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Page i 240689 - 450-470 Study Final Print

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Final Report Study to review the configuration of the 450-470MHz Band in the UK

December 2008

abc

Page ii 240689 - 450-470 Study Final Print


Ofcom Riverside House 2a Southwark Bridge Road London SE1 9HA

STUDY TO REVIEW THE CONFIGURATION OF THE 450-470MHZ BAND IN THE UK

December 2008

Issue and Revision Record

Rev Date Originator

Checker

Approver

Description

1 29 February 2008 Mark Redman Sean Kennedy Susan Sweet Final Draft

2 21 July 2008 Mark Redman Sean Kennedy Susan Sweet Revision

3 16 December 2008 Sean Kennedy Susan Sweet Susan Sweet Final

This document has been prepared for the titled project or named part thereof and should not be relied upon or used for any other project

without an independent check being carried out as to its suitability and prior written authority of Mott MacDonald being obtained. Mott

MacDonald accepts no responsibility or liability for the consequences of this document being used for a purpose other than the purposes for

which it was commissioned. Any person using or relying on the document for such other purpose agrees, and will by such use or reliance be

taken to confirm his agreement to indemnify Mott MacDonald for all loss or damage resulting there from Mott MacDonald accepts no

responsibility or liability for this document to any party other than the person by whom it was commissioned.

To the extent that the report commissioned is to be based on information supplied by other parties, Mott MacDonald accepts no liability for

any loss or damage suffered by the client, whether contractual or tortious, stemming from any conclusions based on data supplied by parties

other than Mott MacDonald and used by Mott MacDonald in preparing this report.

Mott MacDonald Ltd Information, Communications and Media Division

Victory House Trafalgar Place Brighton

BN1 4FY United Kingdom

Page iii 240689 - 450-470 Study Final Print


About the authors

Mott MacDonald prepared this report for the Office of Communications (Ofcom). Mott

MacDonald, wish to thank Ofcom for their assistance and for providing expert comments on

the draft. We also wish to thank the Stakeholders who participated in our interviews and

questionnaires.

This report represents the work of Mott MacDonald Ltd and does not necessarily represent

the views of Ofcom or any other group.

abc

Mott MacDonald is a world-class multi-disciplinary engineering,

management and development company delivering solutions

touching many facets of everyday life – from transport, energy,

building, water and the environment to health and education,

industry and communications. Further information can be found at

www.mottmac.com

ATDI is a radiocommunications software components solution

provider providing radio networking planning and consultancy with

a focus on radio and the technologies and systems that use radio

spectrum. Further information can be found at www.atdi.co.uk

Page iv 240689 - 450-470 Study Final Print


List of Contents Page

0 Executive Summary 1

0.1 Introduction 1

0.2 UHF2 Band in the UK 1

0.3 Regulatory Environment for UHF2 2

0.4 UHF2 Technology and Market 3

0.5 UHF2 Stakeholders 3

0.6 Interference in the UHF2 Band 4

0.7 Cost Benefit Analysis of different Options for the UHF2 Band 5

0.8 Recommendations 6

1 Introduction 8

1.1 Aims and Scope 8

1.2 Background 9

1.3 Catalyst for change 9

1.4 Overview of this study 10

2 Spectrum Management of the UHF2 Band 11

2.1 Introduction 11

2.2 UHF2 Band in the UK 11

2.3 Types of service 11

2.4 Licences 14

2.5 Users in UHF2 band 17

2.6 Geographic and User Split 21

2.7 Summary & Conclusions 24

3 Regulatory Environment 25

3.1 Introduction 25

3.2 International Telecommunications Union (ITU) 25

3.3 European Regulatory Framework 25

3.4 Electronic Communications Committee (ECC) 26

3.5 UK Regulatory Environment for UHF2 29


4 Technology and Market 32

4.1 Introduction 32

4.2 Technology and Services 32

4.3 Projected Sales of PMR Terminals 38


Page v 240689 - 450-470 Study Final Print


5 Reconfiguration drivers and challenges 41

5.1 Introduction 41

5.2 Drivers and challenges for band alignment 41

5.3 Stakeholders current views on the UHF2 band 42


6 Interference environment 47

6.1 Introduction 47

6.2 Interference challenges for UHF2 spectrum 47

6.3 Analysis of the continental interference environment 48

6.4 Analysis of the affects of interference in different spectrum configurations 50

6.5 Economic evaluation of Interference 54

6.6 Future interference environment 55


7 Economics, Costs, Demands and Benefits of Reconfiguring the UHF2 band 58

7.1 Introduction 58

7.2 Measuring Costs and Benefits of UHF2 spectrum reconfiguration 58

7.3 Methodology for measuring the costs and benefits of Band Alignment 62

7.4 Review of previous research on the costs of band alignment 63

7.5 Review of previous research on the benefits of band alignment 68

7.6 Distribution of costs and benefits 76


8 Options development and CBA 80

8.1 Introduction 80

8.2 The options for band alignment 80

8.3 The major cost and benefit categories 80

8.4 Interference Costs and Benefits 87

8.5 Results 89

8.6 Conclusions 97

9 Conclusions and Recommendations 99

9.1 Introduction 99

9.2 Summary of Findings 99

9.3 PEST Analysis 102

9.4 Summary of Conclusions 103

9.5 Recommendations 104

Appendix A: Stakeholder Engagement A-1

Appendix B: Interference B-1

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Appendix C: UHF2 Interference Regulation C-1

Appendix D: Modelling Interference D-1

Appendix E: Narrowband Interference Modelling Results E-1

Appendix F: Wideband Interference Modelling Results F-1

Appendix G: Spectrum Trading and Liberalisation Modelling G-1

Appendix H: Cost Benefit Analysis Assumptions H-1

Appendix I: Glossary I-3

240689 - 450-470 Study Final Print


0 Executive Summary

0.1 Introduction

This report presents the findings of a study on the configuration of the UHF2 band (450-

470MHz), undertaken for Ofcom by Mott MacDonald Ltd and ATDI Ltd. The configuration of

the UHF2 band in the UK is not harmonised with its European neighbours, leading to

challenges around continental interference and the introduction of digital technologies.

The opportunity presented by the Emergency & Public Safety Services vacating most of its

use from the UHF2 band, recent technological and regulatory changes means that now is

the right time for a policy review to ensure the highest value use of the UHF2 spectrum.

0.2 UHF2 Band in the UK

The UHF2 band supports a number of business and mission critical systems. The

configuration of the spectrum enables the deployment of on-site systems, wide area systems

and national/regional systems for use by land mobile services. The UHF2 spectrum in the

UK is suited to narrow band systems with channel spacing ranging from 6.25 kHz to 25 kHz,

due to the configuration and management of the band. The benefits of this spectrum are

realised by both businesses and public safety organisations.

Emergency and Public Safety Services

(E&PSS);

Scanning Telemetry (ST);

Business Radio (BR), including Maritime

radio on board ships;

Programme Making and Special Events

(PMSE);

Short Range Devices (SRD).

BR

33%

ST

10%PMSE

20%

E&PSS

32%

SRD

5%

We concluded the following main points concerning the UHF2 band:

�� Spectrum used in the UHF2 band in the UK supports the operation of multi-

billion pound businesses which benefit from the use of the spectrum in its

current configuration and any disruption to the full time operation of these

systems could result in very costly and very complex changes to critical

national infrastructure;

�� There is high utilisation of the UHF2 band with a growing number of licensees

with thousands of mobiles operating in the band. This indicates the demand

for use of the band and cost effectiveness as an attraction for business type

use;



�� The current configuration of the band is complex with many small fragmented

portions spread throughout the band in a reverse aligned arrangement. The

large number of duplex splits makes network development difficult and limits

use to narrowband type systems, excluding wideband systems.

0.3 Regulatory Environment for UHF2

The regulatory environment has moved at a fast pace and will continue to do so, with Ofcom

introducing liberalisation and trading policies, coupled with simplification of the licensing

processes. These changes have in effect handed much of the future re-configuration of the

UHF2 band into the hands of the market by enabling the configuration of the band to be

managed by licensees within the regulatory framework set by Ofcom. In addition, we drew

the following main conclusions:

�� The 450-470MHz band will become an IMT-2000 band, where IMT2000

wideband technology may be deployed in neighbouring countries in the

future, which may increase interference received from the continent. The UK

will need to ensure that its services in the band are protected from

interference;

�� Liberalisation and Trading will be established as a market mechanism for the

market to decide how the band should be used in the future, allowing

licensees the opportunity to re-configure the band as they wish;

�� Most of the UK’s continental neighbours have adopted ECC Recommendation

TR25-08, but the UK has not adopted this Recommendation, which could lead

to co-ordination problems in the future, thereby necessitating the need for the

UK to proceed with developing an MoU in the UHF2 with its continental

neighbours;

�� The 6-month notice period set by Ofcom for Band Alignment of the UHF2

band still remains an issue that is outstanding and would need to be

addressed to give stakeholders certainty on their security of tenure in the

band.



0.4 UHF2 Technology and Market

The market has risen to the challenge of un-harmonised spectrum by introducing either

flexible digital technology in the form of DMR or indeed has altered existing TERTA products

to fit the UK specific configuration. The diagram below illustrates that either DMR or TETRA

will meet the demands of all market sectors for narrowband technology, where it is expected

that the market will effectively churn

from analogue to digital rather than a

growth in overall market. However,

the introduction of wideband

technology will remain difficult owing

to the lack of aligned contiguous

spectrum with the necessary

spectrum masks.

We concluded the following main points on UHF2 technology and markets:

�� For the introduction of narrow band digital technology, a 10MHz duplex split is

no longer required;

�� Digital PMR technology will out sell analogue over the next two years in the

UHF bands;

�� DMR will be the digital narrowband technology of choice over the next few

years, which will increase capacity of networks, with users benefiting from

new features;

�� There is a market for narrowband Digital PMR technology in the UK now and

in the future;

�� CDMA450 is seen as a technology to deliver 3G services to rural areas.

0.5 UHF2 Stakeholders

We conducted stakeholder interviews from a cross section of the industry on what the future

policy of the UHF2 spectrum should be, where we drew the following conclusions:

�� The original drivers for the alignment project are mainly irrelevant in the light

of new regulation and technology development. The main drivers are now

economic benefit and interference which will be reviewed in the following

chapters;

�� The future spectrum manager of the E&PSS will have a key role to play in the

future re-configuration of the UHF2 band as they will manage the largest

amount of clear spectrum for potential re-assignment;

Market Catagories Vertical Markets EuropeanDigital Radio Standards

European Analogue Standards

Public Safety/ Mission Critical

Professional/ Business Critical

Commercial & Light Industrial

Emergency Services

Public Transport

Airports/Ports Utilities

Local Government

Mining

Petrochemical

Manufacturing

Taxi/Logistics

Construction Radio Hire

Private Security

Retail

Hospitality

Warehousing

Agriculture

TETRA: Release 1

DMR Tier 1: Licence Exempt

DMR Tier 2: Licensed Conventional

DMR Tier 3: Licensed Trunked

TETRA: Release 2 (TEDS)

CDMA: PAMR

PMR446

Standard PMR (EN 300 086)

MPT 1327 & Standard PMR

Other technology

TETRAPOL

Military

TIA Project 25



�� There is a demand for narrowband technology, which does not need to be re-

configured;

�� The introduction of wide band systems, would probably need at least 2 x

5MHz and would need a review of the adjacent channel and international co-

ordination measures to make it attractive to new entrants;

�� Stakeholders would like clear guidance on the future policy of the UHF2 band;

�� Operators of mission critical services within the band would need a

compelling reason and assurances for funding the re-configuration of the

band and would also need to develop mitigation techniques to avoid

interference risks to their services;

�� There is little appetite for any re-configuration within the band from incumbent

licensees.

0.6 Interference in the UHF2 Band

We reviewed current and future interference scenarios that could potentially impact services

in the UHF2 band. We also looked at the procedures that are in place to manage

interference both nationally and internationally. The main element from our analysis was the

geographical area covered in the UK by continental interference, this interference raises the

noise floor by 3dB and gives an indication of how interference impacts coverage areas – see

the diagrams below.

Through our analysis of the interference environment, we concluded the following main

points:

�� There is significant interference from the continent into UK base station

receivers when modelling the current realistic scenario (UK CEPT reversed

with 1% time and Base station antenna is 30m agl);



�� The effect of interference on service area to narrowband systems is around

70% of the noise for which the following coverage areas are lost due to the

noise; 30% in the south of England, 0% in the Midlands and 1% in the North;

�� The UK would benefit from a Memorandum of Understanding for the UHF2

band over and above the procedures contained in the HCM agreement;

�� The introduction of wide band systems into the UHF2 band would have a

dramatic effect on the existing narrow band users not only in the trading

coordination aspect but also in the noise levels rising from 3 to 8dB

depending on the separation distance between the systems. These

degradations will change depending on the separation distances and

geographic terrain between the various co-channel systems;

�� There is an economic impact to the UHF2 band to consider if the UK were to

suffer significant continental interference;

�� Guard bands and geographical separation would be necessary if the UK were

to adopt partial alignment in some areas in the UK;

�� Users of UHF2 spectrum in the UK currently do not suffer continental

interference due to the low level of radio communications activity in the UHF2

band on the continent. It is has been found that if the UK were to become

CEPT aligned, any future potential interference could be greatly reduced.

0.7 Cost Benefit Analysis of different Options for the UHF2 Band

A number of options were used to carry out our Cost Benefit Analysis (CBA) for the UHF2

band. From a case of a ‘do nothing option’ to ‘Partial alignment’. The results of this are

outlined in the table below.

Rank Net Benefit

1 Base case (do nothing) -

2 Partial alignment (narrowband) – Block C only -£2.1M

3 Partial alignment (narrowband) – other blocks -£6.7M to -£22.4M

4 Partial alignment (wideband) -£80M

5 Full alignment – managed -£189M



The CBA was developed from previous studies commissioned by different organisations and

agencies such as the Government, the Radiocommunications Agency (RA) and Ofcom and

drew on information from recent auctions, information on new technology and the impact of

regulatory changes.

0.8 Recommendations

The Band Alignment project was withdrawn by Ofcom in 2004. This project was generally a

process of partial alignment steps, through which these steps are taken through the use of

vacant spectrum as a result of the Emergency Services migrating out of the band, for which

over a period of a few years would have resulted in full alignment. We do not believe that

this process would have been suitable to either industry or indeed Ofcom due to the

upheaval, uncertainty and cost over a long duration this would have had on industry. We

believe that if now Ofcom were to opt for partial or full alignment of the band, then the use of

an Overlay auction process would be attractive, allowing notice to be served on incumbents

of the UHF2 band and allowing the market the option to migrate to new services and new

spectrum. However, our analysis leads us to conclude that a policy of no regulatory

intervention should be maintained, due to the introduction of flexible digital technology, the

CBA results and the regulatory measures currently in place should enable the market to

reconfigure the spectrum should they wish.

Based on the findings of the report, we concluded that Ofcom should not manage any re-

alignment within the UHF2 band. We also recommend the following:

�� Ofcom should not directly intervene in any alignment of the UHF2 band and

should enable the market to align through market mechanisms such as

trading and liberalisation, assisting where necessary;

�� Ofcom should assist the E&PSS spectrum manager (Post 2009) in working

closely with UHF2 stakeholders in any re-configuration of the band;

�� MASTS should be modified or processes put in place to assess the impact of

aligning a channel within unaligned spectrum and amendments to the

algorithm for a guard band and geographical separation needed between co-

channel users. This tool should also be used to assist in any future re-

configuration of the band;

�� Ofcom should proceed with developing an MOU with the its continental

neighbours to avoid any future interference;

�� Ofcom must decide and communicate the future policy for the UHF2 band in

order to remove uncertainty over the band to users;



�� Ofcom should continue to monitor interference that may be caused by any

future deployments of wideband networks from the Continent and the impact

this would have from current licensees;

�� If Ofcom does decide to proceed with alignment, we would recommend Partial

Alignment where users of the UHF2 band are least impacted and further

detailed analysis is carried out.



1 Introduction

1.1 Aims and Scope

One of Ofcom’s key statutory duties is to ensure the optimal use of the radio spectrum under

its management. Radio spectrum is a major asset to the UK, contributing some £24bn to the

economy each year and underlying many aspects of our lives.

In line with its principal statutory duties, Ofcom seeks to further the interests of citizens in

relation to communication matters and to further the interest of consumers in relevant

markets, where appropriate, by promoting competition. In relation to spectrum management,

Ofcom is required to secure the optimal use of the spectrum.

Ofcom does not manage the entire spectrum as some bands are managed by the

Government for defence and other purposes.

In carrying out its spectrum management duties Ofcom has responsibility for:

�� Enabling the availability of spectrum;

�� Understanding current and future demand for spectrum;

�� Promoting efficient management and use of the spectrum;

�� Understanding the economic and other benefits arising from its use;

�� Facilitating the development of innovative services through the use of

spectrum; and

�� Facilitating competition in electronic communications services.

This study investigates and addresses at a high level the optimum balance between the

factors affecting the optimum management of the 450-470MHz (UHF2) spectrum.

Objectives and considerations include:

�� maximising the socio-economics benefit for the UK;

�� minimising regulatory intervention;

�� examining the impact of the adopted policy on the user community;

�� relating the objectives to Ofcom's market led management policy; and

�� taking into account the needs of industry.

This study builds upon previous studies and uses a methodical approach to the development

of future policy options for the spectrum management of UHF2.



1.2 Background

The UHF2 band in the UK is occupied by two distinct communities: a wide variety of narrow

band business radio users and the Emergency and Public Safety Services operating mission

critical systems.

Prior to 2003, a key part of the UK’s spectrum strategy was alignment of the UHF2 band with

the rest of Europe1 and the Radiocommunications Agency (RA) initiated a project to align the

UHF2 band by 2006. This alignment would have significantly reduced the interference from

the continent into the UK, in particular in the coastal regions and on occasion in London and

the Midlands. Additionally it would have created the potential for the existing systems to grow

and enabled the introduction of new digital systems to facilitate more technical and

economically efficient use of the band.

In 2003, the RA, now part of the new communications regulator, Ofcom, was lobbied by the

industry to re-consider the UHF2 alignment project. Although the stakeholders understood

continental interference was a potential risk to the stakeholders operations, the cost and

disruption of alignment was seen as complex and prohibitive.

The alignment project was withdrawn in July 2004, due to industries’ concerns and the

approach not being in-line with Ofcom’s market approach to the management of spectrum2.

1.3 Catalyst for change

Since 2004, regulation and technology have moved on considerably, with Ofcom introducing

spectrum trading and liberalisation and the industry developing new innovative digital

technologies. In addition, the interference environment and how Ofcom quantifies this

through Spectrum Quality Benchmarking, the use of spectrum masks and latterly Spectrum

Usage Rights has now moved forward.

The UHF2 band currently has approximately 7MHz of spectrum allocated for Emergency and

Public Safety Services (E&PSS) use. Within the next 2 years, a significant portion of this part

of the spectrum will become unassigned owing to the majority of the current UHF2 E&PSS

users migrating onto the Airwave service. This migration of E&PSS to Airwave will leave a

considerable amount of UHF2 spectrum potentially available which could be re-assigned,

used as an aid to re-configuration through partial alignment or could assist any migration of

services through temporary assignment.

The opportunities presented by potential availability of E&PSS spectrum, technological

progress and regulatory change mean that now is the right time for a policy review of the

UHF2 band to ensure the highest value use of the spectrum.

1 CEPT Spectrum configuration as defined in ECC Recommendation TR25-08: www.ero.dk

2 Withdrawal of the Band Re-alignment Project: www.ofcom.org.uk/radiocomms/ifi/glines/pbr_cg/450_470_band_realignment



1.4 Overview of this study

This project draws upon studies previously undertaken on the subject of band realignment

and supports the creation of a progressive approach to reviewing any reconfiguration of the

UHF2 band. The main challenges are explored and a method of assessing the Cost and

Benefits of chosen policy directions have been developed, taking into account concerns of

key stakeholders in this era of liberalisation and spectrum trading.

The study takes a three stage approach where we:

�� Understand the environment – Review the use of the UHF2 Band, the

regulatory environment, technical developments and assess the demand. In

addition, through key stakeholder engagement gain an understanding of any

challenges for re-configuration and explore any benefits. Stakeholders,

consulted or interviewed are listed at Appendix A.

�� Model the interference and Economics of UHF2 – The main challenges for

policy of the UHF2 band is the debate between interference and the

economics of policy decisions.

�� Draw conclusions and make recommendations - From the modelling and

understand and develop conclusions and recommendations for the future

policy of the UHF2 band.



2 Spectrum Management of the UHF2 Band

2.1 Introduction

This chapter outlines how the 450-470MHz (UHF2 band) spectrum is used and services are

supported. We address key aspects of the licence regime used in the UK and the

complexities that exist due to the configuration of the spectrum. We also identify the main

industry sectors and stakeholders and discuss how they use the spectrum.

2.2 UHF2 Band in the UK

The UHF2 band supports a number of business and mission critical systems. The

configuration of the spectrum enables the deployment of on-site systems, wide area systems

and national/regional systems for use by land mobile services. The UHF2 spectrum in the

UK is suited to narrow band systems with channel spacing ranging from 6.25 kHz to 25 kHz,

due to the configuration and management of the band. The benefits of this spectrum are

realised by both businesses and public safety organisations.

2.3 Types of service

In the UK the UHF2 band contains many types of services that are categorised as follows:

�� Emergency and Public Safety Services (E&PSS);

�� Scanning Telemetry (ST);

�� Business Radio (BR), including Maritime radio on board ships;

�� Programme Making and Special Events (PMSE);

�� Short Range Devices (SRD).

Each service has its own spectrum allocation, within the UHF2 band. Figure 1 below, shows

the approximate percentage allocation by service.

Figure 1 UHF2 Band Allocations

BR

33%

ST

10%PMSE

20%

E&PSS

32%

SRD

5%

Source: Mott MacDonald



2.3.1 Spectrum allocation and configuration

The UHF2 spectrum allocations are made up of different size blocks of spectrum for each

service. Each block is fragmented throughout the band as can be seen on the next page at

Figure 2, which shows the UHF2 band frequency allocations by service.

Figure 2 illustrates that the UHF2 spectrum configuration in the UK makes provision for

using dual frequencies and single frequencies. Dual frequency operation requires the use of

a duplex split (the frequency separation of a base station transmit frequency and a mobile

transmit frequency). The UHF2 band in the UK makes use of many duplex splits, however,

most of the UHF2 dual frequency channels are on 5.5 MHz and 6.5 MHz duplex splits.

The configuration of the UHF2 band in the UK is mainly the reverse of the European UHF2

allocation. This means the UK band is not in accordance with ECC recommendation T/R 25-

08 which recommends that the UHF2 band is formed of 1x10 MHz (450-460MHz) allocated

for Base Station Receive, and 1x10 MHz (460-470MHz) allocated for Base Station Transmit.

The European configuration of a single 10 MHz duplex split throughout the UHF2 band

makes efficient use of the spectrum and benefits from harmonisation throughout continental

Europe thereby limiting the probability of interference.

There are currently 48 different frequency duplex splits used within the band in the UK which

allows for a variety of different deployments, however we have found:

�� Approximately 16,500 assignments (including E&PSS) are duplex and would

have to retune to a 10 MHz duplex split if the UK were to move to the

European band plan.

Excluding E&PSS:

�� 10,250 assignments are duplex; of which,

� 2200 are the right way round (99% are 6.5 MHz, range 6.5 MHz – 17.8

MHz); and

� Approximately 8100 are the wrong way round (range 5.3 – 10 MHz).

�� 7400 assignments are simplex

�� 4 base stations have 10 MHz duplex split but are the wrong way round.

The diagram in Figure 2 and the statistics given above are indicative of the complexity and

high utilisation of the UHF2 band. If demand for use of this band increases, making

assignments and finding new frequencies will become increasingly difficult.



Figure 2 UHF2 High Level UK Band Plan




2.3.2 Spectrum management

The historical deployment of services in the UHF2 band with the many duplex splits has

helped enable the Business Radio community to meet the particular needs of businesses.

However, this has led to a complex UHF2 spectrum arrangement and the need for guard

bands. The guard bands aid the management of the spectrum and enable the different

services to co-exist. The guard bands provide sufficient protection between channels and

create a non-utilised, reserved set of spectrum allocating enough empty space so that users

either side of the guard band can operate without affecting each other. This spectrum

management technique is essential for making assignments to avoid harmful interference.

However, demand for spectrum will increase in the future and there will be a limit to how

much more spectrum will be available in the current configuration.

The fragmented allocations and variety of duplex splits in the UHF2 band make it extremely

difficult to deploy wide-band systems. This means that currently narrow band systems are

the only technologies accessing this spectrum. The variety of different services and

assignment types, discussed in Section 2.5, add another level of complexity for efficient

spectrum management.

2.4 Licences

Most business radio users requiring a licence must currently apply through Ofcom who

conducts the technical analysis and makes the frequency assignment. Recently Ofcom has

developed a licensing tool that enables new and existing licensees to apply for their licence

online. This facility eases the process of making new frequency assignments in the UHF2

band. In addition to Ofcom, spectrum is managed by other ‘Spectrum Managers’ that

provide the technical analysis to enable frequency assignments to be made. The UHF2

band has several band managers, the Joint Frequency Management Group (JFMG) for the

PMSE sector and the Joint Radio Company (JRC) and CSS Spectrum Management

Services for the Utilities sector. Spectrum Managers are expected to increase over the next

few years, with the next Spectrum Manger in the UHF2 band likely to manage the E&PSS

spectrum.

Ofcom publishes licence statistics to provide knowledge and an understanding of the amount

of spectrum that is occupied from year to year. The last set of published licence statistics for

Business Radio use within the UK was for 20063. This report provides an overview of the

latest business radio licence figures and spectrum availability. Key licence figures are

summarised in the following five tables.

3 Business radio licence class report for 2006:

www.ofcom.org.uk/radiocomms/ifi/licensing/classes/business_radio/information/brls06.pdf



Table 1 provides information on the number of licences and mobiles for wide area Business

Radio licences operating in the UK.

Table 1 Business Radio Wide Area Licences 2005

Business Category Number of licences No of Mobiles

Ambulance & General Medical 260 5,657

Bus & Coach operators 97 25,213

Gas, electricity, coal & Nuclear 45 10,712

General (Wide Area Shared) 3,145 52,550

Local & Central Government 883 66,291

Motor/Pedal Cycle Despatch 126 7,810

Taxis & Private Car Hire 6,121 154,060

Water Industry 12 2,466

TOTAL 10,689 324,759

Table 2 shows the number of licences and mobiles for on-site Business Radio up to the end

of 2005 for Business Radio frequencies licensed to operate between 26 – 466 MHz.

Table 2 Business Radio On-site Licences 2005

Business Category Number of licences No of Mobiles

Ambulance & General Medical 955 10,274

Gas, electricity, coal & Nuclear 342 9,300

General (Single & Dual Frequency) 21,247 302,958

Local & Central Government 1,426 20,408

Water Industry 138 979

TOTAL 24,108 343,919

Table 1 and Table 2 show that for Business Radio:

�� Almost 60% of wide area mobiles are used by taxis and private car hire. This

represents about 40% to the total number of mobiles deployed in the UK.

Table 3 shows the number of mobiles deployed by the end of 2005 for wide area and on-site

licences. These numbers represent over 60% of the total number of mobiles deployed in the

UK.

