Explanatory Memorandum to COM(2016)43 - Use of the 470-790 MHz frequency band in the Union

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This page contains a limited version of this dossier in the EU Monitor.

dossier COM(2016)43 - Use of the 470-790 MHz frequency band in the Union.
source COM(2016)43 EN
date 02-02-2016


1. CONTEXT OF THE PROPOSAL

• Reasons for and objectives of the proposal

The Digital Single Market Strategy for Europe has a vision of universal, high-quality connectivity for businesses and the public. The strategy includes specific proposals from the Commission on ‘the coordinated release of the 694-790 MHz ('700 MHz') band, which is particularly well-suited for ensuring the provision of broadband services in rural areas, while accommodating the specific needs of audiovisual media distribution’.

Wireless connectivity requires access to spectrum in the bands below 1 GHz, being the sweet spot for both wide coverage and high speeds. Following the switch to more spectrum-efficient digital television technologies, the 800 MHz band (790-862 MHz, or the ‘digital dividend’) was the first portion of the UHF broadcasting band (470-862 MHz) to be repurposed for wireless broadband services in the Union. At present the UHF broadcasting band comprises the range of frequencies from 470 to 790 MHz (hereinafter the ‘UHF band’). This band is used for digital terrestrial television (DTT) and audio programme making and special events (‘audio PMSE’) equipment, essentially wireless microphones.

The 2012 World Radiocommunication Conference (WRC-12), the International Telecommunications Union (ITU) Conference that revises the binding Radio Regulations, decided that the 700 MHz band should be allocated to both the broadcasting and mobile service in Region 1 (Europe and Africa) as of 2015.

WRC-15, which took place in November 2015, finalised international negotiations on technical and regulatory parameters for the use of the 700 MHz band for wireless broadband. The coherent situation in the 700 MHz frequency band in all ITU regions 1 offers a rare opportunity for near-global harmonisation of this frequency band for wireless broadband use. WRC-15 also maintained the exclusive allocation of the 470-694 MHz (‘sub-700 MHz’) frequency band to the broadcasting service in Region 1.

In 2013, the Commission’s Vice President Neelie Kroes asked former Commissioner Pascal Lamy to chair a high-level group of representatives of the mobile, broadcasting and media sectors to find a common position on the UHF band’s future use. The Chairman’s report in his own capacity (the ‘Lamy Report’) recommended repurposing the 700 MHz band for wireless broadband while sustaining the European audiovisual model by providing safeguards that terrestrial broadcasting would have spectrum access to the sub-700 MHz frequency band.

The Commission’s public consultation on the Lamy Report found that there was support for coordinated Union action. In parallel, the Radio Spectrum Policy Group (RSPG) adopted an Opinion 2 , which also supports a coordinated Union approach to providing wireless broadband in the 700 MHz frequency band. The RSPG Opinion recommended harmonised technical conditions and a common deadline for effective use of the 700 MHz band and long-term use of the sub-700 MHz frequency band for audiovisual distribution, including its availability for DTT.

The Commission responded to the outcomes of the European stakeholder process and international agreements under the aegis of the ITU by developing a strategy for the Union on the long-term use of the UHF band. The strategy will promote the digital single market and ensure efficient management of radio spectrum in the UHF band, reflecting its social, cultural and economic value. The UHF band strategy has three major strands:

• harmonised technical conditions for wireless broadband electronic communications services in the 700 MHz frequency band based on the principle of technology and service neutrality;

• a common deadline for making the 700 MHz band available for effective use for wireless broadband electronic communications services in line with the harmonised technical conditions above, and coordination measures to support this transition;

• priority for distribution of audiovisual media services (AVMS) in the sub-700 MHz frequency band in conjunction with a flexible approach to how the band is used; this is necessary to cater for diversity regarding the market significance of DTT in Member States.

