DIU, Alm.del - 2024-25 - Bilag 54: Orientering om høring af ny model for frekvensafgifter

Udvalget for Digitalisering og It 2024-25
DIU Alm.del Bilag 54
Offentligt

Final report for the Agency for Data Supply and

Infrastructure

Analysis of the Danish

spectrum fee model

Mark Colville, Audrey Bellis, Noah Crew-Gee, Janette

Stewart

14 December 2022

Ref: 8868699659-354

DIU, Alm.del - 2024-25 - Bilag 54: Orientering om høring af ny model for frekvensafgifter

Contents

1.1

1.2

1.3

1.4

1.5

2.1

2.2

4.1

4.2

4.3

5.1

5.2

5.3

5.4

5.5

5.6

5.7

5.8

6.1

6.2

6.3

7.1

7.2

8.1

8.2

Executive summary

Overview of approach

Current spectrum fee model in Denmark

Demand and technology trends

International benchmarking of spectrum licence fee models

Proposed changes to the Danish model and revenue modelling results

Introduction

Overview of Analysys Mason’s approach to the study

Structure of the report

Fee model in Denmark

Demand and technology trends of relevance

Current and future frequency use in Denmark

International developments that may affect future spectrum use

Analysis of technology and demand trends

International benchmarking of spectrum licence fee models

Summary of key findings

Norway

Ireland

Finland

Netherlands

Malta

Germany

Proposed changes to the model

Identification of potential issues with current fee model

Potential approaches to addressing issues with current fee model

Summary of recommendations for suitable changes

Implications of proposed changes

Revenue breakdown under current fee model

Assessment of revenues under the proposed fee model

Conclusions and further considerations

Overall conclusions

Further considerations for the ADSI

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DIU, Alm.del - 2024-25 - Bilag 54: Orientering om høring af ny model for frekvensafgifter

Analysis of the Danish spectrum fee model

Annex A

Annex B

Variable fee class structure in Denmark

Exchange rates

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DIU, Alm.del - 2024-25 - Bilag 54: Orientering om høring af ny model for frekvensafgifter

Analysis of the Danish spectrum fee model

Confidentiality Notice: This document and the information contained herein are strictly

private and confidential, and are solely for the use of the Agency for Data Supply and

Infrastructure

is provided on condition that it will not be reproduced, copied, lent or disclosed, directly or

indirectly, nor used for any purpose other than that for which it was specifically furnished.

Analysys Mason Limited

St Giles Court

24 Castle Street

Cambridge CB3 0AJ

Tel: +44 (0)1223 460600

[email protected]

www.analysysmason.com

Registered in England and Wales No. 5177472

Ref: 8868699659-354

DIU, Alm.del - 2024-25 - Bilag 54: Orientering om høring af ny model for frekvensafgifter

Analysis of the Danish spectrum fee model | 1

1 Executive summary

This document is the final report of a study carried out by Analysys Mason on behalf of the Agency

for Data Supply and Infrastructure (ADSI) to review the existing model for spectrum licence fees

imposed in Denmark.

As part of its spectrum management activities, the ADSI imposes annual fees on spectrum licence

holders. The current model for determining these fees has been in place since 2010. The ADSI now

wishes to re-evaluate this model, with a view to putting in place an updated model.

The current fee model applies generally higher fees to lower-frequency spectrum, owing to its more

favourable propagation characteristics (which tend to result in increased demand for and greater

scarcity of this spectrum). However, recent technological advances (such as in 5G mobile systems)

are leading to increased demand in other, higher-frequency, bands, meaning the historical position

could be changing.

Analysys Mason was appointed by the ADSI to assist in this re-evaluation, drawing on its expertise

in the telecoms sector to understand relevant technology and demand trends, as well as international

benchmarks of licence fee regulation. Where any changes are recommended, we understand that

these must result in a revenue-neutral outcome for the ADSI.

1.1 Overview of approach

After first analysing the current fee model in Denmark, we have gathered evidence, of two main

types, relevant to the consideration of any changes to the fee model:

•

Recent and future demand and technology trends, which may suggest changes in the nature of

the demand for spectrum

international benchmarks, focusing on the way in which other countries define similar fee

models.

We have then analysed the available evidence in order to identify potential issues with the current

fee model, identify potential approaches to addressing these issues, and through consideration of the

likely implications of such changes, make recommendations for an updated fee model.

1.2 Current spectrum fee model in Denmark

The existing licence fee model in Denmark consists of two parts: a variable component and a smaller

fixed component. The fees imposed vary depending on the type of licence and are republished

annually, although the fees imposed have not changed in recent years. There is currently no

mechanism for automatic adjustment for inflation, resulting in an effective reduction in fees in real

terms over time.

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Analysis of the Danish spectrum fee model | 2

Licences are allocated to one of nine fee classes (or groups) for the purposes of calculating the

variable fee component. Fees imposed on fee classes 2 and 3 are calculated on the basis of the

number of base station positions (‘positions’) operated by the licensee, while fee classes 1 and 4–9

are calculated for the licence as a whole and do not depend on the number of positions. The allocated

fee class depends both on the technology and the geographical scope of the licence, while variation

in the frequency of assigned spectrum is accounted for within the fee classes. Each frequency band

is assigned a ‘band-value factor’ that is used to weight the fee appropriately between frequency

bands in light of variation in the usefulness of different frequencies.

As part of our work, we have examined the appropriateness of both the frequency band breaks, as

well as the band-value factors within each fee class, in light of demand and technology trends, as

well as international benchmarking. Other factors have also been investigated, such as the provisions

for licensing at sea and the impact of replacing the fixed component of the fee.

1.3 Demand and technology trends

Consideration of both historical and future demand and technology trends are critical in developing

an updated fee model. Our consideration of these trends is informed by consideration both of

relevant market drivers within Denmark, and international developments that may affect spectrum

use. Our research in this area also draws upon our 2020 report for the DEA (now ADSI) on this

subject, entitled “Spectrum

needs for future radio services and the licensing of fixed links in

Denmark”.

Our high-level findings of international developments likely to affect spectrum allocation in

Denmark are summarised in Figure 1.1. Out of the sectors of interest for this study, a large number

of bands were identified for both public mobile and fixed links, while no significant changes in

frequency allocation are expected within PMR or broadcasting in the medium term (up to 2030).

Figure 1.1: Impact of recent and on-going international developments on frequency allocations by

sector of interest [Source: Analysys Mason, 2022]

Sector of interest

Public mobile

Consideration of bands for future use

Future assignment of spectrum identified for public mobile use in

Denmark/Europe at WRC-19:

•

37–43.5GHz

•

66–71GHz

For study at WRC-23:

•

470–960MHz

•

3300–3400MHz

•

3600–3800MHz

470–694MHz is the relevant part under consideration for further allocation to mobile services, with the

700MHz, 800MHz and 900MHz bands already assigned for mobile use in Denmark

Already being planned in Denmark and other European countries for 5G use (part of the European 5G

pioneer band from 3.4–3.8GHz)

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Analysis of the Danish spectrum fee model | 3

Sector of interest

Consideration of bands for future use

•

4800–4990MHz

6425–7025MHz

7025–7125MHz

3.8–4.2GHz has also been considered at EU level for private

mobile networks

Broadcasting

No change in future availability of spectrum expected in the

medium term, but possible reduction in availability of spectrum

within the 470–694MHz band post-2030 (noting the study of 470–

960MHz at WRC-23, and possibilities for a mobile allocation in the

600MHz band, co-primary with broadcasting).

No change in future allocations expected in the medium term

Identification of bands for mobile use at WRC-19 may affect

existing fixed links:

•

24.25–27.5GHz

•

37–43.5GHz

•

66–71GHz

Some bands under study for mobile use at WRC-23 may affect

future assignments in these bands for fixed links:

•

6425–7025MHz

•

7025–7125MHz

A number of high-frequency bands were identified at WRC-19 for

future commercial use:

•

275–296GHz

•

306–313GHz

•

318–333GHz

•

356–450GHz

PMR

Fixed links

1.4 International benchmarking of spectrum licence fee models

Our recommendations for changes to the existing fee model are further informed by a benchmarking

exercise to compare licence fee models internationally in other relevant markets. We have

considered seven other markets as part of the benchmarking process, namely: Norway, the UK,

Ireland, Finland, the Netherlands, Malta and Germany, with our benchmark of Germany only

covering its approach to private 5G network licensing. These markets were selected as they either

offer a comparable example to Denmark, or have features in their fee models that are of note.

We found that spectrum licence fees are set using a wide variety of methods across the benchmarked

countries, as shown in Figure 1.2.

•

The UK and Ireland both take an approach of setting licence fees individually depending on the

nature of the use under consideration. In both cases, auctions are used to assign frequencies for

public mobile use. In the UK, an auctioned licence has an initial licence term in which no annual

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Analysis of the Danish spectrum fee model | 4

fees are imposed, and thereafter, annual licence fees are set based on the opportunity cost of

assigning spectrum to the current licensee in a system known as Administrative Incentive

Pricing (AIP). This system is also applied to some other licence categories (e.g. fixed links),

where the regulator deems there to be excess demand for licences (i.e. scarcity) and is intended

to ensure the spectrum is used efficiently. In cases where AIP is not applied, licence fees are

imposed on the basis of administrative cost recovery. In Ireland, the approach is slightly

different to the UK for auctioned spectrum, and public mobile operators pay an upfront fee

(determined by the auction), and a spectrum usage fee (SUF), which is index-linked. For other

categories of use in Ireland (e.g. fixed links), fees are determined based on the frequency band

and bandwidth, taking account of factors such as congestion.

•

Finland’s approach to licence fees is particularly noteworthy, as the regulator sets licence fees

according to a single unified formula with different weighting factors used to differentiate

between spectrum frequencies, technology and geographical scope.

Both Norway and the Netherlands use charges to recover administrative costs, but their

treatment of various band values/breaks and technologies mean they are nonetheless informative

examples.

•

A summary of the key results of the benchmarking exercise is provided in Figure 1.2.

Figure 1.2: Summary of licence fee approaches by country [Source: Analysys Mason, 2022]

Primary purpose

of fees

Minimum

fee/

fixed fee

component

Yes

Fixed

component

of ‘direct

price’

licence

charge

Unified fee

model

Light

licensing

Inflation

adjustment

Geographical

scaling

Norway

Administrative

cost recovery

Partly

Yes

Charges

consist of a

variable charge

component

which is

unified across

different types

of use

Yes

Licence fees

are set

individually for

each type of

use (or licence

in the case of

public mobile)

Yes

Cost-

dependent

Yes

Population

scaling

Efficient

spectrum use

Yes

A minimum

fee applies

to most

uses

Yes

CPI

Yes

For fixed

links,

depending

on pop.

density of

area

covered

It seems to be the case that even where it is not the primary objective, most regulators do include recovering

their own administrative costs as one of the objectives in setting spectrum fees

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Analysis of the Danish spectrum fee model | 5

Primary purpose

of fees

Minimum

fee/

fixed fee

component

Yes

A fixed fee

component

applied to

most uses

Unified fee

model

Light

licensing

Inflation

adjustment

Geographical

scaling

Ireland

Efficient

spectrum use

Licence fees

are set

individually for

each type of

use (or licence

in the case of

public mobile)

Yes

All licence fees

are determined

according to a

single unified

formula

Licence

charges are set

individually for

each type of

use (or licence

in the case of

public mobile)

Licence fees

are set

individually for

each type of

use

Public

mobile only

(using CPI)

Finland

Efficient

spectrum use

Yes

A minimum

fee applied

to all uses

Yes

Population

scaling

Nether

-lands

Administrative

cost recovery

Yes

Through a

one-off

charge for

all licences

Yes

Cost-

dependent

Yes

By area

Malta

Efficient

spectrum use

Yes

A fixed fee

component

applies to

most uses

1.5 Proposed changes to the Danish model and revenue modelling results

Taking into account the results of both the identification of demand and technology trends, as well

as the international benchmarking exercise, we developed a set of recommendations for adjusting

the Danish fee model. These recommendations are summarised in Figure 1.3.

Figure 1.3: Recommendations for changes to the spectrum fee model [Source: Analysys Mason, 2022]

Issue

Insufficient band

breaks

Recommendation

Adopt a unified banding structure across classes 1–4. This approach allows

for more granular setting of licence fees in line with updated groupings of

spectrum of similar value, consistent with modern technology trends. In

particular, this will allow for more targeted encouragement of efficient use

of spectrum, for example for PMR uses.

Adopt a new set of band-value factors. These band-value factors have been

adapted for the proposed updated band structure and have been set based

Band-value factors

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Analysis of the Danish spectrum fee model | 6

Issue

Recommendation

on expected technology and demand trends in Denmark, as well as both

international regulatory and spectrum auction price benchmarking.

Replace the fixed fee with an ‘incremental minimum fee’

for fee classes

1–4 and a minimum fee for fee classes 5–9 to avoid unduly discriminating

against licensees with smaller payable licence fees while maintaining

disincentives for small licensees to use more spectrum than is required. We

suggest adjusting the value of this minimum fee slightly from the current

fixed fee level (DKK600) to account for the small revenue shortfall created

by this change.

Do not replace the existing geographical area factor with a population-

based factor due to the additional administrative effort required and the

relatively small number of licensees affected.

Adopt a fixed area scaling factor of 20% for licensing at sea to encourage

use of spectrum in these areas. The existing area-based fee model is likely

to overprice these licences relative to their commercial value, discouraging

licensing and use.

Consider adopting a light licensing approach for fixed links in the 70GHz

band, although specific implementation will depend on ADSI’s objectives as

well as existing spectrum plans for this band.

Replacement of

fixed fee

Replacement of

geographical area

factor

Provisions for

licensing at sea

Introduction of light

licensing

A major component of these recommendations is the adjustment of the frequency band breaks,

combined with an adjustment of the band-value factors. The proposed changes in frequency band

breaks have been largely informed by the analysis of demand and technology trends, and align the

proposed fee model with current and expected developments in spectrum use. The proposed band-

value factors are then guided by consideration of a combination of demand and technology trends,

international benchmarks and benchmarks of spectrum auction prices in Europe. These sources have

been combined to align the proposed frequency band breaks with their relative spectrum value. The

proposed frequency bands and band-value factors are intended to cover fee classes 1–4, while fee

classes 5–9 remain unchanged. These proposed band breaks and band-value factors, along with the

corresponding fees, are summarised in Figure 1.4.

Figure 1.4: Summary of updated licence fees for fee classes 1–4 [Source: Analysys Mason, 2022]

Frequency band

(MHz)

Band-

value

factor

320

960

320

Class 1 fee

(DKK per

MHz)

3301

6602

33 008

99 024

33 008

Class 2 fee

(DKK per

MHz per

position)

390

1171

390

Class 3 fee

(DKK per

25kHz)

224

672

224

Class 4 fee

(DKK per

licence)

232

464

2320

6960

2320

0–380

380–470

470–694

694–960

960–4200

i.e. a minimum fee but with incremental variable fees charged for additional spectrum blocks, or ‘positions’.

Note: the fee shown is for ≤30 mobile units, the fee for >30 mobile units is four times larger, in line with the

original fee model

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Analysis of the Danish spectrum fee model | 7

Frequency band

(MHz)

Band-

value

factor

0.5

Class 1 fee

(DKK per

MHz)

6602

1650

103

Class 2 fee

(DKK per

MHz per

position)

Class 3 fee

(DKK per

25kHz)

Class 4 fee

(DKK per

licence)

464

116

4200–12000

12000–24250

24250–43500

43500–90000

over 90000

The combined effect of these proposals has been modelled and they are expected to produce an

overall revenue neutral outcome for the ADSI, ultimately increasing total revenue by 0.14% under

an assumption of fixed demand (at 2022 year-to-date levels). Inevitably, the fees for individual

licensees may increase or decrease depending on the licence held as well as the use case, however

we believe that all of these changes are justifiable in light of the current technological landscape as

well as the wider objectives of the ADSI.

The final proposed fee model takes into account changes in technology and demand that have

occurred since the creation of the original fee model, as well as expected future developments. The

spectrum band breaks have been carefully designed to categorise similar frequencies together, taking

into account expected future demand and technology developments, thereby providing a framework

for encouraging efficient use of spectrum. The proposed fee model is therefore expected to provide

a level of future-proofing, allowing regulatory flexibility as the various spectrum use cases mature.

A number of broad objectives are also achieved by updating the proposed frequency bands and band-

value factors, including the encouragement of high-frequency fixed links, modernisation of public

mobile licence fees to represent current technological trends and ensuring efficient use of PMR

spectrum.

While the licence fees for fee classes 5–9 were not changed, the replacement of the fixed fee with a

minimum fee, as noted in Figure 1.3, caused small changes in revenue in these fee classes. We

recommended a minimum fee level of DKK690, replicating the fee revenue previously derived from

the fixed fee component while discouraging inefficient use of spectrum for smaller, previously

inexpensive licences.

