledge of what radio audience it intends to target and how it intends to differentiate itself from its competitors. Also, the increased availability of national multiplex capacity could attract one of the ‘quasi-national’ stations currently broadcasting on a range of regional and local multiplexes. If this were the case, the net effect would be an increase in the availability of regional and local multiplex capacity. Therefore, the ability to make an


accurate assumption with regard to the magnitude of the increase in consumer surplus is limited to the extent which the value of future radio services and the reaction of the market can be predicted.

C.4.2 Accrual of benefit

Another key uncertainty is the problem that a radio set is not only of benefit to the person who bought it. It was stated above that a buyer would only purchase a DAB set when the buyer’s perception of the DAB set’s value exceeded the price premium they had to pay. However, where other members of the buyer’s household have access to the DAB set, they also may accrue a benefit. If they decide to buy collectively, they will compare the total value they accrue from DAB radio with the value of a single DAB set. In this case, a one-to-one relationship of price to value exists. In the case where an individual purchases a DAB radio which is then shared with others, there is an additional benefit to the new users. For the results above, it has been assumed that the set is shared by 2.3 people, the average number of people per household in the UK. We believe this represents the upper bound for this uncertainty.

C.4.3 Impacts on benefits and spectrum allocation

To measure the impact of demand uncertainties upon consumer surplus, a second set of take-up forecasts were formulated, as shown in Exhibit C.19.

0

5

10

15

20

25

30

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Cum

ulat

ive

DA

B s

et s

ales

(mill

ions

)

Base case Reduced adoption

Exhibit C.19: DAB take-up forecasts [Source: Industry forecasts, Analysys, 2004]


The ‘Base case’ corresponds to the more likely scenario that DAB succeeds in developing into a mass market proposition. This forecast is based on industry forecasts of cumulative sales17 to 2008, extended to 2014 by Analysys for the purposes of this calculation. The ‘Reduced adoption’ case corresponds to how the market could develop if one or more of the prerequisites in Section C.4.1 were not met.

To estimate the effect of the uncertainty over who accrues the benefit from a DAB set discussed in Section C.4.2, an lower bound case was considered where benefit was only accrued by the purchaser(s) of the radio. In this case, the value of the radio is equal (or slightly greater than) the price paid.

The resulting sensitivities of the main results to the key uncertainties are shown in Exhibit C.20 and Exhibit C.21 below.

Additional user benefit

Lower bound Upper bound

Normal 18.7 42.9

Low 9.2 21.2 Take

-up

Exhibit C.20:

Sensitivity of

surplus accruing

from additional

national multiplex

[Source: Analysys]

Additional user benefit

Lower bound Upper bound

Normal 10.9 25.2

Low 5.5 12.6 Take

-up

Exhibit C.21:

Sensitivity of

surplus accruing

from expansion of

first layer of local

multiplexes

[Source: Analysys]

The other significant uncertainty is with regard to the magnitude of the increase in value which would result from additional national multiplex capacity being made available. The

17 Source: The Market Impact of BBC’s Digital Radio Services, Oliver and Ohlbaum Associates Ltd, March 2004


resulting consumer surplus is directly proportional to the assumed proportional increase in value and this sensitivity is illustrated in Exhibit C.22.

Assumed increase Consumer surplus

(GBP million)

Change

20% 21 -50%

40% 43 0%

60% 64 +50%

Exhibit C.22:

Sensitivity to value

increase

assumption

[Source: Analysys]

C.5 Implications for allocation options assessment

Based on the analysis of the additional consumer surplus which could potentially be generated by the allocation of more spectrum to T-DAB, the following are issues for consideration during the allocation/assignment options assessment:

• Can the decision to allocate a frequency block to local multiplexes versus regional /national multiplexes be decided by the market?

• To what extent can the decision with regard to the deployment of a national multiplex versus a layer of regional multiplexes be decided by the market? Could a suitable market mechanism be designed to achieve this?

• What specific areas would be covered by any new local multiplexes? To what extent does the use of VHF Band III spectrum for a local multiplex in one area preclude its use for other services such as PMR in another?

• How should spectrum be assigned to users within each of these allocations?

Annex D: T-DAB mobile and portable multimedia services – benefit analysis

D.1 Market overview

D.1.1 Current supply and demand status

As the mobile voice market is now at a mature stage, many industry players are focusing upon developing new services which can provide additional opportunities for growth. Mobile content services, while very successful in Asia, have been slower to develop in Europe but recent developments such as the success of Vodafone’s ‘Live!’ content offering have shown that there is an appetite for such services here.

0

2

4

6

8

10

12

14

16

18

2004 2005 2006 2007 2008 2009

Rev

enue

s (E

UR

bill

ion)

Exhibit D.1:

Western European

mobile content

revenue forecast

[Source: Analysys

Research]

D-2 | Annexes to Final Report for Ofcom

Mobile content is currently supplied through the cellular network. In a cellular network, transmissions costs per subscriber are broadly constant and do not vary with the number of subscribers accessing the same content. In broadcast networks, total transmission costs are constant and so transmission costs per subscribers decrease with increasing numbers of subscribers. As such, broadcast networks have a significant cost advantage when transmitting the same data to a large subscriber base as is case with mobile live television. This interest in mobile broadcasting has spurred the development of new standards and devices which support mobile broadcasting.

Many industry players stand to benefit from the deployment of mobile broadcasting. Mobile operators hope that the new technology will allow them to offer cheaper high bandwidth services to the mass market increasing revenues while third parties see mobile broadcasting as a competing content delivery channel which can be used to gain a foothold in the mobile content market. Mobile device manufacturers are keen to integrate new technologies into handsets to retain the short replacement cycle which mobile devices currently enjoy.