• Consistency with existing policy provisions in the policy area

This proposal contributes to the target of 1200 MHz for wireless broadband, which is one of the key objectives of Decision 2012/243/EU of the European Parliament and the Council establishing a multiannual radio spectrum policy programme (RSPP). The proposal also promotes the further development of innovative audiovisual media services in line with the RSPP objectives and is consistent with the Authorisation Directive 3 and the Framework Directive 4 , in particular Articles 9 and 9a of the latter.

2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

• Legal basis

This legislative measure is based upon Article 114 TFEU to ensure the functioning of the internal market.

• Subsidiarity and proportionality

As also explained in the impact assessment, the solution under this decision proposal is the best option in terms of subsidiarity and proportionality.

The subsidiarity principle is respected as the initiative's objectives could not be achieved by Member States individually while at the same time it allows national circumstances (in both the 700 MHz and the sub-700 MHz bands) to be taken into account.

The EU should decide how it intends to use the 700 MHz frequency band in the future if it wants to avoid divergent national approaches and limit interference across borders. The absence of a Union-wide common legislation for the UHF band would create detrimental fragmentation in the use of the UHF band within the Union. Fragmentation leads to cross-border interference, which could affect up to 13% of the EU population.

Therefore, there is a need for a coordinated designation and authorisation of the 700 MHz band for wireless broadband by 2020 and coordinated designation of the sub-700 MHz band for flexible use which safeguards the provision of audiovisual media services to mass audience, as well as investments into more efficient technologies, which are needed in order to vacate the current use of the 700 MHz band by DTT.

The flexible use of the sub-700 MHz band is also proportionate as it addresses the problem and achieves the objectives in the most efficient way. Clearing the whole sub-700 MHz band for wireless broadband, for example, would go beyond what is currently necessary to satisfy the demand for sub-1 GHz spectrum to meet wireless traffic demand. At the same time, flexible use provides regulatory certainty for DTT in the sub-700 MHz band for those Member States that wish to maintain their current DTT capacity. Moreover, harmonised technical conditions for spectrum use may be established in agreement with national technical experts in the Radio Spectrum Committee under Decision 676/2002/EC.

• Choice of the instrument

The Commission’s UHF band strategy for the Union will be implemented on the basis of two legal instruments. A non-binding measure such as a recommendation of the Parliament and the Council would neither make Union coordination obligatory nor require action from the Member States. A decision has been preferred to a regulation as the measure creates obligations for Member States but is not meant to have directly applicable effects into Member States for private parties. A decision is also more appropriate than a directive as the draft measure does not set out a whole body of general rules to be transposed into national law but only includes a limited number of specific actions to be taken by Member States. Decision 243/2012/EU of the European Parliament and of the Council establishing the RSPP for example included similar obligations and actions for Member States in its Article 6 i, and Decisions 128/1999/EC, 626/2008/EC and 676/2002/EC of the European Parliament and of the Council were also adopted in the past to impose upon Member States obligations and actions of a similar nature.

This measure according to Article 114 TFEU will be accompanied by a Commission implementing decision, adopted through a comitology procedure pursuant to Decision No 676/2002/EC 5 , to designate and make available the 700 MHz frequency band for use for wireless broadband electronic communications services under harmonised technical conditions developed with the assistance of the CEPT 6 . This approach was also used to harmonise the 800 MHz frequency band for wireless broadband electronic communications services by virtue of the RSPP and the Commission decision 2010/267/EU 7 .

3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS

• Stakeholder consultations

Contents

1.

This proposal has taken into account the following stakeholder inputs:


(a)the Lamy report 8 , drawn up by Pascal Lamy himself on the basis of the work of the high-level group he chaired;

(b)contributions to the public consultation 9 on the Lamy report;

(c)the RSPG report on a ‘Proposed spectrum coordination approach for broadcasting in the case of a reallocation of the 700 MHz band’ 10 ;

(d)the RSPG Opinion on a ‘Long-term strategy on the future use of UHF band (470-790 MHz) in the European Union’.

