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11.45 pm

Mr. Ian Taylor: This is an important group of new clauses. They go some way towards the probing of the Government that the Opposition should be doing. Increasing the efficiency of use of the radio spectrum has taken a great deal of thought, certainly while the Conservatives were in government. People in industry who advised the previous Government were also exercised about it. How at any given moment does one find the right spectrum for an activity such as mobile telephony, which needs to group around 18 GHz, I believe--I can never remember whether it is MHz or GHz. It was difficult to accommodate all the spectrum that the industry wanted around that level.

Even when I was a Minister, there was a good deal of difficulty in accommodating the four main mobile telephone operators. There had been considerations about how, if one of them was not using the spectrum properly, one might reasonably claw spectrum back, and under what terms. I am glad to say that, to some extent, reasonable negotiation was possible.

The Ministry of Defence is probably now a good deal more reasonable--the Minister will confirm this--about its spectrum and how it might be used for commercial purposes when it is not fully in use by the military. Certainly, that was the case in my day as Minister, but there are some arguments as to what overarching interest the Government have in making sure that the Ministry of Defence uses spectrum with the greatest efficiency, in the interest of the economy as a whole. The MOD's age-old argument that spectrum must have national clear coverage is not necessarily viable, given improved technology and the better focusing of spectrum.

I had a lively discussion with Channel 5 before it went on air. This is confusing terminology, but there is a national area of clear spectrum called channel 35. I believe that it could be one of the first clear national channels available for auction. That is not the subject of this group of new clauses, but it shows that there is potential for moving to auctions when there could be a lot

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of users of a particular part of the spectrum. When Channel 5 was going live, in certain parts of the country it wanted to use a digital spectrum suitable for analogue transmission in the early days. It said that up to 4 million households would benefit.

There was a trade-off, which we handled by means of a gentleman's agreement, if the Minister will forgive my using that expression, between Channel 5 and the Government. I urge the Minister to keep a close eye on it. It was agreed that Channel 5 would have the right to use part of the spectrum in certain regions for five years, when it would have to hand it back to the Government, at no cost to the Government. When it connected people to Channel 5, it had to tell those who benefited from that analogue use of channel 35 spectrum that they would have to migrate to another delivery system in five years.

Channel 5 accepted that happily, because it knew that in five years it would have better delivery systems and would probably be moving to a clearer digital signal. The negotiations were complex, because my overarching aim on behalf of the Government was not to lose the advantage of a clear national digital channel, which may be used ultimately for, say, genuinely mobile television. That may not be the most exciting use of it, but it is an interesting use and there are tremendous advantages in having genuinely mobile national television which, because it is a clear signal, would be available across the country, even if one was moving around from area to area.

Mr. Boswell: The prospect of genuinely mobile television is exciting. Does my hon. Friend agree that for our present consideration, one of the great--if not the unique--selling propositions of radio is its extreme mobility, which is why it is so attractive and why its spectrum allocation is so important?

Mr. Taylor: I entirely agree. My hon. Friend and I agree on the principle of the Bill, and he is right to table the new clauses, because there are ways of improving the Bill before it is too late. The management of the spectrum will have to develop fairly quickly, and the more powers that are taken at this moment in the Bill, the better it will be. I urge the Minister to consider seriously the new clauses that my hon. Friend has wisely tabled.

As I mentioned in an intervention, there will be cases where, because of the technology, the Government and the Radiocommunications Agency will want to move users off a particular spectrum that is not indispensable to them and which could be used more efficiently by another company and for another purpose. I am sure that the Minister is aware of such cases, and the new clauses would give powers that she would find valuable.

With regard to the move to digital television, I was disappointed that the DTI did not continue to take the lead on the important matters related to digital television, as the Department had done under the previous Government. There seems to be too much interference by the Department for Culture, Media and Sport. I never criticise other Government Departments, of course, but when complicated matters are at stake involving technology and commercial interests, it is important not to let the Department for Culture, Media and Sport have too much say.