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Analysis of the Danish spectrum fee model | 8

2 Introduction

This document is the final report of a study carried out by Analysys Mason on behalf of the Agency

for Data Supply and Infrastructure (ADSI) to review the existing model for spectrum licence fees

imposed in Denmark.

Efficient use of frequencies is essential to ensure that spectrum is put to good use, and is managed

for the good of Danish society, and the economy. The ADSI is responsible for administering national

frequency resources in Denmark, with the objectives to meet demand for frequencies for new

applications whilst maintaining the spectrum needed to deliver existing services, and to maintain

alignment of the Danish national frequency plan with European and international frequency

regulations and use.

As part of its spectrum management activities, the ADSI imposes annual fees on spectrum licence

holders. The current model for determining these fees has been in place since 2010. The ADSI now

wishes to re-evaluate this model, with a view to putting in place an updated model.

The current fee model applies generally higher fees to lower-frequency spectrum, owing to its more

favourable propagation characteristics (which tend to result in increased demand for and greater

scarcity of this spectrum). However, recent technological advances (such as in 5G mobile systems)

are leading to increased demand in other, higher-frequency, bands, meaning the historical position

could be changing.

Analysys Mason was appointed by the ADSI to assist in this re-evaluation, drawing on its expertise

in the telecoms sector to understand relevant technology and demand trends, as well as international

benchmarks of licence fee regulation. Where any changes are recommended, we understand that

these must result in a revenue-neutral outcome for the ADSI.

2.1 Overview of Analysys Mason’s approach to the study

After first analysing the current fee model in Denmark, we have gathered evidence, of two main

types, relevant to the consideration of any changes to the fee model:

•

Recent and future demand and technology trends,

which may suggest changes in the nature

of the demand for spectrum

international benchmarks,

focusing on the way in which other countries define similar fee

models.

We have then analysed the available evidence in order to identify potential issues with the current

fee model, identify potential approaches to addressing these issues, and through consideration of the

likely implications of such changes, make recommendations for an updated fee model.

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Analysis of the Danish spectrum fee model | 9

We provide some further detail on the types of evidence and our approach to analysing it within the

sub-sections below.

2.1.1 Identification of demand and technology trends

One component of our analysis is the identification of historical and future demand and technology

trends that may influence the fees that should be imposed for different frequency bands, as well as

the categorisation of frequencies into frequency bands (i.e. the ‘band breaks’).

Our analysis in this area also draws in part from a 2020 study carried out by Analysys Mason on

behalf of the DEA (now ADSI) entitled “Spectrum needs for future radio services and the licensing

of fixed links in Denmark”. This study examined the historical changes in spectrum use and market

demand in Denmark, as well as known and expected future developments likely to affect future use.

Another key source for our analysis of trends is the known and expected agenda items for the next

two World Radiocommunications Conferences (WRCs). We draw on the results of WRC-19 as well

as the proposed agenda items for the next conference, WRC-23, and expectations for WRC-27, in

identifying international developments in spectrum assignment.

2.1.2 International benchmarking exercise

Another major component of our analysis of the ADSI’s current fee model is international

benchmarking of approaches to setting spectrum licence fees in other markets that are either

somewhat comparable to Denmark, or are otherwise interesting in relation to their approach to

setting spectrum fees. We have benchmarked seven European countries, namely: Norway, the UK,

Ireland, Finland, the Netherlands, Malta and Germany. Germany, which is not generally a good

comparator for Denmark in this context, is considered only in part, with particular focus on its

licensing of private, local 5G networks. The other six markets are considered in greater detail.

2.1.3 Analysis of evidence to propose changes to the spectrum fee model in Denmark

Based on the evidence gathered, we have analysed the appropriateness of the current Danish fee

model and have developed a set of recommendations for changes. These recommendations take into

account specific points identified by the ADSI in its scope of work:

•

consideration of removing the fixed fee component

considerations for licensing at sea for geographical areas within the Danish Exclusive Economic

Zone (EEZ)

means to encourage efficient use of PMR spectrum in light of technological developments.

To ensure our recommendations remain revenue-neutral, Analysys Mason has developed a simple

model in Microsoft Excel, based on partial 2022 data provided by the ADSI, to calculate total

spectrum licence fees that would be payable based on current-year demand under both the current

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Analysis of the Danish spectrum fee model | 10

and proposed alternative fee models. Our recommendations are thus tested within this model to

ensure neutrality of revenue is (roughly) achieved.

2.2 Structure of the report

The remainder of this report is laid out as follows:

•

Section 3 describes the current fee model in Denmark

Section 4 sets out the demand and technology trends identified

Section 5 details the results of the international benchmarking exercise

Section 6 analyses the evidence gathered in Sections 4 and 5 to propose changes to the current

fee model

Section 7 describes the implications of the changes recommended in Section 6 in the context

of revenue neutrality

Section 8 provides our overall conclusions and recommendations, alongside further

considerations for the ADSI.

The report includes two annexes containing supplementary material:

•

Annex A includes details of the variable fee class structure in Denmark

Annex B lists the foreign exchange rates used throughout this report.

Note that we do not seek to ensure revenue remains exactly neutral, since this may create a somewhat

artificial constraint on the nature of any recommended changes (for example, band breaks or band

weighting factors needing to be set at unrounded numbers, which could create artificial complexity).

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3 Fee model in Denmark

The existing licence fee model in Denmark consists of two parts: a variable component and a smaller

fixed component. The fees imposed vary depending on the type of licence and are republished

annually, although the fees imposed have not changed in recent years. There is currently no

mechanism for automatic adjustment for inflation, resulting in an effective reduction in fees in real

terms over time.

Licences are allocated to one of nine fee classes (or groups) for the purposes of calculating the

variable fee component. Fees imposed on fee classes 2 and 3 are calculated on the basis of the

number of base station positions (‘positions’) operated by the licensee, while fee classes 1 and 4–9

are calculated for the licence as a whole and do not depend on the number of positions. The allocated

fee class depends both on the technology and the geographical scope of the licence, while variation

in the frequency of assigned spectrum is accounted for within the fee classes. In summary, each

frequency band is assigned a ‘band-value factor’ that is used to weight the fee appropriately between

frequency bands in light of variation in the usefulness of different frequencies.

The sectors within the scope of our study (public mobile, broadcasting, PMR and fixed links) can

fall into a range of fee classes, as shown in Figure 3.1, although in practice each sector is largely

contained within one or two fee classes. For PMR 99% of fees are collected from fee class 3, while

for fixed links approximately 32% and 68% of variable fees are collected from classes 1 and 2

respectively.

The variable fee model for all nine classes is detailed in Annex A.

Figure 3.1: Matrix relating spectrum licence use and fee class [Source: ADSI

, 2022]

Public mobile

Class 1:

Class 2:

Public mobile

services

N/A

Broadcasting

N/A

PMR

LMR

(nationwide)

N/A

Fixed links

(above 3GHz)

Fixed links

(above 3GHz)

that are licenced

per position

N/A

Class 3:

N/A

PMR (fixed

positions or

geographical

area)

Video links

N/A

Class 4:

Class 5:

Class 6:

Class 7:

N/A

Digital TV

DAB (VHF)

FM networks

N/A

‘New fee structure.doc’, provided by the ADSI

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Public mobile

Class 8:

N/A

Broadcasting

FM radio that

are licenced per

position

N/A

PMR

N/A

Fixed links

N/A

Class 9:

N/A

The total fee for a given licence is then calculated as the sum of the fixed and variable fee

components:

��

where Fee

fixed

is fixed at DKK600 per licence. According to revenue data provided by the ADSI for

2021, fixed fees made up only around 4% of the total fee paid by licensees.

Analysys Mason has developed a simple model on the basis of information provided by the ADSI

regarding the number of positions and licences to calculate the overall revenue expected from the

existing licence structure in 2022. This model is used firstly to reconcile the expected fees for 2022

with actual fees imposed in 2021, and secondly to analyse the impact of any proposed changes to

the fee model to ensure revenue neutrality. The results generated by this model for January–May

2022 are shown in Figure 3.2. Any delta between the model results and the full-year 2021 results

provided by the ADSI are assumed to be as a result of the 2022 data only applying from January to

May, as well as inherent year-to-year variations.

Figure 3.2: Total modelled value of fees per fee class and per ADSI categorisation [Source: Analysys

Mason, 2022]

Class

Total

Fixed links

2 601 159

5 627 570

22 689

8 251 418

PMR

42 483

2 885 744

2 193

2 930 420

Saerlige

67 407 042

1 534 076

530 768

51 243

15 799 025

138 233

352 199

261 764

4800

86 079 150

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Analysis of the Danish spectrum fee model | 13

4 Demand and technology trends of relevance

4.1 Current and future frequency use in Denmark

In this section we summarise the recent trends in each of the sectors of interest in Denmark since

the fee model came into force in 2010. We focus particularly on historical changes in spectrum use

and market demand, as well as known or expected future developments that are likely to affect use

over the remainder of this decade.

This section is based in part on our previous report for the ADSI entitled: “Spectrum

needs for future

radio services and the licensing of fixed links in Denmark”.

4.1.1 Public mobile networks

Out of the sectors of interest, public mobile telecoms has arguably undergone the most significant

transformation over the last decade due to the development and adoption of 4G, and latterly 5G

technology. 5G use is expected to continue to increase rapidly over the next five years as coverage

grows and subscribers move from 4G to 5G. Additional demand is expected to be driven by a

plethora of innovative use cases, enabled by high data speeds, low latency and reliable connections.

Data usage in Denmark is well above the Western European average for data usage per connection

suggesting that there could be high demand for faster data services and 5G. In the last five years,

mobile data usage per connection tripled from 5.52GB per month in 2017 to an estimated 17.84GB

per month in 2022, and is expected to grow further to 31.55GB per month by 2025.

5G is widely expected to be the main technological development in the medium term for the public

mobile sector. Its increasing use by MNOs will have a significant impact on the demand for spectrum

and requirements for access to new frequency bands.

Spectrum availability for public mobile telecoms in Denmark is currently good by international

standards, with all mobile operators able to offer competitive services over a wide coverage area,

using multiple licensed bands. All four main operators launched commercial 5G services in late

2020. The DEA (now ADSI) auctioned several new mobile bands in its 2021 multiband auction

with TDC, Hi3G and TT-Netavaerket

being awarded various spectrum blocks in the 1500MHz,

2.1GHz, 3.4–3.8GHz and 26GHz bands. The same three operators were also awarded spectrum in

the February 2019 auction, namely blocks in the 700MHz, 900MHz and 2.3GHz bands.

As a result, many 5G bands have already been made available in Denmark through various auctions,

including the 700MHz, 3.4–3.8GHz and 26GHz bands. The European 5G Action Plan (5GAP)

identifies these as the 5G pioneer bands in Europe. In the near future additional mid-band spectrum

https://ens.dk/en/our-responsibilities/spectrum/auctions

TT-Netavaerket is a joint venture between Telia and Telenor to operate a shared network with spectrum

pooling.

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Analysis of the Danish spectrum fee model | 14

(1–24GHz) may be required to meet demand for additional capacity and provide new data intensive

services.

Increasing demand for spectrum that supports the delivery of high-capacity 5G services is expected

to require identification of further spectrum for mobile use over the next five to ten years. The full

range of applications and services that are expected to be made available using 5G networks will

require the use of bands in different frequency ranges in order to ensure a technically efficient

deployment. For coverage purposes, 5G networks will use low-range frequency bands (such as

existing mobile bands at 700MHz and 800MHz, but potentially also lower frequencies), but they

will also need access to mid-range frequency bands (e.g. 3.4–3.8GHz) to provide sufficient wide-

area capacity. In addition, high-frequency bands (mmWave bands such as 26GHz) will provide very

large contiguous bandwidths to meet demand for high broadband speeds in localised areas.

Aside from the 26GHz band, a number of other mmWave bands were identified for 5G use at WRC-

19, for which future uses should also be considered. In addition, further frequency bands are being

considered for study at WRC-23. This will be discussed further in Section 4.2.1.

Private networks

As enterprises increasingly undergo process digitisation and digital transformation the demand for

private (on-premise, or area-wide) wireless networks has increased. These private networks typically

operate on a small scale: spectrum resources are managed directly by the enterprise, and can be

designed and used to address specific enterprise or industrial needs. Several alternative technologies

may be used by private networks, including LTE, and/or 5G, depending on spectrum availability.

Some of the applications envisaged for these private wireless networks might require higher speed

connectivity, and/or low latency, and hence private 5G networks are emerging to cater for

applications such as remote control of machinery, automation and real-time video applications.

In Denmark, all MNOs already offer different narrowband IoT solutions to specific vertical sectors

utilising technologies including narrowband IoT (NB-IoT) on 4G networks. NB-IoT is designed to

cater for lower bit rate applications such as wireless sensors, energy meters, etc. Although no

spectrum has been made available specifically for enterprises to operate their own private networks,

there is a leasing obligation applied to spectrum in the 3740–3800 MHz range licensed to TT-

Network. This requires the licence holder to make the spectrum available to parties wishing to

operate private networks on regulated terms for the first four years of the licence period.

Where some European regulators have made specific spectrum assignments for private 5G networks,

several band options have been considered for this, primarily:

•

parts of the 3.4–3.8GHz band (e.g. 3.7–3.8GHz in Germany and Sweden)

spectrum above 3.4–3.8GHz (e.g. 3.8–4.2GHz)

spectrum in mmWave bands such as 26GHz and/or in licence-exempt bands including new

bands such as 66GHz

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Analysis of the Danish spectrum fee model | 15

•

parts of lower-frequency bands if not used by public mobile networks, such as parts of the

1800MHz or 2.3GHz bands.

Guidance from the European Commission’s Radio Spectrum Policy Group (RSPG) now

recommends that administrations consider use of the 3.8-4.2GHz band for ‘local vertical

applications’

4.1.2 Broadcasting

Both the 700MHz and 800MHz bands have been reallocated from broadcasting to public mobile use

in Denmark, with the former band being auctioned in 2019, as noted in Section 4.1.1. A similar

reallocation process has occurred (or is occurring) across Europe. The Lamy report recommends

that the remainder of the 470–694MHz band continue to be used in Europe until at least 2030 for

TV broadcasting.

In Denmark, the whole of the 470–694MHz range is currently used to deliver digital terrestrial

television (DTT) using five multiplexes (MUXs), and the latest (DVB-T2) transmission technology,

with MPEG-4 compression. Existing commercial DTT and public service broadcasting licences

expire in 2030, requiring a decision to have been taken on the future of the 470–694MHz band.

Reallocation before this date is unlikely, however.

Analogue and digital radio broadcasting are also important components of the broadcasting market

in Denmark, with FM analogue radio being broadcast on frequencies between 87.5MHz and

108MHz and AM analogue radio being broadcast on longwave. Digital audio broadcast (DAB) is

also present in Denmark, and since 2017 has been broadcast using VHF spectrum. There are

currently no plans to discontinue FM broadcast, not least due to large amounts of investment by

broadcasters following a re-tendering of all local radio in 2016.

4.1.3 PMR

Businesses globally have almost universally been increasing their use of data and digital applications

to improve productivity, operational efficiency and communication. To a significant extent, the

associated increase in data traffic has been met by commercial public mobile networks, and in future

may potentially be serviced by private 5G networks.

Despite this, PMR (and LMR) can provide attractive options for businesses looking for tailored

services or a greater degree of control over their network. Future transport systems could also use

LMR spectrum, both for operational use and for delivering wireless voice and data connectivity for

their users.

https://rspg-spectrum.eu/wp-content/uploads/2021/06/RSPG21-

024final_RSPG_Opinion_Additional_Spectrum_Needs.pdf

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In Denmark, most PMR licences are issued in the 435–472MHz band, followed by the 148.5–

255MHz band

. We expect the overall demand for PMR spectrum to remain broadly stable.

Traditionally, the LMR sector was dominated by analogue systems (i.e. analogue LMR or MPT1327

trunked radio), with the use of digital solutions (such as digital mobile radio, or DMR and dPMR)

becoming more widespread in recent years. Enhanced modulation techniques, increased spectral

efficiency, interworking with legacy analogue and optimisation of the total cost of ownership have

been key drivers of this migration.

Cellular technologies have also evolved to provide LMR functionality, and to provide M2M and IoT

connections. One benefit of LMR technologies traditionally has been the wide-area coverage that

can be provided via a single base station using VHF or UHF frequencies. However, cellular

technology has also been standardised to use selected UHF bands. 3GPP at its meeting “RAN 84”

has identified additional IMT bands below 500MHz, including 410–415/420–425MHz (Band 87)

and 412–417MHz and 422–427MHz (Band 88) in addition to the 450–470MHz (Bands 31, 72, 73).

Because of favourable propagation characteristics, new use cases for NB-IoT are to be expected in

this frequency range.

