Cost Recovery in Australia and Cost Analysis in Canada

Cost Recovery in Australia


In July 2002, the Australian Government Agency which advises on regulation and other matters, the Productivity Commission, published a long (438 pages) review of existing spectrum policy.  This includes, at Chapter 8, p183, a discussion of how licensee charges were set before 2001as the sum of components set to recover:

  1. Direct costs;
  2. A notional indirect component to recover, for example, the costs of developing spectrum policy;
  3. A further notional component, intended to reflect the scarcity of the spectrum in question (known as the Spectrum Access Tax).

In 2001, components 2 and 3 were combined in a single charge.


In 2000/1, the first component (direct costs) accounted for Australia $5.1 million, 12% of the Australia $43.0 million cost of running the spectrum regulator.  The second component of spectrum charges, which included contributions to the ITU (International Telecommunication Union), amounted to Australia $38.2 million.  Direct costs were calculated using an activity-based costing method, which analysis the activities necessary to understand a give process, send an issuing a licence or monitoring operations and assigning than a direct costThus in Australia, direct costs associated with licences accounted for only one-eighth of the cost of running the agency.  The remaining were indirect costs, such as domestic management, interference management, policy development and ITU subscriptions. 


Cost Analysis in Canada


Industry Canada has in the past conducted in-depth analysis of costs related to processing and administering licenses and license data. The data was built into a production system called STMIS. The replacement of the STMIS system, now over 15 years old, is being studied.

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