FINAL REPORT - Stakeholders - Ofcom

An illustrative calculation of the costs associated with converting to 8.33 kHz has been
provided in a recent study for Ofcom 25 . This is a good general illustration but a number of
comments can be made:
• An upgrade cost of £845 per aircraft is quoted. It is very doubtful that the change
could be made by an upgrade of current radios (as is assumed in the recent
study for Ofcom) – rather, the existing radio would have to be disposed of and
replaced with a new radio. In order to introduce 8.33 kHz, all aircraft operating in
a particular region must be equipped. However, the refresh time for radios in GA
is likely to be even slower than AT class. A GA pilot will not change a radio
unless absolutely necessary and possibly not within the lifetime of the aircraft (15
years at least). Hence, 8.33 kHz could only be introduced at low altitude if there
is requirement to change radios and possibly additional funding to make this
possible. Hence, the illustrative calculation should include the full price of the
8.33 kHz radio (£3,225) and not the marginal difference between a 25 kHz and
8.33 kHz radio (i.e. we rely on wholescale change of the fleet rather than a drip
feed via new aircraft).
• The quoted value of £75,000 for upgrade of a ground station is accepted
assuming it was sourced from NATS. However, the distinction between 8.33 kHz
and 25 kHz equipage is not understood. A particular new ground radio would
support both channel arrangements. Hence, in the illustration, all ground stations
would have to be converted.
• NATS will also incur additional costs to convert its voice network to handle 8.33
kHz. The costs are estimated at £10M although this figure has not been
validated.
• An estimated cost of £20,000 for each non-ATC station upgrade is felt to be a
reasonable estimate given the non-safety critical nature of the services
(equivalent to the cost of a TETRA PAMR transceiver).
• The report quotes 6,200 aircraft as requiring upgrade. Fleet data for the UK
indicates that this may be higher (up to 8000) although in the table below 6,200
has been used.
A revised table (5-14) of marginal cost following the same method with revised input costs
is therefore:
Cost element Cost
ATC station upgrade + Network conversion £45.25m
Non-ATC station upgrade £28.32m
Aircraft station upgrade £20.0m
Total cost £93.57m
Annualised total £9.99m
Cost per MHz £1.05m
Cost per 25 kHz £26,200
Table 5- 14 Marginal Cost for conversion to 8.33 kHz
25 “An economic study to review spectrum pricing”, INDEPEN, Aegis systems and
Warwick Business School, February 2004.
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