4.1.4 Fixed links

Fixed links are primarily used by MNOs to provide backhaul and resilience in public mobile

networks. As data traffic carried by public mobile networks increases, increasingly large fixed-link

channel bandwidths are required to provide increased backhaul capacity.

Other potential users of fixed services are the energy and utilities sectors in Denmark, for activities

such as carrying data to monitor water or energy distribution equipment, gas compressors, pumping

stations and sewage treatment plants.

5G is expected to drive further demand from MNOs for fixed-link spectrum as the demand for data

capacity increases. In parallel, as macro and small cells become more ubiquitous, the distance

between sites requiring mobile backhaul diminishes, increasing the usefulness of high-frequency

spectrum thanks to its potential for high-bandwidth but low-penetration applications. It should be

noted that while, in general, MNOs prefer to use fibre connectivity for backhaul, fixed links will

continue to play an important role in areas where fibre is not yet available or is prohibitively

expensive to install, enabling more rapid 5G deployment.

In Denmark, we understand a large number of fixed links are currently issued in the 17GHz and

22GHz bands. However, we expect the demand for higher-frequency bands will increase in the

medium term, as demand for data capacity increases.

Internationally, there have been various technological developments related to the use of the 60GHz

and 70–80GHz bands. It is likely that in the future, high-frequency bands (>100GHz) will need to

Based on previous analysis in the “Spectrum

needs for future radio services and the licensing of fixed links

in Denmark”

report

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Analysis of the Danish spectrum fee model | 17

be considered for use to meet capacity requirements. Regulators and the fixed links industry are

considering alternative bands for fixed services, such as the 92–95GHz, 95–114.5GHz and 130–

174.8GHz bands. Additionally, a number of high-frequency bands were allocated at WRC-19 for

the implementation of land mobile plus fixed services, including the 275–296GHz, 306–313GHz,

318–333GHz and 356–450GHz bands, as noted in Section 4.2.2.

4.2 International developments that may affect future spectrum use

WRC is held every 3–4 years, with the most recent one, WRC-19, taking place at the end of 2019.

These conferences are used to decide on alignment and changes in spectrum use internationally and

may have significant impact on European frequency assignments. The next WRC, WRC-23, will

take place in late 2023. As a result of these timings, information presented in our previous report to

ADSI, “Spectrum

needs for future radio services and the licensing of fixed links in Denmark”,

still up to date. We summarise the salient points below.

4.2.1 International developments affecting public mobile

A total of around 15GHz of globally harmonised mmWave spectrum was identified at WRC-19 for

mobile use, intended for 5G, compared to around 1.9GHz of bandwidth before. Spectrum in the

26GHz, 40GHz and 66GHz ranges was identified for mobile services applicable in Europe:

•

24.25–27.5GHz (global)

37.0–43.5GHz (global)

45.5–47GHz (mainly outside Europe)

47.2–48.2GHz (mainly outside Europe)

66.0–71GHz (global).

At WRC-19, new agenda items for WRC-23 were determined and include a number of studies:

•

To identify 3.3–3.4GHz (Regions 1 and 2), 3.6–3.8GHz (Regions 1 and 2), 4.8–4.99GHz

(globally), 6.425–7.025GHz (Region 1), 7.025–7.125GHz (globally) and 10.0–10.5GHz

(Region 2) for IMT, including possible additional allocations to the mobile service on a primary

basis.

For the use of HAPS as IMT base stations (HIBS) in the mobile service in selected frequency

bands below 2.7GHz already identified for IMT, on a global or regional level.

On the potential use of IMT technology for fixed wireless broadband in the frequency bands

allocated to the fixed services on a primary basis, in accordance with Resolution COM6/18

(WRC 19).

To review the spectrum use and spectrum needs of existing services in the 470–960MHz band

in Region 1, including Europe.

•

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We expect the outcome of WRC-23 to potentially play a key role in extending the 5G mid-band

range (1–24GHz).

6G is expected to emerge as the successor to 5G in the late 2020s or early 2030s, following the

typical ten-year release cycle of successive mobile generations. 6G is expected to provide data

speeds over 1Tbit/s and latencies below 0.1ms, although research is still under way globally into

precise characteristics and requirements. 6G is likely to require a broad range of spectrum, including

existing low bands already supported by current generations of mobile technology specification

(within the range from 380MHz–1GHz), mid-band (1–24GHz) and high band (24–275GHz). A

number of candidate bands are under consideration by stakeholders, although given the uncertainty

over what the final state 6G will look like we will not consider these further in this report, outside

of bands discussed in past and upcoming WRCs.

4.2.2 International developments affecting fixed links

Some spectrum currently allocated to fixed links is increasingly being considered for other uses,

including public mobile and HAPS systems. As a result, spectrum allocated to fixed links would

become more limited, requiring fixed links to be migrated to other frequency bands.

Internationally, there have been various technological developments related to the use of the 60GHz

and 70–80GHz bands. It is likely that in the further higher-frequency bands (>100GHz) will be

considered into the longer term to meet capacity requirements for fixed services. Taking account of

ITU-R studies, regulators are considering alternative bands for fixed services, such as the 92–

95GHz, 95–114.5GHz and 130–174.8GHz bands.

WRC-19 introduced land mobile and fixed service allocations into a number of high- frequency

bands for fixed links, namely the 275–296GHz, 306–313GHz, 318–333GHz and 356–450GHz

bands. Although there is currently no commercially available equipment to use these bands

commercially, allocations have been made to encourage experimentation, and potential commercial

development. The potential applications of these so-called ‘Terahertz’ (THz) bands are broad,

including real time sensing and imaging, as well as communications-type applications.

Given the loss of spectrum below 30GHz to mobile use (e.g. 26GHz), it is expected that the ADSI

will see increased demand for existing fixed link bands between 30GHz and 80GHz.

4.3 Analysis of technology and demand trends

In this subsection we have analysed the technology and demand trends identified in Sections 4.1 and

4.2 in relation to the band breaks in the current fee model. A summary of the considerations to be

taken into account as a result of existing and future frequency use in Denmark, as well as

international developments, is presented in Figure 4.1.

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Figure 4.1: Impact of recent international developments on future frequency allocations by sector of

interest [Source: Analysys Mason, 2022]

Sector of

interest

Public

mobile

Consideration of bands for future use

Future assignment of spectrum identified for public mobile use in

Denmark/Europe at WRC-19:

•

24.25–27.5GHz

•

37–43.5GHz

•

66–71GHz

Other bands considered in the EU:

•

3.8–4.2GHz

For study at WRC-23:

•

470–960MHz

•

3300–3400MHz

•

3600–3800MHz

•

4800–4990MHz

•

6425–7025MHz

•

7025–7125MHz

Broadcasting

PMR

Fixed links

No change in future allocations expected in the medium term, but possible

reduction in allocation within the 470–694MHz band post-2030.

No change in future allocations expected in the medium term

Identification of public mobile bands at WRC-19 may affect existing fixed links:

•

24.25–27.5GHz

•

37–43.5GHz

•

66–71GHz

Some public mobile bands for study at WRC-23 may affect existing fixed links:

•

6425–7025MHz

•

7025–7125MHz

A number of high-frequency bands were identified at WRC-19:

•

275–296GHz

•

306–313GHz

•

318–333GHz

•

356–450GHz

Detailed discussion of each sector as well as our resulting overall recommendations for appropriate

band breaks are detailed in Section 6.2.1.

470–694MHz is the relevant part under consideration for further allocation to mobile services, with the

700MHz, 800MHz and 900MHz bands already assigned for mobile use in Denmark

Already assigned for mobile use in Denmark and many other European countries (part of the European 5G

pioneer band from 3.4–3.8GHz)

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5 International benchmarking of spectrum licence fee models

5.1 Summary of key findings

As part of our analysis of the spectrum fee model in Denmark, we have considered international

benchmarks of approaches to setting spectrum fees in seven other markets: Norway, the UK, Ireland,

Finland, the Netherlands, Malta and Germany. Germany is considered only in part, with a focus on

the approach adopted in the 3.7–3.8GHz band for the licensing of private 5G networks, whilst the

other benchmark countries are considered in more detail owing to interesting features of their

spectrum fee models, and/or their similarity to the Danish market.

Spectrum licence fees are set using a wide variety of methods across the benchmarked countries, as

shown in Figure 5.1.

The UK and Ireland both take an approach of setting licence fees individually depending on the

nature of the use under consideration. In both cases, auctions are used to assign frequencies for

public mobile use. In the UK, an auctioned licence has an initial licence term in which no annual

fees are imposed, and thereafter, annual licence fees are set based on the opportunity cost of

assigning spectrum to the current licensee in a system known as Administrative Incentive Pricing

(AIP). This system is also applied to some other licence categories (e.g. fixed links), where the

regulator deems there to be excess demand for licences (i.e. scarcity) and is intended to ensure the

spectrum is used efficiently. In cases where AIP is not applied, charges are levied on the basis of

administrative cost recovery. In Ireland, the approach is slightly different to the UK for auctioned

spectrum, and public mobile operators pay an upfront fee (determined by the auction), and a

spectrum usage fee (SUF), which is index-linked. For other categories of use in Ireland (e.g. fixed

links), fees are determined based on the frequency band and bandwidth, taking account of factors

such as congestion.

Finland’s approach to licence fees is particularly noteworthy, as the regulator sets licence fees

according to a single unified formula with different weighting factors used to differentiate between

spectrum frequencies, technology and geographical scope.

Norway and the Netherlands use charges solely as a means of administrative cost recovery, but their

treatment of various band values/breaks and technologies means they are informative examples. In

Norway, the total amount of cost to be recovered is determined and, after subtraction of various

technology-specific fixed charges, is then divided between licensees according to weights assigned

on the basis of bandwidth and population coverage. In the Netherlands, charges are set annually by

the regulator based on its costs and consist of a one-off fixed-charge component and an annual

charge component.

Most benchmarked countries adopt an automatic inflationary adjustment mechanism, based on

either actual incurred costs (in the case of administrative cost recovery) or the country’s consumer

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Analysis of the Danish spectrum fee model | 21

price index (CPI). The notable exceptions to this are Finland and Ireland (excluding public mobile

fees).

Figure 5.1 provides a summary of the spectrum fee model used in each of our six main benchmark

countries (excluding Germany).

Figure 5.1: Summary of licence fee/charge approaches by country [Source: Analysys Mason, 2022]

Primary

purpose of

fees/charges

Minimum fee

charge/fixed

fee or charge

component

Yes

Fixed

component of

‘direct price’

licence

charge

Unified

fee/charge

model

Light

licensing

Inflation

adjustment

Geographical

scaling

Norway

Administrativ

e cost

recovery

Partly,

charges

consist of a

variable

charge

component

which is

unified across

different

types of use

Licence fees

are set

individually

for each type

of use (or

licence in the

case of public

mobile)

Licence fees

are set

individually

for each type

of use (or

licence in the

case of public

mobile)

Yes

All licence

fees are

determined

according to a

single unified

formula

Yes

Cost-

dependent

Yes

Population

scaling

Efficient

spectrum use

Yes

A minimum

fee applies to

most uses

Yes

CPI

Yes

For fixed

links,

depending

on pop.

density of

area

covered

Ireland

Efficient

spectrum use

Yes

A fixed fee

component

applied to

most uses

Public

mobile only

(using CPI)

Finland

Efficient

spectrum use

Yes

A minimum

fee applied to

all uses

Yes

Population

scaling

It seems to be the case that even where it is not the primary objective, most regulators do include recovering

their own administrative costs as one of the objectives in setting spectrum fees

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Primary

purpose of

fees/charges

Minimum fee

charge/fixed

fee or charge

component

Yes

Through a

one-off

charge for all

licences

Unified

fee/charge

model

Light

licensing

Inflation

adjustment

Geographical

scaling

Nether

-lands

Administrativ

e cost

recovery

Licence

charges are

set

individually

for each type

of use (or

licence in the

case of public

mobile)

Licence fees

are set

individually

for each type

of use

Yes

Cost-

dependent

Yes

By area

Malta

Efficient

spectrum use

Yes

A fixed fee

component

applies to

most uses

5.1.1 Spectrum band breaks

Of the benchmarked countries, all use spectrum band breaks analogous to those in Denmark for at

least one of the sectors of interest (with the exception of Malta), although only Norway and Finland

define these for types of use other than fixed links. In all of these countries the band breaks are

generally spaced further apart at higher frequencies, reflecting the higher availability of spectrum at

these frequencies.

In Norway, there are relatively few band breaks for the usage-specific charge component, covering

a bandwidth of 1GHz, 4.15GHz, 3.35GHz and 11.5GHz in order of increasing frequency across five

separate bands (the final band represents all frequencies greater than 57GHz so does not have a

bandwidth). The technology-neutral charge component is only defined for frequencies under

2.2GHz, and is highly granular, covering 15 sub-bands within this frequency range with 12 different

bands covered in the sub-1GHz range. In Denmark, only two sub-bands are defined in the sub-1GHz

range.

In the UK, only fixed links are subject to specific band breaks, with 13 generally evenly spaced

frequency bands covering frequencies from 1.35–57GHz. The same is true in Ireland, although here

the regulator defines only five frequency bands covering the full spectrum. For PMR in the UK,

bands are grouped according to ‘popularity’ rather than using band breaks (for example, highly

popular, medium popular, least popular).

The Netherlands takes a similar approach to Ireland, with four frequency bands defined for fixed

links.

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In Finland, the regulator defines 17 band breaks covering all available technologies. The interval of these

band breaks varies between 28MHz and 15.9GHz, increasing steadily as the frequencies increase. There

are a total of nine bands defined in the sub-1GHz range, compared to Denmark’s two.

These results suggest that Denmark’s current system of defining frequency band breaks for each

technology/sector of interest is broadly aligned with international standards. It should be noted

however that Denmark defines comparatively few spectrum bands in comparison to benchmarked

countries and in particular the fee model lacks granularity in the sub-1GHz and >33GHz segments

of the spectrum. Compared to Norway and Finland, with 12 and 9 bands respectively defined in the

sub-1GHz band, the fee model in Denmark may have scope to increase the granularity of its

spectrum bands in this frequency range. The implications of this will be considered further in Section

5.1.2 Spectrum band factors and values

In general, where benchmarked countries provide granularity in the 0–5GHz range, the spectrum

band values first increase then decrease as the frequency of the band gets higher, in line with the

existing band-value factors in Denmark where fees either increase or remain flat in the sub-1GHz

region. The frequency of the ‘peak’ in spectrum band values can vary significantly between

jurisdictions, however.

•

In Norway, the frequency-dependent band value peaks in the 174–240MHz band (which we

consider unlikely to be an optimal approach). This is slightly lower than Denmark’s peak in the

300MHz–1GHz band, although accurate comparison is difficult due to the relatively large

frequency bands defined in Denmark in the sub-1GHz range, as noted in Section 5.1.1.

Direct comparison to the UK is challenging as frequency bands are not defined for sub-1GHz

fixed links, although the general trend of decreasing band values still applies at higher

frequencies. The application of AIP in bands where there is scarcity also means that fees in the

UK are not just based on band factors but also on congestion within a band.

The same is true of Ireland, where there is also no granularity for sub-1GHz fixed links. Again,

the general trend of decreasing band values for higher-frequency bands holds true. It should be

noted that in Ireland fees also depend on the congestion within a band, resulting in the peak

spectrum band value lying in the most highly congested bands.

In Finland, frequency band values peak in the range 174–862MHz, broadly in line with

Denmark’s peak, before decreasing at higher frequencies.

In the Netherlands, frequency bands are only defined up to 150MHz making comparison

difficult, although frequency band values do increase up to this maximum.

In Malta, licence fees tend to be imposed irrespective of frequency band, with the exception of

public mobile networks where frequency bands up to 1800MHz are imposed at a flat rate.

•

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Analysis of the Danish spectrum fee model | 24

The general trend of Denmark’s frequency bands therefore shows reasonable overall alignment with

benchmarks, particularly the treatment of the sub-1GHz bands. However, there are some differences

that are investigated further in Section 6.

To compare the relative magnitude of spectrum band values in Denmark and the benchmarked

countries we have compiled a number of illustrative licence fees/charges in Figure 5.2. Where

applicable, the licences have been assumed to be nationwide. In the case of Norway, the variable fee

component cannot be calculated due to its dependence on all licences issued in a single year, which

is not published by the regulator.

