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Mr. Ian Bruce: I am following the hon. Gentleman's speech carefully--I almost called him my hon. Friend because we sit on so many Committees together. Does he agree with the Government's view that about £1.5 billion can be raised from the industry? Does he think that that is a good idea or does he think that the money could be better spent within the industry, expanding the service and making it cheaper for consumers?
Mr. Timms: It is difficult to say how much money will be raised by the Bill, but there is no doubt that an orderly approach to spectrum allocation, which is enshrined in this Bill and which was in the Conservative party's manifesto, is the right way to go. My discussions with people in the industry suggest that that is overwhelmingly
their view as well. The mobile operators do not oppose the Bill in the way suggested by the right hon. Member for Wokingham a moment ago.
I want to ask my hon. Friend the Minister about the way in which the Bill will be put into effect. My hon. Friend said that there will not be blanket auctions for every piece of the spectrum, but I wonder what consultation he envisages will take place before a decision is made to auction any given piece of spectrum. I have two concerns and I shall use as my example the 43 GHz range for broadband wireless to which I have already referred. If that piece of the spectrum was auctioned, there could be a danger of undermining a promising new technology. I know that the Government would not wish to stifle that by piling on heavy charges too early in its development.
Equally, as I understand it, the technology would allow competitors to share the same piece of band width with different companies using the same parcel of band width. An auction would probably not be the most appropriate charging mechanism in that case. What steps will be taken to consult potential participants in the industry before any decision is made to auction a piece of the spectrum? Can the Minister confirm that, before there is an auction of any new part of the spectrum, there will be consultation about the appropriateness of that approach?
I want to clarify the impact of the Bill on existing operators. I welcome what my hon. Friend said about the establishment of a spectrum management advisory group. That will be widely welcomed in the industry because it has been pressing for that. What will be the impact on the existing mobile operators? The House of Commons briefing paper suggests that there will not be an impact on existing operators. It gives the example of Vodafone, where the licence has more than 20 years to run. That is almost certainly a misunderstanding, as it relates to its Office of Telecommunications licence. I understand that the Radiocommunications Agency's licence for the use of spectrum by existing operators is renewable each year.
The Bill will lead to a change in the way in which existing operators are charged for the use of spectrum from next year. I believe that that answers the concerns raised by the hon. Member for South Dorset (Mr. Bruce). The Bill does not mean that charges will not be imposed on existing operators; instead, a level playing field is created for them. Perhaps the Minister can spell out how far thinking has gone on that matter.
My hon. Friend repeated the commitment made in another place that there will be no auctions for existing operators. How will charges for existing operators be computed? Is it realistic to expect that mechanism to be in place by next year?
Mr. Prior:
I am grateful to the hon. Gentleman for raising the point that I tried to raise earlier and to which I did not receive a proper answer. As I understand it, the existing licensees, who tend to be big companies, will not be contributing to the £1.5 billion. All the additional money will come from new entrants who, by definition, will be smaller companies.
Mr. Timms:
The hon. Gentleman has misunderstood what my hon. Friend said. He made it clear that existing
Mr. Ian Bruce:
If the hon. Gentleman considers the financial effects of the Bill, it will be clear to him--it is about the only thing that is clear about the Bill--that the sums of between £500 million and £1.5 billion which will possibly come from auctions are set against an increase in charges to existing operators of only £75 million a year. Even if the industry thinks that that is fair, it wants to know whether one group of operators using a piece of spectrum should pay only an extra £75 million a year, while the new entrants will have to pay £1.5 billion to use exactly the same sort of spectrum.
Mr. Timms:
The hon. Gentleman is supporting my argument; there will be charges on existing operators. I want to know how those charging mechanisms will be established.
I do not know whether Conservative Members agree with their spokesman, but I have no objection to charging for the radio spectrum or to the competitive mechanism that is enshrined in the Bill. Those proposals are entirely appropriate and I do not believe that anyone in the industry or throughout the country seriously objects to them. They are entirely right.
