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Business Radio Reform FCS Regional Conference – Perth (Scotland) 25 June 2008 Mostafa Relmy Business Radio Reform FCS Regional Conference – Perth (Scotland) 25 June 2008 Mostafa Relmy and Nigel Gunn

Agenda – FCS Regional Conference • Section 1 – Background on BR Trading and Agenda – FCS Regional Conference • Section 1 – Background on BR Trading and Liberalisation • Section 2: New Licensing approach for Business Radio categories • Section 3 – Pricing for the New Products • Section 4 – Next step – Timescales • Section 5 – The Spectrum Management System – MASTS • Section 6 – Gaining Access to Spectrum • Section 7 – Q & A 1

Where we are So far… Trading q Introduced at end of 2004 to c Where we are So far… Trading q Introduced at end of 2004 to c 900 licences BR: National and Regional PMR, Analogue PAMR, National Paging, Data Networks and CBS q Around 20 -30 trades per annum – 12 larger licences have changed hands through trading Liberalisation q Progressive removal of restrictions on technology and usage BR: Ability to change between classes Coming up… Trading q Extension of trading to other licence classes (including licences in UHF 1) q Over 50, 000 licences to be fully tradable q Introduction of geographical and spectrum partitioning to national licence types Simplification and Liberalisation q Introduction of 3 new and flexible licence types (Area Defined, Technically Assigned and Light Licence) q Minimum technical conditions to prevent harmful interference q New transparent fee structures 2

Business Radio trading and liberalisation policy • Consulted on July 06 on BR trading Business Radio trading and liberalisation policy • Consulted on July 06 on BR trading & liberalisation measures and pricing • Issued the statement on 10 th January 07 – BR T&L and pricing • Statutory Notice (Trading, Register and Charging regulation) published on the 9 th June 2008 (will be closed on the 10 th July 2008) 3

Liberalisation Phase 2 - BRR Key benefits to end users • Replacing 21 different Liberalisation Phase 2 - BRR Key benefits to end users • Replacing 21 different types of licence with three simple licence categories – Removing current restriction on the type of business use and technology – Minimum technical restriction will remain to protect against harmful interference; • Moving 15, 000 licences to 5 year licence term, low flat fee, simple process and eapplication; • About 50, 000 licences to be tradable and flexible; • Improved assignment process to over 40, 000 assignments; • Moving from a complex structure to a simplified transparent structure for fee scales – over 95 % of licences fees will reduce or stay the same. 4

Business Radio – Simplification, Trading, Liberalisation and pricing proposals 21 Licence classes • 6 Business Radio – Simplification, Trading, Liberalisation and pricing proposals 21 Licence classes • 6 licence classes • Large exclusive area – UK/nations – not explicitly defied • Different incentive pricing methods • Some tradable Area defined • One single flexible licence • Geographical boundaries well defined • Clear definition of emissions rights • Geographical segmentation to a minimum of 50 km grid squares enabling partial trades • Greater licence flexibility • Single, simple and transparent fees – based on national rate (£ 1. 65/MHz/km 2 ) and using population to apportion the national rate. • Single business process • Improve spectrum efficiency • On line application. • 10 licence classes with over 50 business types • Assignment process relies on local knowledge • Inconsistencies and uncertainties in assignment quality • Not tradable • 5 licence products which are either prepackaged or lightly managed • Different type of use • Different incentive pricing Technically assigned • One single flexible licence • Assignment and changes to licence characteristics validated by MASTS • Changes of business use, type of use (ie paging/data) number of mobiles without Ofcom consent (no change to the licence conditions) • Single, simple and transparent fees – based on national rate (£ 1. 65/MHz/Km 2), use population to apportion the national rate and sterilised area (use of ERP power and antenna height as a proxy foe base station deployment and radius for operational area) • Tradable • On line application Light licence • Single set of equipment requirements • Single application process • Larger pool of available frequencies • 5 years payment period • Tradable • On line application 5

Agenda – FCS Regional Conference • Section 1 – Background on BR Trading and Agenda – FCS Regional Conference • Section 1 – Background on BR Trading and Liberalisation • Section 2: New Licensing approach for Business Radio categories • Section 3 – Pricing for the New Products • Section 4 – Next step – Timescales • Section 5 – The Spectrum Management System – MASTS • Section 6 – Gaining Access to Spectrum • Section 7 – Q & A 6