Figure 5.2: Example licence fees/charges by country (DKK) [Source: Analysys Mason, 2022]

Example licence Denmark

DTT

Assumes: one

network, 100

transmitters, one

channel, 1000W

transmitters

Fixed fee:

600

Variable fee:

631 913

(scaled

assuming a

multiplex of

five

channels)

Fixed fee:

Norway

584 659 +

variable

charge

component

326 927

(scaled

assuming

multiplex

of five

channels)

Ireland

N/A

(based on

licensee’s

annual

revenue)

Finland

N/A

(determin

ed on a

network-

by-

network

basis)

Nether-

lands

One-off

charge:

4976

Annual

charge:

654 540

Malta

43 314

PMR

Assumes: one

600

channel, national

Variable fee:

licence, UHF band

2 820

I, 100 mobile

radios and 10

base stations

PMR

Assumes: as

above except for

a local licence

with five mobile

radios and one

base station

Fixed link

Assumes: one

point-to-point link,

20GHz band,

100MHz

bandwidth, 20km

distance

Fixed link

Assumes: as

above except at a

Fixed fee:

600

Variable fee:

25 744 +

variable

charge

component

21 520

18 163

5 736

One-off

charge:

1629

Annual

charge:

32 154

21 630

2736 +

variable

charge

component

(proportional

to population

covered)

1103

217

1145

319

One-off

charge:

1629

Annual

charge:

3771

1298

Fixed fee:

600

Variable fee:

1100

11 477

8368

6938

One-off

charge:

3883

Annual

charge:

915

6917

Fixed fee:

600

Variable fee:

1103

28 311

11 157

10 407

One-off

charge:

3883

6917

This variable fee component varies by year and the amount is not published. However, as a whole, the

variable fee component makes up about 65% of revenue under the Norwegian spectrum fee model.

Ref: 8868699659-354

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Analysis of the Danish spectrum fee model | 25

Example licence Denmark

frequency of

6GHz

27 700

Norway

Ireland

Finland

Nether-

lands

Annual

charge:

2008

Malta

5.1.3 Inflation adjustment mechanisms

In the UK, licence fees are generally updated automatically in line with inflation, measured using

CPI. Ireland only adjusts public mobile licence fees using CPI, while other uses are not adjusted for

inflation. In Finland, licence fees are instead updated annually by the regulator, although in practice

remain the same across multiple years. In Norway and the Netherlands, where licence charges are

used to recover administrative costs, charges are adjusted based on the actual costs incurred by the

regulator. It can therefore be concluded that four out of the five benchmarked markets provide a

mechanism to adjusted licence fees for inflation.

These results suggest that there may be scope to incorporate an inflation adjustment mechanism into

the Danish licence fee model, given this is widely implemented in other markets. The simplest

approach would be to use CPI, which is published on a monthly basis by Statistics Denmark

. The

implications of this approach will be discussed further in Section 6.

5.1.4 Approach to geographical scaling

All benchmarked countries (except the Netherlands) that employ a geographical scaling component

to licence fee calculations use population as a basis for doing so. The Netherlands, like Denmark,

scales licences on the basis of geographical area covered, likely due to the comparatively high

population density within certain urban centres making population scaling prohibitively expensive

for some use cases.

Adapting the Danish fee model to use population scaling mechanisms in place of area scaling may

provide a more equitable outcome for licensees. Spectrum is generally more valuable for commercial

use when more people are covered, allowing access to a greater share of the country’s market and

resulting in area-limited spectrum being in greater demand over these high population areas. A

population scaling fee model may therefore provide results that are more reflective of the relative

value of the spectrum when compared to an area scaling model. This approach also has implications

for licensing at sea, as a population coverage factor is potentially more reflective of the spectrum

value than the area covered, which may be very large for areas at sea.

However, a change of approach in this area may add some complexity to the fee model. In particular,

the effort involved in transitioning from an approach based on geographical area to one based on

population coverage may be substantial. This may not be worthwhile if there is limited gain.

https://www.dst.dk/en/Statistik/emner/oekonomi/prisindeks/forbrugerprisindeks

Ref: 8868699659-354

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Analysis of the Danish spectrum fee model | 26

In relation to licensing at sea, Norway sets a minimum population coverage factor of 20% for

offshore uses, while Finland sets a minimum population coverage factor of just 5%. Similar

minimum factors could however also be considered for a geographical area coverage approach, with

the minimum automatically applied for licensing at sea. This concept is further explored in

Section 6.

In the remainder of this section, we provide detailed benchmarking results for each of the benchmark

countries studied.

5.2 Norway

Spectrum in Norway is managed by the National Communications Authority (Nkom). Nkom

imposes spectrum licence charges exclusively as a means to fund its own operations, and as such

these charges may be considered to be exclusively focused on administrative cost recovery. Nkom

publishes an updated charge schedule each year to reflect increases in costs.

5.2.1 Spectrum licence charging model

Nkom’s expenditure budget is determined by the state budget and dictates the maximum amount

that Nkom can collect in charges across the sectors it administers. As of May 2022, 40.6% of Nkom’s

annual budget can be collected from spectrum licence holders, with the remainder being collected

from electronic communication network providers, postal service providers and importers of radio

equipment.

Nkom’s charging model for spectrum licence holders consists of a set of charges that are priced

directly by the regulator (‘direct price charges’) and a set that are calculated each year based on the

regulator’s actual costs ('variable charges’). Due to the way in which these charges are structured,

the direct price charges generally incorporate a minimum fixed charge per licence, regardless of the

amount of spectrum licensed, while the charges on individual decisions scales with the amount of

spectrum used, and is not subject to a minimum charge. In practical terms however, it is very unlikely

that charges for individual decisions would fall below a reasonable minimum charge threshold.

Broadcasting, PMR and fixed link licences all fall under the direct price charge component, while

public mobile frequencies are governed by variable charges. In 2020 direct price charges made up

around 35% of charges collected from spectrum licence holders, while variable charges made up the

remaining 65%.

Direct price charge component

PMR systems are charged an annual charge of NOK800 [DKK588] per base station and NOK270

[DKK199] per mobile radio. Each additional frequency channel is charged at NOK420 [DKK309].

Holders of nationwide broadcasting network licences must pay an annual charge of NOK604 860

[DKK444 905] per network, in addition to the charges per transmitter detailed in Figure 5.3. Holders

Ref: 8868699659-354

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Analysis of the Danish spectrum fee model | 27

of licences for non-nationwide broadcasting networks must pay an annual charge of NOK2420

[DKK1809] per network, in addition to the per transmitter charges detailed in Figure 5.3.

Figure 5.3: Broadcasting network charges per transmitter [Source: Nkom

, 2022]

Frequency band

Transmitter

power <50W

(NOK [DKK])

28 530 [20 985]

570 [419]

Transmitter power

50–1000W

(NOK [DKK])

47 550 [34 975]

950 [699]

Transmitter power

>1000W

(NOK [DKK])

95 100 [69 951]

1900 [1398]

Transmitter in frequency

band <30MHz

Transmitter in frequency

band ≥30MHz

Holders of licences for satellite earth stations pay a charge of NOK7260 [DKK5340] per transmitted

frequency band per earth station. Equivalent licence holders operating in Svalbard and Antarctica

must also pay this charge for receiving signals. Radio telemetry licence holders pay a charge of

NOK260 [DKK191] for each transmitter with a power below 0.5W and NOK750 [DKK522] for

each transmitter with a power above 0.5W.

Any other transmission licences that do not fall under the above categories (i.e. that are not satellite

earth or radio telemetry systems) and do not pay the variable charge are charged a charge as

illustrated in Figure 5.4, provided they do not already pay a charge for a given frequency,

polarisation and bandwidth.

Figure 5.4: Charges for other licences [Source: Nkom

, 2022]

Frequency bands the

transmitters use

<1GHz

1–5.15GHz

5.15–8.5GHz

8.5–20GHz

20–57GHz

Bandwidth

<25kHz

25–150kHz

>150kHz

≤2MHz

>2MHz

<25MHz

25–55MHz

≥55MHz

<25MHz

25–55MHz

≥55MHz

<25MHz

25–55MHz

≥55MHz

Charge per transmitter

(NOK [DKK])

740 [544]

980 [721]

1640 [1206]

610 [449]

720 [530]

610 [449]

720 [530]

820 [603]

410 [302]

610 [449]

720 [530]

310 [228]

510 [375]

820 [603]

https://lovdata.no/dokument/SF/forskrift/2017-03-20-386/, Section 13; https://www.nkom.no/om-

nkom/finansiering-av-nkom

https://lovdata.no/dokument/SF/forskrift/2017-03-20-386/, Section 14; https://www.nkom.no/om-

nkom/finansiering-av-nkom

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Analysis of the Danish spectrum fee model | 28

Frequency bands the

transmitters use

>57GHz

Bandwidth

All

Charge per transmitter

(NOK [DKK])

160 [118]

Variable charge component

The variable charge payable by each spectrum licence holder with frequency less than 2170MHz is

calculated by means of a weighting system. The overall charge is calculated as a percentage of

Nkom’s annual budget, minus any charges collected from the direct price charge component.

Despite the purpose of the spectrum licence charges charged by Nkom being to recover

administrative costs, it is still informative to consider the way in which different spectrum bands are

weighted, and therefore valued, by Nkom.

For each licence, a weighted bandwidth value is calculated as the product of both the licence

bandwidth and a weighting factor. This weighting factor consists of a number of components:

��ℎ��

�� ℎ��

��

where f is the centre frequency of the band in which the frequency band is located (see Figure 5.5

for frequency bands). The band weight is determined by Nkom, and is detailed in Figure 5.5 The

population coverage factor is equal to the percentage of the population of Norway that live in the

coverage area for the licence (and is therefore 100% for nationwide licences), with offshore areas

carrying a factor of 20%.

Figure 5.5: Band weights [Source: Nkom

, 2022]

Frequency band

0–30MHz

47–68MHz

137–174MHz

174–240MHz

380–400MHz

400–470MHz

470–694MHz

738–758MHz

703–733 / 758–788MHz

791–821 / 832–862MHz

870–880 / 915–925MHz

880–915 / 925–960MHz

1427–1517MHz

1710–1785 / 1805–1880MHz

Band weight

0.025

0.1

https://lovdata.no/dokument/SF/forskrift/2017-03-20-386/, Section 15

Ref: 8868699659-354

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Analysis of the Danish spectrum fee model | 29

Frequency band

1900–1980 / 2110–2170MHz

Band weight

The first component of the variable licence charge payable by each licensee is calculated as

�� ℎ��

(��) =

where the overall charge refers to 80% of the amount that Nkom has determined it is able to collect

from spectrum licence holders to cover its administrative costs, minus any charges collected as part

of the direct price charge component. Licences above 2170MHz are exempt from this charge

(Spectrum licence charge (I)). The remaining 20% of this value is collected from all licence holders

proportionally to the number of continuous frequency blocks they hold:

�� ℎ��

(

��

) =

�� ℎ��

��

��ℎ�� ℎ

�� ℎ��

�� ℎ�� ℎ ��

The overall variable spectrum licence charge payable by each licensee is then the sum of these two

variable charge components.

5.2.2 Light licensing

Point-to-point fixed links in the 73.625–75.875GHz and 83.625–85.875GHz frequency bands are

subject to a light licensing regime, subject to a number of conditions.

Operators of these fixed

links are required to register the transmitter with Nkom and pay the associated licence charges (see

Section 5.2.1). There are also a number of restrictions on the technical parameters of the

transmission:

•

FDD and TDD are not permitted in the same location.

If using FDD, the use of both high (83.625–85.875GHz) and low (73.625–75.875GHz)

transmission frequencies is not permitted at the same location.

The maximum radiated power is 85dBm. The maximum permitted power supplied to the

antenna is 30dBm. The maximum antenna gain is 38dBi.

The power flux density at the border between Norway and neighbouring states should not exceed

–122.5dBWm

-2

, measured at a reference bandwidth of 1MHz.

•

Nkom also specifies that new use of the frequency band should not interfere with existing registered

use. Nkom provides a pre-populated table of centre frequencies and channel bandwidths which are

permitted for use in the light licensing regime.

https://lovdata.no/dokument/SF/forskrift/2012-01-19-77, Section 5

Ref: 8868699659-354

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5.2.3 Spectrum licence charges for local 5G networks in the 3.8–4.2GHz band

Nkom has designated the 3.8–4.2GHz band for use by local and private 5G networks. Nkom plans

to grant two different types of licence for these networks:

•

Low-power licence:

with flexibility for the licensee to place base stations freely within 50m

from an approved central location. This type of licence would typically be used for indoor

private mobile networks, with transmitters having a maximum radiated power of 24 dBm EIRP.

High-power licence:

with location-defined base stations. This type of licence is intended for

outdoor use covering larger areas, with transmitters having a maximum radiated power of

42dBm EIRP.

•

These licence types may also be combined to cover a larger area.

Nkom will issue licences for up to five years to provide predictability for licensees, but requires that

licences are in use within 12 months of being granted.

Nkom has set a relatively low-charge model for the 3.8–4.2GHz band, with annual licence charges

varying depending on both the type of licence and the licenced bandwidth as illustrated in Figure

5.6. Holders of these licences are exempt from the variable charge component of the licence charge

detailed in Section 5.2.1, reducing the cost burden significantly.

Figure 5.6: Annual licence charges for the 3.8–4.2GHz band (per licence per annum) [Source: Nkom

2022]

Bandwidth

20MHz

40MHz

60MHz

80MHz

Low-power licence

(NOK [DKK])

100 [74]

400 [294]

900 [662]

1600 [1177]

High-power licence

(NOK [DKK])

200 [147]

800 [588]

1800 [1324]

3200 [2354]

5.3 UK

The Office for Communications (Ofcom) is responsible for licensing and management of spectrum

in the UK. Ofcom has adopted a split approach to licence fees, defining two pricing tiers depending

on the anticipated demand for a given portion of spectrum. In cases where it anticipates that there

are no competing demands that cannot be met for a block of spectrum (i.e. no scarcity) it will seek

If the 3.8–4.2GHz band had been otherwise allocated it is expected that Figure 5.5 would have been

expanded to include this band

https://www.nkom.no/hoeringer/horing-av-lokale-5g-nett-i-3-8-4-2-ghz-bandet

Ref: 8868699659-354

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Analysis of the Danish spectrum fee model | 31

to recover administrative costs only. On the other hand, when excess demand is anticipated, Ofcom

will impose a higher AIP spectrum fee based on the opportunity cost of the spectrum used.

5.3.1 Administrative incentive pricing and cost-based fees

Administrative incentive pricing

AIP works on the principle of setting spectrum fees based on their opportunity cost. That is, the

value of spectrum to the best alternative user that is denied access to it. It follows that users should

continue to hold spectrum licences only if they value it more than the AIP fee, thus encouraging

efficient use of spectrum and maximising its benefit to society. The objective of this fee model is to

replicate pricing that would be set via a market mechanism (e.g. an auction) in a well-functioning

market.

AIP is applied at the discretion of Ofcom to spectrum where there is expected to be excess demand

from alternative users/uses. The alternative is that only cost-based charges are applied. Ofcom has

therefore set the cost-based charges to act as a minimum AIP fee.

In general, when setting AIP spectrum fees Ofcom will first identify alternative uses for a given

spectrum band as well as the value associated with each use. Ofcom then uses a ‘least cost

alternative’ (LCA) method to estimate the value of the spectrum in terms of opportunity cost. This

involves estimating the value of a small block of additional spectrum to the average user in terms of

long-term avoided cost. Ofcom then considers a number of additional factors to convert the LCA

value to fees including:

•

the feasibility of alternative uses; and

variations in demand by frequency and geography.

As a final check Ofcom will undertake an analysis of the impact of potential fee proposals to

spectrum users and consumers in order to balance the opportunities and risks of implementing the

proposed fees.

Cost-based charges

Ofcom charges cost-based charges to recover administrative costs where AIP spectrum fees are not

applied. At a simplified level, Ofcom calculates the administrative costs associated with each

spectrum licence class and uses this to determine an appropriate charge to recover its costs.

5.3.2 Spectrum licence fees

Public mobile networks

Licences for public mobile spectrum are generally awarded by means of an auction process.

Licences remaining within the initial periods granted under the award process are not subject to

Ref: 8868699659-354

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Analysis of the Danish spectrum fee model | 32

annual licence fees until those periods expire. Once the initial auctioned term is reached, Ofcom’s

policy is to make licences indefinite, and these become subject to annual licence fees imposed

annually beyond the initial term.

A number of spectrum bands assigned to public mobile operators have now reached the end of their

initial licence term, and hence are now subject to annual licence fees. The 900MHz and 1800MHz

bands that were licenced before the use of spectrum auctions have always been subject to annual

licence fees, which were most recently revised in 2018. Annual licence fees are also now payable in

the 2.1GHz (FDD) spectrum and in some parts of the 3.4–3.8GHz bands

now that the initial 20-

year licences have expired. A number of other auctioned licences, such as in the 40GHz band, will

reach the end of their auctioned term soon.

In setting fees for the 900MHz and 1800MHz bands, Ofcom considered the market value of the

spectrum based on both economic modelling and international benchmarks, resulting in a ‘lump-

sum value’ for the spectrum blocks for a hypothetical 20-year licence. This lump-sum value is then

annualised over a 20-year period, taking into account inflation in the form of CPI.

The payment is

designed to be constant in real terms, so increases in nominal terms over time. The annual licence

fees, expressed in 2018 terms, are:

•

900MHz: GBP1.093 [DKK9.504] million per MHz per annum

1800MHz: GBP0.805 [DKK6.999] million per MHz per annum.

