| Previous Section | Index | Home Page |
Mr. David Prior (North Norfolk): If existing users of spectrum do not have to pay a fee, and if new users will have to bid in an auction and pay a fee to use the spectrum, how will that encourage new entrants?
Mr. Battle: Existing services will not be subject to an auction. There are no plans to subject current users to auctions for existing arrangements. Auctions will apply to the new space that is opened up. We envisage auctions being used on rare occasions, when there are many intensive bids for the same amount of space. I shall say a little more about the detail of auctions, but I do not see everyone rushing down the auction route. That is not the intention or purpose behind the Bill.
Before outlining the main provisions of the Bill, I should explain that it contains enabling powers. The detailed implementation of these powers in relation to
licence fees and auctions will be through regulations. That will provide the flexibility that is essential to respond to the pace of change in this sector. If we set the rules now and hope that they will last for another 100 years, we shall be caught out by the changing pace of technology and its converging world.
Mr. Bercow:
I am grateful to the Minister, because he has been generous in giving way.
Has the Minister made any estimate of the likely proceeds that will be realised as a consequence of the Bill? Will he share with the House any estimate that has been made? Is it a matter that he has discussed with the Chancellor of the Exchequer?
Mr. Battle:
Much depends, of course, on decisions that are taken on auctions, and I shall spell out later the decisions that are involved. About £500 million to £1.5 billion could be raised over many years. That will not happen overnight, because the process will be phased. Surely that is the proper way in which to proceed. Some revenue will be generated, and we should not apologise for that. I shall return later to the detail.
The intention behind the Bill is to open up space. What will happen if we do nothing? The answer is that cities and main corridors will be left clogged, so that no one can use them. What is the option apart from shutting down the economy? That is not a sensible way in which to proceed.
There will be licensing, and in terms of spectrum space, we have a right to look after taxpayers' interests and to say that they should have a revenue take. The main purpose is to manage the spectrum well. If we do not prise it open, nothing will happen. Indeed, things will get worse.
Clause 1 contains a general power to allow the Secretary of State to set fees by regulations. The clause will replace regulation-making powers as set out in section 2 of the 1949 Act.
Clause 2 is the core of the Bill. In particular, clause 2(1) breaks the link between the fees under the Wireless Telegraphy Act 1949 and the Radiocommunications Agency's administrative costs. That will allow the Secretary of State, if she thinks fit, to set fees higher than those set on the basis of cost recovery.
Concerns have been expressed in the other place and by industry that higher fees could, in effect, become a form of taxation, but those fears are unfounded. I am sad that the hon. Member for Buckingham (Mr. Bercow) has left the Chamber, because I would like to spell out why, as my right hon. Friend recognises, it would be counter-productive to impose unnecessarily high fees on a sector that contributes enormously to the growth of the national economy.
I stress that the clause contains important provisions that will constrain the level of fees charged by my right hon. Friend or any of her successors. There is a built-in break clause. I suggest to the hon. Gentleman that, if he reads clause 2(1), he will find an answer to his question.
The clause requires that, in setting fees, the Secretary of State shall have regard to the matters specified in subsection (2). In setting fees, the Secretary of State must take account of the extent to which the required fee level will promote the efficient use of the electro-magnetic
spectrum, the economic benefits arising from the use of radio, and the development of innovative services and competition in the provision of telecommunication services.
If charges are increased from current levels, it will be because such charges are necessary to balance supply and demand in support of the objectives set out in clause 2. I cannot emphasise enough that the purpose of the Bill is to optimise the use of radio spectrum.
Mr. Michael Fallon (Sevenoaks):
I hope that the Minister was not inadvertently misleading the House when he read out subsection (1), because he missed out the two words "in particular". Given the amendment that was carried in the other place, which I hope he will accept, he will have to concede that the Secretary of State can have regard to matters other than those referred to in subsection (2), so he can increase the charges for other purposes that are not listed in the Bill. Is that not the position?
Mr. Battle:
Of course that is the position, but, as I said, it would not be sane to price out the very sector that contributes massively to the growth of the national economy. That is not the purpose and intent of the Bill. It is unbelievable for Conservative Members to say that they are against it because it may lead to revenue for the Government.
I shall put the issue into a different context. Article 11 of the European telecommunications licensing directive, which was adopted by the previous Government on 10 April and which all member states must implement, deals with fees and charges for individual licences. The directive recognises that, where scarce resources, such as the radio spectrum, are to be used, member states should be allowed to impose charges that go beyond cost recovery, to reflect the need to ensure the optimal use of those resources. The proposals in the Bill are fully in line with that directive, which underpins the safeguards in clause 2.