Area Defined Licence BR Area Defined Licence Design BR Area Defined Licence Spectral boundaries Area Defined Licence BR Area Defined Licence Design BR Area Defined Licence Spectral boundaries • Operating frequency • Channel spacing Geographical boundaries • National borders and/or grid reference squares to capture the geographical operating area. • Maximum power (ERP) • Emissions limits – IR 2044* • Pre-defined “Trading units” with associated fee. • Spectral power density Field strength of – 116 d. Bm/12. 5 k. Hz at and beyond geographical boundary. • Compliance with relevant national & international co-ordination/Mo. Us Fees • National fee rate to remain at £ 9 900 for 2 x 12. 5 k. Hz channel • Fees for trading units based on population • Three bands categorisations • Fee adjustment to reflect spectrum use (minimum licence fee will apply) * IR 2044 to be updated to include 6. 25 k. Hz (reference to ETSI standard) and IR 2008 (Will be a 3 months public consultation through the EC) 7

Area Defined licence “Trading units” We proposed dividing national licences into pre-defined “trading units” Area Defined licence “Trading units” We proposed dividing national licences into pre-defined “trading units” based on National Grid Reference Squares • Licensee can partially trade this; • These pre-defined area can be easily communicated to Ofcom and remove the complexity, ambiguity, and confusion that arises from complex geographical boundaries; • Each unit has a pre-defined licence fee (based on population); • 3 Population categories – High population (Red) – above 3 M – Medium population (Dark blue) – between 300, 000 and 3 M – Low population (Light blue) – up to 300, 000 8

Technically Assigned Licence - MASTS BR Technically Assigned Licence Design Technically Assigned Licence Spectral Technically Assigned Licence - MASTS BR Technically Assigned Licence Design Technically Assigned Licence Spectral boundaries • Operating frequency Geographical boundaries • Designated Service Area calculated by MASTS • Channel spacing • Emissions limits – IR 2044* • Transmission parameters (inc. ERP and Antenna Height) • Assignment Type: Shared or Exclusive • Trading Right – Assignment Parameters. • Designated Service Area - Predicted coverage area calculated using ITU-R P. 1546 -3 of – 104 d. Bm/12. 5 k. Hz (sterilised area of 116 d. Bm/12. 5 k. Hz) • Comply with relevant national & international co-ordination/Mo. Us * IR 2044 to be updated to include 6. 25 k. Hz (reference to ETSI standard) and IR 2008 (Will be a 3 months public consultation through the EC) Fees • National fee rate to remain at £ 9 900 • Proxies (devised from typical ERP and antenna heights AGL) used for fee categories (6, 30, 60 km sterilised area) • Band modifiers for less usage bands (MUB – 0. 833 and LUB – 0. 333) • Reduction of 50% if a shared assignment • Fee adjustment to reflect spectrum use (minimum licence fee will apply) 9

Light Licence category Proposals for collapsing on site and pre-packaged licence classes New Current Light Licence category Proposals for collapsing on site and pre-packaged licence classes New Current On site local communications Light category On site one way paging Self Select UK General Suppliers light Licence Simple UK licence (No Base Station) Simple site Licence (Base Station) ØGeneric licence conditions ØMaximum 15 m antenna height AGL ØMaximum base ERP 2 Watts, mobile ERP 5 Watts (25 Watts for suppliers) ØLicence schedule specifies the channels available ØOne fee ØNo interference / non protection basis 10

Agenda – FCS Regional Conference • Section 1 – Background on BR Trading and Agenda – FCS Regional Conference • Section 1 – Background on BR Trading and Liberalisation • Section 2: New Licensing approach for Business Radio categories • Section 3 – Pricing for the New Products • Section 4 – Next step – Timescales • Section 5 – The Spectrum Management System – MASTS • Section 6 – Gaining Access to Spectrum • Section 7 – Q & A 11

Licence Fee Approach Area Defined Licence: Ø Keeping AIP at £ 9, 900 per Licence Fee Approach Area Defined Licence: Ø Keeping AIP at £ 9, 900 per 2 x 12. 5 k. Hz national channel Ø Apportion the national channel rate in proportion to the population within the nations (Wales, England, Scotland Northern Ireland) Ø UK to be divided into pre-defined “trading units” of 50 km × 50 km - Population within trading unit measured and categorised into three categories (High, medium and low population) with a fee for each category of trading unit applied based on an apportionment of national rate. Ø The bands types (HUB, MUB and LUB) - 0. 83333 band factor for MUB and 0. 333 for LUB Technically Assigned Licence Ø Specified three categories of population – High, Medium and Low – Same as area licence Ø Used technical proxies (power and antenna height – for base station and radius for operational area) for coverage (6, 30 and 60 km Radius). v Power (high power generally deny service to other over a greater area). v Antenna height (higher antenna usually sterilised a large area. ) Ø Shared use – shared assignment will attract a 0. 5 of the exclusive assignment full rate. Light Licence Ø Fees will be charged at a much simpler rate to reflect new on-demand regime. Our fee proposal is £ 75 per 5 years - per site or per licence (for non base station deployment). Please note that the Charging/Fee Regulations for Business Radio will be for 1 x 6. 25 k. Hz spectrum – This is to support greater flexibilities 12