D.1.2 Existing regulatory and licensing conditions

The national multiplex operator, Digital One, holds a Broadcasting Act licence which places a 20% cap on the proportion of the multiplex which can be used for broadcasting data services. Digital One has recently signed a contract with BT Wholesale for use of this portion of its multiplex for the provision of mobile and portable multimedia services. As such, there is at present a scarcity of national multiplex capacity for the purposes of data broadcasting.

It is possible that, if a new national multiplex were to be established, it could be awarded a ‘general’ multiplex licence. This was an option favoured by several consultation respondents as it would more fully expose the multiplex to market forces and encourage experimentation in novel data services.

D.2 Alternative supply scenarios

D.2.1 DVB-H

DVB-H is a variant of the digital terrestrial standard, DVB-T, which has been altered to take into account the requirements of handheld devices. It facilitates the conservation of

Assessment of options for allocating available spectrum | D-3

battery life and uses greater error correction to improve reception for small, moving devices. The standard is supported by Nokia and Vodafone and has been successfully trialled by operators in Helsinki, Berlin and Pittsburgh. An add-on to the Nokia 7700 which is yet to be launched, the Nokia Streamer SU-6, allows users to receive DVB-H broadcasts.

DVB-H is a competing standard to DAB in the mobile broadcasting space. It offers greater bandwidth than DAB and is better suited to applications such as live TV. However, unlike DAB it has no spectrum allocated to it in the UK at present and it is unlikely that spectrum will become available until after analogue television switch-off, scheduled to occur in 2010.

D.2.2 Cellular

As discussed previously, the fixed costs of broadcast technologies mean that they have a significant advantage over cellular networks when transmitted simultaneously to larger audiences. Cellular networks are better suited for downloading individual content on request and although it is possible to do this using DVB-H or T-DAB, using the cellular connection to transmit requests, it is an inefficient use of the available resource. Cellular networks can offer a more diverse range of content to their subscribers than broadcast operators. As such, the magnitude of the advantages of broadcast transport technologies over cellular is highly dependent upon the type of content which consumers demand over the coming years.

D.3 Economic Benefit analysis

The surplus associated with this allocation can be estimated by examining the reduction in cost to the operator of the multimedia data service compared to offering a similar service over a 3G network. The operator could choose to price their service at the same level as a competing 3G service and accrue the cost saving as a producer surplus. The more likely scenario is that some or all of the cost saving would be passed on to consumers as surplus and there would be an additional surplus arising from new users being attracted to the service. It can be expected that this additional surplus would be quite large given the cost saving that is available to any potential multiplex operator. It is difficult to estimate the number of customers that would be attracted to the service as it would require the development of a demand curve for a service which does not yet exist. As an alternative, a lower bound estimate has been made by estimating the size of the cost saving that accrues


to producers. We have assumed that take-up will evolve as it would have if the service was only available on 3G networks. To give an indication of the surplus that could be generated we have examined the cost savings associated with a video clip download and a live video streaming service.

Assumptions

The revenues of the national multiplex operator, Digital One, were GBP8.3 million for the financial year ending 31st March 2004. We have assumed that this would be the cost of operating a national multiplex and would rise with inflation over time and we have estimated that a proportion of the national multiplex would be used for the provision of each of these services.

The cost of transmitting the data on a 3G (W-CDMA) network was estimated to be GBP0.04 per downloaded MB or GBP0.29 per minute of streaming data at 128kbit/s, based on industry data18. To illustrate the cost saving of broadcast over cellular transmission, we have made the following assumptions:

• Video clip download. It was assumed that 4% of mobile subscriber base in the UK would avail of this service by 2014. Each user would download an average of 2.5 video clips per month with an average size of 5MB.

• Live video streaming. For this usage scenario, we assumed that 5% of mobile subscriber base in the UK would use the live video streaming service for an average of 10 minutes per month.

The costs associated with each of the above scenarios are shown in Exhibit D.2.

Source: 3G Mobile June 2004, Motorola.

Assessment of options for allocating available spectrum | D-5

Usage scenario Benefit NPV (2004-2014)(GBP millions)

Video clip download

31.4

Live video streaming 237

Exhibit D.2:

Comparative cost of

broadcast versus

cellular transmission

[Source: Analysys,

2004]

As is evidenced by the above analysis, there are significant cost savings associated with the use of broadcasting to deliver mobile content services. The magnitude of the saving varies widely and is dependent upon the type of content in question and the number of users to whom it is simultaneously being transmitted.

D.4 Key uncertainties

The dominating uncertainty for this service is whether T-DAB will emerge as the industry standard for broadcasting to mobile phones. As discussed in Section D.2.1, DVB-H has strong industry backing and offers higher bandwidth than T-DAB. There is no evidence of any interest from potential mobile broadcast operators in T-DAB outside of the UK. There is also significant uncertainty over consumer demand for potential mobile broadcasting services and to the extent to which broadcast operators will be able to design content and services which leverage their cost advantage over cellular network providers.

As a result of these uncertainties, it is not possible to specify a value for the surplus associated with this service. We believe that the market will be capable of determining the level of use of multiplex capacity for broadcasting data services.

D.5 Implications for allocation options assessment

The following issues arise from the preceding discussion of T-DAB mobile and portable multimedia services for consideration during the allocation/ assignment options assessment:

• To what extent can the market adapt to the uncertain demand for spectrum for T-DAB mobile broadcasting?


• If a new national multiplex licence is awarded, should a ‘general’ multiplex licence be used to allow the market to decide multiplex content?

Annex E: PMSE usage of Band III

In assessing the options for allocating available spectrum within VHF Band III it is clear that, to accommodate more than two DAB multiplexes will have an impact on channel availability within spectrum currently assigned to Programme Making and Special Events (PMSE) licensees.

Broadcasters and news organisations across the UK utilise VHF frequencies for radio microphones, production communications and audio links. In addition radio microphones are used within theatres, conference centres, schools, churches and other venues.