In the context of digital television, it should be the DTI's overriding ambition to achieve progress towards switch-off of analogue transmission at the earliest possible

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date. I am not being silly and suggesting that that means denying many people the ability to receive television. We all understand that. A similar problem emerged with the move from black and white to colour television.

The point is extremely serious. There would be huge commercial advantages for the United Kingdom to be in the lead. If we want to stimulate the move to digital television, a series of timetables must be set. We had set five years or 50 per cent. coverage of digital, whichever was the lesser. Those aims seem to have been fudged in recent Government statements. That will give the wrong impression to industry, which will have to make huge investments if the digital revolution is to occur.

Mr. Boswell: I am grateful to my hon. Friend for giving way, and I am anxious not to interrupt his flow. Does he agree that the experience of radio shows that one critical element is the cost of the receiver? That bears on the acceptability of the switch from analogue systems to digital. Does my hon. Friend further agree that one approach that can fruitfully be adopted, and has been adopted by the Radio Authority, is to allocate licences over a longer period, to give operators a greater inducement to make the shift?

Mr. Taylor: Yes, I accept that. We shall need a series of innovative methods to encourage investment, and longer licences is one. The prize of getting digital transmission for television is not just the fact that we may well become the world's largest set manufacturer--we do not do too badly at the moment, surprisingly.

There are 42 million television sets in this country, if my recollection of DTI figures is right. The Minister is up to date, and the figure might be slightly higher now. If there are 42 million television sets, that is an awful lot to replace. My hon. Friend the Member for Daventry (Mr. Boswell) raised the cost of not only the set, but the set-top box which, at the moment, would be separate but ultimately would be integrated into the new set as the market developed. As the market starts to expand, there will be a downward pressure on prices.

An innovative idea was discussed under the previous Administration. I would not say that it was Government policy; that would be arrogance on my part, and others would point out that I had not achieved any consensus. However, there was a clear possibility that moneys raised from administrative pricing--or, more particularly, from auctions--could have been put to use to stimulate the market for manufacture, distribution and installation of set-top boxes, so that the price to the consumer in the early days would not be as high as it otherwise might have been.

That could have been done in two ways. The first--this is not the way I favoured--was a straight subsidy in conjunction with the television companies that would be players in the digital age, so that the burden was shared between the Government and the private sector, in recognition that there were Government advantages. The second was that the freeing up of the spectrum when the digital signal was able to pass cleanly--rather than with the distortions that occur when an analogue signal passes from transmitter to transmitter--would make the spectrum valuable. A high price could be put on the spectrum, so that an incomer--knowing that spectrum was available--would pay a certain price. That money could be deployed

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to stimulate the freeing up of the spectrum that the incoming investor wished to take advantage of. A pool of money could be put to good use, to stimulate the market and to get it to a critical mass.

Both sides of the House agree that, invisible though it is, the spectrum is one of our most valuable resources, and the ability to make proper use of it is one of the determining factors as to whether the economy is capable of competing efficiently in the future. We need the ability not only to make use of the given current range of spectrum, but to make better use of the very high frequencies which at the moment have not attracted a great deal of investment. The range of 40 GHz would possibly open up the prospect of interactive television channels, and some experiments are going on. Frequencies at the higher end are not at present in great demand, but I suspect that that will change. That means that the Bill will be important, in how we manage and price the system. There are no such powers, but the Bill starts to provide them. In providing those powers, would it not be better to have the extra resources that would be available because of the new clauses?

There are more negative aspects. What powers can we have to take spectrum away from companies--or public authorities--that are hoarding? How do we insist that a company that is not absolutely dependent on a narrow part of the spectrum--and is therefore making inefficient use of that spectrum, looked at in the widest context--is moved to a different spectrum? We may need certain powers because of interference across borders. Obviously, in our case we mostly have a sea border, but that does not stop radio waves and we get interference from northern France and Holland, and vice versa. There may well be occasions--perhaps if we were moving to a new agreement in the European Union on spectrum resource management--when we would need to move companies around. We would need the powers to do that, and we need to find the right pricing mechanism.

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