Table 3 Number of mobiles in UHF2 band Licences 2005

Number of mobiles in UHF2 band

WIDE AREA LICENCE 24,712

ON-SITE LICENCE 184,082

TOTAL 208,794



Table 4 below, shows for each type of use, the number of single and dual channels in the

453-462 block of the UHF2 band. It shows that the majority of single channels are available

for on-site shared systems, which typically includes single frequency data services such as

paging. Table 4 also shows that National channels account for almost 25% of all dual

channels available in 2005.

Table 4 Number of single and dual channels available in UHF2

UHF 2 453.00625-462.49375 MHz Single Dual

Wide area shared 0 15

On-site shared 57 30

National Public Mobile Data operators 0 14

National Channel users 1 41

Exclusive channel users 1 6

UK General 3 0

Short Term Hire 1 9

Parking and Demonstration 0 1

Short Term Hire/Parking and Demonstration 0 1

Limited availability channels 0 32

Split dual frequency channels 0 23

No assignments at present 8 36

TOTAL CHANNELS 71 208

Table 5 below shows the number of single and dual channels assigned for UHF2 licences at

the end of 2005. The majority of assignments were made for on-site licences which make up

over 80% of channels assigned in the UK.

Table 5 Number of single and dual channels for UHF2 Licences 2006

Band Dual Frequency

channels

Single frequency

channels

Total Channels

WIDE AREA LICENCE ASSIGNMENTS 78 1,169 1,247

ON-SITE LICENCE ASSIGNMENTS 8,174 5,915 14,089

NATIONAL & REGIONAL LICENCE ASSIGNMENTS

849 1,183 2,032

TOTAL CHANNELS 9,101 7,197 17,368

BAND Dual frequency channels

Single frequency channels

Total spectrum available (MHz)

UHF2 AVAILABLE CHANNELS 207 71 5.3250

The tables above demonstrate that due to the limited amount of spectrum allocated for

Business Radio, many licences and frequency assignments have been made which include

many hundreds of mobiles deployed. This suggests that there has been very intense use of

the UHF2 band corresponding with high demand, which can be seen from the number of

channels that are available in the UHF2 band for both wide area and on-site. The limit in



spectrum will continue to make awarding licences very challenging and therefore careful

planning is required when making future assignments.

It is clear from tables 1 – 5 that the UHF2 band has been highly utilised and sought after for

business radio use, which could be a concern for the future. Should demand increase for use

of the band, channels will become scarcer and users may have to move to a less optimum

spectrum solution both in terms of cost and network requirements.

Previous land Mobile statistics suggest that licensing in PMR has reached a plateau. There

has been no noticeable increase in sales of PMR equipment or significant developments in

PMR equipment in the last few years. However, it is anticipated that these numbers will

decline with cellular networks attracting users of business radio using wide area networks

due to lower cost bundled minutes offering a more cost effective solution than a private

mobile network.

It is likely in the future that PMR users in the UHF2 band will remain using on-site networks

as a provision for their local communications rather than for wide area systems. On-site

networks for users in the UHF2 band are economical as minimal operational expenditure and

smaller capital outlay is required compared to wide area networks. Therefore, we believe

that wide area users of the UHF2 band business radio will begin to move to public mobile

networks, where their needs are met (i.e. balance of resilience/Facilities (group call)/Costs)),

with on-site users predominantly remaining with their service.

2.5 Users in UHF2 band

This section discusses the main industry sectors that use the UHF2 band and explains in

more detail how they use the UHF2 spectrum, why they have chosen to use the UHF2

spectrum and where they use UHF2 spectrum in the UK. We examine the following sector

users:

�� Emergency and Public Safety Services (E&PSS);

�� Scanning Telemetry (ST);

�� Business Radio (BR), including Maritime radio on board ships;

�� Programme Making and Special Events (PMSE);

�� Short Range Devices (SRD).

2.5.1 Emergency and Public Safety Services (E&PSS)

The Public Safety Spectrum Policy Group (PSSPG) currently dictates policy for the use of

the UHF2 band, and other bands, for the emergency and public safety services. The PSSPG

manages the spectrum policy for the spectrum assigned within the UK3 footnote included in

the UK Frequency Allocation Table (UKFAT)4.

4 UKFAT 2007: http://www.ofcom.org.uk/radiocomms/isu/ukfat/



The E&PSS make extensive use of the UHF2 band. The 81 channel assignments for the

E&PSS make up approximately 30% of the allocated spectrum. The use of the spectrum by

the E&PSS varies between voice only wide area systems and on-site voice and data

systems.

The Fire and Rescue Services (FRS) use six incident ground communication channels and

one national inter-agency channel within the band. This use is for critical communications at

an incident where fire fighters can communicate with each other via their self-provided peer-

to-peer radios. Individual FRS’s hold their own licence enabling them to manage their own

communications effectively.

The Police use 49 channels nationwide in the UHF2 band for their variety of different

communications needs, such as emergency, events, inter-agency and training. The

migration of all these services onto Airwave in 2008/9 will result in the return of these

channels to the PSSPG. The Police and National Policing Improvement Agency (NPIA) are

planning the replacement or augmentation of the Airwave network for 2016 to include

wideband services, where UHF2 is under consideration for a band that could support such a

service.

The majority of E&PSS will be migrating their mobile communications provision in UHF2

band to the Airwave service in 2008/9. However, there are a number of users within the

E&PSS, for example the prison service and HM Customs and Excise, who are not moving on

to the Airwave network and will remain using the UHF2 band. Access to the spectrum for

these other non-emergency users will need to be maintained and consideration given to their

requirements for any re-configuration in the future.

2.5.2 Scanning Telemetry

The service provided by Scanning Telemetry allows the monitoring of critical national fuel

and power, water and non-utility services. The spectrum licensed for the operation of these

national networks is essential to maintain a safe, reliable and resilient service to the

businesses that use them and ultimately to the customers. Certain users of Scanning

Telemetry systems are integrated into the Critical National Infrastructure to ensure the

highest-level priority is given in case of major catastrophic events severely disrupting the

network.

The fuel and power services use 38 channels. Operating on a 24/7 basis there are

approximately 500 base stations deployed in the UK for the fuel and power network with

thousands of outstations which report their status every 2 minutes to the central control

room. This level of management is crucial should an incident occur in the network and allows

for a swift analysis and response to any incident. The network infrastructure has been

developed over many years to ensure national coverage is maintained and a reliable,

resilient service guaranteed.



The water industry use 24 national core channels and the non-utilities use 8 channels. These

channels are available 24/7 for the safe and reliable operation of the national network. Using

approximately 500 base stations and over 10,000 outstations, this critical network monitors

and controls the operation of the water industries services to its customers. The current

spectrum configuration is suited to this type of narrow band use where high packing

densities are utilised to make the most use out of the spectrum.

The duplex split for Scanning Telemetry provides a suitable arrangement for the deployment

of services on a national basis.

The mission critical nature of the utility companies means that any future national spectrum

management policy decisions must be sensitive to these radio systems.

2.5.3 Business Radio (BR)

There are a large number of different users and types of usage within the UHF2 band for

Business Radio (BR). BR extends into many areas of business use, such as:

�� Logistics and services industry;

�� Power and Fuel industry;

�� Private Security services;

�� Transport services - private and public;

�� Media, Sport and Recreation.

BR systems are deployed across the UK and there are some national channel allocations

available to large organisations that require them. An example of a large organisation is

Network Rail, which has a national requirement for a secure, private communications

network. An organisation like this uses several narrowband channels on a national basis to

enable the safe and dedicated operation that is required.

The spectrum allocated for BR services is 5.325 MHz of UHF2 spectrum. The current

configuration in the UK is the reverse alignment with ERC Recommendation T/R 25-08. The

current consequences of this are minimal due to limited activity in Europe in the lower part of

the band, 450-460 MHz, and there is no significant impact to users at the moment. The

situation in Europe could potentially change and could in the future cause interference to

these services in the UK.

There are over 17,000 assignments operating BR within the UHF2 band. The implication of

this in relation to any re-configuration of the band has meant in the past that many users

would need to retune equipment, buy new equipment and possibly obtain new licences at

significant cost. However, selective partial re-configuration, which is planned effectively, may

now be practicable owing to technology advancement.



2.5.4 Programming and Special Event (PMSE)

The Joint Frequency Management Group on behalf of Ofcom licenses Programme Making

and Special Events (PMSE) users in the UHF2 band. The main applications used within the

band are talkback systems together with some audio links, wireless cameras and airborne

systems.

The current configuration of the UHF2 band offers a flexible and robust spectrum

management arrangement to make efficient assignments. The duplex split in the UHF2 band

for PMSE enables many users to operate in the same vicinity on a time-shared basis, which

is the main attraction for PMSE users. PMSE users require spectrum on an ad-hoc basis, for

example for outside broadcasts.

PMSE spectrum is used on a nationwide basis and the requirement for immediate availability

underpins the need for a continued allocation in the UHF2 band.

2.5.5 Short Range Devices (SRDs)

The SRDs that operate in the UHF2 band do not impact other licensed users and are exempt

from requiring a licence to operate. The minimum requirements to operate a Short Range

device can be found in the UK Interface Requirement 2030 document.

Table 6 below shows the technical parameters implemented by short-range device

equipment in accordance with the ETSI harmonised standard EN 300 220.

Table 6 Short Range Devices in UHF2

Application Frequency

Range

ERP Channel

widths

Reference

Standard

Telemetry and Tele-

command

458.5 -

458.95MHz

500mW 12.5kHz,

25kHz

Medical and Biological

Applications

458.9625 -

459.1MHz

10mW,

500mW

12.5kHz,

25kHz

Mobile, Transportable

and Lone Safety Alarms

458.8375MHz 100mw 12.5kHz

Fixed Alarms 458.825MHz 100mW 12.5kHz

Model Control 458.5 -

459.5MHz

100mW 25kHz

EN300 220

Currently it is estimated by the European Commission that the short-range devices market

will be valued at around £15 billion by 2009 and SRDs operating in the UK in the UHF2 band

make up a significant proportion of that figure. This indicates further the intense use of the



band for this type of service. Some users rely on SRDs for operation of non-critical

component parts of their business in the knowledge the spectrum and equipment are readily

available and they can purchase a device and use it immediately. It is this type of

deployment that is attractive to businesses and consumers alike and hence the large number

of devices in operation.

Licence exempt spectrum is identified as an attractive option for users in the UHF2 band and

in future, it is possible more applications will become licence exempt based on

recommendations made in a report from Ofcom on the economic value of licence exempt

spectrum5.

2.6 Geographic and User Split

Frequency planning and how the spectrum is assigned, ensures that spectrum is re-used

geographically, distributing licensees, often for the same type of services nationwide.

Stakeholders and Ofcom have both considered a possible alignment of the spectrum within

the UK borders, providing a geographical split between aligned and un-aligned spectrum.

We have provided a high-level view of the geographical distribution of licensed base-stations

that allows the identification of a significant geographical split between licensees to enable a

UK border of aligned/non-aligned spectrum.

The criteria that would enable a geographical user split are:

�� Identify areas of white space;

�� Minimum density of users affected;

�� Minimum population effect.

To introduce a geographical split certain mitigation requirements would need to be

considered, such as a 50 - 60km exclusion zone around the dividing line and the

consideration of any potential effects with the Fylingdales Radar system.

5 The economic value of licence exempt spectrum – Aegis, Ovum and Indepen December 2006



Figure 3 and Figure 4 demonstrate the vast geographical distribution of data systems across

the UK. There is no large single area that could be geographically separated for alignment

for this type of use. Figure 3 shows both simplex and duplex operation for on-site and Figure

4 shows mainly duplex operation for wide area systems.

Figure 3 On-site speech

and data systems

Figure 4 Wide Area speech

and data systems

Figure 5 and Figure 6 show the usage distribution of wide area PBR and national and

regional PBR. Figure 5 illustrates the geographical distribution of wide area PBR licensees

are mainly used near or within the major conurbations. Most of Wales and the majority of

South West England do not use wide area PBR. National and regional PBR use is mainly

located in the South East with a high concentration of frequency paired use. Simplex use is

quite wide spread throughout the UK for regional and national PBR licences.



Figure 5 Wide Area PBR Figure 6 National and

Regional PBR Figure 7 Public Mobile Data

Figure 7 shows the geographical separation between licensees using the public mobile data

service. There is a distinct natural geographical separation between users throughout the

UK, which is based on terrain shielding and a lack of assignments around this identified

boundary, show below at Figure 8.

Figure 8 Natural geographical boundary

Figure 8 shows a predicted geographical boundary based on the distribution of UHF2 users

in the UK that could separate the country for CEPT aligned and CEPT non-aligned use.

Analysis of the geographical boundary found that areas 60km either side of the boundary

line sterilises use of the UHF2 band and would mean including an exclusion zone that

extends south as far as Manchester and north as far as Glasgow. This level of exclusion of

use would not be an attractive option for separating the country for CEPT aligned and CEPT

non-aligned use and has been discounted as an option.



2.7 Summary & Conclusions

This chapter has discussed the key aspects of UHF2 spectrum configuration and its use

within the UK. It can be concluded that:

�� Spectrum used in the UHF2 band in the UK supports the operation of multi-

billion pound businesses that benefit from the use of the spectrum in its

current configuration.

�� Disruption to the full time operation of these systems could result in very

costly and very complex changes to critical national infrastructure.

�� There is high utilisation of the UHF2 band with a growing number of licensees

with thousands of mobiles operating in the band. This indicates the demand

for use of the band and cost effectiveness as an attraction for business type

use.

�� It is likely that on-site services will remain in the UHF2 band whilst wide area

services not necessarily need to be a private network will diminish as they

move to cellular services for communication provision.

�� The current configuration of the band is complex with many small fragmented

portions spread throughout the band in a reverse aligned arrangement. The

large number of duplex splits makes network development difficult and limits

use to narrowband type systems, excluding wideband systems.

�� UHF2 licensees are geographically distributed across the UK utilising the

spectrum in different ways. This would make introducing a natural

geographical user split across the UK difficult, which was further confirmed by

our analysis.

�� The benefits in using the band in its current configuration are that secure,

reliable and resilient networks can be deployed creating the ability to make

many assignments as the UHF2 band is suited to narrowband systems.

�� It is possible a user split could be found in some areas of the UK for wideband

systems. However, further investigation would be necessary to determine if

any area would satisfy all the criteria for a user split and is beyond the scope

of this study.



3 Regulatory Environment

3.1 Introduction

In this chapter, we review the current regulatory environment with a particular focus on the

following issues:

�� Actions at an international level including the ITU, European Commission and

the Electronic Communications Committee (ECC).

�� The development of the UK UHF2 regulatory environment.

3.2 International Telecommunications Union (ITU)

At the recent ITU World Radio Conference 2007, it was agreed that the 450-470MHz (UHF2)

band would be a recognised IMT-2000 band from early 2009. However, it is understood that

Western European regulators would be unlikely to entertain the use of IMT-2000

technologies in the UHF2 band in the near term owing to the incumbent narrowband use

within the band.

However, in all cases, allocations must comply with internationally agreed allocations defined

under the auspices of the International Telecommunications Union (ITU) and detailed in

Article 5 of the ITU Radio Regulations, if the service concerned is to be protected from

interference from other services in neighbouring countries. This effectively means that from

2009, the UK would need to protect IMT2000 services, either in the UK or internationally

from harmful interference.

3.3 European Regulatory Framework

The last decade has seen a series of regulatory measures resulting in progressive changes

in radio spectrum management and policy in the European Union (EU) through a series of

regulatory measures. These measures enabled decisions to be taken on the availability of

radio spectrum for relevant EU policies, providing legal confidence, mechanisms for radio

spectrum policy development, transparency on spectrum usage and a consolidated

European position in international radio spectrum fora.

The key objective of EU radio spectrum policy is to optimise the use of spectrum, to

maximise its value for society and to avoid harmful interference.6 Since February 2005, the

Commission has issued a number of policy statements aimed at promoting more flexible use

of spectrum and greater use of market approaches to spectrum management. The

Commission has emphasised the need for “a gradual but systematic liberalisation of radio

spectrum use”. As part of the i2010 initiative the Commission has presented a strategy for

advancing a single market for radio spectrum use in Europe. Recently, as part of the 2006

6 The Radio Spectrum Decision also refers to economic, safety, health, public interest, freedom of expression, cultural,

scientific, social and technical aspects of Community policies.



review of the Regulatory Framework for Electronic Communications, the Commission has

signalled its intention to adopt legally binding instruments to:

�� Achieve the introduction of technology and service neutral spectrum use as a

default position (through the WAPECs concept);

�� Establish a committee process to identify selected bands for use under

general authorisation;

�� Develop a common framework for spectrum trading in the EU.

This strategy is aimed at ensuring a common approach within the EU to managing spectrum

resources that will allow innovators to place new technologies on the EU single market

quickly and with legal certainty. By putting in place a common framework across the EU the

costs to organisations of acquiring and using spectrum in Europe on a multi-national and

possibly a pan-European basis are expected to be reduced.

More recently, following two years of consultations with stakeholders, with national

regulators and with users of telecoms services, the Commission has proposed a review of

the telecoms framework7. The proposals are due to be debated in the European Parliament,

and by Member State governments in the Council. Once adopted by the EU the revised rules

have to be incorporated into national law before taking effect. The Commission expects the

new framework to be in place from 2010 onwards. The most pertinent part of the telecoms

framework proposals to this study is the ‘new deal for Radio spectrum’, where the

commission wish to drive a common approach to radio spectrum management, particularly

for the Digital Dividend. Although the proposals may be a radical change for some European

regulators, the proposals are in the main in line with the UK.

3.4 Electronic Communications Committee (ECC)

Historically, the approach to harmonising spectrum use in Europe has been predominantly

on the basis of Recommendations or Decisions issued by the ECC within CEPT. There are

certain exceptions, such as the spectrum allocated to DECT cordless phones, which is

mandated by an EC Directive. ECC Recommendations are limited in the extent to which they

can support harmonisation, as they are voluntary in nature and there is no obligation on

individual Member States to implement them. ECC Decisions carry greater weight, in that

once Member States have committed to implement the Decision they are obliged to

implement them, usually by means of transposition into national legislation or incorporation

into the national frequency allocation table. However, there is no obligation on Member

States to commit to ECC Decisions.

The ECC Recommendation T/R 25-08: ‘Planning criteria and coordination of frequencies in

the Land Mobile services in the range 29.7 – 960 MHz’ describes the UHF2 frequency band

7 Proposals for reform of the EU telecoms rules 13 November 2007:

http://ec.europa.eu/information_society/newsroom/cf/itemlongdetail.cfm?item_id=3701



arrangement with a 10 MHz duplex split between base transmit and mobile transmit. This

can be seen at Figure 9 below.

Figure 9: UHF2 ECC Recommended Band Plan

This is the frequency arrangement to which the UK has been attempting to realign. The

contiguous nature of this European band plan has enabled the harmonisation of radio

equipment standards resulting in benefits to consumers in continental Europe. It is important

to note that the UK is not a signatory to this recommendation; however, the UK’s continental

neighbours, the Netherlands, Belgium and France are signatories, whilst Ireland is under

consideration. Twenty-five European Radiocommunications Office (ERO) members have

implemented this recommendation, while 21 members have not. However, four of these

members have either partially implemented or are planning to implement the

recommendation. These statistics demonstrate that most ERO members are signatories or

will be, but most importantly, our near continental neighbours are signatories, except Ireland.

This in effect means that whilst the UK is not necessarily co-ordinating according to the ECC

recommendation its neighbours are.



Table 7 below is from ERO Frequency Information System (EFIS), which outlines the

frequency band, the type of allocations and associated applications for use within Europe.

Table 7: Frequency table from EFIS of 450 – 470 MHz band allocations and applications

FREQUENCY BAND ALLOCATIONS APPLICATIONS

450.0 - 455.0 MHz MOBILE On-site paging (440.0 - 470.0 MHz)

PMR/PAMR (440.0 - 470.0 MHz)

Analogue cellular (450.0 - 460.0 MHz)


PMR/PAMR (440.0 - 470.0 MHz)



PMR/PAMR (440.0 - 470.0 MHz)


On-board communications (457.525 - 457.575 MHz)

459.0 - 460.0 MHz MOBILE On-site paging (440.0 – 470.0 MHz)

PMR/PAMR (440.0 - 470.0 MHz)


460.0 - 470.0 MHz MOBILE On-site paging (440.0 – 470.0 MHz)

PMR/PAMR (440.0 - 470.0 MHz)

Analogue cellular (460.0-470.0MHz)

On-board communications (467.525 - 467.575 MHz)

A review of this table tells us that, PMR/PAMR and paging are consistent with the allocations

in the UK, whilst analogue cellular is probably historic, back to the NMT450 standard and is

therefore not an issue.

3.4.1 FM38

ECC working group FM38 has the remit of developing and reviewing ECC Decisions,

Recommendations, Reports and other deliverables on PMR/PAMR, Public Protection,

Disaster Relief and cross-border coordination issues based on the requests from Working

Group Frequency Management (WGFM).

FM38 are currently engaged in developing a new draft ECC Decision on the "harmonisation

of frequency bands for the implementation of digital Public Protection and Disaster Relief

(PPDR) radio applications in the 400 MHz bands". This draft ECC Decision covers frequency

bands for narrow band as well as for wide band PPDR radio applications.

Similar to ECC Decision (04)06 on Wide Band Digital PMR/PAMR this Decision will allow

flexibility and technology neutrality. It is important to note that the UK has not adopted this



decision, but Ireland and the Netherlands have, with a commitment from France that they will

also adopt the decision.

Once this new ECC Decision on PPDR at 400 MHz frequency range is adopted, it is

expected that it will replace ERC Decision (96)01 on narrow band emergency services.

3.5 UK Regulatory Environment for UHF2

The status of the UHF2 band remains uncertain, as no decision has been made whether the

undertakings of the alignment project remain active:

�� Radiocommunications Agency, 450-470MHz Band Alignment Project

Information Sheet: “The alignment of frequencies will require the majority of

licensees to adjust or replace their existing equipment. Licensees will be

responsible for arranging replacement or re-tuning of their own equipment.

Service providers should be able to provide the expertise necessary for this

task. The Agency will notify all licensees individually of their new frequency or

frequencies and the date upon which this change will be implemented. The

intention will be to give six months notice of the date when the change is to be

given effect.”; and latterly

�� Ofcom, Withdrawal of the Band Re-alignment Project, Update on the

450-470MHz (UHF2) Band Alignment project: “Until further decisions are

made and communicated to stakeholders, the relevant licences should be

considered as remaining subject to the notices of re-alignment previously

issued by the RA/Ofcom.”

This last statement above effectively means that current UHF2 licensees could still be given

6 months notice to move from their frequencies even though the band alignment project was

withdrawn in July 2004.

The Spectrum Framework Review (SFR) Implementation plan8 amalgamated Ofcom’s

polices for Spectrum Trading and Liberalisation for the future spectrum management, with a

plan relating to specific sectors and spectrum bands. This document, together with the

statement on measures to liberalise and simplify business radio licensing in January 20079

(to be introduced after Q1 2008), will result in the reduction of the current twenty-one

business radio licence products to five. This exercise will result in a simpler licence product

structure enabling easier trading of rights and liberalisation by removal of service

segmentation of spectrum. One of the most significant changes is the introduction of a 5

year revocation notice period for licences, providing security of licence tenure. Table 8

8 Spectrum Frame work Implementation Plan: http://www.ofcom.org.uk/radiocomms/sfr/

9 A statement on measures to liberalise and simplify Business Radio licensing (including measures to extend trading):

http://www.ofcom.org.uk/consult/condocs/brtrading/statement/



depicts the timetable for introduction of spectrum trading and the simplification of business

radio licenses.

Table 8 Timetable for the introduction of spectrum trading and licence simplification in UHF2

10

Onsite PBR(1) includes Onsite Speech and Data Systems and On site Hospital Paging and Emergencies Speech

Systems, Onsite PBR(2) includes On-site One-Way Paging


Although the SFR refers to spectrum trading being enabled for the E&PSS in 2006, it is

understood that this has subsequently changed to 200811

. This new date is likely to coincide

with the proposal for the introduction of Crown Recognised Spectrum Access (CRSA), which

is mentioned in the Independent Audit of Spectrum Holdings and the subsequent

Governments Response12

.

To date, with the licence products that have been made tradable, only one trade has

happened in UHF2, which was a simple ‘take-over’ of a licence. As a result, spectrum trading

and liberalisation have not had any significant impact on Business Radio in UHF2 to date.

However, the impact of these new liberalisation and simplification measures should further

remove regulatory barriers for self-configuration, by providing the license holder more

coherent rights, enabling the market to take the most appropriate action. It is therefore

considered that the impact of trading and liberalisation will become more significant in the

UHF2 band post 2008.

10

This table refers to published timescales and documents as of November 2007, which is subject to change. 11

Confirmed by PSSPG members 12

Independent Audit of Spectrum Holdings: http://www.spectrumaudit.org.uk




This chapter has reviewed spectrum regulation at a high level from both an international

perspective (the ITU), through to national implementation (the UK). We make four main

points:

�� The 450-470MHz band will become an IMT-2000 band, which may in the

future ensure that the UK must protect these services from interference as

they could be deployed in neighbouring countries;

�� Liberalisation and Trading will become the norm with the market deciding the

future use of the bands, enabling the UHF2 licensees to reconfigure there

spectrum should they need to;

�� Most of the UK’s continental neighbours have adopted ECC Recommendation

TR25-08, which enables international co-ordination, but the UK has not

adopted this Recommendation, this could in time cause co-ordination

problems;

�� The UK regulation surrounding the UHF2 band, regarding the 6 month notice

period, remains an issue of uncertainty on security of tenure for stakeholders.



4 Technology and Market

4.1 Introduction

In this chapter, we examine three issues with regard to technologies and services available

with UHF2 spectrum and provide potential market demand statistics. Understanding the

possible technology and service developments and future market demand will inform any

further policy recommendations. The issues covered are:

�� Technologies available for UHF2 spectrum including Digital Mobile Radio

(DMR), Tetra, Professional Mobile Radio (PRM) and associated services

such as mobile TV;

�� Market demand review of projected sales;

�� Future options for technology and service development.

We summarise our findings and provide conclusions at the end of the chapter.

4.2 Technology and Services

The technology available for the UHF2 spectrum falls into two high level categories;

�� Narrowband (=<25 kHz), low data rates (<10Kbps per channel) and long

range (>3Km) mobile communications, mainly used for voice that can be

networked.

�� Wideband (=>100 kHz) and high data rates (>100kbps) providing short range

(<5Km) mobile communications mainly used for data transmission that can be

networked.

Narrowband technology is used for voice and data services, such as Professional Mobile

Radio (PMR)13

, which is typically ‘owned’ or outsourced, for example, Airwave is an

outsourced closed network limited by a Sharers List14

for Emergency & Public Safety Service

(E&PSS) organisations. A PMR network is typically resilient due to both the technology and

the design of the network, designed to meet the coverage requirements of handsets or

mobiles (units located within a vehicle), where the benefits of the coverage of a narrowband

system are most profound.

The increased data usage together with the need for greater security has meant that the

E&PSS are moving towards digital15

mobile solutions with a TETRA based managed service

13

PMR is part of the land mobile service based on the use of simplex, half and possibly full duplex modes at the terminal level in order to provide closed user group communications. 14

http://www.ofcom.org.uk/radiocomms/ifi/licensing/classes/business_radio/emergency/2007/ 15

The term ‘Digital Radios’ is misleading as the radio equipment often employed using analogue radio standards is indeed using digital technology within the radios, allowing them to be fully programmable and have different user data modes. This pseudo- digital-analogue technology differs from the likes of DMR and TETRA that have an standardised air-interface employing TDMA techniques to increase capacity.



from Airwave (380-400MHz). Potential non-civil adopters of TETRA (e.g. Airports) have been

limited to either using the Airwave service (if on the sharers list) or negotiating with Arqiva to

use the only non-civil UK spectrum within the tuning range of TETRA with a 10MHz duplex

split, and aligned with TR25/08. This recently awarded spectrum is 412-414MHz, paired with

422-424MHz. There is a further civil allocation of 10MHz duplex split spectrum found at 410-

412, paired with 420-422MHz, which is managed by the Public Safety Spectrum Policy

Group (PSSPG).