The Joint Frequency Management Group (JFMG) is the band manager for the PMSE licensees, on behalf of Ofcom. They have delegated powers to issue licences and co-ordinate frequencies.

PMSE licensees use frequencies across the radio spectrum from VHF up to 2.5GHz, 3.5GHz, 10GHz and upwards. The higher frequencies (2.5GHz and above) are typically used for point-to-point links carrying video traffic. Three main types of system that use the VHF frequencies are:

• radio microphones • TalkBack (push to talk mobile systems for voice communication) • temporary or portable audio links.

The JFMG frequency register from 200MHz–400MHz is reproduced (from the JFMG web site) as an appendix at the end of this Annex.

E.1 Categories of use of radio microphone frequencies

Radio microphones are licensed in a number of categories:

E-2 | Annexes to Final Report for Ofcom

• licence exempt • co-ordinated • shared use • digital.

Licence exempt frequencies exist at both VHF (173.8MHz–175MHz) and UHF (863MHz). Use of these frequencies is on the same terms as conventional licence exempt devices, which are that devices may receive interference from other users and must not themselves interfere with other (licensed) services. Licence-exempt radio microphones are limited in power to 10mW handheld or 50mW bodyworn equipment.

Co-ordinated use means that the licence (issued by JFMG) specifies a location and a date of use. The use is co-ordinated with other licences issued for the same time period to provide the best assignment of channels for the specified location to avoid interference with other users. Co-ordinated use licences range from one-day licences (e.g. to cover a particular news event) up to ongoing use (up to a year) at a fixed site. Frequencies for co-ordinated use are as shown in the table below.

Channels (centre

frequencies) Total number of channels

Total number of channels affected by Band III allocation options

VHF 176.4, 177.0, 192.3, 200.1, 207.7, 208.1MHz

6 0 – lowest DAB block at 208.6MHz

UHF 470 – 862MHz Unknown 0 – but may be affected in future by ‘Digital Switchover’ (see note below)

Exhibit E.1: Radio microphones - channels for coordinated use

Shared Use means that the assignment is not exclusive to any single licence holder and hence there is an increased chance of interference compared to the co-ordinated channels. Licences for shared use are typically for one year, and are ‘go anywhere’ licences, i.e. not tied to a particular location. Frequencies exist at both VHF and UHF, as shown in Exhibit E.2 below.

Assessment of options for allocating available spectrum | E-3

Channels (centre frequencies)

Total number of channels

Total assignments as of 31 March 2004

Total number of channels affected by Band III allocation options

VHF 175.25, 175.525, 176.6, 191.9, 192.8, 193.0, 199.7, 200.3, 200.6, 208.3, 208.6, 209.0, 216.1, 216.6, 216.8

15 347 4 – 209.0, 216.1, 216.6, 216.8MHz affected by the 5 block DAB scenario (due to position of blocks 10A and 11A), with a fifth (208.6) possibly suffering increased adjacent channel interference from DAB block 10A)

UHF 470MHz–862MHz Unknown Not confirmed 0 – but may be affected by ‘Digital Switchover’ (see note below)

Exhibit E.2: Radio microphones - channels for shared use

For both co-ordinated and shared-use radio microphones, the maximum EIRP is 10mW. Channel width is 200kHz.

Currently, the only frequencies available for digital radio microphones are in the UHF band (470MHZ–854MHz). Estimates from one radio microphone supplier in the UK are that the majority of new radio microphone equipment now sold in the UK is at UHF, suggesting that the population of radio microphones still using VHF channels is predominantly legacy equipment. Estimates given were that this equipment may be some 10-15 years old; we have not been able to confirm this suggestion with users of the equipment (broadcasters, theatres etc.).

E.2 Frequencies for TalkBack

TalkBack frequencies exist at both VHF and UHF, although the majority are in the UHF band. Frequencies are licensed in a number of bands, depending on use and availability. Systems are typically ‘push to talk’ voice systems for communication either at a temporary location (news event) or at a fixed location (e.g. within conference centres).


Frequencies are paired (duplex) as with PMR, as shown in Exhibit E.3 below.

Frequencies Total number of channels

Total Assignments EIRP

VHF 211.91875-212.19375MHz (mobile transmit) paired with 141MHz (base transmit)

4 84 Base station 25 W antenna height 10 metres

UHF 455/468MHz

457/467MHz

462/469MHz

24

18

20

Not confirmed Base station 25 W antenna height 10 metres

Exhibit E.3: Frequencies for TalkBack

Our understanding from the JFMG is that assignments in the 211/212MHz band are mostly annual assignments, typically for BBC local radio’s reporter car links. In London and the South East, the band is also used by BBC Radio for programme-quality links for Network Radio news. These assignments are for use within a defined geographic area.

E.3 Frequencies for audio links

Audio links are temporary fixed point-to-point links, or portable links, typically used for programme-quality audio links. They use a number of frequencies at VHF and UHF (see Exhibit E.4 below). Some spectrum at VHF has already been ‘lost’ due to the introduction of DAB in the 217MHz–230MHz band. The JFMG frequency register suggests that these frequencies are still in use but are co-ordinated with DAB transmitters, however discussion with the JFMG suggests that the frequencies have now been withdrawn from use.


Frequencies Total number of channels

Use

VHF 215.26875-215.49375MHz,

224.00625-224.49375MHz

3

7

Temporary point to point links, audio links.