• Collection and use of expertise

2.

Two dedicated independent studies have been undertaken for the Commission, which provided input to this proposal. These were:


• ‘Economic and Social Impact of Repurposing the 700 MHz frequency band for Wireless Broadband Services in the European Union’;

• ‘Challenges and opportunities of broadcast-broadband convergence and its impact on spectrum and network use’.

The first of the two studies analyses the costs of transitions, the impact of wireless broadband coverage making use of the 700 MHz frequency band and the socio-cultural aspects of reconfiguring DTT spectrum use into the sub-700 MHz frequency band.

The second study provides a comprehensive assessment of the opportunities for convergence between DTT and wireless broadband beyond 2020.

• Impact assessment

An impact assessment prepared by the Commission received a positive opinion from the Regulatory Scrutiny Board 11 on 27 November 2015.

3.

The impact assessment looked at four policy options:


No action at Union level.

Coordinated designation and authorisation of the 700 MHz frequency band for wireless broadband by 2020 and reservation of the sub-700 MHz frequency band for DTT and audio PMSE.

Coordinated designation and authorisation of the 700 MHz frequency band for wireless broadband by 2020. Coordinated designation of the sub-700 MHz frequency band for flexible use, subject to national demand, which would safeguard the continued provision of audiovisual media services to a mass audience (in a technology-neutral way), including free-to-view distribution, as well as spectrum availability for audio PMSE use. To avoid interference, the use of sub-700 MHz spectrum should be limited technically to ‘downlink-only’ mode 12 . This option would also make provision for developing a spectrum strategy for audio PMSE that would respond to spectrum loss for audio PMSE in the UHF band.

Coordinated designation and authorisation of the whole UHF band for wireless broadband services by 2020.

The Commission selected option 3, making it its ‘preferred option’ for fulfilling the policy objectives. The preferred option will contribute to Union-level spectrum and connectivity targets. Use of the 700 MHz frequency band for wireless broadband together with spectrum in the 800 MHz and 900 MHz frequency bands would boost mobile network capacity. This would provide universal coverage at high transmission speeds of at least 30 Mb/s per user within a representative competitive 3-4 operator market. Having 2020 as the common deadline for repurposing the 700 MHz frequency band is appropriate also because it ties in with initial 5G deployment. Option 3 also provides certainty for spectrum access in the sub-700 MHz band to broadcasters and providers of audiovisual media services to the general public, in particular digital terrestrial broadcasting. Flexibility of use for sub-700 MHz spectrum makes it easier to mitigate interference and makes it possible to create an innovative ‘ecosystem’ promoting investment and new business models.

Option 3 is supported by the aforementioned outcome of WRC-15 both for the 700 MHz frequency band and for the sub-700 MHz frequency band. The sub-700 MHz band remains exclusively allocated to broadcasting services in Europe and Africa and in large parts of the rest of the world.

The first aforementioned study tendered by the Commission found that clearing the 700 MHz band in 2020 and upgrading to next generation terrestrial broadcasting technology would cost an estimated €1.2 to 4.4 billion. The bulk of these costs would be incurred by end-users when they upgrade their reception equipment before the end of the normal equipment renewal cycle. Audio PMSE costs for a transition in 2020 would amount to €200 million, based on a figure where 30 % of current audio PMSE users operate in the 700 MHz frequency band. However, EU countries may offer technology-neutral public support measures that limit these costs, if consistent with state-aid rules 13 . Furthermore, the adaptation of DTT networks to carry the same amount of programmed content with reduced spectral capacity is estimated to cost a maximum of around €890 million. This may in particular include costs incurred by right-holders whose rights of use would need to be amended before the period for which they were granted expires. If Member States consider measures to mitigate such costs, they must comply with the principle of technological neutrality and the relevant decision practice of the Commission in the area of State aid 14 as well as the related case law of the EU Courts 15 . In some instances, measures adopted to compensate for the withdrawal of rights, where such compensation does not exceed the prejudice generated by the withdrawal, could be in certain circumstances consistent with Union state-aid law. According to the RSPG, rights of use have been granted in 14 Member States either indefinitely or for a period extending beyond 2020.