Ofcom used a similar approach when setting licence fees for the 2.1GHz and 3.4–3.8GHz bands,

ultimately setting prices at:

•

2.1GHz: GBP0.561 [DKK4.878] million per MHz per annum (in 2022 terms)

3.4–3.8GHz: GBP0.435 [DKK3.782] million per MHz per annum (in 2018 terms).

Ofcom has deliberately adopted a conservative approach to evaluating the licence fees, stating that

the risks of setting the fees too high significantly outweigh the risks of setting the fees too low.

Broadcasting

Charges for the spectrum used by terrestrial television broadcasting (digital terrestrial television) are

determined by Ofcom on a cost basis

and are summarised in Figure 5.7.

This refers to spectrum that was either auctioned for FWA use in 2003 (3.4GHz), or assigned

administratively (3.6GHz), both parts now owned by Three UK after acquiring UK Broadband. But, Ofcom

recently consulted on extending the Three licence durations to be the same as the 2018 auctioned licences,

meaning Three has to pay a lump sum value rather than ALFs,

Consultation: Aligning licence terms in the

3.4-3.8 GHz band (ofcom.org.uk)

https://www.ofcom.org.uk/__data/assets/pdf_file/0020/130547/Statement-Annual-licence-fees-900-MHz-

and-1800-MHz.pdf

https://www.ofcom.org.uk/consultations-and-statements/category-1/cbfframework

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Analysis of the Danish spectrum fee model | 33

Figure 5.7: TV broadcasting fees [Source: Ofcom

, 2022]

Licence class

National DTT MUXs

Local TV DTT MUX

Northern Ireland DTT MUX

Annual charge (GBP [DKK] per MUX)

188 000 [1 634 637]

23 900 [207 808]

3360 [29 215]

National and local radio broadcasting licences are also charged annual cost-based charges which

depend on the band used for transmission as well as the number of people covered. These charges

are summarised in Figure 5.8.

Figure 5.8: National and local radio broadcasting fees [Source: Ofcom

, 2022]

Licence class

Medium-wave band

Population covered

<100 000 people

>100 000 people

Annual charge (GBP [DKK])

226 [1965]

339 [2948] per 100 000

people covered (rounded

down)

339 [2948]

509 [4426] per 100 000

people covered (rounded

down)

VHF band

<100 000 people

>100 000 people

PMR

Ofcom broadly separates PMR licences into four categories

•

Simple UK light:

allows use of hand-held or mobile radio equipment anywhere within the UK.

Charges for this licence are fixed at GBP75 [DKK652] for five years.

Simple site light:

allows use of a base station in addition to mobile radio stations within a small

area. Charges for this licence are fixed at GBP75 [DKK652] for five years.

Technically assigned:

allows use of a wide variety of PMR equipment in specific frequencies

across a large area. Charges depend on the size of the coverage area, the band used and the

number of 6.25kHz channels used. Individual frequency assignments are coordinated by Ofcom

Area-defined:

allows exclusive use of a frequency across a 50km

grid square, a country or the

whole of the UK. Charges for this licence depend on the size of the coverage area, the band used

https://www.ofcom.org.uk/__data/assets/pdf_file/0025/203929/wireless-telegraphy-regs-2020.pdf, page

https://www.ofcom.org.uk/manage-your-licence/radiocommunication-licences/business-radio/guidance-for-

licensees/business-radio-faqs

•

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Analysis of the Danish spectrum fee model | 34

and the number of 6.25kHz channels used, as summarised in Figure 5.9. Licences in this

category are valid for 12 months and are coordinated by Ofcom.

A minimum charge of GBP75 [DKK652] per licence applies regardless of categorisation.

Figure 5.9: Licence charges for area-defined PMR (GBP [DKK] per 6.25kHz channel) [Source: Ofcom

2022]

Area

High-usage

band

(UHF band I, II

and VHF high

band)

Medium usage

band

(VHF band III

and VHF mid

band)

Low-usage band

(26.225MHz

band,

49.49375MHz

band, VHF band

I and VHF low

band)

825.00

[7173]

689.50

[5995]

40.75

[354]

71.25

[620]

23.25

[202]

98.75

[859]

12.50

[109]

1.25

[11]

Band I

England

Wales

Scotland

Northern Ireland

High population

density area

Medium

population area

Low population

area

2475.00

[21 520]

2068.75

[17 988]

122.50

[1065]

213.75

[1859]

70.00

[609]

296.25

[2576]

37.50

[326]

3.50

[30]

2062.50

[17 933]

1723.75

[14 988]

102.50

[891]

177.50

[1 543]

58.75

[511]

247.50

[2152]

31.25

[272]

3.00

[26]

150.00

[1304]

37.50

[326]

37.50

[326]

37.50

[326]

37.50

[326]

37.50

[326]

12.50

[109]

1.25

[11]

Figure 5.10: Licence charges for technically assigned PMR (GBP [DKK] per 6.25kHz channel) [Source:

Ofcom

, 2022]

Small coverage area

Exclusive

Hig

High pop. area

50.00

[435]

Shared

25.00

[217]

Medium coverage

area

Exclusive

185.00

[1609]

Shared

92.50

[804]

Large coverage area

Exclusive

370.00

[3217]

Shared

185.00

[1609]

https://www.ofcom.org.uk/__data/assets/pdf_file/0018/72144/feecalcdoc.pdf, page 2

UHF stands for Ultra high frequency and covers bands between 300MHz and 3GHz, VHF stands for very high

frequency and covers bands between 30MHz and 300MHz

High, medium and low population areas are defined by Ofcom according to a 50km

grid reference system

https://www.ofcom.org.uk/__data/assets/pdf_file/0018/72144/feecalcdoc.pdf, page 3

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Small coverage area

Exclusive

Medium pop.

area

Low pop. area

High pop. area

High usage band

Medium pop.

area

Low pop. area

High pop. area

Medium pop.

area

Low pop. area

25.00

[217]

18.75

[163]

25.00

[217]

21.25

[185]

18.75

[163]

18.75

[163]

18.75

[163]

50.00

[435]

Shared

18.75

[163]

18.75

[163]

18.75

[163]

18.75

[163]

18.75

[163]

18.75

[163]

18.75

[163]

25.00

[217]

Medium coverage

area

Exclusive

50.00

[435]

23.75

[207]

92.50

[804]

42.50

[370]

20.00

[174]

18.75

[163]

18.75

[163]

185.00

[1609]

Shared

25.00

[217]

18.75

[163]

46.25

[402]

21.25

[185]

18.75

[163]

18.75

[163]

18.75

[163]

92.50

[804]

Large coverage area

Exclusive

75.00

[652]

27.50

[239]

185.00

[1609]

62.50

[543]

22.50

[196]

18.75

[163]

18.75

[163]

370.00

[3217]

Shared

37.50

[326]

18.75

[163]

92.50

[804]

31.25

[272]

18.75

[163]

18.75

[163]

18.75

[163]

185.00

[1609]

Fixed links

The annual spectrum licence fee for a two-way point-to-point fixed link is set by Ofcom according

to the following formula:

��

where –

•

The minimum fee for fixed links is set at GBP75 [DKK652] per annum, and the licence can be

prorated down to the number of months it is valid for (if the period of validity is less than one year).

High-usage band

‘Sp’ is the spectrum price, fixed at GBP88 [DKK765] per 2×1MHz bandwidth for each two-

way fixed link

‘Bwf’ is the bandwidth factor and is equal to the bandwidth (in MHz) of the fixed link, subject

to a minimum of 1MHz and a maximum of 135MHz

‘Bf’ is the band factor and is determined by the frequency band (in GHz), as set out in Figure

5.13

‘Plf’ is the path length factor, and depends on the minimum path length (MPL) (see Figure 5.11)

and the path length (PL) (distance in kilometres) between two fixed points of the link. The

method for calculating the path length factor is detailed in Figure 5.12

‘Avf’ as the availability factor and is determined by the availability of the fixed link (in

percentage terms), as set out in Figure 5.14.

https://www.ofcom.org.uk/__data/assets/pdf_file/0018/72144/feecalcdoc.pdf, page 4

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Analysis of the Danish spectrum fee model | 36

Each additional two-way point-to-point fixed link operating on the same channel is charged at 50%

of the licence fee. Each one-way fixed link is charged at 75% of the licence fee.

The licence fees for fixed links have been set according to AIP principles.

Figure 5.11: Minimum path length (MPL) [Source: Ofcom

, 2022]

Frequency band

1.35–2.69GHz

Frequency band

3.60–4.20GHz

5.92–7.13GHz

7.42–8.50GHz

10.70–11.70GHz

12.75–15.35GHz

17.30–19.70GHz

21.20–23.60GHz

24.50–29.06GHz

31.00–31.80GHz

31.80–33.40GHz

37.00–39.50GHz

49.20–57.00GHz

MPL where the data rate is

<140 Mbit/s (km)

24.5

15.5

9.5

MPL where the data rate is <2

Mbit/s (km)

MPL where the data rate is

≥140

Mbit/s (km)

9.5

5.5

2.5

1.5

MPL where the data rate is

≥2

Mbit/s (km)

Figure 5.12: Path length factor (Plf) [Source: Ofcom

, 2022]

Relationship between PL and MPL

MPL ≤ PL

MPL > PL

Path length factor

Smaller of

�½��/��

and 4

Figure 5.13: Band factors (Bf) [Source: Ofcom

, 2022]

Frequency band

1.35–2.69GHz

3.60–4.20GHz

5.92–7.13GHz

Band factor

1.00

0.74

https://www.ofcom.org.uk/__data/assets/pdf_file/0025/203929/wireless-telegraphy-regs-2020.pdf, page

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Analysis of the Danish spectrum fee model | 37

Frequency band

7.42–8.50GHz

10.70–11.70GHz

12.75–15.35GHz

17.30–19.70GHz

21.20–23.60GHz

24.50–29.06GHz

31.00–31.80GHz

31.80–33.40GHz

37.00–39.50GHz

49.20–57.00GHz

Band factor

0.74

0.43

0.30

0.26

0.17

Figure 5.14: Availability factor (Avf) [Source: Ofcom

, 2022]

Percentage availability

≤99.9%

99.9%–99.99%

≥99.99%

Availability factor

0.7

0.7 + (Availability x 100 – 99.9) × (0.3 / 0.09)

1.0 + (Availability x 100 – 99.99) × (0.4 /0.009)

5.3.3 Light licensing

Some PMR licences are subject to light licensing, specifically UK-wide handheld licences and local

base station licences, as described in Section 5.3.3.

The 73.375–75.875GHz and 83.375–85.875 GHz band is also subject to light licensing for point-to-

point fixed links. A link registration process applies, which is intended as an interim procedure until

Ofcom announces a permanent process for managing the band through an on-line tool. Licences are

granted on a non-exclusive basis and licensees are required to self-coordinate measures to limit

interference. Licence applications incur a charge of GBP50 per link, which includes the licence

charge for the first year if successful. Subsequent years are also charged at a rate of GBP50 per

annum. The 60GHz, 65GHz and 66–71GHz bands are licence exempt for fixed link use.

5.3.4 Spectrum licence charges for local 5G networks

Ofcom provides access to four frequency bands under its Shared Access Licence scheme, namely

the 1800MHz, 2.3GHz, 3.8–4.2GHz and the 26GHz band. Under the Local Access licence scheme,

Ofcom provides access to spectrum already licenced to MNOs in location where they are not using

https://www.ofcom.org.uk/__data/assets/pdf_file/0025/203929/wireless-telegraphy-regs-2020.pdf, page

https://www.ofcom.org.uk/__data/assets/pdf_file/0017/115631/statement-fixed-wireless-spectrum-

strategy.pdf

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Analysis of the Danish spectrum fee model | 38

the spectrum. The 1800MHz and 2.3GHz bands are already licensed by MNOs, but may be licensed

locally in areas where the MNO is not using the spectrum. 390MHz of the 3.8–4.2GHz band has

been reserved for local shared access while low-power indoor uses may be licenced in the 24.25–

26.5GHz band. In the context of local 5G networks, the 3.8–4.2GHz and the 26GHz band are of

most relevance.

Once an application for a local access licence has been submitted, Ofcom consults the MNO to

determine if it has any objection to a shared access licence being granted in the specific location.

Following approval, a fixed licence charge will be payable, depending on the frequency band and

the bandwidth used but irrespective of use case. Licence charges are payable per low-power area

and per medium-power base station. Licence charges for the 3.8–4.2GHz band are listed in

Figure

5.15,

while licence fees for the 26GHz band are set at a flat rate of GBP320 [DKK2782] per licence,

regardless of the bandwidth used. Ofcom cites the purpose of these charges as being to cover its

administrative costs.

Bandwidth

Licence charge per channel per

low-power area/medium-power

base station (GBP [DKK])

80 [696]

160 [1391]

240 [2087]

320 [2782]

400 [3478]

480 [4174]

640 [5565]

800 [6956]

Figure 5.15:

Local

Access Licence charges

for the 3.8–4.2GHz

band

[Source: Ofcom

2022]

2×3.3MHz

10MHz

20MHz

30MHz

40MHz

50MHz

60MHz

80MHz

100MHz

5.4 Ireland

Spectrum licensing in Ireland is the responsibility of the Commission for Communications

Regulation (ComReg). Licence fees are generally fixed at the time of regulation and do not vary to

account for inflation, with the notable exception of public mobile licences. ComReg charges licence

charges to recover administrative costs as well as to encourage efficient use of spectrum.

https://www.ofcom.org.uk/__data/assets/pdf_file/0035/157886/shared-access-licence-guidance.pdf

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5.4.1 Spectrum licence fees

Public mobile networks

ComReg employs a fee model that is unique to each band that is licensed. Annual spectrum licence

fees are set out at the point of licensing and vary depending on the regulation governing the licence.

If a licence has less than one year of validity remaining the licence fee will be prorated down relative

to the number of days in the year it is valid for (or the nearest month in the case of 3G licences).

The licence fees imposed for each band are set out in table Figure 5.16:

Figure 5.16: Mobile spectrum licence fees [Source: ComReg

Frequency band

1900–1980MHz

2020–2025MHz

2110–2170MHz

791–821MHz/832–862MHz

880–915MHz/925–960MHz

1710–1785MHz/1805–1880MHz

Technology

Liberalised use

2022]

Licence fee (EUR

[DKK] per MHz)

63 487

[472 213]

63 487

[472 213]

63 487

[472 213]

108 000

[803 299]

108 000

[803 299]

54 000

[401 649]

Inflation

adjustment

Yes, CPI

Public mobile spectrum licences are generally auctioned, so these fees apply in addition to upfront

auction payments.

Broadcast networks

As a result of the establishment of the Broadcasting Authority of Ireland (BAI), ComReg is not

responsible for issuing broadcasting licences to entities other than the national broadcaster, RTÉ.

The BAI is responsible for issuing all commercial broadcasting licences and charges a levy to

licensees solely as a cost-recovery tool.

This levy is charged as a percentage of licensees’ revenue

on a progressive basis, meaning that licensees with higher incomes will pay a proportionally lower

https://www.comreg.ie/media/dlm_uploads/2015/12/SI340of2003.pdf

https://www.comreg.ie/media/dlm_uploads/2015/12/SI_251_of_2012.pdf

Spectrum fees change in line with the CPI published by the Central Statistics Office

https://www.bai.ie/en/about-us/levy/

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percentage fee. A minimum charge of EUR750 [DKK5578] applies to all licensees, regardless of

income.

PMR

Spectrum licence fees for PMR are imposed annually and are based on the number of radios in a

network. The fee is set at EUR22 [DKK164] per radio plus a fixed charge of EUR22 [DKK164] for

the duration of the licence. There are no specific mechanisms to account for inflation beyond

ComReg updating the fee model.

Fixed links

Licence fees for fixed links are set differently depending on whether the connection is a ‘high-usage

path’ (i.e. where the licensee has five or more radio links). For point-to-multi-point fixed links the

annual fee is four times the equivalent point-to-point fee. All licence holders must pay the full annual

fee, regardless of licence duration. The fee model is set out in Figure 5.17 and Figure 5.18.