25 W EIRP 10 m antenna height

UHF 425.3125-425.5625MHz

plus additional channels at 442-463MHz and within 470-862MHz

5 Availability limited to selected locations

Exhibit E.4: Frequencies for audio links

E.4 Summary of VHF frequencies affected by Band III allocation options

In summary, the frequencies/usages listed below are potentially affected by the Band III allocation options:

• Two out of a total of six co-ordinated use radio microphone frequencies (207.7MHz and 208.1MHz), which are not displaced under any scenario but may suffer increased adjacent channel interference under the 5 block DAB scenario from DAB block 10A

• Up to five out of a total of 15 shared-use radio microphone frequencies would be lost to PMSE under the proposed 5 block DAB scenario. Channels affected would be 209.0MHz, 216.1MHz, 216.6MHz, 216.8MHz (due to position of blocks 10A and 11A). A fifth channel (208.6MHz) may suffer adjacent channel interference from DAB block 10A

• All four VHF talkback frequencies at 211/212MHz, which accommodate 84 assignments, are potentially affected if three or more DAB blocks are assigned, due to allocation of DAB block 10B

• Three VHF frequencies for audio links at 215.26875MHz–215.49375MHz are potentially lost if four or more DAB blocks are assigned, due to allocation of DAB block 10D (seven have already been lost due to existing DAB multiplexes).


E.5 Number of licences

JFMG have told us that there were 347 UHF shared-use radio microphone licences on issue at 31 March 2004. In the same period, there were 84 frequency assignments in the 211/212 MHz band and 24 in the 215 MHz band.

JFMG have pointed out that it is difficult to extrapolate use of channels (number of radio microphones) from licensing data. For example, a national news broadcaster may hold a licence for a UK-wide channel but will have many users and equipment operating under that licence.

E.6 Cost of equipment

It is apparent from web information on UK radio microphone equipment that there is a wide range of products in circulation, ranging from single ‘spot frequency’ up to modern switchable microphones that are able to select the best channel for both signal strength and signal-to-noise ratio. Switchable VHF products appear to be programmable with all available UK VHF frequencies and hence, in principle, it would appear that this equipment would not be affected by the loss of some channels within the VHF band since 10 channels would remain outside of the affected band. However, it is not clear what proportion of existing equipment uses spot frequency operation and what proportion is switchable. Information received from one radio microphone supplier suggests that typical VHF sets are not readily re-tunable by the user and would need to be returned to suppliers for reconfiguration. Noting that much of the VHF equipment in circulation appears to be legacy equipment, this may not be a practical option.

Cost of individual microphones typically ranges from GBP200 for a basic set up to GBP400 and above for higher performance sets. Control units for the microphones are typically in excess of GBP1000.

To estimate the total cost of re-equipping products either to UHF or to other frequencies, we would need to know the number of radiomicrophone systems currently in circulation. This would require an estimate of the number of systems used per licence (since a single licence may cover a user for a number of systems across the 15 VHF shared use channels). As pointed out in the previous section, JFMG have said that it is difficult to extrapolate use of channels (number of radio microphones) from licensing data, since a national news


broadcaster may hold a licence for a UK wide channel but will have many users and equipment operating under that licence.

E.7 Other relevant information

JFMG Response to the RA/Ofcom Consultation on Future Use of Spectrum within VHF Band III

The JFMG responded to the RA/Ofcom consultation on future use of spectrum within VHF Band III (the consultation that preceded this study) back in October 2002. Within their response they highlighted that:

• Parts of Band III around the vision carrier frequencies of continental and Irish broadcasts are unsuitable for land mobile services but low-powered radio microphones can be assigned in these frequency ranges without compatibility difficulties.

• The main alternative band to VHF for co-ordinated radio microphones is in the UHF TV bands, where radio microphone usage is tailored to co-ordinate with broadcasting transmissions. There is uncertainty over the impact of ‘Digital Switchover’ at UHF on PMSE assignments. PMSE also has assignments in 410MHz–450MHz, potentially affected by the UHF2 alignment (hence spectrum at VHF is particularly important given the uncertainty over the impact of changes at UHF). (Note that none of the proposed DAB blocks 10A to 11A affect the radio microphone coordinated use channels)

• Audio Links – an increasing portion are via satellite but some news organizations still use terrestrial links for talkback and audio links. Terrestrial Band III links are preferred in urban areas where paths to satellite can be obstructed. Additionally many local radio stations rely on Band III audio links due to propagation advantage compared to UHF, or where satellite options are not available.

• Guard bands. Requirements of programme makers for protection from interference are stringent due to the ‘live’ nature of production.

• Significant costs of re-equipping national broadcasters due to volume of legacy equipment.


E.8 Conclusions

Conclusions are thus:

• 347 shared-use VHF licences are potentially affected by the options for allocating Band III spectrum, if five DAB blocks are assigned, due to loss of channels from DAB blocks 10A and 11A.

• A number of co-ordinated use licences (number unknown) may be operating in channels that suffer increased adjacent channel interference arising from allocation of DAB block 10A.

• All four VHF talkback frequencies at 211/212MHz, which accommodate 84 assignments currently are potentially affected if DAB block 10B is assigned, although most talkback frequencies appear to be at UHF and so the impact of this is unclear.

• Three VHF frequencies for audio links at 215.26875MHz–215.49375MHz, accommodating 25 assignments currently, are affected if DAB block 10D is assigned (a further seven audio link frequencies have already been lost due to existing DAB multiplexes). However, a further spectrum for audio links is available at UHF.

• The proposal that displaced VHF PMSE use could be migrated to UHF could be of significant concern to the PMSE community in view of to the current uncertainty regarding future use of their current UHF channels – impacted by the analogue-digital TV migration in the 470MHz–862MHz band. However, such a move may be beneficial to the user community since it would enable replacement of legacy VHF equipment with higher performance UHF products. It may be beneficial for Ofcom to initiate a review of future spectrum requirements for PMSE and potentially to consider re-farming of current VHF PMSE use to UHF (with this requirement being considered as priority within the planning of the 470–862MHz band for digital broadcasting).

• It seems unlikely that radio microphones and DAB would be able to co-exist in the same spectrum however further technical study within Ofcom may be useful to validate this.

• Given the antenna height and powers of the audio links, it is unlikely that these could co-exist with DAB.


