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Mr. Boswell: I shall share an anecdote with my hon. Friend. I am sure that he is aware of the situation in which somebody's garage door opener in Canterbury might, allegedly, close down all the taxi radios in Calais.

12 midnight

Mr. Taylor: I am sure that The Sun would approve of that anecdote, but I am not sure that it is sensible in any other way. I must not get confused into worrying about European issues, or I shall be thought to be speaking in a different debate.

These powers will be important. There will be many other incidents that I have not mentioned, or which we have not even thought of, because the changes in technology have not yet occurred. I urge the Minister to look carefully at our rather generous offer. It is rare for a Conservative Opposition, fiercely keen as we are to look at the details of Bills, to come forward suddenly, in a fit of generosity at midnight, with new clauses that offer the Government more power. It would be churlish of her not to look at these offers seriously.

Mr. Ian Bruce: My hon. Friend has left out a most important point: the Minister, who is reasonably new to

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her job, has the advantage of my hon. Friend's experience. He did the same job for some time. I am sure that she will agree how valuable his experience is.

Mr. Deputy Speaker: Order. That may be the case, but it has nothing to do with the new clause before us.

Mr. Taylor: I heard my hon. Friend's intervention, but I shall not comment on it.

I hope that the Minister will say what her attitude is, as Britain has a tremendous opportunity to show leadership in the effective management of a resource where not only has British industry been successful, but Britain has been successful in attracting inward investment. The proof of that is in the list of members of the advisory committee, which includes Motorola.

Motorola is an interesting company. Not only does it employ thousands of people in this country, but, as an American company, it is an inward investor. I hope that David Brown, Motorola's chairman in the UK, has the appreciation of the main board of Motorola in the United States, as Motorola in the UK is a leading player in developing digital mobile telephony--GSM--and did it almost under the noses, but without the attention, of the American company.

The one country in the world where GSM is not the universal standard is the United States. The American directors of Motorola often look quite uncomfortable when I remind them of the fact that it is thanks to Motorola in the United Kingdom that we lead the world in the spread of GSM. The United States, which is a fairly backward technological market, is looking to catch up one day.

Mr. Oliver Letwin (West Dorset): I should declare an interest, although, having discussed it with Sir Gordon Downey's office, I am not clear whether it really is an interest. However, for the avoidance of doubt, I declare that I am a director of the bank that has been appointed by the Department of Trade and Industry to advise on spectrum bids.

It is important to understand the background against which the new clauses are set, which has become more evident in many ways in other countries. Over the past 10 years or so, I have spent a large proportion of my time setting up the regulatory regimes for telecommunications in other countries. It is important to understand that even if the Government do not accept the intention behind the Opposition new clauses in the precise form in which we have put it forward, they will have to revisit the idea at a reasonably early date--unless they wish to generate some bizarre results.

The first piece of background that is critical--the Minister and her colleagues and advisers, including the impressive list of members of the advisory board that she read out, will already be aware of it--is the fact that compression, which my hon. Friend the Member for Daventry (Mr. Boswell) mentioned, is not a matter of slow progress in a mature industry, analogous with the gradual expansion in the size of aeroplanes, which enables the slots at Heathrow to be used more efficiently over time. Perhaps incrementally over 10 or 15 years we might see a doubling in the size of aeroplanes.

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We are talking of an industry in which huge shifts have occurred, not least the effective demolition of satellite as the major means of international voice telephony.

Mr. Deputy Speaker: Order. I have heard the hon. Gentleman talk before about the history of why amendments were tabled. Let us simply say that the amendments and new clauses have been accepted for debate. We do not need a history or a background to them. We need only speak to the business before us; perhaps the hon. Gentleman will do that. I do not want to hear the history of why the amendments are before us. They are relevant, and they are now up for debate.

Mr. Letwin: Of course I take your guidance, Mr. Deputy Speaker, but I am offering not an explanation of why the amendments arose but an argument about why they should be accepted, which I believe is directly germane to the new clauses.

We are dealing with an industry in which compression moves extraordinarily speedily. As a result, what is imagined today--even, perhaps, by the greatest experts--about the amount of frequency, the band width, that will be used may be wholly fallacious two or three years, let alone 10 or 15 years, hence.

