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Mr. Colin Breed (South-East Cornwall): I should like to express the Liberal Democrats' views on the Bill. We are concerned primarily with spectrum reallocation, which is a matter in which we should perhaps be more involved. As the spectrum is a scarce resource, I have some sympathy for the Bill's clauses dealing with reallocation.

Three aspects of spectrum use should be controlled, the first of which is its inefficient use, or non-use. I certainly do not wish spectrum to be acquired for purely investment purposes.

Secondly, spectrum use for new purposes in new technology should be controlled. I imagine that, while this debate is going on, new technologies are not only being invented but are being introduced. Indeed, by the time debate on the Bill eventually finishes, I should not be surprised if those new technologies have become obsolete.

Finally, the way in which spectrum is used by spectrum holders should be controlled, to enable some of it to be released. Such controls might make spectrum reallocation possible, which would help in ensuring good spectrum use. Controls may also make it possible to use spectrum for the policing, safeguarding and security of spectrum holders--who may have paid exceedingly large sums for use of that spectrum. Surely there must be some safeguards for spectrum users. Spectrum reallocation to ensure its proper use would ensure also that the system is secure and is being used most efficiently. However, I do not know how successful the Minister will be in persuading the Ministry of Defence to reallocate spectrum.

12.30 am

I am absolutely opposed to new clause 5, which deals with the secondary spectrum market, because secondary markets are an entirely inappropriate way in which to consider spectrum. Milk and fishing quotas--the spectre of quota hoppers--show how secondary markets develop contrary to all expectations. Moreover, the practice of holding spectrum for investment purposes, and even the auction process itself, may encourage undesirable practices and are not the most efficient way in which to use spectrum. I certainly would not like there to be differentiation between spectrum owners and spectrum users.

We have created a system in which spectrum is acquired in auctions--not so that it will be used properly but so that it might be held for competitive advantage, or even to establish a dominant or monopoly market position, thereby preventing others from using it properly.

Secondary markets in spectrum would be a dangerous development in a very immature market, particularly because we have no real understanding of what will happen in the spectrum market. We have had all sorts of problems with milk and fishing quotas which are attributable essentially to secondary markets. Similar problems may be visited upon us in a secondary spectrum market.

The hon. Member for Esher and Walton (Mr. Taylor) briefly mentioned set-top boxes for televisions, which undoubtedly will soon be introduced. The boxes provide

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a good example of the need for care in that market, to ensure that domination is not established by one provider and that proper competition is maintained.

Mr. Ian Taylor: I do not wish to go back over old ground, but the hon. Gentleman mentioned the process of conditional access, which was put in the hands of Oftel to regulate. I think that those rules will provide fair and non-discriminatory access, although the market is currently taking its positions and deciding on one set-top box and compatibility. I believe that Oftel, as the regulator, is the right organisation to consider these very detailed arrangements, and I think that, on balance, we made the right judgment.

Mr. Breed: I bow to the hon. Gentleman's superior knowledge of that. The way in which the dominant operators in that marketplace operate in other fields causes me to fear that the so-called level playing field will not materialise. I hope that Oftel will indeed be able to control and manage that situation, which will have enormous repercussions for us all.

Although I am prepared to support some of the amendments in respect of reallocation, because I believe that they give us some power to ensure that such a scarce resource is used efficiently, I am signalling our complete opposition to new clause 5, as I firmly believe that the creation of a secondary market in such an immature sector is likely to have dire consequences for the Government and for the country.

Mr. Ian Bruce: Although I was the author of most of the amendments in the group that we are debating, I am not the original author. Let me tell the House why we are discussing them, why the Speaker has selected for debate 18 of the 19 that I wrote, and why we did not debate those amendments in Committee, which seems almost an age ago.

During the Bill's passage, we heard from the Minister that she had received advice from the Office of Telecommunications. There was a hint that Oftel was not quite as enthusiastic--or, at least, whole-heartedly enthusiastic--about the Bill as the Government were, and that it felt that the Bill should have gone much further on several issues.

I shall not speak about the whole gamut of utilities, because I did not produce any amendments on that subject. In tabling the amendments, I tried to ask where we had gone wrong in the pricing and efficiency of use of spectrum.

The Government came up with a Bill that was primarily a Conservative Bill--a Bill that was in the hands of the Department of Trade and Industry when the Minister and the Labour party came to power in May. The Bill deals with how the existing spare spectrum will be allocated. It also deals with the reallocation of spectrum that we assume will become available and which we assume will be reallocated, given the current licence criteria. It will become available, and the Government know that it will become available and, in time, by what method it is to be reallocated.