Historically digital PMR/PAMR technology that requires duplex split has generally been

10MHz in the CEPT TR25-08 configuration. However, we now have exceptions in Digital

Mobile Radio (DMR), a digital standard that can have varying duplex split and a few

manufacturers have recently started to provide TETRA at various duplex split (non-

standard). The technology currently used within UHF2 is predominantly PMR and paging

type services, which are spectrally very similar, at either 12.5 or 25 kHz channel split.

The introduction of the new DMR standard, with its three tiers (discussed in more detail in

Section 4.2.1), now offers the market a real distinct digital alternative to standard analogue

PMR; this can be seen below in Table 9. Prior to the introduction of DMR, only TETRA and

Project 25 narrowband digital technology was available. This was designed to serve the

E&PSS market and required the 10MHz duplex split, which is in short supply to non-civil

users. However, now the majority of the non-civil markets needs for digital PMR/PAMR can

be met by the DMR technology.

Table 9 Radio Technology and Addressable Markets




The benefits of digital PMR over analogue PMR have, until recently, centred on the cost of

the equipment as analogue technology has been more cost effective. This was mainly due to

TETRA, TETRAPOL and Project 25 being the only realistic narrowband deployable

technologies. However, these technologies have focused on the Public Safety/Mission

Critical Markets and are usually not cost effective for Professional/Business Critical markets.

The price gap between digital and analogue PMR, and the lack of available 10MHz duplex

spaced spectrum in the UK, have until recently meant sales of digital PMR to the E&PSS

market only, as this market has access to the correctly configured spectrum.

The availability of UHF spectrum configured with a 10MHz duplex split as CEPT TR 25/08 is

as follows:

�� 380-400MHz and 410-12 paired with 420-422MHz managed by the PSSPG

for use by the E&PSS;

�� 412-414 paired with 422-424MHz, licensed to Arqiva16

.

However, recently manufacturers have produced TETRA standard equipment in the UK on

10MHz, reversed ERC Recommendation TR 25-08 (10MHz duplex spaced but the BS Tx is

opposite to TR 25-08) and 7MHz duplex split, allowing for on-site TETRA systems to be

deployed (e.g. Heathrow T5).

DMR has recently changed the paradigm from an inability to deploy digital services in UHF2,

to one that allows cost-effective digital radios, which have programmable duplex splits

allowing them to operate on the same channels as Analogue PMR. The DMR standard was

developed to replace Analogue PMR. This is a simple form-fit replacement as the two

technologies are spectrally the same, conforming to the same ETSI spectral requirements.

In effect, licensees of Analogue PMR can replace the equipment directly, employing the

same feeders, antenna systems and radio spectrum licence with DMR and benefit

immediately from the added features that digital technology brings.

The main benefit of both TETRA and DMR digital technology is a doubling of spectrum

efficiency using TDMA, allowing four voice channels on a 25 kHz channel for TETRA and

two voice channels on a 12.5 kHz channel for DMR.

The benefits of digital technology include:

�� Cost effective virtual-duplex operation, by using TDMA for forward and

reverse channels

�� Battery saving techniques, inherent within the protocol. (e.g. DMR has

approximately a 40% increase in battery life over analogue17

)

16

No permanent systems have been deployed yet in 412 MHz but they have numerous bids out to current and potential customers that will result in systems being deployed in 2008. 17

According to a leading manufacturer



�� Call interruption.

See ETSI TR 102 39818

and TR 300-4 for a complete list of DMR and TETRA features.

4.2.1 DMR

The DMR standard covers three tiers of products:

�� Tier I – 6.25 kHz Channel split, which is PMR446 equivalent, is now legal in

the UK, for latest news see Ofcom web-updates19

�� Tier II – 12.5 kHz Channel split, employing 2 slot-TDMA, which is the

conventional PMR equivalent, peer-to-peer and through a repeater.

�� Tier III – 12.5 kHz Channel Split, employing 2 Slot-TDMA, which is the

trunked and quasi-synchronous/simulcast variant.

A leading manufacturer currently offers Tier II products, with a frequency tuning range of

403-470MHz and duplex split of 3.5, 5 and 10MHz. The duplex split(s) have been through

the approval process, but the duplex split is fully programmable, enabling most duplex splits,

particularly splits that currently exist within UHF2. In addition, the price gap between

analogue and digital radios has narrowed with DMR, with a typical terminal price being 20%

more expensive for DMR over analogue.

DMR Tier III, trunked products are expected to become available in 2008 and like Tier II

products will be available in any practicable duplex split.

4.2.2 PMR Technology Evolution to Higher Data Rates

Mobile Radio network design requires a balance between coverage capability and data

rates. Law’s of Physics determine the maximum data rate of a given channel and states that

the channel bandwidth will affect the data rate, amongst other factors. Therefore, for higher

data rates additional spectrum is required and/or new, innovative modulation and coding

schemes.

The two most prevalent PMR/PAMR technologies capable of providing higher bandwidths to

meet the operational requirements for a self-provided, or potential out-sourced operator

provided network are TETRA release 2 and CDMA450.

i. TETRA Evolution

TETRA Release 1 is a digital trunked mobile radio standard developed by ETSI. The TETRA

standard was developed to meet the needs of traditional PMR user organisations, in

particular the E&PSS feature requirements and specific security issues. The TETRA

standard has been developed over a number of years and continues to evolve.

18

Digital Mobile Radio (DMR) General System Design ETSI TR 102 398, available from www.etsi.org 19

DMR446 update http://www.ofcom.org.uk/consult/condocs/wireless_exemption/statement/



The significant developments in TETRA Release 2 consists of the following:

�� Trunked Mode Operation (TMO) Range Extension;

�� Adaptive Multiple Rate (AMR) Voice Codec ;

�� Mixed Excitation Liner Predictive, enhanced (MELPe) Voice Codec;

�� TETRA Enhanced Data Service (TEDS).

The most significant development, in terms of the emerging requirement for greater

bandwidth, is TETRA Enhanced Data Service (TEDS). This is a High Speed Data (HSD)

service dynamically using multiple RF channel bandwidths and data rates for flexible use of

PMR frequency bands. TEDS is fully compatible with TETRA Release 1 and allows for ease

of migration. The RF channel bandwidths supported in TEDS are 25, 50, 100 and 150 kHz

and when using the 4 TDMA slots in the channel, the maximum data rates in Table 10 can

be achieved.

Table 10 TEDS Packet Data Throughput (Kbps)

Channel Widths Modulation

25kHz 50kHz 100kHz 150kHz

π/4 DQPSK 15.6

π/8 D8PSK 24.3

4-QAM 11 27 58 90

16-QAM 22 54 116 179

64-QAM 33 80 175 269

64-QAM 44 107 233 359

64-QAM 66 160 349 538

The perception in the communications industry is that the first major users of TETRA TEDS

will be the E&PSS networks, which in the UK is a managed service through Airwave using

TETRA Release 1, utilising spectrum at 380-385, 390-395MHz. However, this band does not

have any capacity for implementation of additional TEDS channels. If TEDS was to be

implemented in the UK for the E&PSS, the spectrum configuration would need to be CEPT

TR25/08 aligned and an estimated 2x10MHz of spectrum would be required to meet the

capacity requirements.



Assuming that an E&PSS network operator enters the market for TEDS products, they will

be available during the next 2 years, according to the TETRA MOU. The real market uptake

will depend on whether governments allocate budgets to TEDS, particularly having just

invested in narrowband TETRA networks. Market uptake could also be promoted if new

E&PSS communication network projects invest in TETRA TEDS right from the start (and

have the right spectrum assigned soon).

ii. CDMA – PAMR

The air interface used in CDMA-PAMR20

is known as CDMA 2000 1x. This is specified in the

relevant parts of the TIA standards IS-2000.1 to IS-2000.5, and the radio performance is

specified in IS-97 and IS-98. CDMA-PAMR is designed for use in the frequency bands 410-

430 MHz, 450-470MHz, and 870-876/915-921 MHz. A separation of 1.25MHz is employed

between centre frequency carriers of adjacent CDMA-PAMR carriers, with a minimum of 1

channel required for a network, but typically a minimum of two channels (2 x 2.5MHz) are

required. This standard is capable of 307kbps from the Base to mobile (downlink) and

153kbps in the uplink. This is achieved by adding multiple channels (9.6 or 14.4kbps)

together to achieve higher data rates. There is an upgrade path as 3G services evolve to

higher data rates (2.4Mbps) and more importantly, CDMA-PAMR is deemed more spectrally

efficient and therefore has greater capacity per MHz than TETRA TAPS and GSM-R

according to ECC Report 4221

.

From a European perspective 19 CDMA450 networks have already been deployed with a

further 8 others planned (source www.450world.org, Oct 2007).

The majority of these networks operate in "Block A", which covers 452.5 - 457.5 / 462.5 -

467.5 MHz (with standard CEPT 10MHz duplex split). The planned Irish CDMA450 network

will not be deployed in UHF2, but in UHF1 410-430MHz, so should not cause continental

interference into the UK at UHF2. It is understood the licensee of the potential CDMA450

network in Ireland wishes to obtain spectrum in Northern Ireland to provide a seamless

network, with UHF2 being a candidate band.

CDMA450 technology now offers a dual band scheme, 450MHz and 2100MHz to provide an

upgrade to 3G services to extend coverage into rural areas.

4.2.3 Mobile Television

Mobile Television is a service in the UK, which is in need of appropriate spectrum. The

Digital Dividend may provide access to the appropriate spectrum, but spectrum is unlikely to

be made available until 2012.

The main frequency bands for Mobile Television are:

20

CDMA PAMR – Code Division Multiple Access – Public Access Mobile Radio: for details see the ETSI SRDoc submitted to FM38 at: http://www.nodnett.no/FILES/FM38(2002)81-SRDoc_for_CDMA-PAMR_V0.1.1.pdf 21

Spectrum Efficiency of CDMA-PAMR and other Wideband systems for PMR/PAMR, Granada, February 2004



�� VHF (170-230 MHz, or a portion of it);

�� UHF-IV/V (470-862 MHz, or a portion of it);

�� L (1.452-1.492 GHz).

The three most prominent technologies, DVB-H, DMB and MediaFLO, require dedicated

spectrum. DVB-H is available in all three bands, DMB is available in VHF-III and L Band, and

MediaFLO is available from 450MHz - 3GHz.

Therefore the most likely candidate technologies for use in the 450-470MHz band, for

supplying Mobile Television, are DVB-H and MediaFLO, which each have a channel split of

5, 6, 7 or 8MHz. However, none of these technologies have been manufactured for the 450-

470MHz band and are unlikely to be deployed in this band owing to global economies of

scale. Therefore, it is unlikely that Mobile television technologies will be deployed within the

UHF2 band.

4.3 Projected Sales of PMR Terminals

Ofcom commissioned a bespoke market research report in November 2007, which focused

on the market for UHF2 terminals. The objective of the report was to provide evidence from

the market as to whether Digital PMR is seen as a replacement for analogue PMR. We

summarise the results in this section.

4.3.1 European Market

The PMR industry is predicted to ship 33% more Digital UHF terminals in Europe, over the

period 2006 – 2010. Analogue shipments will decrease over the same period by 6%.

Therefore in 2008, digital shipments of UHF PMR terminals will eclipse analogue shipments

for the first time.

The shipment of Digital UHF2 PMR terminals in Europe is predicted to rise by 42% over the

period 2006-2010, whilst analogue shipments will decrease over the same period by 5%.

This means that during 2009, digital shipments will eclipse analogue in the UHF2 band.



4.3.2 UK Market

The UK market for terminals in the rest of UHF can be seen below at Figure 10, where digital

terminals will see an increase of 16% over the period, with analogue terminals will decrease

over the period by 5%.

Figure 10 UK Market for UHF terminals

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Un

its S

hip

ped

2006 2007 2008 2009 2010

Analogue Digital

Source: IMS Research

The UK market for terminals in UHF2 can be seen below Figure 11, where digital terminals

will see a rapid increase over the next 4 years, with analogue terminals decreasing over the

period by 5%.

Figure 11 UK UHF2 Terminals

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Un

its S

hip

pe

d

2006 2007 2008 2009 2010

Analogue Digital

Source: IMS Research



4.3.3 UK Market Analysis

This market review includes Analogue and Digital (Tetra, Tetrapol, P25, Iden, DMR) and

excludes PMR446 or dPMR446.

The forecasts for the UHF2 band have assumed no frequency band will be allocated for

TETRA in the UHF2 band (if not on a limited/local basis) and that people will therefore opt

for a DMR Tier 2 (or Tier 3) solution for the band.

It is IMS Research's opinion that as much as 80 -90% of the growth in the UHF2 band will be

DMR (starting end 2007). This assumes that no nationwide UHF2 band is allocated to

TETRA for civil/commercial use.


This chapter has covered the current wide and narrow band technologies that could be

potentially used in the UHF2 band. Also by looking at market forecasts, we have determined

the likely uptake of Digital vs Analogue PMR terminals over the next 3 years in UHF2.

We have the concluded the following:

�� For the introduction of narrow band digital technology, a 10MHz duplex split is

no longer required;

�� Digital PMR technology will out sell analogue over the next two years in the

UHF bands;

�� DMR will be the digital narrowband technology of choice over the next few

years, which will increase capacity of networks, with users benefiting from

new features;

�� There is a market for narrowband Digital PMR technology in the UK now and

in the future;

�� CDMA450 is being used elsewhere in Europe or is planned, with particular

mention to Ireland, where a CDMA450 network is planned for use in the 410-

430MHz band;

�� CDMA450 is seen as a technology to deliver 3G services to rural areas.



5 Reconfiguration drivers and challenges

5.1 Introduction

This chapter discusses the overarching drivers and challenges for the reconfiguration of the

UHF2 band and includes a summary of previous studies in this area together with

stakeholder views and considerations.

5.2 Drivers and challenges for band alignment

The challenges facing any re-configuration will be similar to the challenges that faced the

industry during the proposed band alignment project in 2004. The conclusions from an open

forum hosted by the Spectrum Management Advisory Group (SMAG) in 200322

can be

summarised as follows:

�� Economics: The economics study concluded that the value to the UK

economy of the spectrum that could be released was over £200 million

�� Interference: By aligning the spectrum with Europe, a 32dB improvement of

isolation from continental interference would be achieved.

�� Spectrum Scarcity: The impact of co-ordination with RAF Fylingdales on

UHF1 (410-430MHz), will reduce the usability of UHF1 for additional systems,

particularly high sites and power. This alternate band for UHF Business

Radio services, makes UHF2 spectrum scarce and therefore more valuable.

�� New Technology & Harmonisation: The introduction of new technology and

the additional benefits that it can bring is dependent on aligned, harmonised

CEPT TR 25/08 spectrum.

�� Yield of Spectrum: Band alignment was expected to yield an additional 2 to

3 MHz of paired spectrum (in addition to spectrum returned by the E&PSS).

The benefits to the UK GDP of between £247m and £430m NPV were greater

than the costs.

�� Competitive Environment: Alignment would assist the Business Radio

sector to compete with operator provided services such as GSM.

In 2003 the stakeholders had three main points concerning the band alignment project,

namely:

�� The cost of alignment would be expensive compared to the benefits,

considering there were 17,000 licensees, with very few suffering interference;

22

450-470 MHz Band Realignment Open Forum, hosted by the Spectrum Management Advisory Group (SMAG),24 October

2003: http://www.ofcom.org.uk/static/archive/ra/smag/bandalignforum/450summaryfinal.doc



�� There were mission critical systems, that can not be shut down during a re-

alignment process and interference from the process would not be an

acceptable risk;

�� There was a shortage of skilled engineers to undertake the actual alignment

process of physically re-tuning and deploying new systems.

In summary, there was concern that the alignment was not achievable or cost effective and

presented too many risks. The alignment would have serious consequences for all current

stakeholders, except the E&PSS. However, the industry accepted that the main benefit for

alignment would be for future protection from continental interference; but protection from

interference for some users does not necessarily mean that all users should be disrupted.

The stakeholders suggested that a more palatable way forward would be, rather than align

the spectrum with Europe, to remedy only those services affected by continental interference

in the South East.

Therefore, the industry saw no immediate need to align and that interference was a problem

only to UHF2 services in the South East of England.

5.3 Stakeholders current views on the UHF2 band

Mott MacDonald interviewed Key Stakeholders of the UHF2 spectrum, on the current and

future issues of UHF2 policy. The interviewees selected were identified as a representative

view of the industry (See Appendix A for a list of the key stakeholders interviewed as part of

this study.)

5.3.1 Representative view of UHF2 Spectrum Managers

UHF2 Spectrum Managers account for >30% of the UHF2 spectrum use.

Spectrum managers in this band manage the spectrum for national infrastructure networks.

These provide mission critical services, in addition to supporting broadcast services. The

following summarises their position on reconfiguration of the UHF2 band:

�� Any change in configuration would cause a number of detrimental effects to

networks;

�� There is a large financial implication of replacing equipment and running a costly

parallel network (24/7) so that operation and services are not interrupted;

�� Industry would need to be satisfied that all business risks were mitigated;

�� The cost benefit of any re-configuration would need to be clearly identified and

costed to include opportunity cost and parallel networks;

�� There is some interest based on guaranteed access to spectrum at the same

market rate but only if Ofcom was to underwrite the full business cost;



�� There is an interest in how the development of technology proceeds in the future to

help make the most efficient use from the spectrum.

5.3.2 Representative view of Trade Associations

The Trade Associations represent users of the business radio spectrum (>30% of UHF2

spectrum) and manufactures of communications equipment. The following points summarise

their position on reconfiguration of the UHF2 band:

�� As businesses demand more security and insurance there is an increased

requirement for more of the same spectrum;

�� There is strong support for continued licensing of the spectrum in its current

configuration;

�� Generally there is little support for re-configuration owing to the costs involved

and the disruption to many of its mission critical services;

�� It is believed that there is not enough demand for wideband systems in the

UHF2 band, where concentration should be on spectrum offerings higher up

the band;

�� Ofcom are to be discouraged from:

� setting up a third party band manager due to the increased

complexities that would be involved in accessing the spectrum;

� creating large blocks of contiguous spectrum that could potentially

be auctioned off;

�� A swift decision on UHF2 spectrum policy is needed as industry and business

cannot develop their business plans with this current climate of uncertainty;

�� A new digital narrow band technology, DMR can enable reconfiguration of the

band over the air, according to a leading manufacturer.

�� Administered Incentive Pricing (AIP) should be the incentive for moving

forward in spectrum management and users involved in a trading and

liberalisation environment to assist the development of sensible systems;

�� New technology is likely to remain of a narrowband nature due to the current

fragmentation of the band. However, should contiguous blocks of spectrum

become available it will allow for development of networks and increase the

availability of products.



5.3.3 Representative view of the E&PSS

The Emergency and Public Safety Services (E&PSS) are allocated >30% of the UHF2

spectrum. The migration to the Airwave service will leave the majority of the spectrum

available for re-assignment by the Public Safety Spectrum Policy Group (PSSPG).

The PSSPG are planning to appoint a spectrum manager, by the end of 2008, whose role

will be to understand and assess the needs within the E&PSS environment and engage the

market on a commercial basis. The following points summarises the position of the PSSPG

on reconfiguration of the UHF2 band:

�� Provided the same numbers of frequencies were assigned in a known,

interference-free environment some of the E&PSS services within UHF2

could be re-programmed to use alternate frequencies within the band. This

reprogramming could aid the availability of contiguous spectrum within the

band.

�� The impact on individual Fire and Rescue Services (FRS) would be significant

capital cost and a need for a 3-year lead-time.

�� E&PSS will be able to acquire spectrum in CEPT TR 25/08 configuration for

the Future Radio Network (FRN), providing wideband services, which could

be a key role of the future E&PSS spectrum manager. The FRN will either

complement or replace Airwave which is expected to start deployment around

2015, where it is currently estimated that at least 2 x 10 MHz of aligned

spectrum will be required.

�� Most of the use of the E&PSS 7MHz of spectrum is reducing as services

migrate to Airwave. However, use by the prison services and other services

will remain with no current plans to move, meaning that spectrum will not

necessarily be contiguously clear of use.

�� Temporary use could be made of the E&PSS part of the UHF2 band ensuring

that the E&PSS had a sufficient level of protection from interference.

5.3.4 Representative view of Potential New Entrants of aligned UHF2 spectrum

Potential new entrants of aligned UHF2 spectrum would be interested in acquiring spectrum

under particular circumstances in relation to type of configuration and duplex split. The

following points summarise their position on reconfiguration to the UHF2 band:

�� Spectrum should be made available in a ‘useable, contiguous configuration’ of

at least 2 x 3MHz with a preference for 2 x 5MHz (in the configuration of the

latest technology (CEPT Aligned)) or 1 x 10MHz as a minimum.



�� New entrants would look to deploy technologies such as CDMA450 (452.5 -

457.5 (uplink) / 462.5 - 467.5 MHz (downlink) (standard CEPT 10MHz duplex

split) TETRA TEDS, TD CDMA( 3G) to satisfy its customer base.

�� For a wideband national network to be deployed in the UHF2 band in the UK,

regulations would be needed to support technology neutrality, spectrum

masks and guard bands allowing an operator to rollout a viable network.

�� Cross-border co-ordination would be required to enable a viable national

network (around 200 to 300W max ERP). New entrants would prefer a normal

network-to-network interference model used for cross-border coordination to

allow for coverage in border areas, rather than the recent no interference / no

coverage policy adopted by Ofcom.

�� New entrants see demand emerging from the Emergency services, for

deployment of a wideband network.

�� New entrants believe that the spectrum would be worthless if awarded as it

stands. The options either are seen as an overlay auction or vacated E&PSS

spectrum thereby enabling swift reconfiguration for the introduction of

wideband services.

�� Preference would be for national licences.

5.3.5 Representative view of Licensees

The licensees that were interviewed use both on-site voice and data systems throughout the

UK and national wide area voice and data systems. The following points summarise their

position on reconfiguration of the UHF2 band:

�� Licensees generally support the use of UHF2 spectrum in its current

configuration and do not believe that any change in configuration would

necessarily increase the value use of spectrum. Also licensees believe re-

configuration would have a huge commercial risk and cost to customers;

�� Some licensees would be interested in deploying TETRA systems;

�� Some licensees have already deployed TETRA systems through the use of

recent changes in the technology that allow a reverse aligned configuration

and non standard duplex split e.g. 7MHz;

�� Some licensees could potentially realign some channels with Europe as and

when reconfiguration takes place. However, it would be necessary to create

some temporary frequencies to aid migration to a new vacant piece of

spectrum allocated for the particular service migrating;



�� Licensees identified that it would allow them to maximise benefit and minimise

cost if a migration plan over the next 5-10 years was developed.


This chapter has reviewed drivers for band alignment, previous studies and stakeholders’

views in 2004 during the band alignment project and now, 2007. This review highlights the

concerns of the industry, should reconfiguration of the band be mandated. In addition, it is

noted that the industry wish to only address the interference cases, if needed rather than a

mandated re-configuration of the band.

In the light of the findings of this chapter, we conclude the following:

�� The original drivers for the alignment project are mainly irrelevant in the light

of new regulation and technology development. The main drivers are now

economic benefit and interference which will be reviewed in the following

chapters;

�� The future spectrum manager of the E&PSS will have a key role to play in the

future re-configuration of the UHF2 band as they will manage the largest

amount of clear spectrum for potential re-assignment;

�� There is a demand for narrowband technology, which does not need to be re-

configured;

�� The introduction of wide band systems, would probably need at least 2 x

5MHz and would need a review of the adjacent channel and international co-

ordination measures to make it attractive to new entrants;

�� The stakeholders want clear guidance as to the future policy of the UHF2

band;

�� Operators of mission critical services within the band would need a

compelling reason, funding and assurances that any risk to outage of services

was mitigated to consider any re-configuration;

�� There is little appetite for any re-configuration with the band from incumbent

licensees.



6 Interference environment

6.1 Introduction

In this chapter, we explore the interference environment within which UHF2 services are

affected by other UK services and interference from continental Europe. We also cover the

following interference issues:

�� the international coordination process for the UHF2 band;

�� the level of potential interference for aligned and un-aligned spectrum;

�� the different interference scenarios with either narrowband or wideband

technology.

Supporting material and detailed results can be found in Appendices E to I at the end of this

report.

6.2 Interference challenges for UHF2 spectrum

Interference is a technically complex subject, which limits the amount of users that can be

assigned spectrum and therefore its value. If the interference is too high then

communications systems become unusable and, conversely, if interference is extremely low

then spectrum use is inefficient. It is therefore the task of the regulator to achieve the

optimum balance between acceptable levels of interference and efficient use of the

spectrum, in an assigned spectrum band by the regulator.23

To aid in the understanding of interference, Appendix B provides a summary of the different

types of interference that are to be considered when making assignments in the UHF2 band.

Also, Appendix C discusses how Ofcom currently manages interference, the instruments

used and the future tools and policies.

In summary, the main interference challenges are:

�� Due to the UK’s unaligned spectrum with the continent, the UK suffers from

interference, which degrades services particularly in the South East of

England;

�� The UK has a coordination method with continental neighbours that is based

on aligned spectrum, but has no formal international agreement (e.g. HCM

Agreement). The fact that there is no formal agreement could lead to harmful

interference to services in the UK from the Continent, but this is not currently

the case owing to the low use of the spectrum..

23

The term used by Ofcom is ‘Command and Control’.



�� With the UHF2 band having been identified as an IMT2000 band it is likely

that IMT2000 systems will be deployed in the longer term, which could

severely impact the licensees within this band with a likelihood of greater

continental interference than is experienced now. However, it is understood

that Western European National Regulatory Authorities (NRAs) are not

currently considering assigning wideband systems in the UHF2 band owing to

the current use of narrowband services.

6.3 Analysis of the continental interference environment

To understand the impact of the possible UHF2 band continental interference we have

modelled the environment based on the current requirements of the accepted baseline co-

ordination agreement for this band (CEPT TR25-08).

Our analysis is based on the following criteria, parameters and assumptions:

�� the continental interference environment has been modelled as zero;

�� Ireland is also not aligned (same as the UK) and as a result has not been

taken into account for modelling of continental interference in this study;

�� the results present the scenario of base stations from the continent

transmitting to the maximum coordination parameters from CEPT TR25-08.

The interference plot in Figure 12 shows interference from transmissions generated from the

coast of France, Belgium and Holland to the coastline of the UK. The interference plot shows

the threshold levels for 1% (Blue), 5% (Yellow) and 10% (Red) time into a base station

receive antenna at 10m above ground level. This plot is the interference that the UK would

see, if the continental base stations were meeting the coordination requirements in the UHF2

band, and the UK UHF2 band was aligned.

Figure 12 Interference plot of

continental stations into UK to mobiles at 10m

Figure 13 Interference plot from continental Europe to typical base

station at 30m agl

Source: Mott MacDonald/ATDI



This scenario would be valid if the band was aligned and interference was into mobile

receivers but because there is a band reversal24

between the UK and the continent in most

cases, the interference is base station to base station. Therefore the parameters used in co-

ordination of a 10m above ground level (agl) coordination height and 10% of the time are

pessimistic.

