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Mr. Andrew Lansley (South Cambridgeshire): In the context of an auction, what does the Minister foresee might be added under clause 3(3)(e), which says that the Secretary of State may, in relation to the issue of such a licence,
- "specify matters to be taken into account by the Secretary of State"?
Mr. Battle: Again, we do not intend to require the many small and medium businesses that use radio through, for example, self-provided systems to start competing in auctions, because that approach would be neither practical nor desirable, given the number of businesses involved. Nor do we propose to require existing licensees to enter an auction for the right to
continue to provide their services within their existing spectrum allocation. I know that the four main mobile telecommunications operators have expressed concern--
Mr. Battle: Yes, but we do not intend to require a mass auction. That is part of the mythology. Having said that, even the major telecommunications operators have welcomed the Bill and accept it.
We are happy to discuss the detail, including the comments by the hon. Member for Sevenoaks (Mr. Fallon), in Committee--if he still feels that there is a problem in relation to third generation--to find out how we can come to a compromise and ensure that the Bill passes into law, so that the spectrum is managed properly and beneficially. As I have emphasised, if we do not do it now, we will hold back economic and business development.
We do not intend to require broadcasters who have already entered into an auction for the right to provide their service under the provisions of the Broadcasting Act 1990, to enter another auction to have continued access to the radio spectrum they need. I accept that that would be double jeopardy.
Mr. Lansley:
I fear that I have to return to the point that I put to the Minister, because I do not think that he has answered it. Clause 3 seems to foresee that, even in relation to an auction, there will be circumstances in which matters other than the bid made under the prescribed procedure will be the basis on which a licence is issued. That is not about simply specifying requirements in advance. Something other than the greatest bid may be taken--for example, because of the investment that will be put into efficient spectrum use--but what is the Minister's intention in presenting the Bill in this form?
Mr. Battle:
Consultation continues on auctioning, but we envisage that the auctions will most likely be used for new national or regional services, where there are more competing players than can be realistically accommodated in the spectrum and where selection is therefore necessary.
It is likely--although the Government have not taken a decision on this--that the first auction will be for licences for the so-called third generation mobile telephony, also known as the universal mobile telecommunications service. That service uses terrestrial and satellite telephone links. As I am sure the hon. Member for South Cambridgeshire (Mr. Lansley) knows, it combines mobile telephony systems with flexible features such as the possibility of high-speed access to many information and entertainment services.
In July, the Minister for Small Firms, Trade and Industry issued a consultation document called "Multimedia Communications on the Move". That explained that, although the first UMTS services are unlikely to come on stream until about 2000, we accept that there is a case for much earlier licensing certainty--the industry has asked for stability and certainty so that it knows where it is--in view of the scale of investment needed by service providers.
The closing date for comments on "Multimedia Communications on the Move" was the middle of this month. As I have said all along in the debate, we will take account of the comments in deciding the next steps, but there is a clear case for assigning UMTS licences by auction. I hope that the hon. Member for South Cambridgeshire could envisage such a situation. The aim is not to move to mass auctions for everyone else. A mythology has built up around the Bill.
Clause 4 is designed to give enhanced security of tenure to licence holders. It enables the Secretary of State to include in a licence terms restricting her power to revoke or to vary the licence. At present, a Wireless Telegraphy Act licence may, in most cases, be revoked or varied at any time by the Secretary of State. That would normally be done only where the licensee had conspicuously failed to respect the terms of the licence.
In practice, it is rare for the Secretary of State to revoke or to vary a licence other than at the request of the licensee. Where there is a need to move a licensee to a different frequency, for spectrum management reasons, the approach of the Radiocommunications Agency is to do that over time, in consultation with the licensee.
We accept, however, that different considerations are likely to apply where licences for a considerable number of years may be auctioned and licensees may need to undertake large investment. We accept that, in those circumstances, licensees will want a firmer, legally binding guarantee that they will have security of tenure and that their licence will not be unexpectedly revoked by the Secretary of State.
That is why the power in clause 4 will enable the Secretary of State to include conditions that will give licensees the certainty that their licences will not be revoked, except in the exceptional circumstances set out in subsection (5)--for purposes of national security, or to enable the United Kingdom to comply with European Community obligations, international agreements or the like.
Clause 5 will allow the Secretary of State to undertake expenditure in support of the objective of efficient spectrum management. Although the Bill's main purpose, as I have repeatedly emphasised, is to use spectrum pricing as a tool for more efficient spectrum management, it will also produce increased revenues for the Government. There is certainly no question of hypothecation of those revenues.
However, the clause gives the Secretary of State the power to make grants to persons where, in her opinion, that is likely to support the objective of better spectrum management. The whole point is that the power of the Secretary of State is to back up better spectrum management.
There are ways in which the power could be used. For example, it could take the form of support of research into more spectrally efficient technologies. It might also be used to support courses provided by universities for the training of radio engineers in spectrally efficient techniques. Any expenditure that is proposed under that power would have to satisfy normal public expenditure and value-for-money criteria.
Clause 6 deals with the power to make regulations. As I have explained, both licence fees and proposals in relation to auctions will be set out in regulations. Under
subsection 6(2), which we introduced in another place to respond to concerns about the need for consultation on regulations made under the powers in the Bill, the Secretary of State will be obliged to publish a notice, in the London, Edinburgh and Belfast Gazettes, setting out the gist of any regulations made under the power, specifying an address from which copies of the proposed regulations may be obtained, and setting a time limit of at least 28 days during which representations may be made. There is also an obligation on the Secretary of State to consider any representations that are made to her within that time.
We have introduced this provision in response to concerns. However, I emphasise that we see it as supplementary to, and in no way a substitute for, the non-statutory consultation to which we are fully committed. [Interruption.] We are going wider by saying, "Let us open the doors and work together to get this right."
The DTI and the Radiocommunications Agency have consulted extensively about proposals in this area. I have referred to recently published consultation documents on administrative pricing and on the licensing of the universal mobile telecommunications service. That consultation on specific proposals will continue. The new power simply provides a statutory guarantee that there must be a final phase of consultation before regulations are made. That is because consultation and partnership are at the heart of our approach to the development of industrial policy.
We recognise that there are enormous resources of knowledge, expertise and experience in the radio industry. It is to everyone's advantage that we draw upon them in getting the Bill right. Therefore, I am pleased to announce the establishment of a high-level spectrum management advisory group which will be drawn from radio users. The group's purpose will be to provide independent impartial advice directly to Ministers on a broad range of issues that will affect this fast-developing industry.
In particular, the group's role will be to advise on the Radiocommunications Agency's spectrum strategy, on major national allocation decisions, on the application of spectrum pricing, and on the policy objectives to be pursued in the relevant international arena. That will benefit industry and users of the radio spectrum, by bringing an informed industry perspective into the heart of our policy-making process. I shall lay the group's full terms of reference in the Library of both Houses. Appointments to the committee will be made by my right hon. Friend the Minister for Small Firms, Trade and Industry.
The decision to set up the spectrum management advisory group, together with the Bill's provisions and the agency's commitment to consultation, should demonstrate beyond any doubt our total commitment to ensuring that the interests of users are placed at the heart of policy making in this area. In the light of their interventions, I ask Opposition Members simply to ask themselves what will happen if they oppose the Bill and we do nothing. That will effectively clog up the whole system and damage the development of industry and business into the next century.
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