Taking into account the results of the recent spectrum auctions for the 800 MHz and 900 MHz frequency bands, a conservative estimate of the overall revenues from assigning the 700 MHz frequency band in the EU-28 by 2020 would be around €11 billion, all other things being equal.

4. BUDGETARY IMPLICATIONS

No specific budgetary implications are expected for the Union.

5. OTHER ELEMENTS

• Detailed explanation of the specific provisions of the proposal

4.

In accordance with the UHF band strategy, this proposal lays down:


• deadlines for repurposing the 700 MHz frequency band for wireless broadband electronic communications services in accordance with harmonised technical conditions at Union level;

• measures facilitating the transition in spectrum use in the UHF band;

• measures for the long-term use of the sub-700 MHz frequency band, although these will include a review.

5.

Article 1 sets two binding common deadlines for Member States for repurposing the 700 MHz frequency band for wireless broadband:


• cross-border coordination agreements must be completed by the end of 2017;

• the 700 MHz frequency band must be made available for effective use for wireless broadband electronic communications services by mid-2020, in accordance with the Commission Implementing Decision on the harmonised technical conditions for using the band 16 .

Article 1 also stipulates that use of the 700 MHz frequency band for wireless broadband after the common Union deadline must be protected across borders.

Article 2 requires Member States to make rights of use in the 700 MHz frequency band tradable. This is in line with the policy objectives and provisions of the RSPP 17 and the Framework Directive.

Article 3 requires Member States to consult on at national level and consider taking measures to ensure a high-quality level of coverage of their population and territory when they grant rights of use of the 700 MHz band for wireless broadband electronic communications services. The aim is to reap the socioeconomic benefits of the UHF band by contributing to bridging the digital divide and enabling the pervasive Internet of Things.

Article 4 deals with the long-term use of the sub-700 MHz frequency band. It requires Member States to safeguard use of this band in the long term for the distribution of audiovisual media services to a mass audience (or to the general public). This should include continued use for wireless audio PMSE, in accordance with national priorities.

To ensure coherence of Member States' obligations with Articles 9 and 9a of the Framework Directive, the obligation to safeguard use of the sub-700 MHz band applies to the provision of audiovisual media services to a mass audience and not to the type of the underlying wireless technology or the type of electronic communications service. Therefore, the safeguard set out in Article 4 provides certainty for spectrum access and allows for the further development of DTT as the major platform for terrestrial broadcasting of audiovisual media services to the general public. The article also allows the sub-700 MHz frequency band to be used also for other technology or electronic communications services limited to downlink-only (i.e. from the network to receiving terminals such as TV sets or tablets).

Article 5 requires Member States to adopt and communicate across the Union their national roadmaps on repurposing the 700 MHz frequency band for wireless broadband and the related transition process for the whole UHF band. This provision is motivated by the transition roadmap agreed among stakeholders (see Annex 2 to the Lamy report). The roadmap sets out the scope of measures to be considered in the transition to new DTT technologies in conjunction with repurposing of the 700 MHz frequency band. The aim is to ensure that impacts on the public and businesses can be limited using a transparent process.

Article 6 requires the Commission to conduct by 2025 a review of spectrum use in the sub-700 MHz frequency band in cooperation with the Member States. Having carried out this review, the Commission must report its conclusions to the European Parliament and the Council together with any proposal for regulatory changes, which might, for example, change the substance or format of safeguards or their duration. This provision of the Decision is in line with a recommendation in the Lamy report. The Commission’s review of spectrum use in the sub-700 MHz frequency band should take into account the planned review of this band at the 2023 ITU World Radiocommunication Conference.