The issue is that with band reversal the interference is base station transmit (continent) to

base station receiver (UK) and unlike mobile units, base stations are stationary and hence

need to be protected for a lesser percentage (much less than 10%) of time. In addition, the

base station receive antenna heights tend to be greater than 10m agl (using the data

supplied by Ofcom the average antenna height in south eastern UK is around 15m with a

maximum of 160m.

Figure 13 shows the interference from the continent to a typical base station at 30m agl.

Where the mobile can cope with 10% time interference, the base station usually requires 1%

time interference or better. Although the blue plot represents 1% of time which is

approximately 3.5 days per year, for some critical systems this amount of interference

cannot be tolerated due to their high availability requirements (some as high as 99.99% of

time). As an indication of the severity of the impact on licensees, the area where the

interference is present for 1% time or greater is around 27,500km2 and encompasses around

8000 of the records supplied by Ofcom (>30%). This is mainly due to the concentration of

radio use in the South East, particularly London.

The international coordination level of 20dBµV/m for 10% time at 10m agl will cause

significant interference into UK base station receivers. The area over which a reversed

aligned UK base station receiver would be degraded for 1% of time is in fact much larger

than the co-ordination limit suggests. The interference of the continental network to a level

where the interfering signal is 3dB greater than the typical receiver noise floor (-129dBm)

from any single continental base station is shown in the Figure 14 below.

24

Band Reversal – The UHF2 spectrum band in the UK base station transmitters are on the same frequency as base station receivers in the Continent



Figure 14 Area of UK where base station receiver at 30m agl will have a cumulative signal 3dB above the noise floor for 1% of time


This is an area of some 78,000km2 and covers around 16,000 of the records supplied by

Ofcom (>60%). The cumulative interference effect of multiple continental interferers could be

even larger.

6.4 Analysis of the affects of interference in different spectrum configurations

In order to consider future implications of UHF2 spectrum configuration, a high level

representative view of the impact of narrowband and wideband services in the UK and on

the continent were modelled. The following three modelling scenarios were undertaken to

determine the effects of continental interference on the representative modelling areas of

UK25

:

�� 1) Interference levels determined between UK only assignments, excluding

continental interference. This provides the base-line interference case.

�� 2) Interference considering UK (CEPT reversed) and Europe CEPT aligned

and the base-line case (1). This is the current situation.

�� 3) Interference considering UK (CEPT reversed) and Europe CEPT reversed

and the base-line case (1). Although the continent is changed to match the

UK, the effect is that same as aligning the UK to Europe.

25

Modelling areas defined in Appendix E and Appendix F



6.4.1 Interference to narrowband systems in the UK

The detailed results of the modelling of interference to narrowband systems are at Appendix

E: which are summarised below in Table 11, where the “Average Noise Level”, is the power

sum of all the stations that are co-channel and do not block26

the receiver for all the stations

within the modelling area in dBm.

Table 11 Noise levels at UK base stations at 1% time for base-base interference

Modelling area Base Stations

Thames Gateway Birmingham Bradford

No Continental Interference

Average Noise Level (dBm)

-113.8 -118.34 -125.8

CEPT aligned Continental Interference


-100 -113 -125

CEPT reversed Continental Interference


-111.6 -118.2 -125.79


The table shows us that the difference of impact for continental interference for 1% of time

(base station to base station) is around an average of 11dB for the Thames Gateway, 5dB

for Birmingham and 0.8dB in Bradford. Therefore, there is significant interference reduction

in the South East but upon moving North into Bradford the impact becomes negligible.

If UK systems were CEPT aligned there would be an average of 2.2dB more noise in the

Thames Gateway than if there was no continental interference. This increases to an average

of nearly 14dB when the UK is CEPT reversed. This effect is demonstrated in the

Birmingham area to a lesser extent; however, in the Bradford area continental interference is

negligible either CEPT aligned or reversed. This is mostly likely down to the density of

assignments in each region.

26

‘Block the receiver’- in Business Radio terms, this equates to co-channel sharing, where licensees ‘politely’ share the radio channel.



6.4.2 Interference environment when introducing wideband systems in the UK

The detailed results of the modelling of interference to wideband systems are at Appendix F:

and are summarised below in Table 12.

Table 12 Results for isolated Wideband systems deployed in the areas of interest

Modelling area Base Stations




-97.1 -96.1 -100.68



-84.1 -82.95 -87.98



-84.03 -82.94 -87.97


We conclude the following based on the results from Table 12 and Appendix H:

�� Continental stations will have some effect on the wideband systems in the

Thames Gateway area in terms of increased noise level and number of

blockers but this would drop if the wideband network was CEPT aligned. This

continental interference effect is also seen in Birmingham to a less extent and

is negligible in Bradford;

�� UK narrowband stations under the current trading rules have a catastrophic

effect on wideband systems. The effect of narrowband systems in the UK is to

increase the noise levels in the wideband systems by 13 -14dB under the

current trading rules;

�� In the cases where the continental interferers are either aligned or reversed

shows that, similar to the narrowband situation, continental interference has

significant effect in the Thames Gateway area. The results also show that if

the wideband system becomes CEPT aligned there is an improvement;

�� In all cases narrowband users who are co-channel to wideband users suffer

greater noise and blocking unless there is a very large separation distance

between the two systems. In general the degradation of the narrowband

systems is in the range 5 to 8dB extra noise and doubling / tripling of the

blocking numbers. As additional wide band systems are implemented, the

modelling tends to indicate that the noise levels on the existing narrowband

systems will drop;



�� Like narrowband systems, wideband systems in the south eastern UK would

benefit with being aligned with Europe but this benefit has all but disappeared

by the Midlands. The effect of narrowband systems on the wideband

system(s) with the current trading rules is catastrophic decreasing the

available service areas by around 75% and increasing blocking levels from 2

times to 10 times as much. Considering these degradations the overall all

conclusion is that the current trading rules would not allow a practical

wideband system to be deployed;

�� As more wideband systems are deployed so the noise in the wideband

channel drops and the number of blockers also drops. This is because the

spectral density of the narrowband systems is much higher than the

equivalent wideband systems. This tends to indicate that wideband systems

are possible but only if the majority of narrowband users are removed from

the band and those narrowband users that are left are sufficiently far away as

to produce little or no interference.

Note: In the modelling exercise, we only considered narrowband users being co-channel

with wideband users and have not considered adjacent channel effect of the wideband

systems, which could be significant.

i. Interference effects of Trading and Liberalisation

To implement wideband systems in the current narrowband use of the UHF2 band the

Ofcom trading rules would need to be met. To understand the likely impact of a wideband

system being introduced into the UHF2 band, a scenario has been modelled, pictured in

Figure 15 below. This is based on a wideband network (CDMA450) being deployed in the

Thames Gateway, conforming to the Ofcom trading rules. All the narrowband transmitters

outside the 50km trading zones that exceed the trading zone level would need to have there

ERP reduced so that the field strength at the trading zone boundary is less than -116dBm

(12dBuV/m). The technical rules and method of modelling are summarised at Appendix G.



Figure 15 Narrow band existing base stations meeting trading limits for Thames Gateway


In this particular scenario, 460 stations would need adjustment to their ERP levels. In fact a

further 114 stations would require at least 29dB attenuation to their ERP level, e.g. from 25W

to 30mW. This modelling only looked at co-channel and did not consider guard bands or out

of band emissions, which would have an even greater impact on the number of assignments

affected.

Note: the above trading limit coordination only applies to the base stations. The mobile

stations are assumed to transmit at their normal levels since there is no power control used

by the PMR systems.

6.5 Economic evaluation of Interference

The impact of interference can be related to a cost in terms of additional site engineering

required, but at a high level, the main impact is a loss of coverage area due to the noise floor

at the base station receiver being degraded. To perform an economic evaluation of this

effect, we need to understand the impact of the noise floor on coverage area.

Figure 16 shows the percentage of the service area lost per dB of receiver noise degradation

for both narrowband and wideband systems. This graph coupled with the figures from Table

11 show the impact of band reversal. For example, in the Thames Gateway the average

difference between CEPT aligned and CEPT reversed is a loss in coverage of over 60%

without any mitigation techniques. Alternatively, this can be viewed as an increase in

coverage area of 60% if the spectrum were to be aligned.



Figure 16 Base station receiver noise degradation against percentage of coverage lost


This graph coupled with the average noise degradation provides an indicative measure of

the impact to services, which is used in the economic evaluation of interference in Chapters

7 and 8.

6.6 Future interference environment

The future of the interference environment for the UHF2 band could result in a number of

different scenarios based on the configuration of the UHF2 band.

As spectrum regulations adopt liberalisation and spectrum trading becomes a common way

of accessing spectrum the future interference environment will be less predictable. Careful

frequency assignment planning will need to be considered under a market driven framework

so as not to cause interference to incumbent users from a new service or technology.

For UHF2 spectrum where trading has already taken place, users will need to take

responsibility in terms of how they occupy the spectrum for their services and take the

necessary actions to ensure they comply with the current and future regulations. The

regulator has the responsibility to ensure a suitable framework is in place that protects users

from harmful interference from each other and from the continent. Therefore, future interface

requirements and TFAC should include the provision for adopting new technology in the

future without impairing the use of incumbent services. Ofcom will need provision for

assigning wideband digital systems and narrowband systems at 6.25kHz in UHF2 which

would need to be determined and incorporated in future interference modelling tools and

processes.

The future assignment and protection of services from interference will probably be based

around the concept of Spectrum Usage Rights (SUR), which has its origin in the Spectrum



Framework Review (SFR). The SFR proposed that market forces are a more effective way to

manage the valuable, yet limited resources of the radio spectrum than the current centrally

managed approach. It is recognised that the value of the spectrum is in part derived from its

quality, hence the focus on Interference management through appropriate Spectrum Usage

Rights.

Users of the spectrum in UHF2 have varying degrees of protection requirements to use their

service. As explained in Chapter 2 some of the services require a very high level of

availability and the level of interference protection required would need to be sufficient

enough to support those requirements.

In future, it will be necessary for the market to understand their own protection requirements

in order to deploy a quality of service relative to the type of use and expectation to the end

user. In the case for UHF2, users of mission critical systems and emergency and public

safety will inevitably need to define its spectrum user rights to include the extra level of

protection required as to reduce the likelihood of interference. However, interference is

directly linked to the value of the use of that spectrum, where it is likely that licensees will

need to pay more for spectrum that has less interference or procure guard bands.

Development of new services and new technology could improve the interference

environment as filter technology improves and spectrum management moves to a market

driven approach where key drivers would be for both availability of high value spectrum and

the reduction in harmful interference.

6.6.1 Considerations when aligning spectrum

When considering aligning spectrum within the UHF2 band through partial alignment of the

band or on a channel-by-channel basis, which could be through trading and liberalisation, an

important factor is guard bands.

In the UK aligning spectrum piece-meal would mean existing base transmit (CEPT reversed)

would become base receive and be adjacent to other base station transmitters. Current

equipment standards specify that the adjacent channel power should be 60 dB below the

unwanted channel carrier power. However, in practice systems in the UK operating in the

newly CEPT aligned spectrum would need to conform to the current business radio licence

products which could be a 100W base station. Therefore, a geographical separation

distance or guard band would need to be specified according to the type of use. Using

minimum coupling loss calculations, the geographical separation would need to be in the

region of 16km or at least one channel guard band for a 12.5kHz channel.

Therefore what must be considered when aligning spectrum is the efficiency of only aligning

one channel at a time as the ratio of useable spectrum will by 1:2 in a given service area.

The guard bands would of course remain the same if more channels were contiguously

aligned, providing greater efficiency.




This chapter has covered the current and future interference scenarios that could potentially

impact services in the UHF2 band. This chapter also looked at the procedures that are in

place to manage interference both nationally and internationally. We have concluded the

following:

�� There is significant interference from the continent into UK base station

receivers when modelling the current realistic scenario (UK CEPT reversed

with 1% time and Base station antenna is 30m agl);

�� The effect of interference on service area to narrowband systems is around

70% of the noise limited potential service area is lost in the south of England

decreasing to 30% in the Midlands and 0% in the North for 1% of the time;

�� The UK would benefit from a Memorandum of Understanding for the UHF2

band over and above the procedures contained in the HCM agreement;

�� The introduction of wide band systems into the 450 to 470MHz band would

have a dramatic effect on the existing narrow band user not only in the trading

coordination aspect but also in the noise levels rising from 3 to 8dB

depending on the separation distance between the systems. These

degradations will change depending on the separation distances and

geographic terrain between the various co-channel systems;

�� There is an economic impact to consider if the UK were to suffer significant

continental interference;

�� Guard bands and geographical separation would be necessary if the UK were

to adopt partial alignment in some areas in the UK;

�� Users of UHF2 spectrum in the UK currently do not suffer continental

interference due to the low level of radio communications activity in the UHF2

band on the continent. It is has been found that if the UK were to become

CEPT aligned any future potential interference could be greatly reduced.



7 Economics, Costs, Demands and Benefits of Reconfiguring the UHF2 band

7.1 Introduction

This chapter covers the following topics:

�� a discussion in broad terms of the key economic concepts used when

analysing the economics of spectrum;

�� a summary of the theory of measuring economic costs and benefits;

�� an outline of the methodology to be used to estimate the costs and benefits of

band alignment;

�� an outline of the key costs and benefits identified by previous studies when

reviewing the potential reconfiguration of the UHF2 frequency band;

�� a review of previous research into the likely demand for UHF2 frequency

spectrum if it was reconfigured;

�� a review of Ofcom’s current plans for future spectrum allocations in the UHF2

frequency band; and

�� a summary of the key assumptions to be used in the cost benefit study.

With all the relevant topics discussed, we then develop a methodology for the Cost Benefit

Analysis (CBA).

7.2 Measuring Costs and Benefits of UHF2 spectrum reconfiguration

One of the key analytical tools employed when reviewing any future policy changes for the

UHF2 band is to undertake a cost benefit analysis. In this section, we discuss the concept of

cost-benefit analysis and its relevance to policymaking prior to applying the concept to the

challenge of UHF2 re-configuration.

7.2.1 The Theory

Cost-Benefit Analysis (CBA) is an economic tool to aid decision-making. It is typically used

by governments to evaluate the desirability of a given market intervention. The aim is to

assess the efficiency of the intervention relative to doing nothing.

The costs and benefits of the impacts of an intervention are evaluated in terms of:

�� the public's (consumers and producers) willingness to pay for the benefits of

the intervention; or

�� the willingness to pay to avoid the costs.



The costs in a cost-benefit analysis should be measured in terms of opportunity costs,

which are the values in their best alternative use. The guiding principle is to list all of the

parties affected by an intervention, and place a monetary value of the effect the intervention

would have on their welfare as it would be valued by them.

The benefits in a cost-benefit analysis typically attempt to measure the impact of various

options on the value of ‘social welfare’. Economists measure social welfare as the sum of

the total benefits to consumers beyond the price they pay (the consumers surplus), plus the

profit to producers above a normal return (the producers surplus).

In Figure 17 “consumer surplus” is the area below the demand curve, sometimes referred to

as consumers willingness to pay, and above the price (P*), what they have to pay. Producer

surplus is the area above the supply curve and below the market price (P*). The equilibrium

price is where the supply of the service equals the demand for the service. The concept of a

surplus arises for consumers because there are some consumers, as indicated by the

demand curve, who would be prepared to pay a higher price that P* for the service. These

consumers receive a ‘surplus’ as they actually pay a lower price (P*) than they would be

willing to pay for the service. Similarly, there are some producers (as indicated by the supply

curve) that would be prepared to provide the service to consumers at a lower price than they

actually received (that is, P*). Hence, these producers gain a ‘surplus’ above the price that

they were prepared to offer for the service.

The sum of the area of consumer and producer surplus equal the total amount of social

welfare that exists for the supply of a service (Q*) at a given price (P*).

Figure 17 Consumer and Producer Surplus

i. What factors can result in changes in net social welfare?

Changes in net social welfare occur as a result of changes in the demand and supply of

services offered.

quantity

demand

supply

Q*

price

P* producer surplus

consumer surplus



In order to illustrate the range of factors that can influence net welfare due to band re-

alignment, we review the impact of band alignment where spectrum is used as an input to

production. In reality, there are a range of goods and services that make use of spectrum in

the production of final products and services. In addition, band alignment may free up

spectrum to allow completely new services to be provided that are not provided now.

However, the simplified scenarios discussed below show in broad terms the impact that

band alignment can have on net social welfare.

An increase in the demand curve in Figure 17 will lead to an unambiguous increase in

producer surplus. A number of factors could drive the rise in demand. Band alignment may

allow for a range of enhancements (such as international roaming) to the existing service to

be offered, which will in turn increase the demand for the service at every level of supply.

This assumes that before band alignment, continental interference issues prevented the

service from being used in other countries in Europe. This increase in the ‘value’ of the

service leads to an outward shift in demand.

A downward shift in the supply curve in Figure 17 will lead to an increase in the size of the

consumer surplus. Band alignment may reduce production costs because of greater

economies of scale of manufacture (due to greater harmonisation with European Standards).

In addition, the supply curve could flatten as a result of band alignment due to more efficient

use of the existing spectrum. For example, a flattening of the supply curve may occur if, as a

result of band alignment, new digital technologies can be introduced that use the same

spectrum in a more efficient way. This may in turn, allow firms to offer a greater amount or

range of services that could be offered before band alignment.

The costs of band alignment may cause the supply curve in Figure 17 to shift upwards

(increase) and the demand curve to shift to the left (decrease). Band alignment will mean

that many existing users of spectrum will bear additional costs (such as retuning equipment

to new frequencies). This will increase the average costs of production across the entire

supply curve, moving the supply curve upwards and lead to increased prices and reduced

consumer surplus.

Band alignment may also cause the demand curve to shift to the left (decrease). This may

be due to consumers during the band alignment transition phase shifting to other providers

offering similar services (such as cellular services). Consumers may decide to shift away

from these services because of the disruption to their services during the transition phase.

Consumers may make this decision based, for example, on the potential for actual downtime

to their service because of the band alignment. The level of producer surplus reduces as a

result of the reduction in demand.

Hence, there are a range of potential impacts that may occur as a result of band alignment.

The role of cost benefit analysis is to weigh up the size of each of these effects on supply

and demand to arrive at an overall estimate of the net impacts.



7.2.2 Practical issues in assessing the costs and benefits of band alignment

In practice, the process of conducting a cost-benefit analysis of various band alignment

options involves estimating the monetary value of initial and ongoing expenses (costs)

caused by the market intervention. These costs are then weighed against the expected

return (benefits) of the market intervention to derive the net-benefits. The total net benefits

are then compared against the ‘do nothing’ scenario (the base case), as well as to the net-

benefits that result from other market interventions.

Constructing robust measures of the costs and benefits of specific actions is often difficult.

This is because the size of many of the costs and benefits can depend crucially on a number

of future unknowns, or involve making judgements on the consumers ‘willingness to pay’ or

the producers ‘willingness to supply’.

Methods to try to estimate total benefits include using survey methods such as asking

consumers how much they would be willing to pay for a certain service or by drawing

inferences from market behaviour, such as revealed preference techniques.

In order to simplify the calculations, many cost-benefit studies assume that the supply curve

is relatively flat. With a relatively flat – or horizontal – supply curve, there are only marginal

changes in the size of producer surplus (or none if the supply curve is horizontal) which

allows the analysis to focus solely on estimating the size of changes in consumer surplus as

it can provide a reasonable measure of the total change in social welfare.

In addition, we note that band alignment may lead to the freeing up of additional spectrum

that will facilitate the provision of new services. In this case, we are then interested in

estimating the entire value of the consumer and producer surplus (rather than change in

surplus measured for existing services). The value producers are willing to pay for spectrum

is a proxy of the magnitude of the social welfare benefits that accrues as a result of band

alignment.

Another practical issue to consider is to ensure that all relevant costs and benefits are

assessed on a comparable basis. To do this, a discount rate is used to compute all relevant

future costs and benefits in present-value terms. This is because the costs and benefits may

accrue both now and into the future. Our analysis will use the UK Treasury discount rate

estimates.

i. How accurate is cost-benefit analysis?

The accuracy of cost-benefit analysis studies are only as good as the quality of the data

used in the analysis. Many of the drivers of benefits and costs are based on estimates of

future unknown events, such as the potential number of consumers willing to purchase the

service once the intervention has been implemented. Hence, there are inherent dangers in

predicting finite net benefits or costs. Usually, sensitivity analysis is deployed to check the

impact of particular factors. As a result, it is normal to present a range of potential outcomes.



Another challenge comes from determining which costs should be included in the analysis.

This is often controversial as organisations or interest groups may have considerable

debates on which costs should be included or excluded from a study.

ii. Defining Costs

It is important when conducting and reviewing cost-benefit studies to be aware of the way

that economists define costs. The true cost of something is what you give up to get it. In

terms of spectrum band alignment, costs are not only the resources needed to effect the

alignment but also the benefits that were forgone as a result of the decision to re-align the

band. These ‘opportunity costs’ are relevant for cost-benefit analysis.

In assessing which costs to include in the analysis, the key is to consider only the costs that

will vary as a result of the decision to align the band.

7.3 Methodology for measuring the costs and benefits of Band Alignment

We will use the following approach to estimate the costs and benefits of band alignment:

�� Firstly, we will review previous studies on the costs and benefits of band

alignment – and summarise the results. Given primary level research is

beyond the scope of this project, we will rely heavily on the research that has

already been carried out on the costs and benefits of band alignment.

Previous research and analysis will be critically assessed, taking into account

any modifications needed given recent policy and market changes.

�� Secondly, we will outline the major options for band alignment. We will outline

the assumptions made in respect of the future use of the band. In particular,

how the spectrum is used once the band is aligned will have a key impact on

the results (for instance, the value of the spectrum that may be available for

re-allocation as a result of greater spectrum efficiency). Our assumptions on

the future use of the band are critical for the analysis. We will do this based

on providing three broad options for band alignment, which are discussed in

more detail in Chapter 8.

�� Thirdly, we will identify and discuss each of the high-level costs and benefits

that may accrue for each of the options. These will be based on relevant

previous work as well as our own analysis, assessments and assumptions.

�� Fourthly, we will review the three options in more detail and identify for each

option the detailed factors to be taken into account and measured in Net

Present Value (NPV) terms, based on a 15-year assessment period. Again,

we will draw on previous analysis of the costs and benefits of band alignment.

These will be assessed in light of the recent policy and market changes. We

will also carry out a sensitivity analysis to review how sensitive the results are



to changes in the values of key variables. We will also discuss the distribution

of the costs and benefits across users for each of the options as this has been

highlighted in previous studies as an important factor to consider when

assessing the costs and benefits of specific options.

7.3.1 Adjusting the value of costs and benefits to present day

The valuation of costs or benefits are expressed in ‘real terms’ or ‘constant prices’ (i.e. at

‘today’s’ general price level), as opposed to ‘nominal terms’ or ‘current prices’. Given that we

intend to draw on estimates of costs and benefits from studies in the past, there is a need to

adjust the value so that they reflect current values. To do this, we have adjusted values by

the average annual inflation rate for all goods between 2003 and 2007, as produced by the

UK Office of National Statistics.

7.3.2 Discounting for Costs and Benefits that occur in the future

Some of the costs and benefits of band alignment will occur in different time periods. For

example, some of the value to spectrum users of a reduction in continental interference as a

result of band alignment will only be realised when current equipment is replaced. At this

point in the future spectrum users will be able to build a more efficient network (for example,

fewer base stations) given reduced interference risks. Hence, the value to users of this future

benefit needs to be discounted back to present day.

For our analysis, the discount rate of 3.5% is used. This is the rate recommended by the

HM-Treasury for the assessment of the costs and benefits that occur in different time

periods.27

7.3.3 Sensitivity Analysis

In order to test the results produced, it is sensible to apply tests on the sensitivity of the

results to changes in key variables (such as the cost of alignment, or the value of spectrum).

In terms of the costs of band-alignment, PA Consulting have carried out extensive sensitivity

testing of their estimates – and since we are relying on their estimates for our analysis, there

is no need to replicate this work. As a result, our sensitivity tests will focus on the size of the

benefits – and we will analyse the impact on the overall results when the value of key

variables are changed.

The results of this analysis are detailed in Chapter 8.

7.4 Review of previous research on the costs of band alignment

The first stage of our cost-benefit analysis is to review previous work on the costs of band

alignment.

27

See : http://www.hm-treasury.gov.uk/media/3/F/green_book_260907.pdf



There has been considerable research carried out on the costs of reconfiguring the UHF2

spectrum band. Much of this work took place between 2000 and 2004 and was focused on

providing estimates of the potential costs and benefits of harmonising the UHF2 spectrum

band with European standards. In this section, we examine two types of costs:

�� The direct costs of band alignment

�� Additional potential costs of band alignment.

7.4.1 The costs of band realignment

Figure 19 on the next page provides a summary of the estimates of direct costs of band

realignment of the 450-470 MHz band.

As a result, we focus the rest of our analysis on the most recent and comprehensive study

on the costs of band alignment, which was completed by PA Consulting in 2004. This study

estimated that the total costs of alignment were between £260m and £310m.

Costs were disaggregated to provide analysis on the specific costs faced by different users

of spectrum impacted by band alignment. See Figure 18 for a summary of this cost break

breakdown.

Figure 18 Estimates of the cost of alignment by user segment28

Segment/User Total Costs

(£)

Average

Licensee Cost (£)

Average

Terminal Cost (£)

PBR 67 378 434 14 606 189

Paging 8 800 359 38 940 144

PMSE 13 019 319 32 794 368

Telemetry 22 722 600 295 099 1 193

Network Operators

94 022 695 47 011 348 1 274

Site Engineering 71 157 980 n/a n/a

Contingency 55 420 396* n/a n/a

Total 277 101 387 n/a n/a

*20% Contingency distributed evenly across segments

These cost estimates were based on the assumption that the alignment of each user will

take place with a single frequency change.

28

Typical user cost for 450-470Mhz band Alignment, PA Consulting (2004)



Figure 19 Selection of cost estimates of 450-470 Band realignment

Study Methodology Cost estimates

PA Consulting (2004)

Review of direct costs of band realignment. Review of databases combined with stakeholder interviews

Between £260m and £310m if a one-step frequency change is performed.

If ‘parking’ frequencies are used in a totally different band for all users to allow for continuity of service then costs would increase to over £500m.

Significant duplication of costs would also occur if ‘parking frequencies’ within UHF2 were used, estimated to add between £180-200m to the costs.

Radio Agency (2003)

29

Unknown £125m

SD-SCICON (1991)30

Unknown Engineering costs of realignment estimated at £55.7m.

Loss of revenues due to down time estimated at £22m.

Department of Trade

and Industry (2002)31

Based on 2055 responses to a Postal survey to 6 separate user segments that make use of spectrum in the 450-470 MHz band.

Average lifetime of equipment was 10.8 years. Average remaining lifetime was 5.1 years. Average cost of existing equipment was £1700. Percentage of existing units able to be reconfigured was 78% on average.

Average loss of revenue as a result of realignment (excluding equipment costs) was £26,000 on average (or a reduction of 32% of revenues over 7 days).

Average increase in staff costs was £2100 (a 29% increase over an average of 13 days).

A quarter of respondents said they would consider moving to another band. One off costs of moving to another band was estimated at £704,132 (or £8563 excluding Railtrack). Ongoing costs of moving to another band were estimated at £744,366 (or £5374 excluding Railtrack).

PMR Group Members of the Federation of Communication Services (2004)

Unknown Band realignment would reduce interference for an estimated 340 licences – but that 17,285 licences would incur costs in realigning the band.