My third concern relates to protecting consumers' interests. I should like to take up the debate initiated in another place, where it was proposed that the Bill should contain an explicit reference to the interests of consumers in relation to the spectrum allocation process. I know that the Telecommunications Users Association supports that idea, but it was opposed by the Minister in another place on the ground that the existing protection of user interests in the Telecommunications Act 1984, which requires Oftel and the Secretary of State to promote the interests of consumers, is sufficient. I am not entirely convinced and I wonder whether the Minister can comment further on that issue. It appears to me that Oftel has no significant locus to look after consumer interests when it comes to spectrum allocation. Is it the Government's intention that consumer interests should be taken into account in that connection? If so, and I am absolutely certain that it is, such consumer interest should be catered for in the Bill.
The Community Media Association--it was known as the Community Radio Association but it was renamed at the weekend--includes a large number of interesting and enterprising members who represent community-based radio and media initiatives. It has stated:
I have three concerns. First, can we be assured that there will be consultation before a decision is made to auction any given piece of radio spectrum? Secondly, how will the new, different charges be computed for existing mobile operators? Is it realistic to expect such a mechanism to be in place by next year? Thirdly, when determining such matters, will the Bill contain an explicit reference to ensure that consumer interests should be taken into account?
Mr. Ian Bruce (South Dorset):
I am most grateful to be called so early in the debate. One of the silver linings, albeit unwanted, of the defeat of so many of my colleagues has been that I have been catapulted into being a senior member of the Conservative party. I therefore now get to make my speeches earlier in proceedings. That is a rather sad reflection, but at least it reveals some modesty on our Benches.
I declare an interest as a paid adviser to the Telecommunications Managers Association. On this occasion, however, I specifically asked it not to brief me so that I could feel free to make my views known.
I am glad to follow the hon. Member for East Ham (Mr. Timms), who probed the Minister in exactly the same way as my right hon. Friend the Member for Wokingham (Mr. Redwood) and other colleagues have sought to do. It is not as though hon. Members and the industry cannot agree on how to go forward to get a good return for the taxpayer while allowing the industry to go forth and multiply. I do not believe that the Minister or his Department have any nasty intent, but I do not trust the Treasury perhaps as much as he does because the Treasury exists to get the maximum return for the taxpayer.
On Second Reading and in Committee, we will try to probe the Minister more about what the Government intend to do. A new entrant to the industry needs to know the Government's intentions to plan for the type of approaches that might be made.
It is easy for existing operators using existing spectrum to rush to cuddle the Government warmly, and even the Opposition, and say that they are keen on the idea of auctioning the rest of the spectrum. Once that is done, the spectrum that those operators already own is instantaneously given a capital value. The farmers hated their milk quotas until they suddenly realised that, overnight, the Government had created a capital asset that they could sell on. After all, they had their milk quotas for nothing. We must be careful about how we deal with such proposals.
My right hon. Friend said that the Opposition were deeply critical of the Bill because we want to get the proposals right. The Bill must not allow the Treasury to rub its hands with glee, saying, "On the first bid we will go for £1.5 billion and see what we can get later." The balance between existing operators and new entrants is crucial and it is a difficult one to strike successfully.
The history of the previous Government's efforts to allocate spectrum and allow television companies to bid for franchises reveals that the most difficult aspect was making the process fair. The arithmetic and problems will not change for the Labour Government. We will therefore be keen to probe the Government to determine what they have in mind. We will want to get as much information as possible, if not on the face of the Bill, at least discussed in Committee. I give Ministers fair notice that we want to hear in Committee exactly what they are thinking of doing. Ministers have benefited from the consultation put
in train by the previous Minister, my hon. Friend the Member for Esher and Walton (Mr. Taylor), and the information that that has provided.
Many consultation papers were put out by the Radiocommunications Agency and other bodies, so it is not good enough for the Government to say that they will continue with the consultation. If that is what they want to do, let us leave the Bill for a few months and get the consultation over. We and the industry need to know what the Government intend to do.
Although I am sure that the information appears on the face of the Bill, I can never read these things properly, so I want to know whether we are to have the affirmative or the negative resolution procedure for the regulations the Secretary of State will be empowered to make. Often, we receive telephone calls from a business or organisation asking, "Why did you vote to put this charge or this amount of extra tax on me?" and we do not remember doing anything of the sort because the measure disappeared in a resolution that would have needed a prayer laid against it for it to have been brought before us.
It is important that we should know, because we are dealing with a crucial industry that is one of the fastest-expanding parts of our economy. The Minister was somewhat aggressive towards my right hon. and hon. Friends in trying to suggest that we are here simply to oppose the Government. In fact, we are trying to get to the facts and it is important that we do so.