Figure 5.17: Annual fee for point-to-point links not on a ‘high-usage path’ (EUR [DKK] per link) [Source:

ComReg

, 2022]

Frequency (F)

< 3.5MHz

<1GHz

1–17GHz

17–37GHz

37–39.5GHz

>39 .5GHz

750

[5 578]

1000

[7 438]

750

[5 578]

550

[4 091]

100

[ 744]

3.5–20MHz

N/A

1100

[8 182]

825

[6 136]

605

[4 500]

110

[ 818]

Bandwidth

20–40MHz

N/A

1200

[8 926]

900

[6 694]

660

[4 909]

120

[ 893]

> 40MHz

N/A

1500

[11 157]

1125

[8 368]

825

[6 136]

150

[1 116]

Figure 5.18: Annual fee for point-to-point links on a ‘high-usage path’ (EUR [DKK] per link) [Source:

ComReg, 2022]

Frequency (F)

< 3.5MHz

<1GHz

1–17GHz

900

[6694]

1200

[8926]

3.5–20MHz

N/A

1320

[9818]

Bandwidth

20–40MHz

N/A

1440

[10 711]

> 40MHz

N/A

1800

[13 388]

https://www.comreg.ie/industry/radio-spectrum/licensing/search-licence-type/radio-links/

Ref: 8868699659-354

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Frequency (F)

< 3.5MHz

17–37GHz

37–39.5GHz

>39 .5GHz

900

[6694]

660

[4909]

120

[893]

3.5–20MHz

990

[7364]

726

[5400]

132

[982]

Bandwidth

20–40MHz

1080

[8033]

792

[5891]

144

[1071]

> 40MHz

1350

[10 041]

990

[7364]

180

[1339]

5.5 Finland

Finland’s telecommunications regulator, Traficom, is responsible for the licensing and management

of spectrum. Traficom imposes an annual spectrum licence fee to licence holders based on both the

economic value of the spectrum as well as the frequency management costs incurred. No automatic

inflation adjustment mechanism is incorporated into the licence fee model.

5.5.1 Spectrum licence fees or charges

General frequency charge

Charges for most spectrum uses are calculated using a single, general formula, with coefficients set

for specific uses and bands. This charge is referred to as the ‘general frequency charge’. The updated

fee model is published annually by Traficom.

The general frequency charge (in euro) is calculated as follows (the EUR1295.50 factor is equivalent

to DKK9636):

�� ℎ��

��

× 1295.50

where B

is the relative bandwidth of frequencies, K

is the frequency band factor, P is the population

coverage factor and S is the basic charge coefficient. The frequency band factor (K

) and the basic

fee coefficient (S) are factors set by Traficom and listed in Figure 5.19 and Figure 5.20 respectively.

The population coverage factor (P) is determined by the proportion of the population of Finland

covered by the licence, and has a minimum value of 0.05.

The relative bandwidth of frequencies (B

) is the ratio of the bandwidth of the licence (B) to a

reference bandwidth (B

ref

), multiplied by a licence quality factor (K

) which is determined by

Traficom:

��

where B

ref

is 25kHz. The values of K

are tabulated in Figure 5.21.

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If licences are granted for a period of less than one year, the general frequency charge is scaled

proportionally to the number of days the licence is valid for, down to a minimum of 25% of the

annual charge. The overall minimum general frequency charge is set at EUR18 [DKK134] for all

licences.

It should be noted that fees for broadcasting are imposed on a per-network basis.

Spectrum licence fees for television broadcasting networks are determined on a network-by-network

basis.

Figure 5.19: Frequency band factors (K

) [Source: Traficom

, 2022]

Band

0–28MHz

28.0–87.5MHz

87.5–108MHz

108–146MHz

146–174MHz

174–380MHz

380–470MHz

470–862MHz

862–960MHz

960–2200MHz

2200–3100MHz

3100–5000MHz

5000–10700MHz

10700–19700MHz

19700–39500MHz

39500–55000MHz

>55000MHz

0.2

0.9

1.5

1.7

1.9

1.4

0.6

0.4

0.3

0.25

0.2

0.1

0.03

Figure 5.20: Basic fee coefficient (S) [Source: Traficom

, 2022]

Licence use

1) radio transmitters in the mass communication network

2) mobile networks other than ultra-broadband mobile networks

2a) high-speed mobile networks

3) the 2GHz terrestrial network of the satellite system

4) authority network (VIRVE)

0.018

0.006

0.018

https://www.finlex.fi/fi/laki/kokoelma/2021/sk20211257.pdf, Annex 2

https://www.finlex.fi/fi/laki/kokoelma/2021/sk20211257.pdf, Annex 3

Ref: 8868699659-354

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Licence use

5) fixed wireless access network radio systems

6) radio stations for ships and aircraft

7) portable aviation radio transmitters

8) personal emergency transmitter (PLB)

9) amateur radio stations with increased transmission power

10) monitoring systems intended for research use with a radiation power of up to 1mW

11) remote control, telemetry and data transmission systems

12) amateur radio transmitters

13) other amateur radio stations requiring a special permit

14) radio microphone transmitters

15) private radio networks (PMR)

16) radio control transmitters

17) paging networks

18) marine radio systems other than ship's radio stations

19) radio link transmitters below 960MHz and voice program link transmitters

20) fixed headset transmitters

0.018

0.001

0.15

0.004

0.4

0.9

0.014

2.1

0.021

3.1

3.8

Figure 5.21: Licence quality factors (K

) [Source: Traficom

, 2022]

Licence use group

1) mobile networks, authority

network (VIRVE), fixed wireless

access radio systems and mass

communication networks

2) radio link transmitters below

960MHz, voice link transmitters,

private radio networks (PMR),

paging networks, remote control,

telemetry and data transmission

systems and marine radio systems

other than ship's radio stations

Sub-categorisation

Nationwide exclusive channel

Nationwide channel for a limited group of users

Local exclusive channel

Local common channel

Nationwide exclusive channel

Local exclusive channel

Nationwide channel for a limited group of users

Local common channel

Nationwide common channel

3) radio control transmitters

Nationwide exclusive channel

Local exclusive channel

Nationwide channel for a limited group of users

Local common channel

Nationwide common channel

0.4

https://www.finlex.fi/fi/laki/kokoelma/2021/sk20211257.pdf, Annex 1

‘

Exclusive’ refers to an exclusive right of use by the licensee in contrast to ‘common’ where other licensees

may operate in the same frequency band. ‘Limited group of users’ generally refers to specific uses such as

police radio

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Licence use group

4) radio link transmitters above

960MHz

5) Radio transmitters and systems

for military radiocommunications

Sub-categorisation

Local common channel

Nationwide common channel

Nationwide exclusive channel

Local exclusive channel

Local common channel

Nationwide common channel

0.01

0.4

6) Other

All channels

Special licence fee for PMR

In the case of PMR an additional multiplicative factor is applied to the general frequency charge

detailed in the previous subsection, and the ratio component (B/B

ref

) of the relative bandwidth (B

)

is modified by a cubic root. The modified formula in this case is:

��

× 1295.50 ×

��

6��

�� ℎ��

�½

��

where K

(the system factor) is determined by the number of transmitters in the network. The

number of transmitters is allocated to a pre-determined stepped band then multiplied by 0.25, as

illustrated in

Figure 5.22

Figure 5.22: System factors (K6b) [Source: Traficom

, 2022

]

Number of transmitters

2–4

5–8

9–14

15–24

25–34

35–44

45–59

60–79

80–99

>100

Stepped value

0.25

0.50

1.25

2.25

3.75

5.50

7.50

10.00

13.75

17.50

23.75

https://www.finlex.fi/fi/laki/kokoelma/2021/sk20211257.pdf, Annex 4

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Analysis of the Danish spectrum fee model | 45

5.5.2 Light licensing

Finland currently has no provision for light licensing of spectrum bands.

5.6 Netherlands

Spectrum licensing in the Netherlands is managed by the Ministry of Economic Affairs and Climate.

The purpose of spectrum charges is cited as recovery of administration costs incurred in licensing

and monitoring of spectrum, although there is no mechanism for returning overpaid charges to

licence holders as there is in Norway for example. Licence charges are updated each year by the

regulator, to reflect increases in costs. In 2022, charges were increased by 4.99%, primarily to

account for increased cost of labour and materials, over and above the general wage and price

increases calculated by the Ministry of Economic Affairs. We can therefore consider the annual

increase to be partly an inflationary measure, with the regulator having scope to increase the charges

beyond this if its costs have increased beyond standard inflationary measures.

5.6.1 Spectrum licence fee model

Spectrum licence charges set by the regulator consist of both a one-off charge and an annual

‘supervision charge’. If a licence is specific to a limited geographical area the charge is scaled

proportionally to the area covered. The regulator reserves the right to alter this for an individual

licence if the costs are expected to exceed the charges chargeable on the smaller area.

Public mobile networks

The regulator charges broadly flat spectrum licence charges across all currently licensed spectrum

bands, with specific charges in the 700MHz band to account for the additional monitoring required

for spectrum sold with coverage and speed requirements. Spectrum charges are charged for each

MHz, making higher-frequency spectrum bands (which tend to have a larger bandwidth) more

expensive. However, as in most other European countries, the primary cost of mobile spectrum

licences is determined by auction and is an upfront amount, separate from ongoing spectrum licence

charges.

Figure 5.23: Public mobile spectrum licence charges [Source: [Source: Ministry of Economic Affairs and

Climate

, 2022]

Frequency

700MHz

One-off licence charge

(EUR [DKK] per licence)

844 [6278]

Annual licence charge

(EUR [DKK] per MHz)

Paired, with coverage/speed requirement:

9466 [70 408]

Paired, without coverage/speed requirement:

8330 [61 958]

https://zoek.officielebekendmakingen.nl/stcrt-2021-45605.html, Appendix 1.A

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Frequency

One-off licence charge

(EUR [DKK] per licence)

Annual licence charge

(EUR [DKK] per MHz)

At sea

472 [3511]

800MHz–2.6GHz

844 [6278]

Paired:

8330 [61 958]

Unpaired:

4166 [30 986]

Broadcasting

Spectrum licence charges for broadcasting licence holders are charged based on the number of

installation locations as well as the transmission power (per kW) according to the following

equation:

��

where A is the charge charged per channel and per installation location, nC is the number of channels

occupied by the licensee, nT is the number of transmission locations operated by the licensee, B is

the charge charged per kW of transmission power and P is the transmission power in kW.

Figure 5.24: Broadcast spectrum licence charges [Source: Ministry of Economic Affairs and Climate

2022]

Type

AM/shortwave and

FM with frequency

<104.9MHz

FM with frequency

≥104.9MHz

One-off licence charge

(EUR [DKK] per licence)

669 [4976]

Annual licence charge

(EUR [DKK])

Per channel and per transmission location:

368 [2737]

Per kW of transmission power:

610 [4537]

164 [1220]

Per channel and per transmission location:

368 [2737]

Per kW of transmission power:

610 [4537]

Digital

broadcasting in

bands III, IV and V

(i.e. DAB and DTT)

Low-power MW

669 [4976]

Per channel and per transmission location:

440 [3273]

Per kW of transmission power:

440 [3273]

164 [1220]

Per licence with power <1W:

175 [1302]

Per permit with power 50–100W:

A separation between onshore and at-sea regions was made when licencing the 700MHz band to separately

encourage the development of mobile communications services for companies with active operations in the

North Sea

https://zoek.officielebekendmakingen.nl/stcrt-2021-45605.html, Appendix 1.D

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Type

One-off licence charge

(EUR [DKK] per licence)

Annual licence charge

(EUR [DKK])

462 [3436]

PMR

The regulator charges a fixed annual charge for PMR licences, which varies depending on the type

of licence, as detailed in Figure 5.25.

Figure 5.25: PMR licence charges [Source: Ministry of Economic Affairs and Climate

, 2022]

Type

VHF/UHF radio devices for (limited)

land mobile use and local mobile

broadband networks

HF calling device (OS-HF)

Radio remote control

Telemetry and DGPS overall planning

Walkie-talkie for temporary use

Wireless audio connection

Radio alarm

Radio Security Installation

HF radio devices (27MHz)

One-off licence charge

(EUR [DKK] per licence)

219 [1,629]

Annual licence charge

(EUR [DKK])

83 [617] per licence and

424 [3154] per permanent

position

298 [2217] per radio device

332 [2469] per licence

83 [617] per licence

219 [1,629]

Fixed links

Point-to-point fixed link licences are charged at a one-off charge of EUR522 [DKK3883]. Annual

licence charge depend on both the bandwidth and frequency used, as detailed in Figure 5.26.

Figure 5.26: Point-to-point fixed link licence charges (EUR [DKK]) [Source: Ministry of Economic Affairs

and Climate

, 2022]

Bandwidth

<10MHz

10–25MHz

25–50MHz

50–150MHz

≥150MHz

<12GHz

154 [1145]

193 [1436]

231 [1718]

270 [2008]

N/A

12–24.5GHz

78 [580]

93 [692]

108 [803]

123 [915]

138 [1026]

24.5–39.5GHz

54 [402]

70 [521]

85 [632]

101 [751]

115 [855]

>39.5GHz

31 [231]

35 [260]

38 [283]

42 [312]

46 [342]

https://zoek.officielebekendmakingen.nl/stcrt-2021-45605.html, Appendix 1.b

https://www.agentschaptelecom.nl/onderwerpen/straalverbindingen

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5.7 Malta

In Malta, spectrum allocations and licensing are managed by the Malta Communications Authority

(MCA). The MCA charges licence fees both for the recovery of administrative costs as well as ‘for

the right to use scarce resources’. Even though there is an administrative cost recovery component,

the overall motivation for imposing fees in Malta can be considered to be relatively closely aligned

with the situation in Denmark.

There is currently no mechanism for automatic inflation adjustment within the fee schedules.

5.7.1 Spectrum licence charging model

Public mobile networks

Public mobile licence charges vary depending on both the frequency and the bandwidth used.

Spectrum licence charges, or usage charges, are charged to public mobile licensees on an annual

basis. The licence charges payable in 2022 are reproduced in Figure 5.27.

Figure 5.27: Public mobile spectrum licence charges [Source: MCA55, 2022]

Frequency

Paired

700MHz

800MHz

900MHz

1800MHz

2.6GHz

Unpaired

1.5GHz

2.6GHz

3.6GHz

1600 [11 901]

1100 [8182]

1800 [13 338]

22 400 [166 610]

2400 [17 851]

Annual licence charge (EUR [DKK] per MHz)

Broadcasting

As with public mobile licence holders, broadcasting licensees are charged a flat annual charge for

each channel, or frequency block, held. The licence charges for DTT broadcasters are currently set

at EUR5823.43 [DKK43 314] per channel per annum, while digital radio broadcasters pay

EUR2329.37 [DKK17 326] per annum for each 1.536MHz frequency block held.

https://legislation.mt/eli/sl/399.48/eng, Twelfth Schedule

Ref: 8868699659-354

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Analysis of the Danish spectrum fee model | 49

PMR

Licence charges for PMR are charged annually for each device irrespective of the frequency used.

Licence charges payable for PMR are summarised in Figure 5.28.

Figure 5.28: PMR spectrum licence charges [Source: MCA

, 2022]

Device

Repeater station

Base station

Mobile station

Charge (EUR [DKK] per annum)

116.40 [886]

58.20 [433]

23.20 [173]

Fixed links

Fixed links in frequency bands above 1GHz are charged on either a per-link basis, or on a nationwide

coverage basis, allowing the use of any number of links. The MCA may license other users on the

same frequency as an existing per-link fixed link licence, provided there is minimal potential for

interference. The base charge payable for a single fixed link is set at EUR45 [DKK335] per MHz

per annum, and does not depend on the frequency used.

For a per-link fixed-link licence, the first link is charged the base charge of EUR45 [DKK335] per

MHz, while subsequent links using the same frequency are charged at 50% of this rate to encourage

reutilisation of assigned frequencies.

The charge for nationwide licences is set at the equivalent of ten per-link licences on the same

frequency, EUR247.5 [DKK1841] per MHz (i.e. 1

EUR45 + 9

EUR22.5). As previously stated,

additional links using the same frequency on this licence are not charged for, so the 11

link onwards

is effectively free of charge.

Fixed links in frequency bands below 1GHz are charged annual charges per transmitter/receiver

depending on the bandwidth used, as summarised in Figure 5.29.

Figure 5.29: Charges for fixed links operating in bands below 1GHz [Source: MCA

, 2022]

Bandwidth

<100kHz

100–1MHz

1–10MHz

10–100MHz

>100MHz, per 100MHz

bandwidth

Charge (EUR [DKK] per annum)

230 [1711]

465 [3459]

695 [5169]

930 [6917]

https://legislation.mt/eli/sl/35.1/eng/pdf, page 4

https://www.mca.org.mt/sites/default/files/pageattachments/Radio_Links_Guidelines_0.pdf

Ref: 8868699659-354

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Analysis of the Danish spectrum fee model | 50

5.8 Germany

In Germany, the Bundesnetzagentur (BNetzA) is responsible for management of spectrum and the

setting of licence charges. Of particular interest for this study is BNetzA’s approach to licensing the

3.7–3.8GHz spectrum band for local use in private 5G networks.

5.8.1 Spectrum licence fees for local 5G networks in the 3.7–3.8GHz band

BNetzA is looking to encourage innovative use cases for local 5G networks and has set relatively

low licence fees to avoid placing a significant cost burden on enterprises, while the fees can scale

up significantly with increasing bandwidth and area coverage to encourage efficient use of spectrum.