Costs caused by the disruption to UK electrical and gas supplies, the threat to airport operation etc. estimated at ‘hundreds of millions of pounds’

Indepen and AEGIS (2004)

Case study of Telemetry/Telecommand services in the 450-470 MHz band. NPV estimated over a 10 year period

Net Costs of harmonisation (which include NPV $5m benefits) calculated at £4200m. Costs were calculated as those involved in using alternative bands and technologies to deliver equivalent services

Indepen and AEGIS Case Study of PMR at 450-470 Earlier harmonisation results in a larger positive NPV. (Difference in NPVs is around £70-100m).

29

This cost estimate was quoted in a 2004 report by the Federation of Communications (The UHF Band 2 Re-Alignment Controversy). Mott MacDonald has been unable to find the original Radio Agency report that produced these estimates. 30

This cost estimate was quoted in a 2004 report by the Federation of Communications (The UHF Band 2 Re-Alignment Controversy). Mott MacDonald has been unable to find the original SD-SCICON report that produced these estimates. 31

White and Stilwell, Department of Trade and Industry (2002) 450-470 Band Alignment Project Report.



The study was based on consultation with industry and this was combined with a flexible

cost model that allowed for the testing of sensitivity of each of the cost drivers. The study

made use of existing databases on equipment quantities cross referenced with interviews of

key stakeholders.

In reviewing the costs, the report listed the following critical issues generic to all the users of

the 450-470 MHz spectrum band:

�� Equipment re-tuning or replacement;

�� Coordinating multi-user sites;

�� Maintaining continuity of service;

�� Logistics of the equipment changes;

�� Reducing business uncertainty.

In addition, the report reviewed specific issues that would be faced by each of the following

450-470 MHz user categories as a result of the band alignment. The report noted that the

costs fell unevenly across the sector (as indicated in Figure 18 above).

We will be using these cost estimates (adjusted to reflect 2008 costs) as the basis for our

cost estimates for each of the options proposed in Chapter 8. In our opinion, there has been

no fundamental change in the make up of these costs since they were estimated (apart from

the need to adjust the values to reflect the impact of inflation). Our approach is consistent

with the views of the stakeholders that were interviewed as part of this study.

We note that the PA Consulting cost estimates focused on the direct costs of realigning the

band. The report included a 20 per cent contingency to account for ‘factors such as

uncertainty in database information, wasted engineering effort in cases where vehicles or

terminals are not available for conversion or there are problems with site access, the cost of

delays arising due to technical problems at sites and increased labour costs due to the

market demand for engineers’.32

The report also indicated that the total costs of band alignment would increase if the use of

parking frequencies was needed as part of the alignment process. The report estimated that

the costs would increase by between £180-200m if parking frequencies within UHF2 were

used. The report indicated that the costs would increase to over £500m if parking

frequencies outside of the UHF2 band were used.

Notwithstanding the potential for additional costs highlighted in the report, some other costs

were not included in the study. These costs may or may not be relevant, depending on the

management of the band alignment process. They include the cost impact of down-time and

32

PA Consulting (2004), p. 1.4.



potential complications/interference as a result of the alignment which may impact on the

operations of essential services such as airports, electrical and gas supplies.33

7.4.2 Summary

A range of costs needs to be considered when completing a cost-benefit analysis of band

alignment. We intend to draw heavily from the 2004 PA Consulting report on the direct costs

of band alignment. It provides relatively recent estimates of a range of relevant costs that

would be incurred during the band alignment process. These estimates need to be adjusted

to reflect 2008 values. The logical complexity of aligning the band cannot be discounted. In

particular, if the alignment of the band cannot be completed through a one step process, the

actually costs of band alignment almost double.

The types of costs identified in these studies included:

�� The costs of modifying or replacing base stations and mobile equipment;

�� The cost of site engineering – re-tuning or replacement of filters and

combiners that are specific to the current frequency arrangements;

�� The cost of providing temporary parallel infrastructure to enable continuity of

service or long-term migration of a large pool of end-user equipment;

�� The user project management needed to plan and co-ordinate the

changeover;

�� Potential re-training where new equipment is deployed;

�� Any costs associated with hiring equipment or services to maintain service

during equipment downtime;

�� The cost of providing additional staff to cover temporary outages of critical

systems and to perform the re-configuration of central network control

systems;

�� Cost of replacing stock or spares that become obsolete as a result of the

band alignment process and must be replaced to ensure continuity of

maintenance provision;

�� (For public network operators) Any loss of revenue from customers who move

to an alternative either during the changeover, or permanently;

�� The administrative costs associated with making the allocations and any on-

going administrative costs associated with managing the band;

�� The costs of reversing the allocation decision should it turn out to be wrong;

33

See, for example, a discussion of the costs of this in relation of Heathrow Airport in the PMR Group members of the

Federation of Communication Services (2004) The UHF Band 2 Re-alignment controversy, p. 8.



�� The costs of dealing with any increase in congestion in licensed and licence-

exempt bands caused by the denial of licensed and licence-exempt use

respectively. For example, installing additional infrastructure or using more

interference resistant handsets;

�� The potential for band re-alignment to constrain the potential for spectrum

trading;

�� That loss of potential revenue from Administrated Incentive Pricing (AIP) as a

result of band re-alignment.

7.5 Review of previous research on the benefits of band alignment

A review of previous research on the benefits of band alignment suggests benefits accrue in

the following broad areas:

�� Benefits due to the harmonisation of the spectrum band with European

standards. This includes reductions/removal of radio interference between UK

users on the East coast of the country and other users of the spectrum in

other parts of Europe (namely, France);

�� Benefits due to standardisation of equipment between the UK and Europe.

These benefits include the ability of UK users to take advantage of Economics

of Scale of production, as well as the potential to offering additional services

(such as European roaming);

�� Benefits of more efficient spectrum use, which potentially frees up

additional spectrum that can be allocated to the market. These benefits

accrue in a number of ways including the extra funds available to the UK

Treasury because of the allocation of spectrum, as well as the lower costs of

supply that may result for greater spectrum being available. New services

may also be possible as a result of the extra spectrum that is available that

was not possible under existing arrangements.

The magnitude of these potential benefits depends on a range of factors, including:

�� The characteristics (service, quality, and price) of the new applications and

the extent of competition from substitute products and services, which in turn

will affect the benefits users enjoy and take-up rates;

�� The differential impact of the licensing arrangements on service/application

innovation and the timing of investment to deliver the service/application;

�� The timescales over which benefits are to be enjoyed and the discount rate

applied to future benefits;



�� The size of the potential market addressed by the spectrum allocation

decision;

�� In the case of an occupied licensed band, whether incumbent licensed users

are displaced or not by the designation of the band for licence-exempt use;

�� The wider impact of the new applications on competition and, assuming this is

positive, the consumer benefits from enhanced productivity and lower prices,

improved service quality in other services;

�� Externalities generated by the services or the spectrum use. This includes

interference effects and any positive or negative environmental, economic or

social externalities. Possible examples of the latter include any

inclusion/democracy benefits from wider broadband deployment and changes

in road congestion, accidents and pollution caused by automotive radar;

�� The ability to achieve these benefits through alternative means. For there may

be a number of alternative methods to band alignment of reducing radio

interference (such as spectrum trading between existing users or the use of

intelligent antenna techniques in areas of the country where interference

occurs.

We note that it is likely to be challenging to estimate the likely benefits of band alignment, as

many of the key variables are unknown. This is in contrast to the costs of band alignment, for

which costs are more readily obtained or estimated.



Despite these challenges, a number of studies have attempted to estimate the benefits of

band alignment. These estimates are presented below in Figure 20.

Figure 20 Estimates of the benefits of alignment of the UHF2 band

Study Methodology Estimates of financial benefits

Radio Agency (2003)

34

Unknown Up to £555m

Radio Agency (2003)

35

Unknown Band alignment expected to yield an additional 2-3MHz of spectrum – with a Net Present Value of £247-£430m

Department of Trade and Industry (2002)

36

Based on 2055 responses to a Postal survey to 6 separate user segments that make use of the UHF2 band.

Estimates of the existing cost of interference were around £150 per day for the users that experienced interference. Only 10 users out of 2055 provided an estimate of the costs of interference. Alignment of the spectrum band would assumedly mean that these costs would not be incurred.

7% of Users stated that there would be a benefit to band realignment. These users estimated that their business revenues would increase by 9% (or £5200). Averaged across all users the revenue increase was 4% (or £2400).

Indepen and AEGIS (2004)

Detailed case studies of PMR and Telemetry/ Telecommand services in the 450-470 MHz band.

Case studies drew upon previous studies on estimates of the consumer surplus of PMR spectrum and the 2003 Radiocommunications Agency Study of Costs and Benefits of Band re-alignment. NPV approach was applied.

Case study on NPV net-benefits of band alignment for PMR users based on a scenario that band alignment took place in 1980.

PMR users: NPV net benefits of re-alignment range from £4m-£16m to £78m-£124m, (depending on assumptions made about the amount of spectrum released because of re-alignment and the potential value of that spectrum).

Telemetry and Telecommand devices: impact of band re-alignment would free up 1MHz of spectrum available for PMR and other mobile radio use in the 450-470 MHz band. NPV of benefits equal to £5m (although costs of realignment significantly overshadowed the benefits)

7.5.1 Benefits of Standardisation

Indepen and AEGIS state the following types of benefits that result from standardisation:37

�� Compatibility/interface standards: These standards promote network effects

(or network externalities) that derive from being part of a large network of

34

This estimate of the financial benefits of alignment was quoted in a 2004 report by the Federation of Communications (The UHF Band 2 Re-Alignment Controversy). Mott MacDonald has been unable to find the original Radio Agency report that produced these estimates 35

Presentation to the Royal Society by Paul Jarvis, Head of Private Business Systems (2003) Can be found here www.ofcom.org.uk/static/archive/ra/smag/bandalignforum/pauljarvis.ppt 36

White and Stilwell, Department of Trade and Industry (2002) 450-470 Band Alignment Project Report. 37

Indepen and AEGIS, p. 20.



users (e.g. international mobility, ability to communicate with many others, low

cost ancillary and support services). These standards reduce the costs to

consumers and producers of switching between different interfaces and

thereby promote competition;

�� Minimum quality/safety standards: These standards are valuable in

circumstances where consumers cannot easily discriminate between low and

high quality goods (as may often be the case with equipment which uses

radio access). The standards reduce consumers’ search and transaction

costs and ensure low quality producers do not drive out high quality

producers. Technical barriers to trade may be reduced by providing reference

points for quality;

�� Variety reduction/focussing standards: Standards that reduce the variety of

technologies developed allow economies of scale in equipment manufacture

and service provision to be exploited and so lead to lower costs to

consumers. Producers’ risks of sponsoring an unsuccessful variant are also

reduced as the likelihood the market will achieve critical mass is increased

(compared with the situation where there is no standard), even if there may

be increased competition between producers of the standardised product or

service;

�� Information/measurement standards: Standards of information and product

description give consumers assurance of compatibility between

complementary products reduce producer and consumer transaction costs

and thereby promote trade and accelerate the take-up or diffusion of new

technologies;

�� Promotion of First Mover Advantages. The adoption of standards can also

provide an incentive to innovate by helping secure a first mover advantage in

the marketplace. However, the flipside of this is that there may be costs due

to the ability of the ‘first mover’ to lock-in consumers to certain technologies,

and through that reduce potential competition from competitors.

However, the authors point out that many of the benefits (and costs) of standardisation are

not dependent on the adoption of European standards. However, the adoption of European

wide standards can have the additional benefits of reducing radio interference, promoting

international mobility and creating a larger market.

7.5.2 Benefits of Harmonisation of the spectrum band with European standards

The main benefits of Harmonisation as identified by Indepen and AEGIS (2004) include:

�� A reduction in the likelihood of harmful interference between services

operating in different countries, particularly in border areas, and thereby



increase the available spectrum for each country. The scale of this benefit

will depend in part on whether spectrum in the bands in question is scarce or

not;

�� the creation of a European-wide market for equipment and services thereby

reducing manufacturers’ risks and allowing them to take advantage of scale

economies;38

�� a reduction in equipment costs through Economies of Scale in equipment

manufacture by limiting the number of frequency bands for which equipment

must be made;

�� the creation of new services (such as international roaming)

�� Benefits of regulatory certainty (protection) to users of spectrum that the

spectrum will not be reallocated to other potential uses.

However, the size of the benefits of harmonisation depended crucially on current and future

use. Where spectrum was expected to remain un-congested, the study report argued there

was little or no benefit of band alignment. In addition, the study highlighted that technological

change was allowing many of the benefits of harmonisation to occur without the need for

band alignment. We note that this has now happened in the field of narrowband technology,

where DMR and TETRA offer flexibility in the spectrum configuration, enabling the UK to

benefit from digital services, whilst not harmonising the spectrum. However, the case for

introducing wideband technology at this moment still requires harmonised spectrum. Even if

the technology was to be more flexible and be able to adopt different duplex splits, the

technology would still need approximately 2 x 5MHz of spectrum, which would not be

achievable in the 450MHz band current allocation.

The report offers a number of conclusions on the benefits of standardisation and

harmonisation, both historically and if implemented now. See Table 13 for details. The report

argues that net benefits only occur for some spectrum user segments in the 450-470 MHz

band. The conclusions suggest that a partial band alignment is preferred to the full band

alignment.

38

In this regard, there are thought to be significant benefits from trading with “nearby” countries, where distance is measured in cultural, administrative, geographic and economic terms. See Distance Still Matters, P Ghemawat, Harvard Business Review, 79(8), September 2001.



Table 13 Conclusions on the impact of standardisation and harmonisation caused by band alignment

Segment (case studies) Key conclusions

PMR at 450-470 MHz –

historic

Harmonisation would have yielded greater benefits if undertaken

earlier.

PMR at 450-470 MHz – future Benefits from allowing users to chose whether to use wideband

or narrowband

Radio car keys Appears to be a good case for harmonisation

Telemetry and telecommand

systems

Harmonisation would have a substantial negative impact.

PMSE – historic Harmonisation could have a negative impact because it would

reduce the available spectrum, not lead to lower equipment costs

and the benefits of mobility are small. Against this users might

gain more security of tenure, though this seems unlikely in

practice.

PMSE – future Standardisation per se does not offer benefits.

7.5.3 Benefits of greater spectrum efficiency

One major benefit of band alignment is the potential for greater spectrum efficiency, which

allows the same amount of services to be provided with less spectrum. The ‘freed up’

spectrum can then be allocated to new uses that were not available before the band

alignment process. Studies have estimated that there is the potential to free up between 2-3

MHz of spectrum in the 450-470 frequency band. The value of this spectrum (which can be

used to proxy the size of the benefits to consumers and producers) depends crucially on how

it will be used in the future. Previous estimates range to over £400m. However, to gain an

accurate estimate of the current value of spectrum that may be freed up through band

alignment it is important to estimate the current value of the spectrum available. This

requires an assessment of the future demand for the spectrum. Information about the value

of spectrum can also be obtained from a review of the recent spectrum auctions for similar

spectrum frequencies.

Since 2004, Ofcom has introduced spectrum trading and liberalisation, which has had a

significant impact on the spectrum management of UHF2. These reforms increased the

influence of market mechanisms in spectrum allocation and have removed many of the

licence restrictions that prevented a change of use. See Chapter 3, for more details on the

spectrum management reforms, particularly the new reforms to Business Radio in 2008.

The influence of these liberalisation measures means that the previous argued benefits of

band alignment must be reassessed. In particular, one of the reasons argued in favour of

band realignment was to allow for greater harmonisation of spectrum use, and through that

greater take up of services (for instance, it is often argued that harmonisation with European

standards would allow for greater economies of scale for equipment manufacture). However,



the proposed benefits of band alignment will be reduced if liberalisation of spectrum policy

allows these services to be delivered through alternative means.

In addition to a liberalised spectrum trading market offering a means to gain access to the

required spectrum, spectrum is available piece-meal from Ofcom39

and it s being awarded

en-block by Ofcom in a variety of bands over the coming years. Ofcom has laid out its plans

for future spectrum awards, which we have summarised below in Table 14. The table

illustrates the likely alternate spectrum bands for services currently in the UHF2 band.

Table 14: Ofcom Spectrum Awards related to UHF2

Band Status Opinion

412-414 MHz/422-

424 MHz

Awarded to Arqiva, who are

acting as a spectrum

manager with no services

currently operating in the

band.

This band is CEPT aligned and can

accommodate a variety of Digital

PMR technologies. However the

constraints within the band are

such that a national network would

be difficult to deploy. It is expected

that discrete local networks will be

deployed and managed by Arqiva

for operators to PMR type users.

470-854 MHz Addressed as part of the

Digital Dividend Review.

Due for award around 2009.

It is likely that mobile services will

be accommodated within this band,

which may cater for the wideband

requirements of the emergency

services, such as the 700MHz

E&PSS allocation in the US.

Spectrum will also become available from the UK Civil Sector, as proposed in the October

2007 consultation40

on proposals to extend market mechanisms to public sector spectrum

holdings in line with the implementation plan. The Government has already committed in the

Forward Look41

to releasing a ‘significant proportion’ of the MOD’s spectrum holding

between 2008 and 2010. The MOD expects to publish its Military Spectrum Implementation

Plan, which will identify opportunities to share or release spectrum and how its spectrum

holdings will be shared or released to the market, in spring 2008.

39

Referred to as command and control by Ofcom, which is based on a first come-first served approach to the award of spectrum, where spectrum demand exceeds supply in some areas, whilst in other areas spectrum is available. 40

Spectrum Framework Review: the public sector: http://www.ofcom.org.uk/consult/condocs/sfrps 41

Forward Look: A strategy for management of major of public sector spectrum holdings: http://www.spectrumaudit.org.uk/pdf/Forward_Look_2007.pdf



It is understood that the Public Safety Spectrum Policy Group (PSSPG) is currently

considering options for the future management of E&PSS spectrum holdings involving the

use of market mechanisms to secure the best possible use of the spectrum and to maximise

opportunities for band sharing while safeguarding the continuing operational effectiveness of

E&PSS. It is expected that this will result in a single entity managing the spectrum on behalf

of PSSPG from the end of 2008.

It is therefore understood that spectrum will become widely available for those that need

spectrum from sources other than Ofcom for the current type of users of UHF2, through

secondary trading of currently vacant spectrum in 2008. In addition, these new awards and

spectrum managers could facilitate the spectrum provision for future wideband services.

Specifically, UHF2 spectrum will become available through the E&PSS spectrum manager,

with a predicted 6MHz (not aligned or necessarily contiguous) of spectrum being made

available from 2009. Additional spectrum will also be available though normal command and

control licensing from Ofcom as spectrum is available in most areas except London and the

surround areas.

Alternatively UHF2 type users can also source spectrum from UHF1, through command and

control licensing via Ofcom, secondary trading or through the spectrum manager of the 412-

414 and 422-424MHz spectrum, which as of January 2008 remains vacant.

The efficiencies of digital technology and the introduction of new vacated spectrum to the

market, will meet the needs of the UHF2 type of users for the near future without any need

for regulatory intervention above and beyond what is currently happening, with spectrum

available either within the UHF2 band or in alternate bands. Any demand for wideband

services within the UHF2 band, would probably need to be met with regulatory intervention

for provision for in the near term, as at least 2 x 5MHz of contiguous spectrum would be

required in the current fragmented band.

7.5.4 Benefits of reduction in continental interference

Interference within the UHF2 band was discussed in detail in Chapter 6. Interference

ultimately results in the loss of coverage area, which is shown at Figure 16 on page 55. The

benefits of reducing interference are therefore an increase in coverage area. Alternatively,

this can be viewed as less infrastructure required to cover the same area, therefore a

reduction in costs. In addition, the services in UHF2 rely on communications, with services

such as logistics companies using cellular services when outside of the ‘business radio

coverage area’. Therefore as a proxy, a company’s reliance on cellular services to

supplement coverage and therefore ‘call costs’ would reduce if interference was reduced.



7.5.5 Summary of the benefits

Previous estimates of benefits of band alignment need to be re-assessed given the

significant changes that have occurred in both the policy and market environment since

many of the studies were completed.

The introduction of spectrum trading means that many of the benefits of band alignment can

now be achieved without direct intervention by the regulator. In addition, technological

advances have meant that the costs of managing continental interference for existing

spectrum users in the 450-470 MHz frequency band have been significantly reduced. This, in

turn, has reduced the size of benefits that would accrue by aligning the band. For more

details on these changes, see Chapters 3 and 4.

As a result of theses developments we have significantly discounted previous research on

the benefits of band alignment. Instead, we have carried out our own analysis on the likely

use of the spectrum that is freed up as a result of band alignment. We have also examined

the value of that spectrum based on our expectations of the likely revenues that will accrue

to Government through allocating the spectrum to the market and the associated AIP pricing

that would result. In terms of the benefits from reduced interference, our modelling has

provided an estimate of the actual net impact of band alignment, taking into account the

impact of current technologies that can manage continental inference without the need for

band alignment. Chapter 8 discusses this in more detail and provides our estimate of the

size of these benefits.

7.6 Distribution of costs and benefits

Cost-benefit analysis is typically not concerned about how the cost or benefits are distributed

among consumers or producers. However, as highlighted by a number of previous studies

into the costs and benefits of band alignment, the issue of how the benefits and costs are

distributed is of critical importance for public policy.

Earlier studies indicated that the benefits of band alignment tended to be concentrated on

those spectrum users on the South East coast of the UK (where continental interference

risks exist), while costs are shared across all users in the band. Hence, many spectrum

users receive no benefit from band alignment – but may face considerable costs. This is

demonstrated in the continental interference differences between the Thames Gateway and

Bradford in Chapter 6.

In defining the options to be studied as part of the cost-benefit study, we have tried to be

cognisant of the impact of each of the options on spectrum users. As well as reviewing the

size of net-benefits for each of the options, we also review the net-impact on spectrum users.

Minimising the impact of band alignment on spectrum users will be one of the factors to be

considered when making our recommendations on the preferred route for achieving the

policy aims of band alignment.




In this chapter, we have discussed in broad terms the key economic methods for assessing

the costs and benefits of spectrum band alignment. We have also reviewed the work carried

out in identifying and assessing the main types of costs and benefits of band re-alignment

and provided a summary of the main results. We have concluded that:

�� Estimating the change in net social welfare lies at the heart of cost benefit

analysis. This involves estimating the aggregate change in producer and

consumer surplus as a result of the band alignment process;

�� An assessment of the costs and benefits require careful review to identify

which factors are solely due to the band alignment process;

�� An assessment on a Net Present Value basis of the relevant costs and

benefits is complicated and has produced a range of results. It requires a

range of subjective assumptions as many of the costs and benefits are based

on estimates of future uncertain outcomes.

�� The main costs as a result of band alignment found in previous work included:

� Costs to existing operators being moved to a new ‘harmonised’

spectrum band;

� The loss of revenues if current consumers of services move to

alternative providers (such as GSM operators) as a consequence of

the band alignment;

� Administrative costs;

� The potential for band alignment to restrict spectrum trading and

reduce the value of the spectrum.

�� The key benefits that were found in previous cost-benefit studies focused on

three main areas:

� Benefits due to more efficient spectrum use (including the freeing up

of additional spectrum for further allocation);

� Benefits due to the harmonisation of the spectrum band;

� Benefits due to standardisation of equipment.

�� Since most of the studies reviewed were produced between 2000 and 2004,

an assessment of today’s costs and benefits will require taking into account

the following key changes in the industry:

� changes in the industry demand for spectrum in the 450-470 MHz

band;



� technological change (such as developments that enable radio

interference issues to be addressed without the need for band

alignment);

� Regulatory reforms (such as the recent moves to liberalise of spectrum

allocation and use). This includes recent announcements by Ofcom to

for future spectrum awards which can be considered the likely future

alternative spectrum bands for 450-470 MHz users.

�� The largest single contributor to the benefits was the value that was created

through the freeing up of spectrum;

�� Studies have shown that the costs of band alignment are unevenly distributed

amongst existing spectrum users.

Based on our review of previous work – as well as our assessment of the impact of changes

in the policy and market environment since these studies were completed, we outline in

Table 15 our proposed approach to estimating the value of each of the cost and benefit

categories for band alignment.



Table 15 Cost and Benefit Categories

Cost/Benefit Category Method used to estimate value

Direct costs of aligning the band Use PA Consulting 2004 report estimates, adjusted for inflation.

• Adjust PA estimates by UK RPI for 2004-2007

Increased risk of service down-time during alignment

Use PA Consulting 2004 report methodology (adjusted for inflation)

Reduced customer demand during alignment as customers move to alternative suppliers

Use PA Consulting 2004 report methodology (adjusted for inflation)

Reduction in Continental Interference Management costs

The reduction in interference will result in less expenditure in interference mitigation costs, which will be included in the network efficiency costs (below).

Increase in network efficiency as a result of less interference (i.e. Less base stations needed)

ADTI/Mott MacDonald modelling of continental inference see Chapter 6. Account for infrastructure reduction and less reliance on alternative operator provided services. The assignments only affected by interference will be considered.

Benefits over 15 years discounted to Net Present Value (based on a discount rate of 3.5%)

Greater spectrum efficiency allowing:

• Higher Govt revenues through further allocations of spare spectrum

• New/improved services

Review of recent spectrum auctions in other markets (where appropriate) combined with using the equivalent value of spectrum based on Administrative Incentive Pricing rates.. Estimate revenue per MHz for two service scenarios:

• Narrowband services

• Wideband services

Assume that the value of additional spectrum freed up through band alignment is a proxy for the total producer and consumer benefits as a result of spectrum efficiency. No additional values are estimated for the impact of new/improved services.

The value of efficiency benefits due to band alignment should be discounted to take account of the degree of spectrum efficiency that may occur in any case as a result of spectrum trading

Standardisation and Harmonisation benefits

• Lower equipment costs

• New services available (such as European-wide roaming)

We assume the key benefits of standardisation and harmonisation are a 5% reduction in the average cost of a handset in the case of full band alignment. This is due to economies of scale of production as a result of full band alignment. This on the basis that (1) stakeholder interviews suggested little, if any, demand for services that leveraged spectrum harmonised with the rest of Europe and (2) technological progress means non-harmonised/standardised equipment no longer a major barrier to mass production etc.



8 Options development and CBA

8.1 Introduction

This chapter provides details on the options chosen for band alignment and the costs and

benefits used in assessing each option as part of the Cost Benefit Analysis (CBA). It also

outlines the sensitivity analysis carried out as part of the CBA and the results of the CBA for

each of the options. Finally, we have provided conclusions on the CBA.

8.2 The options for band alignment

In order to complete a robust CBA, it is crucial to identify the range of options that could

potentially be introduced to achieve band alignment. As discussed earlier in this report (in

particular in Chapter 7), there are a range of options available. There is also the option of no

regulatory intervention. In order to review costs and benefits in a manageable way, we have

identified three broad options for band alignment. Our view is that these options broadly

summarise the practical scenarios available. The options that we will review in terms of the

cost benefit analysis are:

�� Option 1: Full band alignment through direct Ofcom intervention;

�� Option 2: Partial band alignment, with spectrum yield used for narrowband

services;

�� Option 3: Partial band alignment, with a spectrum yield used for wideband

services.

These options are discussed in more detail below, with the assumptions used for each

option summarised in Appendix H. Details on why these options were chosen and their

impact on the overall results are discussed in the following sections.

8.3 The major cost and benefit categories

In Chapter 7, we reviewed previous related studies in order to calculate the costs and

benefits of various band alignment scenarios. Since these studies were completed, there

have been some considerable changes in the policy, the market environment and

technology. These changes combined have had significant regulatory impacts on the

spectrum value of the costs and benefits of the spectrum (when compared to costs estimates

from earlier studies). In addition, we consider that some of the benefits of band alignment

that were included in earlier studies can now largely be discounted as a direct result of policy

and technological changes that have occurred since 2004.