• Five radio microphone suppliers were contacted to request information; one reply was received. This was received from a major UK supplier of VHF and UHF ancillary broadcasting equipment. This supplier suggested that the majority of total sales of radio microphone systems is now at UHF and that the majority of VHF products remaining in use are legacy systems. The supplier also confirmed that legacy equipment is not readily retunable by users (e.g. to move to unaffected VHF frequencies outside Sub Band 3)

• Cost of displacement will depend on the number of microphones per licence, which JFMG have not quantified. Our estimate is that costs could be as high as GBP42 million, assuming the majority of shared-use channels being used by national broadcasters with hundreds of microphones per licence. A full cost assessment would need to consider the actual number of systems operated per shared use licence, which we have not been able to quantify for this study.


Appendix - JFMG register of frequencies 200-428MHz

Centre Frequency or Lower edge of Band (MHz)

Upper edge of Band (MHz)

Maximum Effective Radiated Power (ERP)

Maximum Bandwidth

Restrictions and Notes All frequencies are available in England, Scotland, Wales, Northern Ireland, the Isle of Man and Channel Islands except where stated otherwise

Typical Applications

200.5 201.1 10MW 200kHz Radio microphones


208.3 10MW 200kHz Radio microphones


211.91875 212.19375 25W 75kHz Maximum transmitter antenna height 10m above ground level.

Wide area duplex Talkback – Mobile Tx. (Base Tx in 141MHz band.)

215.26875 215.49375 25W 75kHz Maximum transmitter antenna height 10m above ground level.

Temporary point-to-point audio links. Portable audio links.

216.1 10MW 200kHz VHF Shared mics

216.3 10MW 200kHz Radio microphones

216.5 217.1 10MW 200kHz VHF Shared mics

224.00625 224.49375 25W 75kHz This band is shared with Digital Audio Broadcasting. Availability depends on location, power and type of use required.

Portable audio links

425.3125 425.5625 25W 50kHz Available only in Bristol, Bournemouth, Dorchester, Newport Isle of Wight, Portsmouth, Southampton and Weymouth.

Temporary point-to-point audio links.

427.7625 428.0125 25W 100kHz

Available only in Greater London, West Midlands, East Midlands, Greater Manchester, Merseyside, South Yorkshire, West Yorkshire, Cleveland, Tyne & Wear, Glasgow, Edinburgh, Aberdeen.

Wide area Talkback

Annex F: Interference analysis

This note sets out results of Mason’s interference assessment for Phase 2 of the Analysys/DotEcon/Mason study for Ofcom on costs and benefits of alternative allocation options in VHF Band III and L Band.

Within the interference assessment, Mason was asked to confirm:

• In a ‘mixed PMR/DAB’ spectrum scenario (e.g. if PMR is used in Greater London) which other parts of the UK could DAB be assigned such that it does not exceed the PMR interference threshold in London and PMR transmissions in London do not interfere with DAB in other parts of the country.

• What are the adjacent channel constraints between PMR and DAB, i.e. can a PMR system operate in the next adjacent channel to a DAB transmitter.

• Constraints arising from requirements to co-ordinate UK Band III usage with analogue broadcasting transmitters located on the continent (France, Belgium) and Ireland.

We have focused the analysis on a PMR receiving threshold of an MPT1327 system. This will represent the worst case since TETRA and TETRAPOL systems both offer an improved receiver performance compared to MPT1327.

F.1 DAB/PMR assessment

F.1.1 Interference scenarios

As PMR is a two-way service (duplex), there are four possible modes of interference:

• PMR base station receiving unwanted DAB • PMR Mobile receiving unwanted DAB

F-2 | Annexes to Final Report for Ofcom

• DAB Radio receiving unwanted PMR base station signal • DAB Radio receiving unwanted PMR Mobile signal.

PMR receiving unwanted DAB

The PMR base station has a higher gain antenna than the PMR mobile, resulting in greater Effective Radiated Power (ERP) and greater Effective Receive Sensitivity (ERS) at the base station. This is used to compensate for the relatively low ERP and ERS of the mobile.

This means that the base station will suffer more from DAB interference than the mobile, as it has to work with a lower noise to signal ratio.

In addition the base station antenna will typically be 20m or more above ground level and so will receive a much stronger DAB signal due to the lack of clutter attenuation.

DAB receiving unwanted PMR

Considering a distant PMR mobile and a distant PMR base station we know the PMR base station has the greater ERP plus a height advantage, so the base station will be the greater source of interference to DAB rather than the mobile.

We also note that an out-of-coverage trunked PMR radio (possibly within a DAB reception area) will not key-up (transmit) because it cannot determine which traffic channel to use (it will continue to search for a pilot channel).

In summary, we consider that two of the four modes of interference will determine the minimum frequency re-use distance:

• PMR base station receiving unwanted DAB • DAB Radio receiving unwanted PMR base station signal.

As the DAB transmitters invariably use a higher ERP than a PMR base station, and also because the PMR base station has a higher ERS than a DAB receiver, we see that the limiting case will be:

• PMR base station receiving unwanted DAB.

Assessment of options for allocating available spectrum | F-3

Therefore, our assessment focuses on this case. We consider two cases (a) geographic separation required for co-frequency DAB-PMR operation and (b) geographic separation and/or frequency separation for adjacent channel DAB-PMR operation.

F.1.2 DAB/PMR assessment

Approach

Using a free space propagation model, it can be calculated that the geographic separation required between an area of DAB coverage and an area of PMR coverage operating co-frequency would need to be several hundred kilometres to avoid the PMR interference threshold being exceeded due to receiving unwanted DAB emissions.

To take account of attenuation due to terrain and clutter in the interference path requires use of a Planning Tool. Therefore, we used the ATDI ‘ICS Telecom’ tool to model the limiting scenario, that of a (MPT1327) PMR base station receiving unwanted DAB emission. The objective was to assess the geographic separation required between DAB transmitters outside of London and PMR systems within the greater London area, considering (a) co- and (b) adjacent channel effects.