I received a letter from the Federation of Communication Services, which represents existing operators--those who already have spectrum--especially businesses in the mobile telephony sector and those in related fields, such as radio. It is worth reading to the House the list of concerns set out in the letter, although the Minister will be pleased to learn that he has already acceded to the fourth request or demand in the list, which is to the good. The first concern is that
The second point is that there should be a
The FCS's third point is that
The fourth point is one to which, as I said, the Minister has just acceded. It was that
The European Informatics Market Group, which operates within the House, has all of the industry on board and its representatives get together and come up with wonderful reports. As a member of the editorial board, one of my roles is to say, "Hang on a minute. This is the view of the people already here, but we also have to think about the people who may want to come in and, even more important, about the user--the person who has one mobile phone and does not really know what is available, but who has a real interest in ensuring that the products are available at a sensible price." That is extremely important.
The key questions posed by the FCS are:
I turn now to the interesting case of the fishermen. The amount of money involved is small, but the fishing industry is deeply annoyed and we all know how much pressure the industry has been under in recent years. Fishermen are now subject to additional expense because--quite rightly--we have demanded that the safety of those who work on fishing boats must be paramount. In addition to normal safety gear, which almost requires boats to be extended to carry all that the Government want them to have on board, they must have access to radios.
In many cases, the radios that boats are required to have on board--some requirements are already mandatory, while some are still being pushed through the system--are used only in emergencies. Many of my fishermen are inshore fishermen and the best way for them to ring up their wives or their fish merchant is to use a mobile phone, not to use the radio to which they often do not have immediate access. However, to get in touch with the emergency services when they see someone else in trouble--another vessel reports a vessel in trouble in the vast majority of cases--they have to have the radios on board.
A long time ago, it was brought to my attention that the sum fishermen had to pay for their licences under the existing regime was subsidising those who install in their fancy yacht radios for leisure and other purposes. Providers of services for leisure fishermen who used their radios far more often got a cheaper licence than professional fishermen who required a radio for safety reasons.
I had a good response from my hon. Friend the Member for Esher and Walton when he was the Minister. He met representatives from the fishing industry and felt that changes should be made to regulations. I am sure that my hon. Friend will not be upset if I offer to supply copies of the correspondence between us; the last letter I received directly from him was dated 29 October 1996, in which he agreed that a case had been made out.
"Information technology is essential to assuring freedom of information and expression, social inclusion and cultural diversity. The CMA would like to see amendments brought forward in Committee to take account of the social and cultural benefits of use of the radio spectrum."
No doubt the Committee will wish to consider its concerns.
"the new spectrum pricing regime should be fair, equitable and transparent and should apply to all users in order to maximise efficient spectrum use".
I have already remarked on the difficulty of achieving fairness and avoiding imposing double taxation or charging people for things of which they had free use in the past while allowing new entrants in and ensuring equity between them and existing operators. That is a difficult balance to strike.
"clear statement of Government policy as to where it will apply auctions and administrative pricing, now and in the future".
The Minister says that that is still being discussed, but before we give the Government the powers they seek, we want to know what they and the Treasury have in mind. We must get clear statements from Ministers.
"the Radio Agency's (RA) ideas for implementing spectrum pricing are at an early stage and require much more thorough analysis of spectrum congestion, monitoring mechanisms and the derivation of the Spectrum Tariff Unit before licence fees can be set. In a combined response to the RA's May 1997 consultative document, the mobile communication industry and radio users proposed a partnership approach with the Agency to develop this new mechanism".
I hope that the Government will look carefully at how to work in partnership with the industry.
"there should be a new consultation body, the Spectrum Management Advisory Group reporting directly to the Minister."
I am keen that the Minister should understand that the existing industry will want to advise Ministers and it is right that it should do that, but I hope that Ministers will take independent advice from users and potential new entrants.
"what is Government policy on the application of administrative pricing and auctions; whether Government can give assurance to small and medium sized businesses that the spectrum they currently use, or may wish to access in future to provide the same services, will not be auctioned;"
and
"whether the Government will adopt a partnership approach with industry and users to develop the implementation mechanisms for administrative pricing."
Those are valid questions and they must be addressed in Committee.
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