Our conclusions on the relevant costs and benefits of Band Alignment that can be included

and an assessment of their relevance to the band are discussed below.



8.3.1 The Direct costs of Band Alignment

As discussed earlier, we have used the total full costs calculated by PA Consulting for each

of the options. The PA report indicated that one of the major costs of alignment was

engineering costs. These full costs were calculated as PA Consulting considered that it was

too complex to allocate these costs to individual licence categories, given the large degree of

shared costs to the user. For the purposes of our analysis, we have chosen to distribute

these costs evenly across the user licence categories.

We have adjusted the total full costs for Band Alignment for inflation (based on the Statistics

UK Real Price Index price for all individual categories) so that they reflect 2007 values.42

8.3.2 Measuring the benefits of reduced interference

During stakeholder interviews, a number of stakeholders indicated that the costs of

managing interference have greatly reduced for a number of reasons. One main reason

being that the capital costs for site engineering to mitigate interference was invested a

number of years ago and they continue to benefit from this. In addition, interference has

significantly reduced from the continent in recent times, thereby reducing any related costs.

We have attempted to measure the benefits of band alignment using the following two

methods:

�� A reduction in continental interference as a result of band alignment means

that current users can provide equivalent services with a reduced network

size. Current networks have been deployed with additional site engineering

+costs in order to manage existing continental interference. With this

interference removed, users can, over a period of time as they replace

equipment, optimise their network size and save in capital and operating

costs.

�� A reduction in continental interference will increase the reach of the existing

network. This will reduce the costs of using alternative commercial services

(such as cellular) when users are out of network coverage.

i. Number of base stations impacted by interference

In order to estimate the benefits of reduced continental inference it has been necessary to

make assumptions on the number of base stations that are actually impacted by

interference. We have assumed that 60% of the total number of base stations in the country

are within the geographic region where continental interference is present, see Figure 14. Of

these base stations, we assume that only 33% are actually impacted by interference, which

takes account of the on-site systems for in-building coverage, which are not necessarily

impacted by continental interference.

42

More information on the Inflation adjustment data used can be found here http://www.statistics.gov.uk/StatBase/tsdataset.asp?vlnk=7172&More=N&All=Y



ii. Impact on network size of reduced interference

Using our modelling results, we calculated that a typical spectrum user would be able to

provide an equivalent service with 45 per cent less network coverage if there was no

continental interference. This is based on an average interference level of 7dB, inferred from

the modelling in Chapter 6.

Spectrum users will be unable to benefit from the reduced capital and operating costs of a

smaller network size immediately. Over time, as base stations are replaced, spectrum users

will be able to slowly reduce network size to take advantage of reduced interference. We

assume that the average life of a base station is 5 years, so 20 per cent of the network is

replaced each year.

iii. Impact on GSM costs of reduced interference

We assume reduced interference increases existing network coverage and leads to a

reduction in call costs for cellular mobiles. We assume that call costs are reduced by £5 per

month per mobile. Other key assumptions include:

�� Average cellular costs (before band alignment) are £20 per month per mobile;

�� An average of 30 Mobile phones used per base station.

8.3.3 Reduced handset costs as a result of band alignment

We assume that the costs of full band alignment enable economies of scale in the

manufacture of handsets and leads to a 5 per cent reduction in the average cost of a

handset.

We have assumed that the benefits of band alignment mean that the average costs of

handsets (whether they be DMR, TETRA or CDMA450) are reduced because of economies

of scale in manufacture. We have made assumptions on the number of handsets per base

station and the average costs of handsets to calculate the size of benefits for each of the

options. These are included in the CBA calculations for each of the options.

8.3.4 Spectrum efficiency

Increased spectrum efficiency is a key benefit of band alignment. Band Alignment allows for

these efficiencies to be recovered. The outcome of this is that existing users will be able to

provide equivalent services using less spectrum. The spectrum that is freed up as a result of

band alignment is then available for re-allocation back to the market, which provides

opportunities for existing as well as new operators to purchase spectrum and use it to offer

services. There are a number of benefits to purchasing spectrum as a result of greater

spectrum efficiency, these include revenues to the Government obtained through re-

allocation of spectrum to the market, increased competition (and lower priced and/or higher

quality services) or the means to provide new services that cannot be provided under the

existing spectrum configuration. For example, the 450MHz band is used in some other



European markets to provide mobile services. The propagation properties of the 450MHz

band have made it particularly cost effective to roll out a network in rural areas, where there

are low population densities.

As outlined in Chapter 7, previous studies on the benefits of band alignment calculated that

the release of spectrum as part of the alignment process would deliver significant benefits.

We consider that since those studies were completed, the value of spectrum has declined

significantly due to technological advances allowing efficient management of interference

without the need for alignment.

The options that we considered as part of the Cost Benefit Analysis (CBA) included a

number of scenarios for the average size of the spectrum yield for Partial Alignment.

�� For Option 1 (Full alignment), we assume that 2-3 MHz of spectrum is freed

up with the alignment process. Taking the mid-point of 2.5MHz, we calculated

the value of the spectrum at that point using Administrative Incentive Pricing

(AIP) rates.;

�� For Option 2 (partial alignment, with spectrum used for narrowband services),

we assume that no spectrum is freed up with partial alignment... We assume

that any spectrum freed up will not be useable for alternative narrowband

services due to the complexity of the alignment process under this option;

�� For Option 3 (partial alignment, with spectrum used for wideband services),

we assume that 4.5 MHz of paired spectrum is made available for wideband

services.. The estimated value of this spectrum is based on spectrum

auctions of similar spectrum and compared to the value that would be

obtained through the AIP process.

When previous studies on the benefits of spectrum efficiency through band alignment were

conducted, there were no recommendations other than direct regulatory action to producing

higher spectrum efficiency. However, the introduction of spectrum trading is an alternative

method to achieving greater spectrum efficiency.

Through spectrum trading, there may be the potential for spectrum efficiency benefits

equivalent to those that would occur under direct regulatory action. It could be the case that

band alignment could potentially occur under a spectrum trading scenario as an alternative

to direct regulatory action. In comparison to direct regulatory action, it is unclear the exact

amount of spectrum that will be freed up through spectrum trading and over what period of

time this would occur.

We have considered whether spectrum can be yielded through spectrum trading only and

have concluded that this may not be the case. We have based this on the views of

stakeholders and in our view the configuration of the UHF2 band is very complex and will

involve a mixture of commercial trading with a number of different organisations for some



form of alignment to occur. Additionally, even if there is some spectrum yield, it is unclear

whether spectrum users would actually return the spectrum freed up through the spectrum

trading process back to Ofcom to allow for future allocations of assignments. Another point

to consider is the option of auctions in which spectrum will be more likely to remain for a

considerable period in the hands of the users or organisations who value it.

In order to evaluate any potential net benefits as viewed through the options analysed for

Full Alignment and Partial Alignment, the spectrum fee at AIP rate would need to be

evaluated. The value of this UHF2 spectrum, is complex to calculate if awarded by auction

given the number of different users allocated in the spectrum.

We consider that there are likely to be two scenarios:

�� the first scenario being in which sufficient spectrum is made available with an

appropriate spectrum mask to enable wideband or IMT2000 services;

�� the second scenario whereby spectrum is auctioned to enable the provision of

narrow band services.

We discuss these two scenarios in the next two sections. We draw on observations,

assumptions and analysis from previous studies and then provide our assessment of the

relative value of UHF2 spectrum under both scenarios if it was awarded through an auction

process.

i. UHF2 Narrow Band and Wide Band Spectrum Valuation

AIP rates are used for narrowband and wideband spectrum to value the spectrum freed up

as a result of the band alignment process. In our view, AIP rates are the best method of

estimating the value of the spectrum.

We have also considered how the results of the Cost Benefit Analysis (CBA) would change if

the value of the freed up spectrum was based on the auction values in the 5 October 2006

Ofcom UHF1 spectrum auction of 412-414MHz paired with 422-424MHz.43

Using current AIP values the CBA was calculated for the freed up spectrum as a result of the

band alignment process. A lower CBA value was calculated using AIP and was closer in

value to the auction values in the 5 October 2006 Ofcom UHF1 spectrum auction of 412-

414MHz paired with 422-424MHz. This resulted in the CBA being more negative.

ii. UHF2 Wideband Spectrum Valuation

The UHF2 spectrum as mentioned in Chapter 3 will be recognised as an IMT2000 band,

although CDMA 450 networks have already been deployed in a number of European

countries. According to potential suitors for providing a wideband network in the UK, a

minimum of 4.5MHz with appropriate spectrum masks would be required. The 3G auction in

43

http://www.ofcom.org.uk/media/news/2006/10/nr_20061009



the UK has skewed the market valuation of spectrum, so for this band we will look at the

following:

�� 2.6GHz European auctions; and

�� 450MHz European awards.

The Norwegian auction of the 2.6GHz band in November 2007 provided a fair index of future

pricing of 2.6GHz, with an index of US$0.047 per MHz per Pop44

, which equates to

approximately £1.44m per MHz for the UK valuation. This figure provides a guide as to the

value of IMT2000 spectrum, where fees have been in decline since the ‘3G Auctions’. We

note the propagation characteristics are very different for the 2GHz band, but the technology

for broadband wireless services could operate in both bands.

Table 16 below summaries three recent auctions, which resulted in CDMA450 technology

being deployed.

Table 16 450MHz Selected European Valuations

Auction Spectrum Index

$/MHz/Population

UK equivalent

Value per MHz

Norway, 2004

453-457.5 / 463-467.5 MHz (9MHz)

0.0046 £143k

Sweden, 2005

453-458MHz/463-448.8MHz (3.6MHz)

0.412 £12.6m

Denmark, 2006

453.0-457.5 MHz and 463.0-467.5 MHz (9 MHz licence)

0.08 £2.45m

In order to estimate the value of any UK future wideband spectrum in the UHF2 band, we

have taken the index from the Norwegian 2.6GHz auction and the Swedish and Danish

auctions of 450MHz and have taken the mid point as a fair representation as the start range

(US$0.17/MHz/Pop). This assumption is based on the recent introduction of multi-band 3G

handsets in Sweden (including 450MHz Band), but taking into account that in the UK we

have excellent cellular coverage with low levels of population in rural areas. We have

discounted using the Norwegian auction valuation, as the technology was immature at that

time. We therefore predict the value of UHF2 spectrum in the UK to be between £5.2m and

£12.6m per MHz for spectrum available to wideband services.

44

According to Policy Tracker



iii. UHF2 Spectrum Valuation

Table 17 below summarises our conclusions on the approximate value of aligned UHF2

spectrum.

Table 17 Summary of UHF2 Spectrum Valuation

Spectrum allocation Value

Contiguous UHF2 CEPT aligned paired spectrum, for 0 – 4.5 MHz, with spectrum masks that support deployment of narrow band technologies

£690k, per MHz (excluding NI) for a 15 year period (based on AIP rates).

Contiguous UHF2 CEPT aligned paired spectrum for 4.5 – 10MHz, with spectrum masks that support the deployment of wide band technologies (IMT2000)

£5.2m (PAMR) and £12.6m (Cellular) per MHz (excluding NI) for a 15 year period.

iv. Consumer and Producer Surplus

One fundamental measure of economic benefits is provided by consumer and producer

surplus. A 2002 Radiocommunications Agency study of consumer surplus used survey

results to calculate residential and business average consumer surplus per month of £16

and £44 for public cellular systems.45

Based on these figures and using a range of methods accounting for number of mobile

subscribers and inflation, Europe Economics calculated an average value of consumer

surplus for 2006 at approximately £18bn.46

This figure provides some idea of the possible

magnitude of consumer surplus associated with the provision of wide-band cellular services

in the UHF2 band.

It may be reasonable to assume producer surplus for wide-band cellular service is fairly

small. This would reflect a high degree of competition between existing mobile operators in

the UK now and into the future. Concentrating on consumer surplus only, a very broad idea

of its size can be gleaned from the same study carried out by Europe Economics. Based on

company accounts, consumer surplus for cellular mobile was calculated at approximately £2-

£3bn.

From these estimates, we have calculated the total amount of consumer surplus for

wideband cellular services. We have based this on the Europe Economics report and

adjusted the value of benefits to reflect the amount of spectrum available for wideband

cellular services (4.5MHz paired spectrum).

45

http://www.ofcom.org.uk/static/archive/ra/topics/economic/economicisreport_final.pdf 46

http://www1.bsc.org.uk/research/radiocomms/reports/economic_spectrum_use/economic_impact.pdf



We assume that the 4.5MHz paired spectrum would be used either for cellular services or for

PAMR services. We have included estimates of consumer surplus for both these scenarios.

We note that European Economics did not calculate consumer surplus estimates for PAMR.

The original consumer surplus of £19Bn for the cellular mobile was converted to a per MHz

figure, to arrive at the equivalent for 2 x 4.5MHz cellular spectrum. This is an overestimate

given the type of service that will be offered using the UHF2 band. In particular, we expect

the take-up to be in rural areas (special multi-band phone, more expensive, larger) which will

reduce the size of the market. Hence, we have discounted the equivalent 4.5MHz value by

90%, which represents the rural market split in the UK (22% of population (ONS), with 50%

of that market (estimated) with limited 3G coverage. A summary of the consumer surplus

used for this study can be seen below in Table 18.

Table 18 Consumer Surplus

Consumer surplus

(£m 2006)

Cellular Mobile (total market) 18964

Wide-band Cellular services in UHF2 (2 x 4.5MHz)

50

8.3.5 Value of increased Standardisation and Harmonisation

We consider that the standardisation and harmonisation benefits argued in previous studies

and discussed earlier in this chapter are less important than they used to be. This is due to

the introduction of equipment and technologies that provide more flexibility in the spectrum

configuration that it uses, meaning that a rigid duplex split is not necessarily needed. In

addition, new technology such as DMR also has the capability of over the air re-tuning which

provides a relatively quick and simple method of moving a network to a different spectrum

configuration. In particular, the availability of different spectrum bands for the same service is

no longer the barrier that it once was as more spectrum is made available to economies of

scale in production.

However, we consider that full band alignment will deliver some economies of scale in

production of handsets. We have included an estimate of these benefits in the results. More

details on our assumptions are included in Appendix H.

8.4 Interference Costs and Benefits

In Chapter 6, we discussed the amount of interference due to aligned or reversed aligned

and the impact this would have on service area. In this section, we discuss the benefits of

reducing interference through the alignment of the spectrum.



8.4.1 High level cost of interference

Firstly, we consider at a macro-economic level the impact of interference, based on the

amount of coverage reduction at each base station. Although the costs are spread over the

whole assigned community, which isn’t representative of reality, the headline figures provide

a measure of the impact of interference.

We have assumed the following:

�� On-site, E&PSS (post 2009) and peer-to-peer services are not affected by

interference - all other assignments are impacted and taken into account;

�� From the interference analysis conducted in Chapter 6, we have taken

account of assignments that in the worst case would have >3dB interference

at the base station receiver;

�� The number of assignments affected ranges from 3500 to 4500.

�� The average interference ranges from 6 to 9dB, in the area seen at Figure 14

�� The average capital cost of a base station is assumed to be £3k

Figure 21 shows the range of costs attributed to a loss of coverage of interference. Since

the interference level is modelled at a maximum co-ordination level, this range should be

read as a near-maximum cost attributable to the loss of coverage by continental interference

whilst the UK is reversed-aligned. The range of these costs is from £4.2m to £7.4m.

Figure 21 Costs of reverse-aligned spectrum in terms of loss of coverage

£4.0

£4.5

£5.0

£5.5

£6.0

£6.5

£7.0

£7.5

£8.0

6 7 8 9

Average Interference Across Assignments in area upto 3dB loss at the base station Receiver (dB)

£ M

illi

on

4500

4000

3500

Number of Assignments

There are further costs associated with further base stations required, which are attributed to

site rental, maintenance and new equipment provision. This is assumed to be on average



£2k per annum per assignment. These costs plus the equipment costs amortised over a 5-

year replacement cycle provide an annum cost in the range of £3.6m - £6.4m.

8.4.2 Detailed look at Interference costs

Let’s consider the cost to a logistics service within a town, which used PMR to manage a

fleet in an ideal situation with aligned spectrum covered the desired service area, but with

reversed aligned supplemented the coverage with GSM calls. In this particular scenario, the

costs of GSM could be taken as the cost-benefit of alignment.

Assuming that the most popular monthly tariff of £15- £25 per month will cover the number of

calls when out of area due to interference, the cost is directly a proportion of the number of

mobiles. This would be the most likely scenario and therefore if a fleet of 30 mobiles is taken

as an average, the direct costs would be in the range £5.4k- £18.75k per annum. This cost is

dependent on the amount of interference and the tariffs arranged by the company.

If we assume the first scenario is typical and like the further base stations scenario in the

previous paragraph is examined between 3500 – 4500 assignments, then the cost ranges

between £18.9m and £84.375m. Table 19 below summaries the high level benefits of

aligned spectrum.

Table 19 Summary of high level Benefits of Aligned spectrum

Min Annual

(£m)

Max Annual

(£m)

Average Annual

(£m)

Additional Costs of base stations

owing to loss of coverage

area/interference through

reversed aligned spectrum

£3.6 £6.4 £5

Additional costs of alternative

communications owing to loss of

coverage/interference through

reversed aligned spectrum

£18.9 £84.5 £51

8.5 Results

The options that we will review in terms of the cost benefit analysis are:

�� Option 1: Full band alignment by Ofcom intervention;

�� Option 2: Partial band alignment, with spectrum yield used for narrowband

services;

�� Option 3: Partial band alignment, with spectrum yield used for wideband

services.



8.5.1 Option 1 – Full Alignment

Details on the assumptions used for Full Alignment are in Appendix H. The estimates of the

costs are based on the PA Consulting report with the benefits calculated taking into account

the following areas:

�� Reduced continental interference reduces network costs and/or reduces

cellular costs used at the edge of the network;

�� Spectrum yield benefits calculated to be 2-3MHz (we take a mid-point of

equivalent AIP values and our own assessment of spectrum value of

equivalent spectrum at recent auctions);

�� Reductions in handset costs due to economies of scale;

�� Introduction of digital technologies such as TETRA equipment that requires a

10MHz duplex split;

�� The UHF2 band in the UK will be in the same configuration as Europe in line

with the ERC Recommendation TR25-08;

�� Reduced interference impact on the network due to a 7dB reduction in

interference from the Continent.

Table 20 below summarises the net benefits for full alignment.

Table 20 Summary on Full alignment Net Benefits

Costs NPV Benefits NPV Net

Benefits

NPV

Managed Band

Alignment

£286m £77.7m (reduced interference and

handset prices)

+ £19.5m (spectrum value)

-£189m

8.5.2 Options 2 and 3 – Partial Alignment, with different uses for the spectrum yield (narrowband versus wideband)

For the partial alignment options, we have chosen two scenarios; for narrowband services

and the other for wideband services. In both cases partial alignment on a mainland UK

basis47

is only considered as the interference of aligned and unaligned within the borders of

the UK would prove to be inefficient.

The benefits are similar to the benefits that occur for Full band alignment, but the size of the

benefit is proportional to the number of base stations impacted for each of the band

47

Excludes Channel Islands and Northern Ireland



alignment options. However, there are no benefits to handset price reductions due to

economies of scale, as we assume that these will only occur with full band alignment.

The value of the spectrum yield will differ according to its use, which is discussed below.

8.5.3 Narrowband Partial Alignment

Firstly narrow band partial alignment would need to focus on a particular area of spectrum,

where costs for alignment are at a minimum, the services are not of significant national

importance and could be disrupted for a short duration and the community would benefit.

Our high level analysis demonstrates that the Business Radio (BR) spectrum with a 10MHz

duplex split adjacent to the E&PSS spectrum, which will be vacated by 2009, offers the most

attractive option for narrow band partial alignment for the following reasons:

�� The PSSPG have indicated that they would support re-configuration activities

and the spectrum to be vacated would provide a good starting point since one

of the frequency legs of the pair will not involve alignment costs or disruption.

�� Business Radio services are often able to re-tune within the band and most

services would not require a parallel network to manage any disruption as

most are not concerned with critical national infrastructure.

Figure 22 below shows four areas depicted as Blocks A-D for consideration for partial

alignment.

Figure 22 Areas for Potential Partial Alignment of Narrowband Spectrum



Table 21 Narrowband Alignment Analysis

Block Frequency Range (Amount) (MHz)

Single Frequency

Assignments

Dual Frequency

Assignments

Density (Assignments Per MHz)

Notes

A 460.0 - 462.475 (2.475)

5299 5548 4383 2893 of the dual frequencies in Block D

B 454.025 - 454.85625 (0.83125)

1732 1511 3901 476 of the dual frequencies fall within block A

C 455.5 -456.05 (0.55)

27 1009 1883 461 of the dual frequencies fall within block A

D 456.0625 - 456.975 (0.9125)

602 2893 3830 2893 of the dual frequencies in Block A

The relative blocks of spectrum for analysis from Figure 22 have been analysed, with the

summary in Table 21.

The metric of assignment density shows that block C would require the least amount of

assignments to be removed for a given return on spectrum, even though the spectrum

aligned would be the least at 0.55MHz.

Since all the partial alignment options are concerning Business Radio (BR) and with each

option concerning a different number of assignments, at a high level the cost per Business

radio assignment will provide a general cost metric to provide a proxy cost. Using the PA

report of costs to align all BR users and distributing the site engineering costs, the proxy cost

to align a BR assignment is £4997.



We assume that there is no spectrum yield for any of these partial alignments, neither were

there benefits due to lower handset prices (as is the case of the Full alignment option). The

benefits that were included were associated with lower continental interference.

The results are summarised below in Table 22.

Table 22 High level Net Benefits of selected Partial Alignment

Block No of assignments benefiting from alignment

Cost in 2008

Benefit (Mean) NPV over 15 years

Net Benefit NPV over 15 years

A 2148 £54.2M £31.7M -£22.5M

B 642 £16.2M £9.4M -£6.8M

C 205 £5.2M £3.0M -£2.2M

D 692 £17.5M £10.2M -£7.3M

To simplify the analysis, we have only reviewed the CBA for each of the spectrum blocks

identified. There may be a large range of other band alignment options that involve the

impact of the residual release of spectrum to other blocks when aligned, see note column in

Table 21.

The residual release of spectrum as a benefit has not been calculated owing to the added

complexity, but would need to be considered in any detailed analysis if this were an option

that was likely to be considered.

All of the partial alignment options result in a negative CBA, with Block C having the lowest

negative result.

8.5.4 Wideband Partial Alignment

In the Wideband Partial Alignment, the Extended Block B (453.0125 - 454.85625MHz) aligns

with Block A, from Figure 22, also Blocks C and D are considered for Partial Alignment.

Blocks E in Figure 23 along with other blocks mentioned above has been considered for

Partial Alignment. We have assumed that 2 x 4.5MHz would be required for wideband

services as a minimum in the range 452.5-457.6MHz paired with 462.5-467.5MHz, which

does not consider guard bands. In this band Programme Making and Special Events

(PMSE), Scanning Telemetry (ST) and Business Radio services would be impacted, making

this band difficult to align due to multiple stakeholders, however, if wideband CDMA services

were to be provided stakeholders have informed us that this is the preferred band.

The costs for moving equipment outside of UHF2 double as a result compared to moving

within the band, based on the analysis of the PA Consulting report.



Figure 23 below illustrates four areas depicted as Block E for consideration for partial

alignment for the introduction of wideband services.

Figure 23 Area for potential alignment of Wideband Spectrum

The key assumptions used for the partial alignment options are:

�� PMSE has 4MHz of spectrum in the UHF2 band, 2x1.25MHz is considered for

Partial Alignment. This equates to 27.8 per cent of the UHF2 band under

consideration for Alignment;

�� The total costs figures derived from the PA report for full alignment for PMSE is

£29.5M, this figure has been adjusted for inflation from the total costs figures

derived from the PA report for full alignment, so for 27.8 per cent of the PMSE

band for Partial Alignment, the total cost calculated is £8.2M;

�� The total cost figure derived from the PA report for full alignment for Scanning

Telemetry is £23M, this figure gave a full total for Partial Alignment for Scanning

Telemetry of £23M;

�� Sufficient information on the producer surplus of equipment is not available, but

it can be assumed that this number is low given the uncompetitive nature of the

market as digital equipment such as TETRA cannot be allocated in the UHF2

Block E



band in the UK, as the configuration of the UHF2 band is the other way around

to Europe and is not in accordance with ERC Recommendation TR 25-08;

�� Consumer surplus figures on mobile services (e.g. CDMA 450) is not needed to

be taken into account into the cost calculations for Partial Alignment as it is

assumed that this figure is low. This low figure was derived from a study

conducted by Europe Economics on the average size of the market for mobile

services;

�� No reduction in handset prices as a result of undergoing Partial alignment.

The results of our CBA modelling of partial alignment of block E are shown below at Table

23.

Table 23 Summary of Partial Alignment (Wideband) CBA results

Block Frequency Range (Amount) (MHz)

Single Frequency

Assignments

Dual Frequency

Assignments

No of Assignments benefiting from alignment

Cost in 2008

Benefit (Mean) NPV over 15 years

Net Benefit NPV over 15 years

B Extended

453.0125 – 454.85625 (1.84375)

2690 4860 1495 £37.7M Between £10.7M & £17.9M over 15 years (£14.3M)

-£23.4M

A 460.0 –462.475 (2.475)

5299 5548 2148 £54.2M Between £27.2M & £36.2M over 15 years (£31.7M)

-£22.5M

C 455.5 – 456.05 (0.55)

27 1009 205 £10.4M [costs

double]

Between £2.6M & £3.5M over 15 years (£3.05M)

-£7.4M

D 456.0625 – 456.975 (0.9125)

602 2893 692 £35M [costs

double]

Between £8.8M & £11.7M over 15 years (£10.2M)

-£24.8M

PMSE (1.25MHz x 2) £8.2M Marginal -£8.2M

ST All £80M Marginal -£80M

Spectrum Yield for Wideband (assuming value based on mid-point of Auction and AIP value) £36M +£36M

Consumer Surplus £50M +£50M

Total for Block E -£80M



8.5.5 Sensitivity analysis

It is important to review the impact of key variables as part of any CBA. These key variables

are used to test what impact they would make on the Options used for both narrowband and

wideband services in the UK to the CBA results.

i. Sensitivity on the costs of alignment

For calculating the costs of band alignment, we have relied upon the results of the PA

Consulting report on the cost for full band alignment. The results of that report included a

detailed sensitivity analysis which was used in our analysis. Our sensitivity analysis has

focused on the sensitivity of the assumption that we have made on the benefits received for

each of the options.

ii. Methodology used

There are a number of techniques available for testing the sensitivity of the results. For the

purposes of our analysis, we have used a simplified approach and reviewed the impact on

the overall results realising marginal changes of 10 per cent benefits in key assumptions

used.

iii. Results and conclusions

Table 24 presents the results of the sensitivity analysis for a number of factors used to

assess the CBA for full band alignment, which tests the individual impact of each parameter

in isolation. This provides a broad assessment of the impact of the changes on the key

assumptions by varying the baseline assumption used in the modelling with an upper and

lower bound. It can be seen that individually the impact of varying the key parameters is

negligible and when applied to our CBA models, the impact on the overall results realised

marginal changes of ±10 per cent net benefits.