Using the planning tool, we positioned a number of DAB transmitters around the greater London area, progressively ‘switching off’ transmitters until emissions were below the PMR interference threshold (-116dBm).

For the co-frequency assessment, both DAB and PMR systems are centred on the same frequency within Sub-band 3 of Band III.

For the adjacent channel assessment, we are aware from the RTCG reports provided by Ofcom that there are two alternative spectrum masks for DAB within the ETSI standard ETS300401; a basic mask and a more stringent mask, which is designed to be used in critical areas for adjacent channel interference. The more stringent mask provides greater attenuation in emissions away from the carrier frequency. Therefore, we considered both in our assessment of adjacent channel interference (ACI) effects.

The following assumptions are used in the assessment, reflecting scenarios where the DAB transmitters are used to provide DAB coverage ‘fill in’ (i.e. we have assumed that


transmitters will operate at a lower EIRP compared to the main DAB transmitters currently used by BBC/Digital One:

DAB:

• Tx height: 20m • Rx height: 1.5m • power: 50W (1kW typical for main transmitters) • DAB emissions – both the ‘basic’ emissions mask and the ‘stringent’ emissions mask

are considered.

PMR:

• MPT1327 • BS height 15m • MS height 1.5m • base station power 44dBm EIRP • bandwidth 12.5kHz • receive sensitivity -96 dBm • protection Ratio 20 dB (interference threshold thus (-96)-20=(-116) dBm).

Frequency offset for adjacent channel operation

In the proposed 5 DAB block scenario, where PMR is used in Greater London up to the Sub Band 2 boundary (207.49375MHz) and DAB is used outside of London on DAB block 10A (centre frequency 209.936MHz), a frequency offset of less than 3MHz occurs (2.44MHz). Referring to the RTCG report on DAB-PMR co-existence, this illustrates that the DAB transmitter produces signal levels that will interfere with the PMR receiver at between 1MHz and 3MHz offset from the DAB centre frequency. Critically, the frequency offset required for effective adjacent channel operation depends on whether the basic or the stringent DAB mask is applied.

Comparison of DAB signal levels seen at the PMR receiver between the basic and the stringent mask are shown in the spectrum masks measured by RTCG for Ofcom (Figure 7 on page 13 – Comparison of Measured and Calculated TDAB Signal Levels).


Interfering signal levels measured at the PMR receiver as illustrated in the RTCG report are shown in Exhibit F.1 below. The red line added to the RTCG diagram shows the signal levels occurring at 2.44MHz frequency offset, which is the offset proposed in the 5 DAB block plan (highest PMR channel 207.49375MHz, lowest DAB block 10A 209.936MHz).

Comparison of Measured and Calculated T-DAB Signal Levels(for 14 dB SINAD and with a Wanted Signal Level of -107 dBm)

-100-90-80-70-60

-50-40-30-20-10

0 1 2 3 4 5

Frequency Offset (MHz)

T-D

AB

Sig

nal L

evel

(dB

m)

Measured w ith basic mask T-DAB source Measured w ith stringent mask T-DAB sourceCalcaulated using T-DAB basic mask Calculated using T-DAB stringent maskMaximum T-DAB due to PMR receiver blocking

-30 dBm Aprox. 300m-51 dBm Aprox. 4km-66 dBm Aprox. 10km

Distance from T-DAB 50W EIRP Tx at which adjacent channel interference is experienced

2.44

Comparison of Measured and Calculated T-DAB Signal Levels(for 14 dB SINAD and with a Wanted Signal Level of -107 dBm)

-100-90-80-70-60

-50-40-30-20-10

0 1 2 3 4 5

Frequency Offset (MHz)

T-D

AB

Sig

nal L

evel

(dB

m)

Measured w ith basic mask T-DAB source Measured w ith stringent mask T-DAB sourceCalcaulated using T-DAB basic mask Calculated using T-DAB stringent maskMaximum T-DAB due to PMR receiver blocking

-30 dBm Aprox. 300m-51 dBm Aprox. 4km-66 dBm Aprox. 10km

Distance from T-DAB 50W EIRP Tx at which adjacent channel interference is experienced

2.44

Exhibit F.1: DAB signal levels at increasing frequency offsets from a PMR system [Source:

Ofcom Project 801 – T-DAB/PMR protection ratios]

The above illustrates that:

• For the stringent DAB mask, emissions should in theory drop to an acceptable level for adjacent channel DAB-PMR operation at around 1.5MHz offset.

• For the basic DAB mask, emissions do not drop to an acceptable level until between 2.5MHz and 3MHz offset.

• With the basic DAB mask, a 2.44MHz offset is not sufficient to prevent interference (the black line in the illustration relative to the horizontal green line). Hence, some geographic separation is required between the interfering and victim system to attenuate the interfering signal.


• For the stringent DAB mast a 2.44MHz offset will, in theory, be sufficient to avoid interference (since the blue line crosses the horizontal green line between 1MHz and 2MHz), without geographic separation (i.e. as long as coverage areas are not co-located). However, the measurements conducted by RTCG suggest that the DAB signal source used for the measurements did not comply with the stringent mask in practice (the dotted blue line relative to the solid blue line). Unfortunately, measurements stop at 2MHz so it is not clear what signal level exists at the offset of interest to us (2.44MHz).

In summary, at frequency offsets of less than 1.5MHz for the stringent mask and for less than 3MHz for the basic mask, PMR and DAB systems cannot co-exist without some geographic separation between the systems. The actual separation required will be dependent on terrain factors, for which a planning tool is required to predict the signal path.

Results of Planning Tool Assessment of Geographic Separation Required for Effective Co and Adjacent Channel DAB-PMR Operation

Results of our planning tool assessment are shown in Exhibit F.2 and Exhibit F.3 below, first showing a screen plot from the planning tool and secondly, the same results reproduced using MapInfo.


