09 December 2005
The Treasury is likely to place a strict cap on the money retained by public bodies if they sell parts of their radiowave spectrums, Public Finance has been told.
But an independent report this week urged the likes of the Ministry of Defence and the emergency services to sell off unused radio bandwidth to provide public bodies with significant cash boosts in future.
Initial estimates of the benefit to the public purse run into billions of pounds over the long term. The Treasury told PF that a trial study of 'a small part' of the UK's spectrum had identified cash returns of between £75m and £250m.
The Independent Audit of Spectrum Holdings, published alongside the chancellor's Pre-Budget Report on December 5, sets out a framework for improving radio spectrum management in the public sector.
The year-long study was led by Professor Martin Cave of the Warwick Business School.
Although Cave makes no specific recommendations on pricing, or the percentage of cash that should be retained, a spokeswoman for his audit team said the Treasury was likely to draw on existing public asset sales models.
'We can envisage a similar model to that used for public land sales, for example, where departments keep a certain amount of the proceeds, with a strict cap on maximum revenues,' she said. 'Our inquiries indicated that there is little incentive for departments to maximise sales if they do not benefit from those activities.'
Public bodies own around half of the UK radio spectrum, with the Ministry of Defence accounting for a third of the public sphere.
With spectrum demand set to outstrip supply – as mobile phone companies, for example, seek extra capacity – Cave has also recommended that more public bodies should be charged fees for using scarce resources. Other recommended solutions to capacity problems include bandsharing.
The Treasury has accepted Cave's recommendations and will work with the Department of Trade and Industry and the communications regulator Ofcom to determine future prices and usage fees.
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