Categorisations for BR fee charging 1. Bands categorisation for Area Defined and Technically Assigned Categorisations for BR fee charging 1. Bands categorisation for Area Defined and Technically Assigned licences 2. Coverage categorisation for Technically Assigned licences Coverage categorisation Band categorisations Bands High usage bands – category A High band; UHF 1 and UHF 2 Medium usage bands -Category B Mid Band III Least usage bands – Category C Band 1, Low Band Paging Radius in Km – Power (ERP - Watts) and operational area Antenna (m) Category 1 – Including indoor/underground antenna use - Dowfire or leaky feeder antenna type 0 5 and Ah ≤ 10 m 15 < R ≤ 30 P> 5 and Ah > 10 P ≤ 5 and Ah > 30 3. Assignments type categorisation for Technically Assigned licences Category 2 Current product Exclusive or shared Analogue PAMR Common Base Stations Band 1 and Band III CBS Exclusive IR 2008 Data Wide Area One-Way Paging and Speech Systems Category 3 4. Population categorisation for Area Defined and Technically Assigned licences • Red colour – High population • Blue – Medium population • Light blue – Low population Shared Remote Meter Reading Operator-Shared channels Wide Area Distress Alarms On Site Hospital Paging / Emergency Speech Systems Wide Area Speech and Data Systems Shared* On-Site Speech and Data Systems 13

Licence Fee for Area Defined Licence for a 2 x 12. 5 k. Hz Licence Fee for Area Defined Licence for a 2 x 12. 5 k. Hz channel Area Fee (£) for high usage Fee (£) for medium bands (HUB) usage bands (MUB) Fee (£) for less Usage Bands (LUB) UK 9900 8250 3300 England 8275 6895 2758 Wales 490 410 163 Scotland 855 710 285 Northern Ireland 280 235 93 Trading unit within high population category 1185 990 395 Trading unit within medium population category 150 125 50* Trading unit within low population category 14* 12* 5* * minimum £ 75 licence fee 14

Technically Assigned Licence Class Fee (£) for a 2 x 12. 5 k. Hz Technically Assigned Licence Class Fee (£) for a 2 x 12. 5 k. Hz channel Band Population categorisation category Less Usage Bands Coverage Category 3 Exclusive Shared A (High) 200 100 740 370 1480 740 B (Medium) 100 75 200 100 300 150 75 75 95 75 110 75 A (High) 100 75 370 185 740 370 B (Medium) 85 75 170 85 250 125 C (Low) Medium Usage Bands Coverage Category 2 C (Low) High Usage Bands Coverage Category 1 75 75 80 75 90 75 A (High) B (Medium) 75 C (Low) For TDMA – IR 2008 the fee will be 1/8 of the technically assigned licence fee for each timeslot – minimum licence fee £ 75 applies 15

Example of a fee calculation for a Technically Assigned Licence - 1 Current licence Example of a fee calculation for a Technically Assigned Licence - 1 Current licence technical parameters Categorisation type Category – New fee calculation Spectrum quantity 1 Band Medium usage band (Mid band) Antenna height (above ground level): 4 metres Coverage Category 2 Base station location: TQ 300 800 Population High population (A) Assignment type Exclusive Bandwidth: 2 x 12. 5 k. Hz channel Base frequency: 164 MHz ERP power: 25 Watts CBS licence class 16

Example of a fee calculation for a Technically Assigned Licence - 2 Band Population Example of a fee calculation for a Technically Assigned Licence - 2 Band Population categorisation category Less Usage Bands Coverage Category 3 Exclusive Shared A (High) 200 100 740 370 1480 740 B (Medium) 100 75 200 100 300 150 75 75 95 75 110 75 A (High) 100 75 370 185 740 370 B (Medium) 85 75 170 85 250 125 C (Low) Medium Usage Bands Coverage Category 2 C (Low) High Usage Bands Coverage Category 1 75 75 80 75 90 75 A (High) B (Medium) 75 C (Low) For TDMA – IR 2008 the fee will be 1/8 of the technically assigned licence fee for each time slot – minimum licence fee £ 75 applies 17