Exhibit F.2: Planning tool output


SIGNAL

STRENGTH (dBm)

-51

-66

-116

-96

DESCRIPTIONCode

DAB Stringent Mask ACI with PMR (typically 4 km from Tx @ T-DAB EIRP of 50W)

DAB Basic Mask ACI with PMR (typically 10 km from Tx @ T-DAB EIRP of 50W)

DAB Reception(typically 40 km from Tx @ T-DAB EIRP of 50W)

DAB to PMR Co-Channel Interference Threshold(typically 55 to 90 km from Tx @ T-DAB EIRP of 50W)

SIGNAL STRENGTH (dBm)

-51

-66

-116

-96

DESCRIPTIONCode

DAB Stringent Mask ACI with PMR (typically 4 km from Tx @ T-DAB EIRP of 50W)

DAB Basic Mask ACI with PMR (typically 10 km from Tx @ T-DAB EIRP of 50W)

DAB Reception(typically 40 km from Tx @ T-DAB EIRP of 50W)

DAB to PMR Co-Channel Interference Threshold(typically 55 to 90 km from Tx @ T-DAB EIRP of 50W)

Exhibit F.3: MapInfo illustration of results

Explanation of the plots is as follows:

• The green areas of the map show areas around a DAB transmitter where signal levels are above the adjacent channel interference limit for PMR, for the stringent DAB mask (this is typically 4km from the DAB transmitter with the DAB EIRP at 50W).

• The turquoise areas of the map show areas around a DAB transmitter where signal levels are above the adjacent channel interference limit for PMR for the basic DAB mask (this typically 10km from the DAB transmitter with the DAB EIRP at 50W).


• The mid-blue areas of the map show the DAB reception area from a DAB transmitter at 50W EIRP.

• The dark blue areas of the map show where emissions are above the DAB to PMR co-channel interference threshold.

This illustrates that:

• If PMR is operating in London, a DAB transmitter needs to be between 15–50km away from the edge of the PMR coverage to avoid co-channel interference levels being exceeded

• For the adjacent channel case, the distance depends on whether the DAB transmitter complies with the basic or the stringent DAB mask, and the frequency separation between the DAB transmitter and the PMR system. For the basic mask, a PMR system less than 10km away from a DAB transmitter may suffer adjacent channel interference at frequency offsets of between 1MHz and 3MHz. For the stringent mask, the area reduces to 4km (i.e. a PMR system less than 4km from the DAB transmitter with the stringent mask will suffer interference). Thus, for the stringent mask between 1MHz and 2.5MHz frequency offset (the –51dBm level show in the blue line on the RTCG mask), the geographic separation required to avoid ACI is approximately 4km. For the basic mask at between 1MHz and 3MHz offset (the black line on the RTCG mask), the required separation increases to 10km.

F.1.3 Conclusions from DAB-PMR assessment

Conclusions are thus as follows:

• Between 15–50km separation is required between a PMR system in greater London and a DAB transmitter in the surrounding area to avoid the PMR receiver threshold being exceeded. This applies to the co-frequency case (i.e. PMR receive channel within the DAB transmitting bandwidth) for a DAB transmitter at 50 W EIRP.

• For the adjacent channel case, the geographic separation depends on the frequency offset between the DAB and PMR centre frequency and the DAB mask (basic or stringent). For the stringent mask at between 1MHz and 3MHz frequency offset, the geographic separation required to avoid ACI is approximately 4km. For the basic mask


between 1MHz and 2MHz offset (the black line on the RTCG mask), the required separation increases to 10km.

• The 2.44MHz separation proposed in the 5 DAB block scenario appears is feasible with no geographic separation (with non overlapping coverage areas), if the stringent DAB mask is applied. However, RTCG measurements of a DAB signal source designed to the stringent mask suggest that the source did not meet the mask in practice, falling some way off, which may exceed the ACI threshold at 2.44MHz (since the RTCG measurements stop at 2MHz offset this is not confirmed).

• Our assessment assumes DAB transmitters at 50W EIRP, typical of a ‘fill in’ transmitter. A main DAB transmitter operating at higher EIRP will therefore cause higher levels of emission for which the geographic separation would have to be significantly greater. We recommend that a lower EIRP be used for local multiplex transmitters to prevent interference with DAB.

F.2 Continental interference assessment

F.2.1 Introduction

Research into analogue television transmitters on the continent (based on web sources and discussion with Ofcom) suggests that the following operate in the vicinity of the 209MHz–216MHz band, with the potential to cause interference to UK assignments in Sub-band 3:

• France: two main transmitters – Boulogne centre frequency 216MHz – Brest centre frequency 210.25MHz Vision Carrier.

• Ireland: two main transmitters within 206MHz–214MHz (vision carrier 207.25MHz (5.5MHz bandwidth), sound carrier 213.25MHz (50kHz bandwidth) – Maghera 280kW EIRP, 122m height – Kippure 160kW EIRP, 107m height.

• Belgium: one main transmitter centred at 210.25MHz – St-Peiters-Leeuw near Brussels 100kW EIRP 265m height.

To assess the potential interfering powers that these transmitters generate towards the UK, we used the planning tool to plot the transmitters relative to the PMR receiver threshold


and the DAB receiver threshold, to illustrate how far into the UK analogue television emissions from the continent could interfere with PMR systems (and the area within which UK transmitters would have to be co-ordinated with France under the relevant regulatory MOUs).

F.2.2 Continental analogue TV interfering with UK PMR

The output from the planning tool is shown in Exhibit F.4 below, illustrating areas of the UK for which the PMR interference threshold would be exceeded by interference from analogue television transmitters in Ireland and the continent.

