Aeronautical Communications Panel (Acp)

ACP-WGW02/IP-01 International Civil Aviation Organization 2008-04-14

WORKING PAPER

AERONAUTICAL COMMUNICATIONS PANEL (ACP)

FIRST MEETING OF THE WORKING GROUP OF THE WHOLE

Montreal, Canada 20 – 25 April 2007

Agenda Item 4: Future Work

SPECTRUM PRICING

(Presented by Mr A Knill)

SUMMARY This paper provides information on the current situation within the UK with respect to the governments response to the Independent Audit of Public Sector Spectrum Holdings ACTION Note the Information

1. INTRODUCTION

1.1 In 2002 Professor Martin Cave produced, on behalf of the Radiocommunication Agency, a report entitled “Independent Review of Spectrum Management” that looked at spectrum management within the UK. Whilst this review mentioned the use of spectrum by the public sector its main focus was on the commercial sector. One question inevitably raised by the review, given the amount of spectrum they use, was what is the situation within the public sector.

1.2 The Chancellor of the Exchequer in 2004 commissioned Professor Martin Cave to undertake an Independent Audit of public sector spectrum holdings. The audit was published in 2005 with the formal government response being published in March 2006. Whilst the audit touched on all public services its main focus was on the major spectrum users Aviation, Defence and Maritime.

2. DISCUSSION

(7 pages) 0a51ea9a1e07fbe04f6060272b22ae79.doc 2 ACP-WGW02/ IP-01

2.1 Since the publication of the audit and the government response significant work has taken place within the public sector with respect to the practical implementation of the audit findings. A copy of the recent brief provided by the CAA to its National Air Traffic Management Advisory Committee can be found in Appendix 1. This provides information on the recommendations that were relevant to aviation and the current situation.

2.2 Whilst a number of the issues such as spectrum pricing, trading and band sharing are currently UK issues, the European Commission are also interested in the UK initiative and have established a group under the Radio Spectrum Policy Group to review its applicability across the EU. This group have held 2 meetings and a recent workshop on the issue and are due to report to the Radio Spectrum Policy Group by the end of 2009.

2.3 One area where the recommendations of the audit will have wider implications is with respect to reviewing aviations CNS requirements. As mentioned in the brief, work has already started on this. This work will present opportunity to undertake a review of what systems will be required for the future, and in particular allow a review of how the sector deals with redundancy, obsolescence and transition. If the number of radio systems fitted to an aircraft can be rationalised then this could provide cost savings for aircraft operators in terms of weight, fuel and maintenance thus also delivering a potential environmental benefit as well as an Administrative Incentive Price saving from using the spectrum more efficiently.

2.4 It is my intention to provide relevant inputs to ICAO as the work progresses.

3. ACTION BY THE MEETING

3.1 The ACP WGW is invited to note the information provided: 3 ACP-WGW02/ IP-01

Appendix 1

NATMAC

28 Mar 08

Cave Audit/Spectrum Review

— Introduction

1.1. Following the publication of the Chancellor’s independent audit of public sector spectrum and the actions accepted by Government in their response published in Mar 06, the CAA has been engaged with various Government departments and independent regulators. The work has progressed to a level such that it is appropriate to brief NATMAC on the current status and potential impact on aviation.

— Background

1.2. In Dec 2004, the Chancellor of the Exchequer tasked Professor Martin Cave with conducting an independent audit of public sector spectrum holdings. Although this touched areas across the whole of Government, the primary sectors affected were Aviation, Defence, Emergency Services and Maritime. The audit, conducted throughout 2005, was aimed at making a comprehensive assessment of public sector holdings with the aim of maximising efficiency. The specific TORs were:

 To identify the major spectrum holdings for consideration.  To audit the use of and the operational need for major spectrum holdings, having regard to the potential future demand with a view to identifying spectrum that could possibly be opened for other use.  To recommend a strategic approach for making such spectrum available, taking into account operational, financial, technical and international factors, and to indicate possible timescales. This could include proposals for spectrum clearance projects.  To review the effectiveness of ongoing incentives for public sector users to maximise efficient use of the spectrum and whether this could be enhanced, including the treatment of shared bands and the means of meeting new spectrum requirements of public sector users.