Licence fee - Mitigations • Change licence product – Light licence - £ 75 Licence fee - Mitigations • Change licence product – Light licence - £ 75 / 5 years – Area Defined – Multi sites / share spectrum – Licence exempt PMR/DMR 446 • ERP power • Antenna Height (AGL) • Base station location – Outside the high population/medium population • Size of area – Operational area • Frequency band – 0. 8333 (Medium usage band) – 0. 33 (Less usage band) • Antenna – use – Indoor – Type – Downfire / leaky feeder • Assignment type – Shared (50 % reduction) 18

Agenda – FCS Regional Conference • Section 1 – Background on BR Trading and Agenda – FCS Regional Conference • Section 1 – Background on BR Trading and Liberalisation • Section 2: New Licensing approach for Business Radio categories • Section 3 – Pricing for the New Products • Section 4 – Next step – Timescales • Section 5 – The Spectrum Management System – MASTS • Section 6 – Gaining Access to Spectrum • Section 7 – Q & A 19

Getting there – key work items IT System Major development of a new IT Getting there – key work items IT System Major development of a new IT platform (Unify) including development of an advanced new licensing and spectrum management system. BRR highly dependent on the delivery of the new system Regulations Consultation and statement on the Trading, Register and Fee Regulations to give legal effect of the policy changes Variation Process to move over 50, 000 licences to the new licence classes Data cleansing Update technical data following customers interaction Documentation Revision and development of documents to support the changes Communication Keeping our stakeholders updated on the progress and time scale 20

Next Steps 1. Currently we are consulting on the Statutory Notice – Published on Next Steps 1. Currently we are consulting on the Statutory Notice – Published on the 9 th June 2008 and will be closed on the 10 th July 2008 – We are consulting on making the following regulations in order to introduce the BRR changes: – – – WT trading regulations - to extend trading, specify the permitted modes of trading and the procedure to be followed; WT register regulations - to extend the coverage of the WT register so as to the publication of information on all tradable licences; WT licence charges regulations - to give effect to the new fee rates for the new licence products. Also include transitional arrangements for existing licensees to move to the revised fees. We expect the regulations to be in place by the end of August 08 2. Ofcom variation – BRR – vary new licences into the new licence products 3. Also Ofcom will • • Publish all supporting documents (IR, TFAC, licensing documents (new application form and WT Act licence documents, Licensing policy manual, trading and liberalisation guidance notes, …. ) We are in the progress of finalising the IS Unify/SMS Business Radio phase (incorporating MASTS algorithm). 21

Indicative approach for BRR Late 2008 IS Regulations Statement with final regulations Consultation on Indicative approach for BRR Late 2008 IS Regulations Statement with final regulations Consultation on draft regulations 4 weeks Consultation NOW Variation Go Live Design / testing / UAT Regulations come into force 21 days Finalising the detailed approach Issue variation notices (minimum 1 month to make any representations) Issue New Licences 22

Agenda – FCS Regional Conference • Section 1 – Background on BR Trading and Agenda – FCS Regional Conference • Section 1 – Background on BR Trading and Liberalisation • Section 2: New Licensing approach for Business Radio categories • Section 3 – Pricing for the New Products • Section 4 – Next step – Timescales • Section 5 – The Spectrum Management System – MASTS • Section 6 – Gaining Access to Spectrum • Section 7 – Q & A 23

Project UNIFY • Ofcom inherited around 70 systems from the legacy regulators from which Project UNIFY • Ofcom inherited around 70 systems from the legacy regulators from which it was formed; • Project Unify was launched in 2005 to integrate these disparate systems; • Project encompasses all of Ofcom’s activities – so not only WT Act Licensing but field operations, finance, human resources, project management and the Ofcom licensing centre; • Unify has already delivered improved efficiency and reduced costs across Ofcom; • Fixed Links phase was delivered / go live on 28 th April 2008; • Business Radio is expected to go live in November 2008. 24

Unify/SMS (MASTS) update SMS / Business Radio technical tool to be delivered w/c 14 Unify/SMS (MASTS) update SMS / Business Radio technical tool to be delivered w/c 14 July 08 – Looking at: Propagation Models (P 1546 – 3 and P 370 – 7), MASTS, International Co-ordination, Geolimits, Data Migration and Transformation, UHF-1 Co-ordination (Fylingdales), Channel Plans, Frequency Assignment and Application Form; – Aim to complete testing by mid September 2008. Licensing Admin. Project – Detail Design is underway. Next Steps – Detailed Design and Business Processes for Licensing System; – Incorporation of SMS Technical Tools into overall Licensing System; – Data Migration; – Testing; – Training. Timescales as currently planned: – Target Go-Live for Unify/SMS Release 2 c/d (including Business Radio): November 2008. 25