Interfering Signal (-116dBm)Interfering Signal (-116dBm)

Exhibit F.4: Continental analogue TV Interfering with UK PMR in Sub Band 3

Results are plotted for a PMR receiver height of 20m and show continuous interference (50% time).

This illustrates that PMR systems within the majority of the UK would suffer interference from analogue television transmitters in Ireland and the continent. The only areas not affected are to the north of Scotland. This is due to the high transmit power and elevation of the television transmitter antennas. The characteristics of the analogue television spectrum mask mean that harmful interference to PMR is likely to arise across the whole bandwidth of the analogue television vision carrier (6MHz). In summary, it appears that continental interference would place severe constraints on the use of Sub-band 3 in the UK for PMR.


F.2.3 Continental analogue TV interfering with UK DAB

The outputs from the planning tool are shown in Exhibit F.5 and Exhibit F.6 below, illustrating areas of the UK for which the DAB interference threshold is exceeded by interference from analogue television transmitters in Ireland and Belgium.

The first plot shows the results assuming interference is predicted for 50% time, 50% locations, and the second plot shows the corresponding plot for 50% time, 1% locations (the ‘worst case’ co-ordination criteria).

Brief discussion with Ofcom has suggested that the 50% time, 50% locations assumption should be used, which suggests that the interference that UK DAB transmitters would receive from continental transmitters is largely limited to coastal areas.

Assumptions used for DAB reception are:

• Rx height: 1.5m • receiver sensitivity: -116 dBm.

Exhibit F.5: Continental analogue TV interfering with UK DAB: Brussels and Ireland


Exhibit F.6: Continental analogue TC interfering with UK DAB: Brussels, Ireland and France

Plots are shown at DAB receiver height of 1.5m, for continuous interference (50% time).

The results suggest that DAB blocks assigned across the 209MHz–216MHz band will suffer some interference from analogue TV transmitters operating on the continent. In summary, the results illustrate that:

• Sub-band 3 of Band III is not useable in any part of Northern Ireland for DAB due to interference from television transmitters in Ireland.

• Sub-Band 3 of Band III could be allocated to DAB in the UK, however systems would experience some interference in coastal parts of the UK. Since the analogue television transmitters are located at different frequencies across the 209MHz–215MHz band, different DAB blocks would be affected by interference to some degree (block 10A affected by Brest, Ireland and Belgium, block 10C by Ireland and Block 11A by France/Boulogne).


• If Ofcom is assigning spectrum by auction, it should be made clear within the technical conditions of the licences that interference may be received in parts of the UK (and that sites will need to be designed to meet exported interference limits).

F.2.4 UK DAB interfering with Continental television

For the exported interference assessment, we considered interfering emissions from DAB transmitters in the UK falling on the Irish, French and Belgium coastlines. The results of the analysis are show in Exhibit F.7 below.

The following assumptions are made:

• max permissible T-DAB interfering signal: 13 (µV/m) [Wiesbaden Agreement, Annex 2]

• receiver height 10m (average domestic antenna) • interference plotted at 1% of time • omni-directional T-DAB antennas at 50W ERIP.


Exhibit F.7: Level of UK DAB emissions on the coastlines of France and Belgium

The results illustrate that emissions from DAB transmitters in the UK exceed the interfering threshold on the French and Belgian coastlines and some way inland. This is based on our assumption of 50W EIRP; main DAB transmitters would thus interfere to a greater degree.

The implication of this on the UK assignment process is that it is likely that technical conditions for use of some or all DAB blocks will need to include some constraints on maximum EIRP allowed from transmitters in UK coastal areas, for the purposes of co-ordination with France, Belgium and Ireland. It appears that this requirement may have to be placed on all transmitters located within the South-East of England, including areas towards the South of London.

This will have a number of implications for DAB operators:


• New transmitters will need to be planned to the specified continental interference limits (as per the Wiesbaden Agreement). Sites exceeding the co-ordination thresholds will need to be notified to the neighbouring regulator by Ofcom for approval, which causes some delay in the site planning process.

• Transmitters in UK coastal areas may have to operate at reduced power or with specific antenna configurations (tilts etc.).

F.2.5 Conclusions on Continental interference assessment

Conclusions on the impact of continental interference on potential new UK assignments in Sub-band 3 are as follows:

• It appears that new DAB blocks 10A, 10C and 11A will be worst affected by interference from the continent, with 10A affected by transmitters in France, Ireland and Belgium, 10C by Ireland and 11A by France.

• It would appear that PMR systems within the majority of the UK would suffer unacceptable interference if operating in Sub-band 3 from the analogue television transmitters in Ireland and the Continent. The only areas not affected are to the north of Scotland.

In terms of interference caused to the Continent, it is likely that the French, Belgium and Irish regulators will require all new DAB transmitters within coastal areas of the UK to be co-ordinated through the regulatory MOU process. This can cause delay to the DAB operators roll-out (awaiting regulatory approval) and may place some constraints on DAB transmitter characteristics in coastal areas (transmitter power, height and/or antenna tilt), affecting coverage and frequency planning. Therefore, the requirements for co-ordination should be clearly set out by Ofcom in any auction/assignment rules. It is assumed that Ofcom will act as the central point of contact for co-ordination purposes (alternatively, this would be the band managers role).

The requirements that are likely to be in place, which should be stipulated in technical conditions associated with each block sold in an auction, are:

• A maximum field strength in dBuV/m that a UK DAB transmitter in coastal areas (with areas defined fully e.g. by grid references) can emit without requiring co-ordination.


• A description of the co-ordination process if DAB transmitters exceed the field strength limit (including the timescales for approval with the continental regulators, information required from the UK DAB operators and in what form (e.g. field strength prediction plots using a planning tool).

Documents

Assessment of options for allocating available spectrum ... · Annex D: T-DAB mobile and portable multimedia services – benefit analysis1 D.1 Market overview 1 D.2 Alternative supply