Table 24 Sensitivity analysis of key factors on size of benefits for Full Band Alignment

Parameter Lower

Limit

Baseline assumption

Upper Limit

% impact on overall CBA

Cellular Cost savings due to reduced interference (average Cellular cost saving per month)

£4.50 -£8.5M

£5 per month

[£84.4M]

£5.50 £8.5M

± 4.2 %

Number of base stations at risk of interference – impact on network cost savings

4500 -£5.1M

5000

[£58.6M]

5500 £5.1M

± 2.6%

Number of base stations at risk of interference – impact on Cellular cost savings

4500

-£8.5M

5000

[£84.5M]

5500

£8.5M

± 4.2%

Average number of mobile phones per base station

27 -£8.5M

30

[£84.5M]

33 £8.5M

± 4.2%

Average level of continental interference (impact on total network cost savings)

6dB -£5.7M

7dB

[£58.6M]

8dB £5.7M

± 2.9%

Average life of a base station – impact on network cost savings

6 years

-£2.0M

5 years

[£58.6M]

4 years £1.7M

± 1.0%

8.6 Conclusions

The CBA provides a high-level assessment of the key costs and benefits and to assess the

impact of changes in these costs and benefits as a result of broad regulatory intervention

options. The results have been based on a number of assumptions about future unknowns.

While every effort has been made to produce accurate results, the CBA should only be used

to provide information at a broad level on the scale of costs and benefits for each of the

options. If any of the options were to be explored further, then we would recommend that

further detailed work be carried out on the costs and benefits.

The CBA figures in tables Table 20 to Table 23, provide guidance, based on previous

research and our assessment of the likely magnitude of net benefits for each option. These

results show that all options to a greater or lesser extent have a negative CBA. The options

can be ranked as follows:

�� Base case (do nothing);

�� Partial alignment (narrowband) – Block C only;

�� Partial alignment (narrowband) – other blocks;

�� Partial alignment (wideband);

�� Full alignment – managed.

In addition, we have drawn the following conclusions:

�� There is no net benefit in partial or full alignment of the UHF2 band.

�� Partial alignment to enable the introduction of wideband services in UHF2, would

lead to the disruption of many services and has a large negative net benefit.



�� The sensitivity analysis results concluded that the impact on the overall results

of key assumptions realised marginal changes of 10% net benefits in the CBA

results, providing confidence that the assumptions made in the model are stable

and has provided relatively sensible results.



9 Conclusions and Recommendations

9.1 Introduction

In this final chapter, we pull together the conclusions of the previous chapters with a brief

discussion and analysis, and then provide our recommendations to Ofcom on the future

policy suggested for the UHF2 band.

9.2 Summary of Findings

To aid in the understanding of the conclusions and recommendations and to summarise our

conclusions, we have posed the following key questions and provided our recommendation

based on the findings of the report.

9.2.1 Is there an appetite for spectrum re-configuration in the UHF2 band?

The main feature of most communication services in UHF2 is that they are generally self-

owned, self provided, and that the resilience of the service fits the need of the business and

most importantly, there are no airtime charges. The provision of self-provided services has

been a trade-off against functionality, resilience, capital and operational costs. It is clear that

many of these services have needed to consider this business case of spectrum re-

configuration in the UHF2 band over many years, particularly since the advent of GSM

technology, which has in the past removed users from the ‘business radio community’. The

amount of assignments within this band have remained quite steady over the past 5 years,

which suggests that a plateau has been reached for these niche services requiring

communications that cannot be provided by an operator. The stakeholders within this band

have confirmed they do not want any regulatory intervention to align the spectrum, unless

they are fully financially compensated and in some cases, that continuation of service is

guaranteed during any transition.

9.2.2 Will the current services continue to be allocated in UHF2 over the next 10 years ?

It is anticipated that over the course of the next few years, if operator services introduce

group calling and reduce airtime costs significantly, the majority of logistic services using

wide area (i.e. Taxi), which use a mix of voice and data, would move from UHF2 to operator

provided services such as GSM/UMTS. However, on-site services are expected to maintain

the same user base in UHF2 or indeed grow slightly, even with on-site mobile services being

offered through DECT, licensed exempt PMR446 and mobile technology in ISM bands.

We believe that digital technology, mainly in the form of DMR will become prominent in this

band, where there will be significant churn from analogue technology over the next 5-10

years. While digital technology increases voice capacity through TDD, we believe that

spectrum would not be significantly re-assigned to new use (through trading or return to

Ofcom) as users propensity to fill the capacity through more calls or additional services such

as data messaging will diminish this theoretical yield.



We believe the user base will slowly diminish in UHF2 over the next 10 years as equipment

is replaced in wide area type services by as much as 50%, with these services being

replaced by different type operators which will make the market more competitive. Much of

this decline is predicated on the operators’ reduced airtime costs and the market’s

communications costs appraisal, leading to a change to operator provider services.

Therefore, if the spectrum yield from the reduction in the user base were aggregated then 2

x 0.1MHz (1% of the UHF2 Band) would be available for reassignment on a national basis.

The impact of this potential yield of spectrum is minimal, even though 50% of a market

sector (e.g. taxis) would no longer use this spectrum. Any further yield of spectrum, without

regulatory intervention will be wholly dependent on the intentions of the PSSPG, with

approximately 30% of the band available for re-assignment.

9.2.3 Is interference a key driver within the UHF2 band for spectrum re-configuration?

Interference is an issue for some people in particular and it is most troublesome when the

interference is not constant. However, interference can be mitigated and users accept that

radio use is sometimes unreliable. Therefore, to justify an interference solution through re-

configuration, a compelling business case would need to be shown. Our research shows

that even at a macro-economic level there is no economic benefit.

The only time that a business would possibly move out of a band is when the communication

system becomes so unreliable that the system needs to be changed and is costing the

company financial resources. The choices, which a business would then have, would be to

look at alternative means outside of the UHF2 band or possibly operator provided services.

Recently businesses have not relocated systems within or outside of the band because of

interference, mainly because very few cases have been reported and there is little use on

the continent to cause interference. However, if the situation were to change significantly

with the introduction of IMT2000 services in the UHF2 band on the continent, then it is

possible that systems would become un-useable on the South East Coast of the UK due to

interference.

The problem remains that in a market led approach with interference, where only a small

portion of the market is disadvantaged, in this case, the South East of the UK, some areas of

the UK will continue to be disadvantaged until the whole of the UK is aligned. This is due to

the ripple effect whereby if the South East is aligned then the Midlands receive interference

etc, so the interference just moves as systems are aligned. Therefore, the rest of the

country has no particular reason to align, as there would be little benefit, unless the ripple

effect is managed.

9.2.4 What is likely to happen within the UHF2 band if there is no direct regulatory intervention?

We believe most stakeholders would be satisfied with no direct regulatory intervention.

Indeed a statement to this effect would provide security of tenure in the band rather than the



regulatory uncertainty, which has left businesses in uncertainty for of the past few years. It is

likely that systems will continue to be replaced and maintained and over a number of years,

with some services over-time moving out of the band. For those services that are in the

South East it is likely that increased interference will either force a move outside of the band

or indeed, force an alignment of ‘pockets’ of spectrum. Ofcom and the E&PSS spectrum

manager, through the market mechanisms such as trading and liberalisation, could facilitate

alignment. However, the ‘ripple effect’ and guard bands required to manage interference

would need to be managed, leading to difficulties in assigning spectrum.

i. Guard Bands when aligning spectrum

An important element of any partial band alignment or stepped full alignment is providing a

measure of protection to protect each service where there is aligned and unaligned

spectrum. This protection would in effect require allocating a guard band of the size of a

channel and also geographical separation in the order of kilometres between adjacent

channel users without additional site engineering being needed. Therefore, as alignment

takes place on particular channels a ‘ripple effect’ occurs where assignments need to have a

geographical separation. If alignment were to begin on the south coast, the effect of this

would be larger geographical separations within the UK, creating a ‘ripple effect’ of

interference. Managing interference for assignments would be complex to manage as the

interference would have an effect on adjacent assignments. Therefore, co-ordinating and

managing such an exercise is extremely labour intensive when having to consider a total of

17,000 assignments in the bands, can lead to a question of practicality.

9.2.5 If direct regulatory intervention was the way forward in the band, what would be the main challenges?

It is likely that stakeholders would prevent any attempt of direct regulatory intervention

without any assurances on costs and mitigating risks. Managing the costs and practical

implementation of a managed partial or full alignment project would be complex due to a lack

of resources such as skilled labour and high costs, which as identified in this report return no

net benefit.

It is our opinion that the only possible practical method of aligning spectrum in a co-ordinated

and efficient manner would be to use an ‘Overlay auction’, which is described in more detail

below. This method would be in our opinion the most appropriate method to introduce future

wideband services within the UHF2 band.

i. Regulatory Intervention in a fragmented band

One option for re-configuration of the UHF2 band is an ‘overlay licence’ or ‘overlay auction’,

which has been used successfully in other countries. There are two main circumstances in

which a spectrum band may need to be cleared of existing users:

�� when a band is fragmented;



�� where a band needs to be re-farmed.

Overlay licences have been awarded for a block of spectrum which is occupied by existing

licensees where more efficient use would result by bringing together fragmented use.

An overlay licence gives the holder the right to do two things:

�� use any unencumbered spectrum immediately (provided there is such

spectrum), and;

�� use encumbered spectrum as and when it is cleared by the incumbent

licensees. The regulator would provide a period of notice to the incumbent

licences to vacate the use of spectrum.

Overlay licences have been used when there is a need to clear spectrum of existing users

(as was the case in the USA and Canada), and when it is regarded as useful to create

alternative arrangements for managing spectrum (as was the case in New Zealand).

Overlay licences provide mechanisms for accelerating the reassignment of spectrum. This is

achieved by the following:

�� the overlay licensee is awarded rights to a block of spectrum which includes

unencumbered and encumbered spectrum;

�� the overlay licensee is permitted to start using any available unencumbered

spectrum immediately;

�� the regulator serves revocation notice on incumbents; and

�� the overlay licensee is empowered to negotiate with incumbents on relocation

or revocation before their revocation notice period terminates.

In the case of UHF2, where the band is fragmented between a large number of small users,

overlay licences could be issued to one or more overlay licensees with incumbent users

either relocated to another band, or having their requirements met in some other way (e.g.

by a service provider). However, the use of Overlay licensing needs to be balanced by a

cost-benefit analysis, socio-economic and political impact of undertaking such an option.

9.3 PEST Analysis

We conducted a Political Economic Social and Technical (PEST) analysis to aid us in

making recommendations for this complex topic. The PEST analysis is a standard tool used

by management consultants when faced with analysing complex subjects on a variety of

levels. We have produced a summary of the results, shown below at Figure 24, based on

the three main options: no intervention, partial or full alignment.



Figure 24 PEST Analysis

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

Political: Current Legislation/Home Market

Political: European Legislation

Political: Government Policies

Political: Lobbying/Pressure Groups

Economic: CBA

Social: Consumer choice

Social: Rural acccess to IMT2000

Technological: Interference

Technological: Technology Access

Technological: New Services

No Intervention

Full Intervention

Partial Intervention

As can be seen from Figure 24 there is strong Political and Economic motivation for not

intervening and allowing the market mechanism of spectrum trading and liberalisation to

enable the part of the market that may wish to align. Full intervention has strong social and

technological benefits but would have little political or economic incentive. However, partial

alignment seems to sit in between the two extremes, with lesser technological and social

benefits than full alignment but greater political and economic reasoning.

9.4 Summary of Conclusions

We have provided detailed conclusions at the end of each chapter, but have summarised

these into the following main points:

�� Stakeholders see little benefit in alignment and we believe that any forced

alignment without funding would be blocked politically;

�� The UHF2 spectrum within the UK for the South East of the UK is at a

disadvantage due to the possibility of interference from the Continental

Europe disadvantages the South East UK mainly in terms of interference.

This disadvantage can manifest itself through loss of coverage area and

temporary denial of service. The current interference situation is manageable

owing to little use of the UHF2 band on the continent;

�� The UHF2 band will be an IMT2000 band, which may mean that in the future

Western Europe will change its use from Narrowband to Wideband services

within this band, which could potentially lead to increased interference;



�� The Cost Benefit Analysis indicates that ‘forced’ alignment within the band

produces no net benefits. The costs of alignment outweigh the potential

benefits;

�� There are now regulatory measures in place coupled with the appointment of

a future Spectrum Manager for the E&PSS that would aid the market to

proceed with any future alignment of spectrum within the UHF2 band.

The CBA results below for Table 25 indicates that other than proceeding with the ‘do nothing

option, the case for partial alignment is marginal.

Table 25 Ranked CBA

Rank Net Benefit

1 Base case (do nothing) -

2 Partial alignment (narrowband) – Block C only -£2.1m

3 Partial alignment (narrowband) – other blocks -£6.7m to -£22.4m

4 Partial alignment (wideband) -£80m

5 Full alignment – managed -£189m

The Band Alignment project was withdrawn by Ofcom in 2004. This project was generally a

process of partial alignment steps, through which these steps are taken through the use of

vacant spectrum as a result of the Emergency Services migrating out of the band, for which

over a period of a few years would have resulted in full alignment. We do not believe that

this process would have been suitable to either industry or indeed Ofcom due to the

upheaval, uncertainty and cost over a long duration this would have had on industry. We

believe that if now Ofcom were to opt for partial or full alignment of the band, then the use of

an Overlay auction process would be attractive, allowing notice to be served on incumbents

of the UHF2 band and allowing the market the option to migrate to new services and new

spectrum. However, our analysis leads us to conclude that a policy of no regulatory

intervention should be maintained, due to the introduction of flexible digital technology, the

CBA results and the regulatory measures currently in place should enable the market to

reconfigure the spectrum should they wish.

9.5 Recommendations

Following on from our conclusion that Ofcom should not force any re-alignment with UHF2

we have the following recommendations:



�� Ofcom should not directly intervene in any alignment of the UHF2 band and

should enable the market to align through market mechanisms such as

trading and liberalisation, assisting where necessary;

�� Ofcom should assist the E&PSS spectrum manager (Post 2009) in working

closely with UHF2 stakeholders in any re-configuration of the band;

�� MASTS should be modified or processes put in place to assess the impact of

aligning a channel within unaligned spectrum and amendments to the

algorithm for a guard band and geographical separation needed between co-

channel users. This tool should also be used to assist in any future re-

configuration of the band;

�� Ofcom should proceed with developing an MOU with the its continental

neighbours to avoid any future interference;

�� Ofcom must decide and communicate the future policy for the UHF2 band in

order to remove uncertainty over the band to users;

�� Ofcom should continue to monitor interference that may be caused by any

future deployments of wideband networks from the Continent and the impact

this would have from current licensees;

�� If Ofcom does decide to proceed with alignment, we would recommend Partial

Alignment where users of the UHF2 band are least impacted and further

detailed analysis is carried out.

Page A-1 240689 - 450-470 Study Final Print


Appendix A: Stakeholder Engagement

Air Radio

Arqiva

Communities and Local Government (CLG)

CSS Spectrum Management Services

EADS

Federation of Communication Services (FCS)

Intellect

Joint Frequency Management Group (JFMG)

Motorola

National Police Improvement Agency (NPIA)

Network Rail

Office of Communications (Ofcom)

On site Communications Association (OSCA)

Zapp Holdings (formerly Inquam)

Page B-1 240689 - 450-470 Study Final Print


Appendix B: Interference

B.1 Types of interference

Ofcom manages spectrum to avoid harmful interference48

primarily49

on two levels; co-

channel and adjacent channel interference, which we discuss in the following sections of

this appendix.

The consequences of co-channel or adjacent channel interference in voice schemes

manifests itself to the users as poor audio quality or other audio signals breaking through

into the system. For data systems, the effects are data errors, or no data received at all.

Interference in its worst case can cause systems to be blocked, which in effect makes them

unusable.

B.2 Co-Channel Interference (CCI)

To avoid harmful interference no two assignments should normally be assigned the same

frequency (co-channel) in the same geographical area. Planning criteria is used to

determine the frequency re-use. For co-channel use in the UHF2 band it is essential to

understand both the technical criteria that determine the re-use distance and also where

the terrain forms a natural obstacle between different co-channel users. As spectrum is

becoming increasingly more utilised and the availability of usable frequencies becomes

scarce, natural obstacles can play an important role. The efficient use of spectrum is the

balance between avoiding harmful interference and the potential to assign as many

channels as close together as possible.

The mitigation techniques that are used to reduce the levels of CCI in UHF2 include

CTCSS (Continuous Tone Code Squelch System) which transmits encoded tones onto the

channel which is then detected by the receiver to filter the wanted signal. This type of

mitigation technique enables the users to share a radio channel resource, which is blocked

from use by other users during transmission. This orderly use of the channel enables many

users to share a channel in a manner that provides polite access. Other CCI mitigation

techniques include cross-polar discrimination, this can be in the order of 12 dB protection,

where one service uses horizontally polarised antennas against another co-channel service

operating vertically polarised antennas.

Many different applications and services are used in the UHF2 band across the UK. Many

channels that are occupied are used by mobile systems on a national basis. However,

48

where “harmful interference” is defined by ITU as that which “…endangers the functioning of a radionavigation service or of

other safety services or seriously degrades, obstructs or repeatedly interrupts a radiocommunication service operating in accordance with Radio Regulations.” 49

There are others not covered by this report such as inter-modulation and 3rd order harmonics



considering the vast and diverse use of the UHF2 spectrum, CCI does not occur very often.

This is due to the careful planning of frequency assignments, the application of standard

channel protection requirements such as system protection ratios and the use of standard

equipment whose radiated emissions are limited by specifically designed spectrum masks.

The benefit of this high level spectrum management means that more usable channels are

available for assignment and the optimum use can be gained from the spectrum.

B.3 Adjacent Channel Interference (ACI) and Out Of Band Emissions (OOBE)

Spectrum planning and the process of assigning new frequencies must consider the impact

of adjacent channel interference (ACI) and Out-of Band Emissions (OOBE).

ACI can occur when two services are located in close proximity with their assigned

frequencies are on adjacent channels. ACI can cause those channels to become unusable

due to the high level of unwanted emissions radiating into adjacent services.

The diagram shows the desired

(wanted) signal in the frequency

domain and where the relative

interference can occur. Out of band

interference occurs adjacent to the

wanted signal where some of the out

of band signal spills over into the

wanted signal which causes the

interference.

To mitigate against this type of interference, channel protection ratios are used in the

interference calculations to determine the acceptable level of signal into the wanted

system. The level of protection ratio is dependent on whether the unwanted system is co-

channel, adjacent channel or 2nd

adjacent and so on. It is often the case for spectrum

planning that to make the most efficient use of the spectrum to determine if a new service

can use the adjacent channel near to the existing service. In order to introduce a new

service geographically close to an existing service stringent limits must be applied to the

out of band emissions of the adjacent service so as not to cause harmful interference.

Out of band emissions are the unwanted emissions that are transmitted outside the

necessary bandwidth of the system. This is managed using spectrum emission masks that

are put in place to reduce/remove the out of band emissions of radio equipment. However

if the incorrect limits are put in place this mechanism can cause adjacent channel

interference to a system.



In Europe harmonised radio equipment standards are developed in accordance with the

relevant EC directives that enable equipment manufacturers and national regulatory bodies

to specify the radiated limits of out of band emission masks. The radiated emission limits

that are chosen must provide adequate protection in the out of band domain, therefore

ensuring no harmful interference to frequencies operating in the adjacent channel. The

adjacent channel power for land mobile systems is:

�� 60 dB for 12.5 kHz separation

�� 70 dB for 20/25 kHz separation

Equipment deployed in the UHF2 band in the UK must be products from technically

compliant manufacturers which must be in accordance with The Radio Equipment and

Telecommunications Terminal Directive 99/5/EC (R&TTE). It is illegal to sell and bring in to

service equipment that is not compliant to the relevant equipment standard or meets the

national interface requirements.

B.4 Potential Sources of Interference

Radio equipment operating within the UHF2 band could potentially suffer interference from

a number of interference sources across the UK. Systems operating near or within the 450-

470 MHz band include the Fylingdales radar. There is also the potential for users in the

UHF2 band to suffer interference from wideband digital systems in the future. Wideband

systems introduced into the UHF2 band could interfere with the incumbent narrowband

systems that currently operate in the UHF2 band.

B.4.1 Fylingdales

The Fylingdales Radar operates in the frequency band 420-450MHz, with the vast majority

of energy directed upwards, for the detection of potential missiles and aircraft. The main

beam cannot be aimed lower than an elevation of 3° above the horizontal, with the first side

lobe at an angle of 2.9° to the main beam, which is considered the main source of potential

interference. In theory, the radar can only interfere with base stations at a height of 30m for

distances less than 150km away from the radar site.

Business Radio shares the UHF 1 band with the MoD and all business assignments in the

UHF1 band must be co-ordinated with RAF Fylingdales, ensuring that a set power-sum

interference base-line is not exceeded. Ofcom has developed a tool to undertake this co-

ordination, to validate any amendments or applications within the UHF1 band.

The impact to the users in the UHF2 band from Fylingdales is not significant enough to

require formal coordination. However, it is understood that operation near the Fylingdales

site require processes for setting up an exclusion zone for users operating near the radar.



In addition, it is unclear whether the OOBE from Fylingdales would affect any services

around 450MHz, and business radio services wishing to use UHF spectrum may have to

use UHF2.

B.4.2 Wideband Digital Services

It is possible that in future Wideband Digital Services could be used in the 450-470 MHz

band. These wideband digital services have a bandwidth that is greater than 25 kHz. In

practice services that could potentially be deployed in UHF2 which use bandwidths greater

than 25 kHz are TETRA and CDMA systems. The latest release of TETRA systems specify

bandwidth up to maximum of 150 kHz for TETRA TEDS. For CDMA 450 the bandwidth

specified is 1.25 MHz.

The operation of TETRA TEDS in the 450-470 MHz band would require guard bands to be

equal to or greater than half the bandwidth of operation in order to prevent interference to

the incumbent narrowband systems. The effect of wideband systems into narrowband

systems is the overall level of the noise floor increase across the wider bandwidth can

cause increased interference to narrowband systems. This can be significant enough to

cause narrowband systems to be unusable. This could be due to blocking effects in the

receiver front end.

With appropriate guard bands CDMA technology should be able to co-exist with other

narrow-band technologies such as DMR and TETRA, with the following mitigations:

�� Introduction of filters, guard bands or frequency separation around the duplex

transition frequency.

�� A guard band of 200kHz in the uplink-uplink (MS-BS) and Downlink-downlink

(BS-MS) interference paths.

�� A frequency separation of 125kHz at the duplex transition frequency between

the uplink and downlink bands (MS-MS) interference path.

�� A frequency separation of 1875kHz between the uplink and downlink bands

(BS-BS) interference path.

Page C-1 240689 - 450-470 Study Final Print


Appendix C: UHF2 Interference Regulation

C.1 Introduction to interference regulation

International radio communications regulations are negotiated, agreed and mandated

between member states through the activities of the International Telecommunications

Union (ITU). Regulations concerning the use of the radio spectrum consider the affects of

interference and the ITU outlines the regulations that members states must adopt to ensure

the proper procedures are in place to reduce or prevent interference from occurring

between users and member states.

The UK, through its legislation The Wireless Telegraphy Act 2006, specifies its own

regulations for managing interference through powers granted by the Government to

Ofcom. It is these regulations that define the nature of interference in the context of using

the radio spectrum and how it is managed in the UK.

Interference becomes harmful if the operation of wireless telegraphy apparatus creates

dangers or risk of danger to services providing safety of life but also if it degrades,

obstructs or repeatedly interrupts anything that is being broadcast or otherwise transmitted:

(i) by means of wireless telegraphy; and

(ii) in accordance with a wireless telegraphy licence, regulations under section 8(3) or a

grant of recognised spectrum access or otherwise lawfully.

The description of harmful interference given above can also be regarded as undue

interference, since the Wireless Telegraphy Act states:

“Interference with any wireless telegraphy is not to be regarded as undue for the purposes

of this Act unless it is also harmful.”

It is Ofcom’s responsibility to maintain a high level of spectrum quality and reduce or where

possible prevent the occurrence of interference. To aid the understanding of the types of

interference that users may suffer, two high level definitions are given below:

�� Legal transmissions, where authorised users have been incorrectly

assigned frequencies or are operating outside of the permitted criteria.

�� Illegal transmissions operating on the same or adjacent frequencies as

authorised users.

Ofcom have an obligation under the Wireless Telegraphy Act 2006 to control both of these

types of interference in order to maintain clean and efficient spectrum. Regulations set out

in the Act enable Ofcom to define guidelines for mitigating interference and if necessary

Ofcom will intervene to remove the source of interference. The adverse consequences of



interference affect users, operators, suppliers and manufacturers who all rely on the safe,

reliable and available operation of the spectrum.

Legal transmissions are managed by adopting clear spectrum policy guidelines and

creating technical frequency criteria and technical parameters that can be easily

implemented when assigning spectrum.

Illegal transmissions are controlled either through monitoring by Ofcom or by users

reporting interference to Ofcom, who would then investigate the matter further.

C.2 Interference environment for UHF2 band

Users of UHF2 spectrum currently benefit from the planning and management of

interference by Ofcom. Assignments in the UHF2 band are made based on technical

criteria defined by Ofcom and knowledge of the interference environment and incumbent

use. To enable the appropriate planning of frequency assignments in the UHF2 band the

following spectrum management instruments are used:

�� Interface Requirements considering the emission masks and equipment

standards;

�� Technical frequency assignment criteria (TFAC);

�� Mobile Assignments Technical Systems (MASTS)

�� International coordination agreements e.g. Berlin Agreement, Memorandum

of Understanding (MoU);

�� Spectrum usage rights (SUR’s).

These instruments aid the management of interference and define the service area, out of

band and spurious emission limits and transmission rights of licensees. In conjunction with

these instruments, Ofcom is able to issue a variety of different licence classes that meet

the specific needs of users, such as shared or exclusive use of an assignment or a mixture

of both.

The management of frequencies is conducted using known propagation characteristics,

system losses and antenna systems for calculations to determine usable and interference

limited service areas to ensure safe and reliable operation of the radio spectrum.

In the following sub sections, we describe each of the instruments that are used to aid the

management of spectrum to fully understand the complex process for making frequency

assignments in the UHF2 band. Each sub section describes a particular policy, guideline or

requirement that applies to licensees and users of the UHF2 band.



C.2.1 Interface Requirement (IR)

Interface requirements specify the minimum technical requirements of a particular

technology or service. Licensees operating in the UHF2 band are required to adhere to the

minimum requirements of IR2044 for Land Mobile Services or IR2030 for Short Range

Devices.

The particular requirements that would affect the use of equipment in the UHF2 band are

the equipment parameters specified in the IR and the requirements applied to achieve the

desired level of compatibility within the channel spacing for land mobile services, this

currently includes 12.5 kHz and 25 kHz. Ofcom has recently announced that IR2044 will be

updated to include 6.25 kHz channel spacing for use in the UK.

C.2.2 Technical Frequency Assignment Criteria (TFAC)

The Technical Frequency Assignment Criteria (Ofw164) describes the technical

parameters and the processes for frequency assignments for Business Radio services.

The TFAC applies to all frequencies used for Business Radio services.

A new TFAC for business radio is currently under development by Ofcom and provides the

technical parameters for the newly developed licence products discussed in Chapter 2.

The new TFAC contains the details of the new MASTS software tool giving a description of

the process of how MASTS will be used to make assignments. This new process for

making assignments will benefit users operating in the UHF2 band due to increased

flexibility of use of the spectrum. Users will be able to increase the volume of their mobile

network more easily and without reference to Ofcom. Furthermore, there will be no

restriction on the type of technology used, as long as it does not exceed the limit of

causing interference to neighbouring users.