Indeed, there is a long history of false prediction about the crowding of use of spectrum, comparable to the long history of false predictions about population growth. The experts turn out to be no better than the rest of us at guessing about such things. The intent behind the new clauses is precisely to allow for the possibility of a huge mismatch between current occupation of the spectrum and what will turn out, perhaps even during the Minister's occupation of her post, to be efficient occupation of the spectrum.

Of course, we all hope that the hon. Lady will progress to the dizzy heights of the Cabinet, but if she remains in the DTI and retains responsibility for the sector, she may find that, even during the lifetime of the present Government, current predictions, including those made by experts in the Department, will have been falsified by technological advance.

The new clauses seek to establish an arrangement under which that would not give rise to either of two developments, both of which must be wholly antipathetic to the Minister's desires. One, which has already been much discussed tonight, is inefficient use of spectrum.

I shall illustrate how extreme such inefficiency can become. Only about 10 years ago, the Government of a not very advanced country, Fiji, thought that it would be appropriate to allocate the entire 900 MHz band--that is, the entire part of the spectrum currently occupied by GSM in the United Kingdom--to one company serving Fiji, whose population is far smaller than that of a small British city. That happened because, on the best advice then available, that Government misunderstood what would be necessary.

That could well occur in a different form in this country. It is a grossly inefficient use of a scarce resource, because other companies could use that but cannot. Secondly--a point that I think will matter to the Minister, as it does to Conservative Members--the deficiencies to which the Labour party has frequently alluded in recent weeks--that rail and water privatisation have generated

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some unanticipated profits--could be brought home to roost on a scale that even the Minister might not yet have contemplated.

To be the owner, when compression has moved faster than anticipated--we must remember that we are talking about a geometric progression; it might be two, four, eight, 16 or 32 times faster than anticipated--of a large array of frequencies, which can at that time be used, but only by someone else who does not have possession of them, when a given company which has bid for them has possession of them, is an immense resource.

Mr. Boswell: Is it my hon. Friend's judgment that, despite the compression that he so eloquently describes and its rapid progress, the demand for these frequencies is probably rising faster still? In other words, in the race between the potential demand for frequencies and the technical compression which effectively makes more frequencies available, unless we use the spectrum to best effect we shall be losing, not gaining, ground.

Mr. Letwin: My hon. Friend makes a fundamental point, and it may be right. It is likely to be right. The difficulty is that none of us has the slightest idea whether it will be right. However, the new clauses establish a regime under which, if it proves to be right, as my hon. Friend and I suspect it will, the surplus profit, which would otherwise accrue to the monopolist, who would be able to exact a ludicrous monopoly rate, out of all proportion to the bid that he might have made or the administrative charge that he might be paying, would instead find himself in circumstances where there would be the possibility of that surplus profit being recouped.

I draw the Minister's attention to the kinds of quantity about which we might, in certain scenarios, be talking. Even public switched voice telephony occupies broadly 2.5 to 3 per cent. of gross domestic profit in the UK today. It is perfectly imaginable that, under certain hypotheses about convergence, about which my hon. Friend the Member for Esher and Walton (Mr. Taylor) spoke a moment ago, and under certain hypotheses about compression and demand, which my hon. Friend the Member for Daventry mentioned, we might be talking about surplus profits equivalent to about 1 per cent. of GDP--about £74 billion a year.

That would knock into a cocked hat the entirety of the surplus profits apparently generated, if one listens to Labour Members, by all the nationalised industries following their privatisations. It would still knock them into a cocked hat if one multiplied them by 10. We are talking about great quantities, a great unknown, and, accordingly, a great need for flexibility.

New clause 5 is the minimum response to that range of possible eventualities. It simply argues for a secondary market; a tradeability. That in no sense eliminates the surplus profit. It allows those who possess frequencies today later to trade out of some of them, presumably at the then market value, and, hence, to realise profit. But at least it solves the first problem of inefficient use. It means that if the proud possessor cannot immediately realise--because, for example, he cannot find the financing--capital expenditure sufficient to make use of the spectrum or the frequencies that he holds, somebody else will be able to do so by buying them.


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