1.3. The Audit Report, published in Dec 2005 contained a range of recommendations of which the following are key to aviation:

 Pricing. The report recommended that Administrative Incentive Pricing, based on the opportunity cost of the spectrum (i.e. its potential value to another user), be extended to aeronautical spectrum, initially for primary radar spectrum but with the aim of extending it to communication and navigation bands. 4 ACP-WGW02/ IP-01

 Trading. It was recommended that market mechanisms, such as trading of spectrum, be introduced into public sector spectrum management. The intention would be that public sector demand for spectrum would be met through the market with public sector bodies acquiring Spectrum through trades or sharing arrangements. Allowing users to trade surplus spectrum to other sectors would also enhance efficiency.  Band Sharing. The report, recognising the emergence of new technologies, recommended that opportunities to share aeronautical spectrum with non- aeronautical users, subject to full testing and investigation, be fully investigated.  Cave also recommended that the CAA conduct a review of CNS requirements and their impact on spectrum. This review would be to assist in developing national positions for the future. This work is currently in progress and appropriate stakeholders will be invited to comment in due course.

2.3 Although the recommendations offer some effective means by which spectrum efficiency could be delivered, there are specific aspects of aviation which must be taken into account:

 The CAA has international safety, operational and regulatory obligations, including the international allocation of spectrum and the coordination of frequencies. As such, the UK is not free to act independently in determining how aeronautical spectrum is managed. That said, the CAA supports the aspiration of delivering greater efficiency in spectrum and frequency management.  Aeronautical users do not own the frequencies assigned to them. The CAA assigns frequencies solely for the purpose of enabling air navigation service provision. If a user no longer needs a frequency, it must be surrendered, not traded. Furthermore, the ANO approval to a user is for a specific service in a specific volume of airspace by that user on a specific frequency. The coordination of that activity with other users is a key part of the approval.  If frequencies within one State were traded, it would potentially reduce the international frequency ‘pool’ size, making it more difficult to plan future assignments.  The release or sharing of aeronautical spectrum should only be agreed following compatibility studies to provide the evidence required by the necessary safety cases. A key issue will be how those sectors/agencies with whom aviation share spectrum are regulated – if it is not robust it could seriously undermine the safety case for aeronautical services, particularly in a technology neutral environment.  Dependent on the method of AIP calculation and decisions on charging mechanisms, there is a real concern that UK industry could be severely disadvantaged in the international market. This does not appear to be consistent with the UK policy for aviation.  Because aviation is based on a concept of global interoperability, the UK sector would not seek any new spectrum to support safety of life services using market mechanisms. New requirements would be sought through the International Telecommunications Union (ITU) process so as to ensure a consistent and interoperable approach. Failure by the UK to recognise ITU recommendations in 5 ACP-WGW02/ IP-01

this respect would potentially seriously damage the UK aviation sector and supporting industry.  Band management arrangements must enable the CAA to meet its obligations, particularly in respect of safety. Arrangements to allow Safety of Life requirements to be met alongside national security interests already exist and must be maintained in future arrangements.