The TFAC for scanning telemetry (Ofw 49) contains the frequency criteria specifically for

fixed terrestrial point to point and point to multipoint services in the UHF2 band. This

document describes the particular criteria networks must adhere to for successful

frequency assignment. The criteria can include calculations for EIRP of transmitters, co

channel protection requirements and specifications of particular antenna design.

C.2.3 Mobile Assignments Technical System (MASTS)

MASTS, an automated frequency assignment tool, has been in development for a number

of years and will be in service by the end of 2008. The MASTS tool will be used for making

assignments for all areas of business radio including UHF2.



The benefits of using MASTS in particular for UHF2 assignments is the ability to quantify

the spectrum quality in terms of interference, and determine the amount of available

spectrum for use in the band. Ultimately, MASTS will be used to make more effective

assignments due to the predictive nature of analysis of the interference environment. This

will result in either more channels available for assignment in the same frequency band or

being able to ‘squeeze’ more geographical users from the existing channels. Using the

MASTS algorithm a ‘Band Alignment tool’ was developed and in 2004 it was calculated that

if the assignments were re-packed in the UHF2 band then Ofcom could have had a

spectrum yield of between 2-3MHz50

.

This tool will assign spectrum based on a set of rules and technical criteria (introduced in

the new (TFAC)) that will determine the spectrum quality and protection requirements. The

tool is also able to take account of terrain and other assignments thereby defining which

frequencies can be used in a particular location. This is a change to the current primary

practice of establishing a generic protection distance between base stations for particular

licence classes.

When the MAST tool is used to assign channels in the UHF2 band, in its current unaligned

state, it is likely that a few more assignments may be made in spectrum otherwise thought

as full. This packing of assignments may lead to incumbents being subjected to more

interference than previously experienced. However it should be noted that all assignments

suffer from interference; the difference with MASTS is that the level of interference will be

planned and part of the licence conditions.

The MASTS process is underpinned by the Technically Assigned licence product for

shared and exclusive use. An assignment can be identified for an activity factor, which is a

measure of what percentage of time an assignment is transmitting. For example, a shared

assignment is an assignment that transmits no more than 50% of the time in its busiest

hour. An exclusive assignment is one that either transmits up to 100% of the time, more

than 50% of the time in its busiest hour or requires extra protection because of either

business or safety critical reasons. The activity factor determines the amount of time that

an assignment may block another assignment from transmitting at that point in time.

With the nature of Business Radio in a shared environment, there may be instances when

a user exceeds the activity factor (as defined by their assignment type) over a short period.

If there are continual breaches of the guideline criteria then it may be necessary to liaise

with the users concerned and move them to Exclusive status or move them to a different

channel (where possible).

MASTS will benefit users of the UHF2 band as it can be used to help reduce the likelihood

of interference by way of more carefully assigning spectrum. MASTS will have the ability to

coordinate aligned and non-aligned UHF2 frequencies that should there be alignment of

the band there are tools in place to aid the development of new systems helping prevent

50

According to the Radiocommunications Agency/Ofcom



the likelihood of increased interference. In addition, there is scope for the tool to assist in

the market aligning the spectrum, assignment by assignment.

C.2.4 International coordination and Memorandum of Understanding (MoU)

Ofcom has a duty to co-ordinate all assignments with neighbouring countries to manage

the risk of international interference. Either this is achieved through ITU regional

agreement treaties such as Geneva 06, or an agreed Memorandum of Understanding

(MoU), or in the absence of a formal agreement, the Harmonised Coordination Method

(HCM) Agreement (formerly the Berlin Agreement) is used (adhering to the general

principals of CEPT Recommendation T/R 25-08 for UHF2).

If a proposed assignment is in breach of the requirements in place then it is the

responsibility of the country wishing to use the assignment to send a request for

International Co-ordination to the countries affected. Assignment will often depend on

whether a specified concession can be agreed upon. Such concessions are usually agreed

upon in the form of an MOU, where usually, preferential channels to each party are defined

where the normal co-ordination level can be exceeded to a specified level. The UK does

not have an MoU for the UHF2 band and therefore by default complies with the procedures

in accordance with the HCM Agreement. The necessity for adopting these coordination

procedures is bound by the ITU Radio Regulations that state that national administration

must notify the ITU of any frequency assignment likely to cause harmful interference into a

neighbouring administration.

A possible consequence of continental interference to licensees operating in the UHF2

band in the UK could be that their service becomes unusable. In the case of mission critical

systems and E&PSS this is unacceptable and is not an option that would be tolerated by

users and licensees. Currently, the low level activity in the UHF2 band in continental

Europe is not posing an immediate threat to UK licensees, so currently there is no cause

for concern.

The procedure in place, the HCM, is specified for co-ordinating CEPT harmonised

spectrum, which the UK is not harmonised to. The problem of not being harmonised, but

having a default co-ordination procedure is illustrated in the figure below.



The figure above illustrates UHF2 continental interference between Europe and the UK.

As the UK is non-CEPT aligned the base transmitter frequency in Europe is on the same

frequency (f2) as the UK base station receive. The implications of this are the base station

transmitter in Europe generates co-channel interference to base stations receivers

operating in the UK. It is conceivable a mobile in the UK trying to communicate with a base

station in the UK is unable to do so due to interference from Europe. Chapter 6 investigates

the interference scenario between mobile networks deployed in the UK suffering

interference from networks deployed in continental Europe. The modelling includes the

impact to narrowband and wideband systems.

C.2.5 Spectrum Usage Rights (SUR)

Spectrum usage rights are currently being debated with Ofcom and the industry to

determine how usage rights of spectrum would affect users and licensees. Users of

spectrum will have as a main priority the availability of services using that spectrum. This

implies a strictly controlled interference environment where service availability is assured.

SUR are in direct support of providing technology neutrality, where currently spectrum

masks and TFACs make assumptions on the technology used.

Currently the use of spectrum is managed by the knowledge and understanding of the

technologies and systems being deployed so the amount of interference is controlled

indirectly. In future, the rights of licensees will be defined in terms of the maximum Power

Spectrum Density that can be received at a boundary. Therefore, where there is inflexibility

of use, SURs could provide a solution where a user could introduce a new service or

technology that can use the geographical or spectrum mask more efficiently.

Users of spectrum in the UHF2 band could make particular use from SURs especially for

users of mission critical systems and emergency and public safety services. It is vital these

services do not suffer harmful interference that could affect safety of life services such as

the Fire and Rescue Services radio network as the consequences could potentially be

disastrous. SURs would provide the type of solution to these problems by specifying the

maximum interference that can be tolerated by these critical systems thus enabling the

development of networks and technology around them without further disruption.



SURs could also benefit other business radio users in the UHF2 band. SURs offer the

flexibility to change use, which could be a change in technology or increase in power levels

or deployment density. This type of flexibility would enable development of networks, or the

introduction of a new technology benefiting the industry as a whole.

The most recent statement released from Ofcom (Dec 07) on controlling interference using

Spectrum Usage Rights specifies the transition arrangements of SURs from development

to implementation. It specifically examines the format of SURs and the definition and

change process to licenses. This will have a positive impact for users of the UHF2 band

and will be realised as licensees continue to develop their networks and wish to introduce

new technologies and systems in order to meet demand of the end users. However, the

complexity of working within SURs is above and beyond the capabilities of most of the

industry, where it is either anticipated that the industry will push back the introduction of

SURs on the grounds of complexity or a new advisory industry will be created based

around SURs.

Page D-1 240689 - 450-470 Study Final Print


Appendix D: Modelling Interference

D.1 Modelling of Stations

To undertake the modelling, fictitious interfering networks have be defined in Europe and

live networks in the UK modelling for both the narrowband and wideband scenarios

required to demonstrate interference scenarios. It is important to note that the modelling

demonstrates the scenario of the maximum permitted interference from the continent in

terms of the co-ordination recommendation TR25-08.

D.2 Interfering Stations in Europe

To model interference from the continent a fictitious network consisting of a transmitter

every 10km along the North and East coasts of France, Belgium and Holland was

modelled. The transmitters have a defined antenna height of 30m above ground level with

a maximum ERP of 25W and an activity factor of 1, meaning that they are permanently

transmitting (active). The ERP was then modified where necessary so that the power

incident at the coast of the UK meets TR25-08 recommendations of 20dBuV/m for 10% of

the time at 10m above ground level for a single transmitter, see the figure below.

This fictitious network has two variants, the first meets the CEPT frequency plan in that it

will transmit in the 460 to 470 MHz band and receive on the 450 to 460MHz band (Transmit

on from mobile users) and the second will be CEPT reversed so that the effects of UK

becoming CEPT aligned can be examined. These systems are also on the same co-

channel as the narrowband and wideband modelling in UK.

Co-located with the base stations is a mobile station that is also implemented with the

same antenna pattern as the base station (omni) but with an antenna height of 1.5m agl

and with 25W transmit power with an activity factor of 0.5. The transmit and receive

frequencies are exchanged for the mobile station. The mobile station is not coordinated



with the UK and hence may not meet the TR25-08 recommendation for exported

interference.

D.3 UK Narrow Band Stations

To be able to determine if changes in the spectrum usage have an effect on the current

state of affairs, major users of the spectrum were selected for inclusion in the modelling.

The frequencies were mapped on to a consistent raster assignment with a 10MHz duplex

split. This was undertaken to simplify the interference calculations and to remove frequency

channel effects from the modelling.

The following mobile parameters were applied:

Product Code Description Mobile TX power (Watts)

401060 On site PBR speech and data 5W

407010 Wide-area PBR speech and data 25W

407020 Wide area PBR (one way paging and speech)

NA

409010 National & Regional PBR 25W

502020 Public mobile data 10W

Police Police Service 25W

Fire Fire Service 5W

�� Antenna height 1.5m above ground level

�� Antenna gain 0dBd

�� Transmit and Receive frequencies exchanged

To allow the model to be exercised

with other systems without having to

take into account the real channel

frequencies, all the selected records

have had their frequencies modified

so that all the users are 2 channels

apart (so that adjacent channel

effects will not be seen) in the

middle of the band with a consistent

10MHz duplex spacing.

The following figure shows both the

base stations and mobile stations (approx. 4350 records) were used in the modelling.

The green dots

indicate stations

with frequency

duplex

assignments and

the blue dots

indicate single

frequency

operation.



D.4 UK wide band stations

We assumed an IMT-2000 network, with assumed traffic model characteristics for a mature

network, a 10km cell radius in rural areas and 1km cell radius in urban areas. The following

parameters were used:

Base station parameters Mobile station parameters

Transmit Power 40 dBm 20 dBm

Antenna Gain 17 dBi 0

Antenna height 30 m 1.5 m

Receive thermal noise -129 dBm -104 dBm

Duplexing FDD FDD

CEPT Alignment CEPT Reversed CEPT Reversed

Bandwidth 1.25 MHz 1,25 MHz

The coverage from the wideband systems were calculated and the power in a 12.5KHz

bandwidth was checked at the edge of the trading area. The limits at the edge of the 50km

trading squares (32dBµV/m in 1.25MHz, which is equivalent to 12dBµV/m into 12.5kHz)

were met, so the configuration would represent a potential realistic future scenario.



D.5 Modelling areas of UK base stations

The modelling uses all of the stations described earlier in the modelling area but the

receiving interference and blocking effects are only taken in three areas of interest:

�� Thames Gateway - this area is Urban,

suburban and rural and will have severe

interference for the continent and

interference from other users in UK.

�� Coventry & Birmingham - this area will

have little interference from the continent but

will influence interference in the London

area. The area will be interfered with by

stations in the London area and the rest of

UK.

�� Bradford & Blackburn & Preston – this area will not have interference

form the continent but will suffer interference from mainly Coventry &

Birmingham area and to a less extent the Thames gateway and the rest of

the UK.

When the model is exercised, changes in the user parameters in the areas of interest will

allow the interference effects on any users to be seen. This study only shows interference

in the areas of interest to provide a base-line view of interference changes. The other

stations outside of the areas of interest will contribute to the degradations in the areas of

interest but are not considered as receivers.

Page E-1 240689 - 450-470 Study Final Print


Appendix E: Narrowband Interference Modelling Results

The following two tables show a summary of the results obtained from the modelling,

showing the levels of interference for base stations and mobiles.

Effect of continental interference on Base Station receivers in UK

Modelling area Base stations



-113.8 -118.34 -125.8

Number of Blockers 3.69 0.78 0.06


Standard deviation of noise level

6.8 5.01 9.67


-111.17 -118.12 -125.8


CEPT aligned

Continental Interference


6.19 4.96 9.67


-111.6 -118.2 -125.79


CEPT reversed



6.12 4.98 9.67

Where the “Average Noise Level” is the power sum of all the stations that are co-channel

(continental and UK based) and do not block the receiver for all the stations within the

modelling area in dBm. This data can be used with knowledge of the receiver’s noise floor

to determine the degradation in receiver performance in each area. This can then be

equated to loss of service area using the graphs in Section 6.5.

The “Number of Blockers” is the average number of blocking signal levels into each

station within the modelling area. This shows how many users are in effect sharing any

given channel and as a consequence the availability of the channel for any user. The

blocking level used is -112dBm and this level is used for both narrowband and wideband

systems. Although the term blocking denotes no entry, in reality this means that the radio

channel is actually shared, which is common place in PMR, where users wait until the

channel is not busy before transmitting through the aid of CTCSS51

.

51

See B.2

Page E-2 240689 - 450-470 Study Final Print


The “Standard deviation of noise level” is the standard deviation of the noise levels

incident at the test receivers in the modelling areas.

Effect of continental interference on Mobile receivers in UK

Modelling area Mobiles



Average Noise Level -119.42 -136.09 -141.19

Number of Blockers 2.38 0.25 0


6.7 4.04 4.38



CEPT aligned



6.32 3.98 4.38



CEPT reversed



6.21 3.94 4.38

Note: the areas highlighted in Yellow are where the external interference from the

Continent is below the typical noise floor of the receiver.

Contribution from Continental base stations for % time

AVERAGE Noise Level (dBm) % time

Thames Gateway Birmingham Bradford Product Type

10% Time 1% Time 10% Time 1% Time 10% Time 1% Time

401060 -124.8 -110.9 -146.0 -135.4 -157.9 -143.1

407010 -130.0 -116.5 -125.4 -114.9 -156.4 -142.5

407020 -123.1 -111.2 -134.5 -123.9 -144.7 -129.5

409010 -118.1 -106.6

502020 -108.0 -101.5 -126.3 -115.7 -156.7 -144.6

Police -117.7 -106.5 -152.0 -137.7

Fire -140.8 -130.2

Total -120.3 -108.9 -134.6 -124.0 -153.6 -139.5

Page F-1 240689 - 450-470 Study Final Print


Appendix F: Wideband Interference Modelling Results

Wideband systems were modelled in each of the areas of interest as described in

Appendix E. These wideband systems also meet the current trading rules described in

Appendix G.

When considering the effects of narrow band systems on the wideband systems the

modelling considered 20 channels worth of narrowband users (4350 stations) and not 100+

channels (20,000+ stations), owing to modelling time constraints. Therefore a fifth of the

wideband systems spectrum is interfered with by the narrowband systems. Scaling up the

narrowband contribution by 7.5dB provides an estimate of the narrowband interference that

can be obtained in the full wideband channel.

Initially, single wideband networks were deployed in the areas of interest with all the other

areas keeping their existing narrowband systems and modelled to produce the results

below.

Results for isolated Wideband systems deployed in the areas of interest

Modelling areas Single Wide Band Systems WIDEBAND BASE STATIONS



Number of Blockers 160 156.5 93.1

No Continental Interference or Narrowband local UK interferers

Wide band systems in isolation


1.74 1.16 2.54


Number of Blockers 1781 470 202



0.46 0.91 2.6


Number of Blockers 1099 470 202



0.46 0.88 2.6

These results show that UK narrowband stations under the current trading rules have a

catastrophic effect on wideband systems. The effect of narrow band systems in the UK is

to increase the noise levels in the wideband systems by 13 -14dB under the current trading



rules. The number of blocking transmitters also increases significantly (2 to 10 times)

depending on the density of narrowband uses in the surrounding areas.

The effects of continental interference are minimal though if the same levels are used for

narrowband systems when considering base station into base station interference,

however the interference would have more of a significant impact.

The table below shows the results of modelling multiple wideband systems:

Modelling areas multiple Wide Band Systems

Thames Gateway & Birmingham

Birmingham & Bradford

WIDEBAND BASE STATIONS

Thames Gateway

Birmingham Birmingham Bradford

Average Noise Level -87.4 -84.4 -83.7 -89.7

Number of Blockers 1329 422 416 143



2.62 0.59 1.19 2.62

Average Noise Level -84,4 -84.4 -83.8 -89.8

Number of Blockers 1045 432 411 143



0.44 0.55 1.19 2.61

The noise and the number of blockers into the wideband systems decrease as other

wideband systems are deployed and the number of potential narrowband users decrease.

The narrowband users seem to have a disproportionate effect. This is because the spectral

density of the narrowband systems is much greater and as existing narrowband systems

are replaced with wideband systems hence the number of narrowband systems causing

blocking levels and high interference levels drop. The overall result is that the current

trading rules do not allow for a mixture of wide and narrowband systems to be deployed.

This can be seen further, when all three modelling areas have wideband systems as shown

in the table below.



Modelling areas multiple Wide Band Systems WIDEBAND BASE STATIONS


Average Noise Level

-90.97 -91.63 -95.90

Number of Blockers

316.93 198.06 103.13

No Continental Interference but all Wideband Systems modelled


0.53 0.76 2.24

Average Noise Level

-84.4 -85.5 -90.0

Number of Blockers

1054 368 143



0.43 0.88 2.57

Average Noise Level

-84.4 -85.5 -90.0

Number of Blockers

1047 377 143



0.44 0.82 2.58

Comparing the rows without continental interference with the cases where there are

continental interferers, shows for either aligned or reversed that as in the narrowband

situation continental interference has significant effect in the Thames Gateway area. In

addition, it also shows that if the wideband system were to be CEPT aligned there would

be an improvement.

Page G-1 240689 - 450-470 Study Final Print


Appendix G: Spectrum Trading and Liberalisation Modelling

G.1 Method

All co-channel users within grid referenced 50km squares were removed. No users outside

the 50km squares exceeded -116dBm (This is equivalent to 12dBuV/m assuming a 0dBd

antenna) in a 12.5 KHz band at 1.5m agl for 50% time at the 50km square border.

Area of interest with 50 x 50km square trading areas

The picture above shows the Thames Gateway modelling area with its associated 50km

trading squares. The broadband system was modelled to cover only the selected Thames

Gateway area (pink area). In addition the wide band systems were modelled to be within

the 50km trading zone and meet the criteria at the trading zone border. As shown below.

Wide band system deployed in the Bradford area-showing limit of interference to 12dBuV/m

Page H-1 240689 - 450-470 Study Final Print


Appendix H: Cost Benefit Analysis Assumptions

H.1 Option 1: Full Band Alignment

Key assumptions used for this option include:

�� Alignment takes place over 3 years. In year 4 the band is fully aligned;

�� Benefits and costs staggered - (20% accrue in Year 1, 30% accrue in Year

2, 50% accrue in Year 3, from Year 4 onwards, all costs have occurred and

100% of benefits are achieved each year);

�� Alignment does not occur until E&PSS has vacated the band;

�� Assume a 2 step alignment with existing UHF2 spectrum (probably the

E&PSS) used for parking or parallel networks;

�� There will be a spectrum yield of 2-3 MHz;

�� Interference reduced from an average of 7dB across the impacted area –

benefits lead to mixture of:

� Lower GSM costs of £5 per mobile (assume 30 mobiles per base

station with 5000 base stations subject to interference);

� Allows for a 45% reduction in network size (taking 5 years to

reconfigure network) (ie. The network coverage of each base station

increases by 45 per cent allowing for a reconfiguration of the network

over time and a reduction in the number of base stations needed for a

given level of coverage). Assume 5000 base stations subject to

interference;

�� Costs based on PA Report – site engineering evenly distributed across

segments;

�� A 5% reduction in the average cost of handsets occurs as a result of full

band alignment. The average cost of a handset is £65, the average number

of handsets per base station is 30, and the total number of base stations in

the UK is 14,790 (as per PA Consulting Report). For simplicity, we assume

that the number of handsets does not change over the period of analysis.

H.2 Option 2: Partial Band Alignment, with spectrum yield used for narrowband use


�� Focus on 4 spectrum bands;

�� Least impact on existing users, no impact on critical infrastructure;

Page H-2 240689 - 450-470 Study Final Print


�� Alignment does not occur until E&PSS has vacated the band;

�� One step alignment due to spectrum available from E&PSS vacating band;

�� No spectrum yield benefits;

�� Reduction in interference leads to a mixture of reduced network size or the

choice of the user to increase the size of the network and reduction in GSM

and other narrowband equipment costs(as per Option 1);

�� Costs based on PA Report – site engineering evenly distributed across

segments.

H.3 Option 3: Partial Band Alignment, with spectrum yield used for wideband use


�� A targeted amount of spectrum (consistent with European CDMA-450) is

aligned;

�� A mixture of one-step and two-step alignment of spectrum;

�� Some spectrum alignment involves moving some existing spectrum users

permanently outside the band. We assume that this doubles the costs of

alignment (based on findings of PA cost report). We assume that these

users are provided with equivalent spectrum outside of the band at no extra

cost to them – and that they are able to provide equivalent service to what

they had provided in the 450-470 MHz band;

�� Costs based on PA Report - Assume site engineering costs evenly

distributed across segments;

�� Reduction in interference leads to a mixture of reduced network size or the

choice of the user to increase the size of the network and reduction in GSM

and other wideband equipment costs(as per Option 1);

�� Alignment results in a yield of 4.5 MHz paired spectrum, which is allocated

to wideband use.

H.4 Base Case – no intervention

We assume the following if no action is taken to align the band:

�� Spectrum trading does not lead to significant spectrum yield (existing

allocations too complex for spectrum trading to make significant impact);

�� Technology allows for interference to be managed at current levels;

�� Any changes in continental interference can be managed without significant

cost (more digital equipment allows for easier re-tuning using Over the Air

retuning (OTAR technology) );

Page I-3 240689 - 450-470 Study Final Print


�� Assume that continental neighbours do not introduce Wideband cellular at

450MHz.

Appendix I: Glossary

3G

The third generation cellular phone system, currently being deployed, which

offers higher data rates than previous systems allowing services such as

videophones

ACI or Adjacent channel interference Interference occurring in the adjacent channel. Also, see Interference.

AIP

Administered incentive pricing – setting charges for spectrum holdings to

reflect the value of the spectrum in order to promote efficient use of the

spectrum

Allocation

Used of a frequency band. Entry in the table of frequency allocations of a

given frequency band for the purpose of its use by one or more terrestrial or

space radio communications services or the radio astronomy service under

specified conditions. This term is also applied to the frequency band

concerned.

Assignment

Used of a radio frequency or radio frequency channel. Authorisation given by

an administration for a radio station to use a radio frequency or radio

frequency channel under specified conditions.

CBA Cost Benefit Analysis

Common Base Station (CBS)

A base station for PBR shared by users (also known as a community

repeater) or a PBR installation giving wide area coverage under the control

of one or more operators offering mobile communications on a commercial

basis to a number of independent (usually business) users.

CDMA

Code Division Multiple Access: A radio transmission method where individual

traffic transmissions use the same frequency, but where users’ traffic is

separated by means of different codes.

CEPT European Conference of Post and Telecommunications Administrations

CTCSS Continuous Tone Code Squelch System

DECT Digital Enhanced Cordless Telephone

DMB Digital Multimedia Broadcasting

DMR Digital Mobile Radio – a new PMR standard from ETSI

Duplex Split Where sensitive receivers are separated from potentially hostile transmitters

by a significant amount of spectrum



DVB-H Digital Video Broadcasting - Handheld

E&PSS Emergency and Public Safety Spectrum

ECC European Communications Committee

EFIS European Frequency Information System

EIRP Effective Isotropically-Radiated Power

ETSI

European Telecommunications Standards Institute: a European based

industry group that addresses equipment standards for telecommunications

equipment.

EU European Union

FDD

Frequency Division Duplex: A transmission method where the

downlink/downstream path and the uplink/upstream path are separated by

frequency.

GHz Gigahertz: a unit of frequency equal to 1000 million (1 x 109) Hz or cycles

per second.

GSM

Global System for Mobile communications: a 2G mobile phone technology.

This is the technology behind the vast majority of 2G mobile phones used

across Europe and is used by approximately 80% of 2G operators

worldwide. Also sometimes referred to under its original meaning of “Groupe

Spécial Mobile".

Guard Band Frequency range deliberately kept vacant between assignments to give a

level of protection to users on either side from interference from each other.

Harmful interference Interference with any wireless telegraphy is not to be regarded as undue for

the purposes of this Act unless it is also harmful – WT Act

IMT 2000 International Mobile Telephony 2000: a family of global standards for mobile

phone networks proposed by the ITU Also referred to as 3G.

Interference

The effect of unwanted signals upon the reception of a wanted signal in a

radio system, resulting in degradation of performance, misinterpretation or

loss of information compared with that which would have been received in

the absence of the unwanted signal.

ISM Industrial Scientific and Medical spectrum band, usually referring to the

2.4GHz band with WiFi being one of the well known services

ITU International Telecommunications Union

KHz Kilohertz (frequency of one thousand Hertz)

MHz Megahertz (frequency of one million Hertz)



Paired Spectrum

Used by FDD systems where two frequency bands are used together, one

for transmission in the forward or downlink direction (e.g. base station to

handset) and another for transmission in the reverse or uplink direction

(e.g.handset to base station).

PBR Private Business Radio

PMR Private or Professional Mobile Radio

PMSE

Programme Making and Special Events – a class of radio application that

supports a wide range of activities in entertainment, broadcasting, news

gathering and community events

PPDR Public Protection and Disaster Relief

PSSPG Public Safety Spectrum Policy Group

RA Radiocommunications Agency

Scanning Telemetry Radio Frequencies that are licensed to the water, electricity and gas

companies for the purposes of data collection and telecommand.

Spectrum Framework Review (SFR)

Ofcom consultation on how spectrum will be managed in the future published

in November 2004.

Spectrum liberalisation

Removal of restrictions from WT licences and RSA to allow holders greater

flexibility to change how they use spectrum

Spectrum Mask A way of specifying the amount of power that a transmitter is allowed to

transmit into neighbouring frequency channels.

Spectrum trading

Ability of spectrum users to transfer rights and obligations under WT licences

to another person in accordance with regulations made by Ofcom. Trades

may be total, partial, outright or concurrent

SUR Spectrum Usage Rights

TDD

Time Division Duplex: A transmission method where the

downlink/downstream path and the uplink/upstream path are separated by

time.

TETRA

Terrestrial enhanced Trunked Radio Access: An ETSI standard for digital

mobile radio utilised by fleets of vehicles such as emergency services,

courier companies etc.

TFAC Technical Frequency Assignment Criteria – a document produced by Ofcom

detailing how the licensees are assigned on a technical basis

UHF Ultra High Frequency (300 MHz – 3 GHz)

UHF I UHF frequency band from 410 – 450 MHz.



UHF II UHF frequency band from 450 – 470 MHz.

UKSSC

Cabinet Office committee that discusses matters relating to the use of the

radio spectrum, including by government departments and other public

sector bodies

Unpaired Spectrum

Used by TDD systems where only one frequency band is used for

transmitting in both the forward or downlink direction (e.g. basestation to

handset) and the reverse or uplink direction (e.g. handset to basestation).

WAPECS Wireless Access Platforms for Electronic Communications Services

WRC World Radio Conference



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