Annual licence fees (in euros) for the 3.7–3.8GHz band are calculated according to the following

formula:

��

= 1000 +

��

× 5(6��

��

)

where B is the assigned bandwidth, t is the fraction of the year the licence is valid for (in months),

is the licence area in square kilometres covering settlements and transport infrastructure and a

the licence area in square kilometres covering other types of land. The EUR1000 fixed component

is equivalent to DKK7437.

The fees are higher for built-up areas (specifically settlements and transport networks) to account

for the need for increased frequency coordination and to encourage licensing and use in less densely

populated areas.

Assigned bandwidth can vary between 10MHz and 100MHz. There is no automatic mechanism to

adjust the fee for inflation, meaning it has effectively decreased in real terms over time since it was

set in October 2019.

BNetzA now also allows mobile operators to utilise the spectrum to offer local private 5G networks.

This decision came following concerns that licensing the 3.7–3.8GHz band to industrial users only

was an inefficient use of spectrum, and may indicate that there was insufficient demand for these

local 5G networks. Operators and existing licensees are required to negotiate to ensure adjacent

networks can coexist without significant interference and, if necessary, BNetzA can intervene to

apply measures to ensure efficient use of spectrum in these cases.

https://www.policytracker.com/germany-allows-mobile-operators-to-use-3-7-3-8-ghz-campus-bands/

Ref: 8868699659-354

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6 Proposed changes to the model

6.1 Identification of potential issues with current fee model

We have identified a range of potential issues with the existing spectrum fee model in Denmark in

light of demand and technology trends identified in Section 4 as well as through comparison to the

international benchmarks presented in Section 5. We have summarised these issues in Figure 6.1.

We then examine possible approaches to addressing these issues in detail in Section 6.2, noting that

changes to the current fee model are not necessarily required in all cases.

Figure 6.1: List of potential issues with the Danish spectrum fee model [Source: Analysys Mason,

2022]

Potential issue

Insufficient band

breaks

Explanation

There are likely insufficient band breaks to fully

capture current and expected future differences

in spectrum value for already allocated bands

across all uses.

Band-value factors should be reconsidered in light

of possible changes to the band breaks as well as

to take into account past (since 2010) and

expected future evolution of spectrum usage.

Doing so can incentivise efficient use while

countering that spectrum is subject to ‘squatting’,

where licensees maintain licences for spectrum

they are not using.

A fixed fee affects smaller licensees

disproportionately as it constitutes a larger

proportion of their overall fee. It also has the

potential to complicate the fee-setting process, as

it creates a fixed additive factor where one may

not always be desirable.

A geographical area factor is unlikely to correctly

model the spectrum value of limited geographical

licences for an unevenly distributed population as

this is usually more closely tied to population

coverage.

Licensing at sea is currently treated in the same

way as land-based licences, which has the

potential to disincentivise use, even where there

is limited or no scarcity.

Implementation of light licensing could be

considered for a number of bands/technologies,

including high-frequency fixed links, as is the case

in the UK and Norway.

Affected usage

All uses

Band-value factors

All uses

Replacement of

fixed fee

All uses

Replacement of

geographical area

factor

Licences with limited

geographical scope

(i.e. subnational

licences)

Licensing at sea

Provisions for

licensing at sea

Introduction of light

licensing

Fixed links

Ref: 8868699659-354

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Analysis of the Danish spectrum fee model | 52

6.2 Potential approaches to addressing issues with current fee model

In this subsection we examine potential approaches to addressing each of the broad issues identified

in Section 6.1. For each potential approach we consider its advantages and disadvantages,

identifying impact on the various stakeholders as well as implications for efficient use of spectrum.

Where necessary, identified issues have been broken down into their individual sectors of interest

and treated separately. The impact of the proposed changes from a revenue-neutrality perspective is

discussed in Section 7.2.

6.2.1 Spectrum band breaks

In this section we identify, for each sector of interest, possible adjustments to the existing band

structure across fee classes 1–4, based on the review of relevant current and future demand and

technology trends. We then summarise our resulting overall recommendations for appropriate band

breaks and cross check with relevant benchmark countries.

Public mobile networks

As noted in Section 4.1.1, there is already a significant amount of spectrum available to mobile

operators in Denmark, including large portions of 5G-suitable spectrum. Spectrum bands licenced

to public mobile operators include the 450MHz, 700MHz, 800MHz, 900MHz, 1500MHz,

1800MHz, 2.1GHz, 2.3GHz, 2.6GHz, 3.4–3.8GHz and 26GHz bands.

The existing band breaks for public mobile licences (i.e. class 1), detailed in Figure A.1 (see Annex

A), coarsely break the mobile spectrum into six bands: 0–300MHz, 300MHz–1GHz, 1–3GHz, 3–

10GHz, 10–33GHz, and >33GHz. In our view, these breaks no longer provide sufficient granularity

to represent the public mobile licence fees, given the significant variation in spectrum scarcity and

value across the 450MHz–4.2GHz range.

For fee class 1, as with fee classes 2–4, we propose a more granular approach to the setting of bands

that is closely aligned with historical and future expected use, outlined in Figure 6.2 below.

Figure 6.2: Possible updated fee class 1 structure [Source: Analysys Mason, 2022]

Proposed band

0–380MHz

380–470MHz

470–694MHz

Reasoning

Covers LMR primarily, no public mobile usage expected.

Covers UHF LMR as well as the IoT/M2M-focussed 450MHz public mobile

holding by Cibicom

Used exclusively for DTT broadcasting and not expected to be reallocated

prior to 2030. WRC-23 will examine the future of this band in its review of

470–960MHz.

Encompasses public mobile spectrum in the 700MHz, 800MHz and

900MHz bands. These bands can be considered to have closely related

data capacity and propagation properties, and can therefore be treated

similarly when setting spectrum fees.

694–960MHz

Ref: 8868699659-354

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Proposed band

960MHz–4.2GHz

Reasoning

Covers existing 4G and 5G mid-band bands, as well as many other uses.

Spectrum in this range is useful to MNOs to provide wide-area capacity and

is generally highly attractive to many categories of use. The 3.8–4.2GHz

band is potentially appropriate for the licensing of private 5G networks. In

addition, a number of bands in this range are being considered for 6G in

the longer term.

Frequency in this range is generally not assigned for public mobile use at

present, but the agenda for WRC-23 will consider parts of it as potentially

useful spectrum to be considered for upper mid-band 5G use.

Covers the upper range of mid-band that might be of interest for future

mobile use. In practice these frequencies have less favourable

characteristics than the 4.2–12GHz band for mobile use, so it is in our view

appropriate to split them into a separate category.

Covers two mobile bands identified for use in Europe at WRC-19,

specifically the 24.25–27.5GHz and 37–43.5GHz bands.

Covers one mobile band identified for use in Europe at WRC-19, namely the

66–71GHz band.

Not directly applicable to mobile use but provides flexibility to set licence

fees for fixed service use using these frequencies once equipment is

commercially available.

4.2–12GHz

12–24.25GHz

24.25–43.5GHz

43.5–90GHz

>90GHz

Broadcasting

Broadcasting is not expected to undergo significant change in the medium term (prior to 2030),

largely due to the remaining validity of existing licences as well as broadly stable demand as, for

example, OTT media services soak up excess demand for DTT and radio.

As a result, we do not recommend any changes to fee classes 5–8 on the basis of technology and

demand trends. There are, however, other relevant approaches, one of which we discuss in section

8.2 which would require a considerable overhaul of broadcasting licences.

PMR

The overwhelming majority of spectrum fees (>99%) for PMR are collected from fee class 3, which

varies depending on the number of mobile units being registered. The spectrum band breaks are

structured similarly to fee class 1, with six bands defined as: 0–470MHz, 470MHz–1GHz, 1–3GHz,

3–9.5GHz, 9.5–33.4GHz, 33.4–57GHz and >57GHz.

Out of these bands, we understand that all PMR licences will be confined to the 0–470MHz band.

In line with the unified band structure presented in Figure 6.2, we propose to break this band into

two categories: the 0–380MHz and 380–470MHz bands. In doing so it will become possible to

differentiate fees for the comparatively more valuable 380–470MHz from the less valuable 0–

380MHz spectrum. This change will be discussed further in Section 6.3.

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Fixed links

Fees for fixed-link spectrum are imposed either using fee class 1 (if they are not imposed per

position) or fee class 2 (if they are imposed per position) in a roughly 30:70 split between the two

in terms of total variable fee value collected. As a result of increasing data demands driven by 5G

deployments, it is expected that demand for high-frequency spectrum for fixed links will increase in

the short to medium term.

A number of high-frequency bands were identified at WRC-19, including the 275–296GHz, 306–

313GHz, 318–333GHz and 356–450GHz bands, while regulators are widely considering the 92–

95GHz, 95–114.5GHz and 130–174.8GHz for use by fixed links in the more immediate future.

Recent technological developments have also meant that use of the 60GHz and 70–80GHz bands

for fixed links is becoming increasingly feasible, however there is currently no commercially

available equipment available for frequencies greater than this (although bands above 90GHz are

considered prime candidates for fixed services use, and standardisation activities have occurred)

It is therefore important, in our view, to distinguish between the commercially exploitable above

90GHz frequencies (which include 92-114.5GHz, referred to as ‘W’ band, and 130-174.7GHz,

referred to as ‘D’ band’) and the other currently unusable frequencies above 90GHz. Adopting this

approach will provide flexibility to set spectrum fees at appropriate levels to encourage use of

nascent technologies in the frequencies above 90GHz.

We have also split frequencies in the 12–90GHz range, generally useful for high-capacity fixed

links, into three bands: 12–24.25GHz, 24.25–43.5GHz and 43.5–90GHz, as presented in Figure 6.2.

While these are broadly aligned with public mobile frequencies identified at WRC-19 and WRC-23,

these also reflect blocks of spectrum with similar propagation and bandwidth properties and

therefore commercial value. In our view these also therefore provide suitable band breaks for fixed

links, supporting the unification of frequency bands across fee classes 1–4.

We note that for higher frequencies, the existing pricing framework may not provide a similar level

of deterrence to spectrum hoarding/inefficient spectrum use. For example, given that absolute costs

are relatively low, an MNO may choose to buy a nationwide block licence and use it to deploy a

number of short-hop links in only a few dense urban locations across the country. Alternatively, an

MNO may choose to buy a block licence of large channel size, but not make use of all of the

bandwidth available in its deployments. Adjusting the pricing framework may not be the best tool

to address this problem. Rather, only allowing block licensing at a regional level, or imposing some

form of ‘use-it-or-lose-it’ condition to ensure full frequency use, may be more suitable.

For example,

https://www.etsi.org/deliver/etsi_gr/mWT/001_099/018/01.01.01_60/gr_mWT018v010101p.pdf

Ref: 8868699659-354

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Analysis of the Danish spectrum fee model | 55

Summary of recommendations for frequency band breaks

We recommend splitting many of the existing frequency bands into multiple sub-bands, ultimately

moving from six or seven bands to ten bands.

We propose these adjustments are made across fee

classes 1–4, standardising bands across frequency classes where previously fee class 1 was slightly

different from the remaining three frequency-dependant, non-broadcasting fee classes. Our

recommendations are summarised in Figure 6.3.

In the figure we have also included a column comparing the proposed bands with the international

benchmarks presented in Section 5. In most cases, direct comparison of bands is difficult due to the

variety of band breaks applied to different use cases in different jurisdictions. Because of this,

Norway and Finland are the most relevant comparators due to their unified fee structure and form

the primary basis for comparison to other European band breaks. Our proposed band breaks reveal

general alignment with these European regulators.

Note that in the current fee model class 2 had seven bands while fee classes 1,3 and 4 had six

Ref: 8868699659-354

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Analysis of the Danish spectrum fee model | 56

Figure 6.3: Proposed changes to existing band breaks [Source: Analysys Mason, 2022]

Current

band(s)

0–300MHz,

0–470MHz

Proposed change

Expand to cover 0–

380MHz

Comparison to benchmark

countries

Norway provides an

equivalent 0–240MHz

band, that is non-

continuous with the next

band.

Finland provides six sub-

bands in the same range,

with an identical end-point

of 380MHz.

Norway defines an

equivalent 470–694MHz

band, while five bands

span the range from 694–

960MHz.

Finland provides three

bands in the same range:

380–470MHz, 470–

862MHz and 862–

960MHz.

Norway defines three

frequency bands in the

same range, although the

variable fee does not

extend beyond 2170MHz.

Finland defines three

bands: 960–2200MHz,

2200–3100MHz, 3100–

5000MHz.

Affected public mobile

bands

Existing:

•

450MHz

Future:

•

No additional bands

0–470MHz,

300MHz–

1GHz

Break into:

•

380–470MHz

•

470–694MHz

•

694–960MHz

Existing:

•

700MHz

•

800MHz

•

900MHz

Future:

•

470–960MHz

reassignment

1–3GHz

Expand to cover

960MHz–4.2GHz

Existing:

•

1500MHz

•

1800MHz

•

2.1GHz

•

2.3GHz

•

2.6GHz

•

3.4–3.8GHz

Future:

•

3300–3400MHz

•

3800–4200MHz

Existing: None

Future:

•

6425–7025MHz

•

7025–7125MHz

•

10.0–10.5GHz

Existing:

•

26GHz

Future:

•

37–43.5GHz

•

66–71GHz

Existing: None

Future: Uncertain

3–10GHz,

3–9.5GHz

Adjust to cover 4.2–

12GHz

Finland defines three

bands from 3100–

5000MHz, 5000–

10700MHz and 10700–

19700MHz.

Finland defined three

bands in this range, with

the upper band terminating

at 55GHz.

10–33GHz,

9.5–21GHz,

21–33.4GHz

Break into:

•

12–24.25GHz

•

24.25–43.5GHz

>33.4GHz,

33.4–57GHz,

>57GHz

Break into:

•

43.5–90GHz

•

>90GHz

Finland defines two

frequency bands: 39.5–

55GHz and >55GHz while

Norway defines 20–57GHz

and >57GHz for fixed links.

Ref: 8868699659-354

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The proposed band breaks, summarised in

Figure 6.4

allow spectrum licence fees to be set at a more

granular level, and blocks of spectrum with similar utility are grouped, reflecting recent and expected

future technological developments. Increasing the top-end band break from 33GHz to 90GHz

provides further regulatory flexibility to encourage use of near-future fixed-link uptake in these

frequencies.

Breaking the sub-1GHz spectrum into four bands, instead of two in the original banding, reflects the

actual use of this spectrum more accurately, and goes some way to providing the flexibility to

regulate the more valuable PMR bands in the 380–470MHz range separately from the less valuable

bands in the 0–380MHz range.

Bands

0–380MHz

380–470MHz

470–694MHz

694–960MHz

960MHz–4.2GHz

4.2–15GHz

15–24.25GHz

24.25–43.5GHz

43.5–90GHz

>90GHz

Figure 6.4: Proposed

band break structure

[Source: Analysys

Mason, 2022]

From an administrative point of view, unifying the band structure across fee classes 1–4 also

simplifies the fee schedules.

As with any change to the fee model, one disadvantage of the change is the added administrative

complexity of implementing the change. On balance however, we believe that the added regulatory

flexibility and the more accurate reflection of true frequency value groupings outweigh this

additional administrative effort.

We are not recommending changes to fee classes 5–9 as there has not been significant development

in the broadcasting sector and significant future development is not expected. In addition,

Denmark’s current licence fee model for broadcasting is generally aligned with international

benchmarks.

Note that where multiple bands in the same frequency range are listed these refer to variations in band

definitions in different fee classes under the current fee model

Ref: 8868699659-354

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6.2.2 Band-value factors

Along with the spectrum band breaks, the corresponding band-value factors must be updated to

reflect historical and future developments in technology and demand, as well as to encourage

efficient use of spectrum. We have used results from the international benchmarking exercise

(Section 5) as well as consideration of benchmarks of European spectrum auction prices to arrive at

a suitable set of band-value factors. However, we note that this exercise nonetheless requires a

significant degree of regulatory judgement: there is no unique and objectively justifiable ‘right

answer’ in this case.

In the context of revenue neutrality, the numerical value of individual band-value factors is not

relevant. Instead, revenue neutrality will be achieved within each fee class by setting an appropriate

‘unit fee’. This will then be multiplied by the corresponding band-value factor to determine the

corresponding fee for each band within each fee class.

Of the benchmarked countries, Norway and Finland provide relevant benchmarks of band-value

factors as these are unified across use cases and span a wide range of frequencies. Due to differences

between band breaks in each of the countries, it is impossible to precisely map band-value factors

from benchmark countries onto our proposed bands. As a result, we have adopted a mapping that

places the lowest frequency in each benchmark country’s band into the corresponding band in our

proposed spectrum banding and averaging across bands where multiple band weightings exist.

Utilising this method, we were able to produce an approximate picture of international band

weightings in each of the benchmarked countries, as presented in Figure 6.5. Each band weight has

been normalised relative to the lowest band weight in the benchmark.