— Current Status

3.1 Since the publication of the formal Government Response to the Cave Audit in Mar 06, the CAA, in conjunction with other regulators and Government Departments has been addressing the key issues resulting from the recommendations. The two priorities have been the institutional arrangements necessary to create the environment in which the Market Mechanisms can be applied, and the potential impact of AIP. 3.2 In order to delegate the necessary authority to holders of public sector spectrum, Ofcom have created an instrument known as Recognised Spectrum Access (RSA). This places a responsibility on the holder to manage the spectrum efficiently and utilise market mechanisms where appropriate. However, Ofcom have created RSA in a way that restricts its award to Crown bodies, thereby excluding the CAA. To resolve this, earlier proposals had suggested that MOD be granted RSA for appropriate bands and that a MOU would be established with other users to protect their interests. However, a serious concern with this approach is that it would effectively make MOD accountable for spectrum in support of public transport safety of life services. This would not be consistent with statutory obligations. 3.3 As an initial step, 2.7 – 3.4 GHz has been identified as the first band for the implementation of this process. This band currently supports primary radar use and is managed by CAA, MOD and, in respect of 2.9 – 3.1 GHz, Ofcom, who look after maritime assignments on behalf of the Maritime and Coastguard Agency (MCA). CAA, MOD and MCA have been working together to develop the administrative arrangements, which whilst addressing requirements for the 2.7 – 3.4 GHz band, are aimed at creating a suitable model for other bands, which are candidates for the future application of RSA and AIP. 3.4 Following extensive discussion, a revised arrangement has been proposed by which RSA is granted to SoS Defence and SoS Transport as appropriate. This proposal would allow MOD, who are considerably more advanced in their AIP arrangements, to be able to manage and use market mechanisms to deliver spectrum efficiency, and reduce the impact of AIP on the Defence budget without being constrained by public sector safety of life requirements. DfT could then, through Ministerial Directions, effectively continue the existing arrangements by which CAA conducts aeronautical spectrum management and frequency assignment. A diagram of the proposed arrangement is illustrated below: 6 ACP-WGW02/ IP-01

SoS holds RSA, pays AIP, formally makes decisions on release and sharing

SoS(D) participates in collective SoS(T) participates in collective discussion on release and sharing discussion on release and sharing

MOD manages certain bands solely DfT manages certain bands solely or or jointly with DfT and advises jointly with MOD and advises SoS(T) SoS(D)

Ofcom grants RSA, makes External adviser trading and RSA regulations, CAA and MCA provide provides technical technical and safety advice advice and assistance advises and assists on and assistance maximising citizen- consumer benefits and on international issues

This proposal has advantages, as it would allow the continuation of processes designed to protect safety and international obligations. However, it would also ensure full participation in spectrum efficiency and AIP processes. The proposal would also bring DfT into the process for determining AIP responsibilities and how charging schemes are to be put in place for transport as a whole taking into account the potential impact on related Government policies. 3.4 In introducing AIP, Ofcom commissioned an independent assessment of the value of aeronautical spectrum, which was published in Mar 07. At this stage, Ofcom has not made a formal proposal on AIP levels or the phasing arrangements. However, the sums involved are not insignificant. 3.5 In order to progress the issues, a series of working groups with representatives from the appropriate Government Departments, regulators and agencies, have been established. These will address band management arrangements, particularly in shared bands (e.g. MOD and CAA) and the creation of MOUs between Secretaries of State, and pricing and financial arrangements.

3.6 Key issues, which should be noted, are:

 MOD, who already pay AIP for their spectrum, are under considerable pressure to adopt spectrum reforms and to release spectrum to the market where feasible. As MOD shares spectrum with a range of users, including aviation, their involvement has a potentially significant impact on the way forward.  MOD wish to employ a commercial third party to ensure they can gain the best results from releasing spectrum to the market. Whilst some other public sector interests are showing a willingness to be a party to such proposals, CAA and DfT do not see this approach as serving the best interests of aviation. However, both parties would have to work in cooperation with such an organisation. 7 ACP-WGW02/ IP-01

 Ofcom intend to consult on proposals for specific Aeronautical and Maritime spectrum during the first half of 2008. As yet, the content of their proposals has yet to be seen but there is a concern that there are significant detailed issues still to be addressed which could undermine the value of the consultation at this stage.  DfT have become fully engaged in the work and the CAA is providing the department with full support in addressing the issues.

4. Conclusion

4.1. CAA has made a significant contribution towards how the Cave recommendations can be implemented. We are engaged at appropriate levels and whilst raising significant issues that need to be resolved, have offered constructive suggestions concerning the implications of the proposals and the constraints under which the industry operates. The CAA is now working closely with DfT to support their lead in addressing the issues from a Government Department perspective, which must of course address the needs of all transport sectors, not just aviation. 4.2. In respect of AIP, there is a potentially significant impact on the UK aviation sector. However, once Ofcom makes a formal proposal to DfT and CAA, in advance of public consultation, full consideration of the implications will be possible. NATMAC members will be kept advised concerning future developments, and in particular details of the Ofcom consultation.