If the Bill becomes law, it is proposed to introduce new fees by regulation next year. We want the implementation of spectrum pricing to take full account of the views of radio users. We attach great importance to consultation. It has happened before, and we have continued that process in good faith so that industry can be fully prepared for the likely changes that will be required and so that the new fee proposals, which will ultimately be contained in regulations, take full account of the views of users. I do not know what more we can practically do.
That is why, on 29 May, the Radiocommunications Agency issued a consultation document called "Implementing Spectrum Pricing", which set out in some detail how it is proposed to implement the new approach. The proposals in that document represent the culmination of a great deal of on-going discussion with the industry, and in particular the results of the consultations that took place under the previous Government. Consultation is a sensible way to take this debate and these policies
forward, so that the proposal is practical and breaks open the spectrum without pricing people out. The idea is to price people in.
Mr. Fallon:
Is it or is it not the case that, under clause 2, revenue could be raised through extra charges for matters that are not specified in the clause?
Mr. Battle:
Yes, but we felt that the range set out for the more efficient use of the spectrum, and enabling innovation to be considered, was not wide enough to ensure that we allowed for the possibilities of the future.
The hon. Gentleman may not realise that, given the current merger of telecommunications services, we need some space so that we can try to anticipate the shape of the future in an incredibly dynamic area. I accept that I shall never convince the hon. Gentleman; he believes that this is purely a tax measure, he will stick to that view, and will presumably oppose the measure. I challenge him, however, to say in opposing it what he would do instead. If we do not break open that space, there will be a massively damaging effect on business.
Mr. Prior:
Will the Minister give way?
Mr. Battle:
I have already given way to the hon. Gentleman, but I shall do so again, for the last time.
Mr. Prior:
I want to return to the question that I asked earlier, about the effect of the legislation on new entrants to the industry. It is all very well for those with existing spectrum, who are paying no fees--I can see why they would support the Bill--but what about new entrants?
Mr. Battle:
The whole point of the Bill is to support existing entrants. If we can prise open the spectrum, new entrants will be able to go into it without any problem. I do not see how, when we are changing the fee structure across the board, there is any differentiation to be made. There would be if there were auctions, but I have the impression from what the hon. Gentleman and his hon. Friends have said that they believe that the purpose of the legislation is not spectrum management, but the introduction of a tax measure.
Mr. Battle:
The hon. Gentleman presses me, but even the amendment to which he referred stated that any other reasons taken into account by my right hon. Friend would have to have reference and be related to spectrum management objectives. Clause 2 is not a clause under which revenue can be raised for anything; the point is to link it directly to the spectrum management objectives.
As for the specific proposals, as I have explained, the agency will take fully into account the comments that were made on the consultation document, and the revised proposals will take account of comments made then, and here, during this debate. Under the revised proposals, higher charges will be focused on the services and geographical areas where the spectrum is under most pressure, and where there is a spectrum management need to use the spectrum pricing tool. We estimate that most licensees will pay no more than they do now, and may
pay up to 50 per cent. less. This is good news, not the bad news that Conservative Members seem to want to make it out to be.
"Safety of life" charities such as the Royal National Lifeboat Institution and St. John Ambulance benefit from concessionary licence fees now. I emphasise--because some concern has been expressed--that those arrangements will continue under the new powers.
The other main plank of the Bill is the provision in clause 3 for licences to be auctioned. Hon. Members have raised the question of auctioning. We see auctions as a new tool. We do not intend them to be introduced across the board--that would be impractical--but there may be circumstances in which, in relation to a particular service, there will be more competing service providers than can be licensed. In such circumstances, the Secretary of State will have to choose who can be given a licence.
We believe that, in such circumstances, auctions have the real attractions of speed and transparency. They represent a more objective means of licensing than the alternative of what could be described as a beauty contest, which would require the Secretary of State or another person to choose between competing providers on the basis of criteria that would inevitably involve an element of subjective judgment. Although I would not rule that out in all conceivable circumstances, it is proving increasingly complex and contentious as the number of players in the industry continues to grow. An auction, however, would provide an objective basis for selection and ensure the selection of people who attach the highest value to the spectrum and are likely to use it to generate the greatest economic benefit.
| Next Section
| Index | Home Page |