After the Committee, I attended a presentation organised by Pitcom--the Parliamentary Information Technology Committee--of which I have the honour of

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being vice-chairman. It seemed to me, from the frank comments made to me by Oftel at what is generally an off-the-record briefing, that there was more to be said about the Bill. The amendments that we have tabled generally reflect what Oftel said about what it wanted to happen.

I shall take advice from my hon. Friend the Member for Esher and Walton (Mr. Taylor), who was Minister for Science and Technology in the previous Government. He has told me that he well acknowledges that other things were wanted when he was Minister, but that, in the time leading up to the general election, for manifesto purposes, the Government felt that they could make only limited recommendations. My hon. Friend has told me that any limitation of agreed Government policy just before the general election, for manifesto purposes, should not be a limitation on the present Minister.

I wrote the amendments in less than an hour, reading Oftel's clear advice to the Radiocommunications Agency and the Government. That is where the amendments spring from. I do not want to attribute any words to Oftel. After our meeting, I asked Oftel to tell me what it felt should happen, and I should like to read from the letter that I received.

Mr. Lansley: My hon. Friend raises an interesting point. Some of the issues raised by Oftel were referred to in Committee, whereas others have come up since. The Standing Committee sat about two weeks after Second Reading, but four months have elapsed since then. The Government have had an opportunity to respond, but have failed to do so. They have not tabled their own new clauses.

Mr. Bruce: That is true. I pay tribute to the Minister. I often complain about not receiving replies to letters, but the Minister is very quick to respond to them. When I received a letter from Oftel, I wrote to tell her about the additional information that was available to us--which was already available to her. She rapidly wrote back, telling me that she had read the information, and that the Government had made their decisions with that advice available and did not intend to move any further forward.

I understand that the Department of Trade and Industry has been very busy with legislation. This week has shown how the Department has become clogged up, not having parliamentary time to bring its Bills back on Report. That backlog of parliamentary business gave the Department time to deal with the issues that Oftel wanted the Government to move further on. If the Government reject the new clauses, they will have to find time in the remaining three or four years of this Parliament to do something about these important issues.

I thought it proper not to interpret what Oftel told me, but to read the relevant paragraphs from Don Cruickshank's letter of 5 December. He says:

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    Under the heading, "The Bill", the letter says:

    "OFTEL welcomes the Government's Wireless Telegraphy Bill as part of a process of reviewing the way spectrum is used. Radio makes a very significant and increasing contribution to national economic welfare".

I shall not detain the House with the details of the £13 billion involved and the 410,000 jobs. He continues:

    "It is vital that methods of spectrum management are updated to meet the increasing demands of new market requirements and to allow increasing competition and the development of innovative services. The RA"--

Radio Authority--

    "review, the White Paper and the current Bill are steps in that process."

That is very important--they are steps in the process.

The letter continues:

The letter goes on:

    "I attach a copy of Oftel's response to the recent RA consultation on administrative pricing so you can see Oftel's views on these detailed issues.

    The Bill is only part of this process of overhauling the previous regime. The RA have indicated that they will go on to look at the possibility of secondary trading of spectrum".

That is very important in the context of the new clauses.

    "Oftel strongly supports the use of secondary trading"--

which is not in the Bill but is in the new clauses--

    "which will enable spectrum to be traded between users, encouraging them to use only what they need and to sell the remainder. This will ensure more efficient use and lead to competitive and lower prices for the consumers as the surplus holdings are used by other operators. As we discussed on Tuesday, this will become increasingly important as the fixed and mobile telephony markets merge and more operators want access to radio spectrum.

    The RA will, in addition, be seeking to ensure that spectrum is not hoarded by public and private holders to the detriment of others who are seeking to use it for new, innovative services."

Again, that is not in the Bill, but it is in the new clauses.

    "It is extremely important to keep up pressure here in order to provide spectrum for new operators and services."

I will not read the last paragraph; suffice it to say that it mentions putting consumers first. It is not relevant to the new clauses and I would certainly be out of order to read it. I know that a copy of the letter was sent to the Minister, so she is aware of the point.

With the letter, I received two very important documents. One was the review of utility regulation, which is also not relevant to the new clauses. Our debate could well have lasted for several days if I had gone through that document and drafted amendments that would make the proposed changes to utility regulation, but I shall not stray from the new clauses.

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