Figure 6.5: Normalised band-value factors in Norway and Finland [Source: Analysys Mason, 2022]

Frequency band

0–380MHz

380–470MHz

470–694MHz

694–960MHz

960MHz–4.2GHz

4.2–12GHz

12–24.25GHz

24.25–43.5GHz

43.5–90GHz

>90GHz

Norway band-value factor

3.1

2.1

1.0

1.6

1.8

Finland band-value factor

45.6

66.7

46.7

22.2

9.2

6.7

3.3

1.0

European spectrum auctions also provide another measure of band value, and are a useful indicator

of spectrum scarcity when setting licence fees. We have benchmarked 54 European spectrum

auctions in the last five years (since 2016) using Analysys Mason’s in-house spectrum auction

tracker to determine an average normalised auction value for each spectrum band where sufficient

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auction data is available. The normalised value is calculated in terms of EUR per MHz of spectrum

per head of population, in line with industry standards for comparing spectrum auction values. Our

results are presented in

Figure 6.6.

Frequency band

0–380MHz

380–470MHz

470–694MHz

694–960MHz

960MHz–4.2GHz

4.2–12GHz

12–24.25GHz

24.25–43.5GHz

43.5–90GHz

>90GHz

Spectrum value

(EUR/MHz/pop)

0.03

0.43

0.15

0.0020

Normalised spectrum

value

219

Figure 6.6:

Comparison of

international

spectrum

benchmarks

[Source: Analysys

Mason, 2022]

On the basis of current and future demand and technology trends identified in Section 4, as well as

the benchmarks presented above, we have determined a potential band-value factor structure, shown

Figure 6.7,

to be applied to the band breaks proposed in Section 6.2.1. These band values are

designed to apply to across fee classes 1–4. Fee classes 5–9 will not see updated band-value factors,

in line with our view in Section 6.2.1 to keep these fees as they stand currently.

Frequency band

0–380MHz

380–470MHz

470–694MHz

694–960MHz

960MHz–4.2GHz

4.2–12GHz

12–24.25GHz

24.25–43.5GHz

43.5–90GHz

>90GHz

Proposed band-value factors

320

960

320

0.5

Figure 6.7: Proposed

updated band-value

factors [Source:

Analysys Mason, 2022]

The 43.5–90GHz frequency band has been allocated the second-lowest band-value factor. This

figure has been calibrated specifically to ensure revenue neutrality for >57GHz fixed links in the

43.5–90GHz band, avoiding punitive fees for operators and encouraging further use of this band. As

Note that in cases where the normalised spectrum value is not present there are insufficient auctions in this

band to generate a representative benchmark value

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only fixed links currently exist in the 43.5–90GHz band it is appropriate to apply this calibration

across fee classes 1–4.

The band-value factor for the >90GHz band has been set at half that of the 43.5–90GHz band to

provide incentives for use. This is intended to future-proof the fee model by encouraging future use

in these high-frequency bands, such as fixed links.

The 12–24.25GHz and 24.25–43.5GHz have been given the same band-value factor to reflect the

similarities in potential use-cases and spectrum value. Although frequencies up to the 24GHz band

increasingly being referred to as possibilities for mobile deployment, it is acknowledged by industry

sources that frequencies below 12GHz are significantly more suitable for mid-band (1–24GHz)

mobile applications due to their advantageous propagation characteristics. These bands value factors

are set at 16 times the 43.5–90GHz band, which, we believe, appropriately reflects the relative value

of these frequencies in light of expected technological and demand trends.

The band-value factors of the 380–470MHz and 4.2–12GHz have been set four times higher than

the 12–24.25GHz and 24.25–43.5GHz bands. In comparison, spectrum auction benchmarks indicate

an equivalent factor of around 14 times (instead of four), while benchmarks in Finland place this

figure across a broad range between 1.4 and 20. The spectrum auction benchmarking may be

unreliable due to the relatively small sample size of auctions in this band, and the range in Finland

provides little guidance due to its breadth. A mid-range factor of four represents the expected relative

value to operators of the 4.2–12GHz band for mobile use relative to the 12–24.25GHz band.

The 0–380MHz and 380–470MHz bands, notably used in part by PMR, have a relative factor of two

between them, with the lower-frequency band having half the band-value factor of the higher-

frequency one. This reflects the relative usefulness of the spectrum for PMR, with the 380–470MHz

band being generally more useful for digital PMR applications thanks to the greater availability of

bandwidth and higher frequencies. It is therefore important to encourage use of the 0–380MHz band

where possible to prevent overcrowding in the 380–470MHz band by setting a significantly lower

band-value factor. While these band-value factors are likely to reduce the variable fee burden for

PMR licensees, the introduction of a minimum fee, as discussed in the next section, is expected to

rectify this effect.

The proposed band-value factor for the 960MHz–4.2GHz band is subject to a five-fold increase

relative to the 380–470MHz and 4.2–12GHz bands, and sits just below the approximately six-fold

increase suggested by spectrum auction benchmarks. Benchmarks in Finland suggest a 2.4-fold

increase (from the 4.2–12GHz band to the 960MHz–4.2GHz) would be more appropriate. We have

chosen to increase the band-value factor by a factor of five to more closely reflect the spectrum

auction benchmark, as we believe this provides a more accurate measure of the economic value of

the spectrum, therefore ensuring the relative licence fee burden is not excessive. The 470–694MHz

band has also been set with an equivalent band-value factor to the 960MHz–4.2GHz band.

Finally, the 694–960MHz band has been given a band-value factor three times greater than the band-

value factor for the 470–694MHz and 960MHz–4.2GHz bands. This band is key for public mobile

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usage and has valuable coverage characteristics which have been essential for 2G/3G and 4G

coverage and will continue to be essential for 5G networks. This closely aligns with the relative

value of 2.7 times indicated by the spectrum auction benchmarks and has again been selected

because we believe this provides a fair and objective measure of the relative economic band value.

6.2.3 Replacement of fixed fee

As mentioned previously, fixed fees disproportionately disadvantage smaller licensees. A solution

to this issue would be the introduction of a minimum fee as a replacement. In this way, it could be

possible to ensure that most smaller licensees are not unduly disadvantaged.

Of the countries benchmarked, the UK and Finland both utilise minimum fees in this way, providing

precedent for adopting such an approach. It should also be noted that while Norway, Ireland and the

Netherlands charge a fixed fee or charge in some way, it is not constant across different uses as is

the case in the Danish fee model currently. In the case of Ireland, licence fees involving a fixed fee

do not generally have an additional variable component. With this in mind, it is clear that the current

approach in Denmark of imposing both a fixed and variable fee component annually does not have

a direct parallel among the benchmarked countries.

We also note that in 2021 fixed fees made up only around 4% of the total revenue collected by the

ADSI from licensees, as outlined in Section 3. Although replacing the fixed fee with a minimum fee

could reduce the overall income collected by up to this amount, this can be remedied by marginally

increasing the overall variable fee. This will be discussed fully in Section 7.

A significant risk of introducing a minimum fee is that smaller licensees, such as small PMR licence

holders, would no longer be disincentivised from increasing the spectrum they licence beyond what

they actually require. This is because under a ‘pure’ minimum fee model there is zero incremental

cost while the overall variable licence fee remains below the minimum fee threshold. To address

this risk, we are proposing an ‘incremental minimum fee’ model, such that minimum fees are applied

to the entry in the licence database with the highest applicable fee and subsequent entries (i.e.

additional spectrum blocks, or ‘positions’) under the same licence number are charged as

incremental values on top of the minimum fee, calculated as variable fees in the same manner as if

there was no minimum fee. This approach will have no effect on licensees exceeding the minimum

fee, while introducing an incremental cost for additional spectrum for smaller licensees.

One solution could be to apply this incremental minimum fee model to fee classes 1-4 (which are

charged on a per-position basis), while adopting a standard minimum fee approach for fee classes

5-9 as these fees are instead charged on a per-licence/per-network basis.

Following discussions with the ADSI, we understand that for licences valid for only a part of the

year, the variable component of the licence fee is scaled proportionally. In moving from a fixed fee

to a minimum fee the minimum fee could be similarly scaled, down to a minimum licence duration

(which could be two weeks subject to case-by-case exceptions for large events). Adopting this

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approach will discourage licensees from holding licences for longer than is necessary, while

ensuring that the principle of a minimum fee remains applicable to all licence holders.

6.2.4 Replacement of geographical area factor

The spectrum value of sub-national licences is generally driven by population coverage, reflecting

the expected demand for spectrum in a given area. Denmark’s current approach of using a

geographical area coverage factor is unlikely to be as reflective of spectrum value, given the

variations in population density across the country, even if these variations are more limited in

Denmark than in some other European markets. As a result, licensees with sub-national licences

covering a lightly populated area may end up paying the same licence fees as a licensee with an

equivalent licence covering a more densely populated area, despite the spectrum being more

valuable in the latter case.

One solution to this problem would be to replace the geographical area factor with a population

coverage factor, which expresses the percentage of the population of Denmark that is covered by a

given licence. This approach is used in all benchmarked countries excluding Ireland and Malta,

which do not have any form of geographical scaling factor, and the Netherlands, which uses an area

scaling factor like Denmark.

The primary advantage of this change would be to make spectrum licence fees more closely

reflective of spectrum value, reducing disparity between licensees under the current system. Use of

a population coverage factor would also simplify adding provisions for licensing at sea, as discussed

in Section 6.2.5, although this is a minor point as alternative remedies exist.

A major disadvantage of this adjustment, however, would be the increased administrative burden of

assessing population coverage. Whilst a calculation of area coverage is relatively straightforward

(and already setup), population coverage would require the ADSI to make assumptions on the

population density of given areas within the country, and assess these against the geographical area

covered by each licence. There are also currently very few licences subject to a geographical area

factor (discussed further in Section 6.2.5), limiting the impact and need of replacing the geographical

area factor.

As a result, we suggest that the limited benefits of transitioning to the population coverage factor

are unlikely to justify the costs of doing so.

6.2.5 Provisions for licensing at sea

As noted previously in Section 6.2.4, a transition to a population coverage factor over a geographical

area coverage factor would have the most significant implications for licensing at sea (in effect in

the Danish Exclusive Economic Zone (EEZ)). While these licences would likely have very large

geographical area coverage factors, their population coverage factor would be near zero, resulting

in much lower licence fees.

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It is important for prevention of spectrum hoarding that licences are not priced too low. Much like

in Norway and Finland, the solution to this problem would be to set a minimum area scaling factor

to ensure that an appropriate licence fee is still payable for licences at sea. Norway sets this minimum

at 20% explicitly for these uses, while Finland uses a figure of 5% in general across all uses. We

expect that a figure closer to 20% is likely to be most appropriate for licensing at sea in Denmark,

as opting for the higher threshold will reduce the chance of ‘spectrum squatting’ by large maritime

organisations, such as oil companies.

The effect of this approach on fees imposed on holders of licences for use at sea will be identical to

using a population coverage factor. By setting a lower fee level for licences at sea compared to land-

based licences, the ADSI can encourage efficient use of spectrum that would otherwise be unutilised

by ensuring the fees are not excessive. In terms of disadvantages, there is some potential for lost

revenue by effectively reducing the fees collected from holders of licences at sea, although this is

expected to be negligible and will be discussed further in Section 7.

There is also the potential that licensees with low area coverage factors presently will be subject to

higher fees as a result of this change. We note however that there are only 17 entries in the licence

database that are subject to geographically scaled fees (class 1 licences) and have a coverage factor

less than the proposed 20%, with all but one being below 5%. These licensees appear to be operating

under ‘nationwide’ licences for fixed links and LMR, while simultaneously reporting low coverage

areas. In all but two cases, this results in a lower overall variable licence fee than would be imposed

if the licence was a class 2 licence instead, which would likely be more appropriate. The introduction

of a minimum area scaling factor would encourage these licensees to transition to class 2 licences to

avoid significantly higher fees. These licence database entries are listed in Figure 6.8.

Figure 6.8: Summary of class 1 licence database entries with area factors below 20% [Source: ADSI,

2022]

Licence number

H100593

H100818

H100219

H100380

H100425

H100524

Usage type

Fixed links

Saerlige

Area factor

0.35%

0.70%

0.35%

0.70%

0.35%

4.17%

1.89%

5.52%

2.15%

1.12%

Class 1 fee (DKK)

111

659

213

15 571

243

126

Class 2 fee (DKK)

308

168

1106

13 850

1106

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Licence number

H101002

Usage type

Saerlige

Area factor

0.31%

Class 1 fee (DKK)

350

Class 2 fee (DKK)

5540

6.2.6 Introduction of light licensing

Light licensing has been introduced in some bands in a number of benchmarked countries, namely

the UK and Norway, for high-frequency fixed links. Light licensing provides, among other things,

a low barrier of entry for licensees and is generally used in cases where the administrative burden

of directly managing the licensees would result in excessive fees or, as is the case in the UK, as an

interim measure to encourage use of experimental frequencies (such as the THz bands above

100GHz and the upper 6GHz band) or use cases before a long-term regulatory approach is enacted

once the spectrum is subject to sufficient demand

Light licensing in Denmark could be used to offset the increase in class 1 fixed link licence fees

under the newly proposed band structure, or to encourage these licensees to move into higher-

frequency bands where a greater amount of spectrum is available. Denmark could adopt a similar

approach to the UK and Norway in lightly licensing a portion of the 70GHz band for fixed link use.

Interest in this lightly licensed band would likely be stimulated by the increase in class 1 fixed-link

licence fees, and may provide an attractive alternative to fixed link licensees as the technology

matures, future-proofing the fee model. In line with common light-licensing practices, this spectrum

would not be actively managed by the ADSI, but it would instead be the responsibility of licensees

to mitigate interference. The ADSI would instead define a set of operating parameters, such as

transmission power and bandwidth, that all licensees must adhere to. It is noted that the argument

against light licensing that has been made in some other countries is over unpredictable operating

conditions in the band due to uncertainty over nearby uses, plus an overall lack of certainty of

spectrum access.

6.3 Summary of recommendations for suitable changes

Following the discussion in Section 6.2 of potential approaches to addressing the issues identified

in Section 6.1, we have collated a list of our recommendations for adjustment to the Danish fee

model. Where applicable, the revenue implications of the proposed changes are be analysed in

Section 7.2.

Figure 6.9: Recommendations for changes to the spectrum fee model [Source: Analysys Mason, 2022]

Issue

Insufficient band

breaks

Recommendation

Adopt a unified banding structure across classes 1–4, as summarised in

Figure 6.4

and discussed in detail in Section 6.2. This approach allows for

more granular setting of licence fees in line with updated groupings of

The light licensing approach for the 70-80MHz bands is not interim, however the manual registration is and

Ofcom intends to replace this with a database.

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Issue

Recommendation

spectrum of similar value, consistent with technology trends. In particular,

this will allow for more targeted encouragement of efficient use of

spectrum, for example for PMR use.

Band-value factors

Adopt the set of band-value factors indicated in

Figure 6.7.

These band-

value factors have been adapted for the proposed updated band structure

and have been proposed based on expected technology and demand

trends in Denmark, as well as both international regulatory and spectrum

auction price benchmarking.

Replace the fixed fee with an incremental minimum fee for fee classes 1–4

and a minimum fee for fee classes 5–9 to avoid unduly discriminating

against licensees with smaller payable licence fees while maintaining

disincentives for small licensees to use more spectrum than is required. We

suggest adjusting the value of this minimum fee slightly from the current

fixed fee level (DKK600) to account for the small revenue shortfall created

by this change. This is be discussed further in Section 7.2.

Do not replace the existing geographical area factor with a population-

based factor due to the additional administrative effort required and the

relatively small number of licensees affected.

Adopt a fixed area scaling factor of 20% for licensing at sea to encourage

use of spectrum in these areas. The existing area-based fee model is likely

to overprice these licences, discouraging use.

Consider adopting a light-licensing approach for fixed links in the 70-80GHz

band, although specific implementation will depend on ADSI’s objectives as

well as existing spectrum plans for this band.

Replacement of

fixed fee

Replacement of

geographical area

factor

Provisions for

licensing at sea

Introduction of light

licensing

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7 Implications of proposed changes

7.1 Revenue breakdown under current fee model

Analysys Mason has constructed a simple Microsoft Excel model of revenue from all spectrum

licence fees in Denmark according to current 2022 data supplied by the ADSI. The objective of this

model is to provide a means to test the revenue neutrality of any proposed changes to the Danish fee

model.

The results from the model were compared to full-year 2021 figures supplied by the ADSI to confirm

alignment. The results of this comparison are summarised in Figure 7.1. Following discussions with

the ADSI, we understand that where misalignments exist between the model and the 2021 data, these

can be discounted as they are due to year-to-year fluctuations (as we are comparing actual data from

2021 with results based on 2022 year-to-date data).

Figure 7.1: Comparison of model results to 2021 data supplied by the ADSI [Source: Analysys Mason,

2022]