BR new licensing system SPECTRA web SPECTRA emc SPECTRA plus SPECTRA plan CHIRplus_LM 26 BR new licensing system SPECTRA web SPECTRA emc SPECTRA plus SPECTRA plan CHIRplus_LM 26

Agenda – FCS Regional Conference • Section 1 – Background on BR Trading and Agenda – FCS Regional Conference • Section 1 – Background on BR Trading and Liberalisation • Section 2: New Licensing approach for Business radio categories • Section 3 – Pricing for the New Products • Section 4 – Next step – Timescales • Section 5 – The Spectrum Management System – MASTS • Section 6 – Gaining Access to Spectrum • Section 7 – Q & A 27

Acquiring access to spectrum • Apply to Ofcom – Paper application or e-application – Acquiring access to spectrum • Apply to Ofcom – Paper application or e-application – Moving towards on line application and payment for all products - at a later stage • Use the Trading Register to identify tradable licences – Open negotiations and establish if a trade can be agreed • Apply to Ofcom for approval and issue of new licence(s) 28

UK simple Licence - no site (UK General) BR licence process BR Light Licence UK simple Licence - no site (UK General) BR licence process BR Light Licence Applicant can seek advice from Ofcom on which type of licence will meet his requirements UK site licence (On site Local communication, Onsite one paging & self select) Suppliers Licence Licensee requires a BR licence Applies to Ofcom will assist to check if deployment meets the boundary conditions Licensee requires Ofcom approval through post issue support BR Technically assigned licence BR Area defined licence UHF 1, Band III, and International coordination Ofcom evaluates the request – MASTS Ofcom issues a Licence with a set of frequencies Ofcom issues a licence assignment process Ofcom checks availability (frequency within the geographical area: Nations, trading units or combinations) Ofcom issues a licence Licensee flexibility granted but licensee must comply with licence conditions and national and international Coordination 29

Type of trade A A B B A A A Full and Outright A+B Type of trade A A B B A A A Full and Outright A+B A A+B Partial and Outright Full and Concurrent Partial and Concurrent 30

 • How will it work – the procedures ? • Trading Buyer wants • How will it work – the procedures ? • Trading Buyer wants spectrum • Parties negotiate and make own investigations Parties apply to Ofcom for approval to trade Ofcom assess and approve Ofcom issues new licence Liberalisation Licensee wants to change licence • Buyer looks at Register Consults guidelines Licensee applies to Ofcom assess and approve Ofcom varies licence Initially cautious and controlled but with experience we may look to ease restriction. Web Link to the Trading Register http: //146. 101. 202. 225/public-tnr/wtr. Search. do 31

Example of trade and liberalisation flexibility • 25 k. Hz channel currently is used Example of trade and liberalisation flexibility • 25 k. Hz channel currently is used for national paging - This will be migrated to Area Defined licence class – So licensee can then split the 25 KHz channel to 2 X 12. 5 k. Hz through partial trade change the use for example analogue PMR (12. 5 k. Hz) and trade the other 12. 5 k. Hz; – Can be concurrently traded + Commercial agreement between the two holder on the usage of the licence; – Any other changes to the licence term and conditions including the technical licence conditions has to be approved by Ofcom. • 12. 5 KHz wide area – Business class: Taxi – This licence will be migrated to Technically Assigned licence class with no Business restriction – So it can be used for Taxi/courier or others as long as the technical licence conditions are met; – Any changes the licence technical parameters (for example increase/decrease power or antenna height) has to be approved by Ofcom. 32

Further Information If there any questions regarding these changes, please contact: Businessradio@Ofcom. org. uk Further Information If there any questions regarding these changes, please contact: [email protected] org. uk Further information is available on the Ofcom website at: www. ofcom. org. uk/radiocomms/ifi/licensing/classes/business_radio/ Any other enquiries regarding existing licences should be addressed to [email protected] org. uk 33

Agenda – FCS Regional Conference • Section 1 – Background on BR Trading and Agenda – FCS Regional Conference • Section 1 – Background on BR Trading and Liberalisation • Section 2: New Licensing approach for Business Radio categories • Section 3 – Pricing for the New Products • Section 4 – Next step – Timescales • Section 5 – The Spectrum Management System – MASTS • Section 6 – Gaining Access to Spectrum • Section 7 – Q & A 34

Any Questions? Thank You Any Questions? Thank You