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Lord Clinton-Davis: I thank the noble Lord for tabling this amendment which helps me to clarify the situation and to underline the points that he has already stressed which have been set out by my right honourable friend the President of the Board of Trade and myself on numerous occasions. The noble Lord is right to express the concerns that he has. However, I submit, with respect, that the amendment is unnecessary. Perhaps I may explain why. It is not a question of simply making assurances, although I hope that appropriate credence will be given to the assurances that have been given in this regard.

There are provisions in this Bill and elsewhere which safeguard the situation that the noble Lord is seeking to achieve. The commitment that we have given over and over again that the use of the new powers will be driven by spectrum management considerations is beyond doubt. I believe that the industry has noted that. The Government would be extremely imprudent if they were to go back on their word and, as far as I am concerned, there is no question of that happening.

Clause 2, as amended, sets out the matters to which the Secretary of State shall have regard in particular in setting fees under the clause. The factors listed, the demand for and availability of spectrum, spectrum efficiency, innovation and competition are all related to spectrum management. The amendments that have been made to Clause 2 underpin my assurances that spectrum management considerations will be at the heart of administrative pricing.

There is an additional safeguard in European law in the shape of the licensing directive, which also constrains the power to set licence fees above cost in
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relation to telecommunications services. That is a very important provision. If fees were raised to a level higher than could be justified under Clause 2 or in contravention of the directive, the Secretary of State—the President—could be open to challenge in the courts. It is, therefore, wholly superfluous to state explicitly in statute that the Secretary of State should not act in a way that would conflict with the law. As a matter of law, the Secretary of State cannot legally exceed her powers.

I readily appreciate the concerns that the noble Lord has expressed on behalf of the industry. The further amendments that have been tabled to Clause 2 should, I hope, be sufficient to meet those concerns. If reinforcement is necessary, there is the licensing directive. That is why I do not believe that further belts and braces are necessary. In those circumstances, I hope that the noble Lord will feel able to withdraw his amendment. I repeat that I readily understand why he tabled it.

Lord Inglewood: I am grateful for the Minister's remarks about spectrum management considerations being paramount in this context and for his confirming the link between pricing and administrative efficiency. It was helpful that he drew attention to the European licensing directive, to which, as he pointed out, it is not necessary in law to refer specifically in this context, but it is important at the same time to draw it to the attention of the wider public because some anxiety has been expressed outside the Chamber on that point.

Lord Derwent: I thank the Minister for his remarks. I should like to study particularly what he said about European law, on which I confess that I am not fully briefed. It would be churlish not to accept what the Minister has said by way of assurance, and at this stage I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Derwent moved Amendment No. 4:

Page 2, line 32, after ("of") insert ("the part of").

The noble Lord said: In moving Amendment No. 4, I should like to speak also to Amendment No. 5. These amendments relate to the question of cross-subsidy between different users of the spectrum. As we read it, it is possible for the Government, using the powers under Clause 2, to apply price increases to one class of spectrum user in order to raise funds which would then be used to support spectrum management goals for a different class of spectrum user. A typical example might be cross-subsidies between that part of the spectrum used by broadcasters and that part used by mobile telephone operators. The amendments seek to prevent such cross-subsidies.

Under the Bill as drafted, it would be possible for a levy to be raised on profitable but very efficient spectrum users to enable grants to be made to less efficient users to re-equip their system. In such a case, the efficient users will have been penalised and the less efficient users will have been rewarded by such grants
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or equipment subsidies. The amendments would remove the possibility of such cross-subsidies by directing the Government's consideration to the promotion of efficient use in that part of the spectrum subject to the price changes in question. I beg to move.

Lord Clinton-Davis: It is right that the noble Lord should ventilate this point, although I hope that when he has listened to my explanation he will feel it appropriate not to press the issue. The amendment as drafted would not have quite the effect that the noble Lord postulates because it would remove the possibility of cross-subsidies from the factors to which the Secretary of State is required to have regard in setting fees, but it would not prevent her from taking that course.

In any case, all licence fee income has to be paid into the Consolidated Fund. The level of fees will be determined under Clause 2. The payment of financial assistance under Clause 5 is quite separate from that. That would be decided independently of those previous considerations. It would be done on the merits of the case for the additional expenditure contemplated. There is no necessary relationship between the two procedures, as I stated on Second Reading in these memorable words:

In view of that explanation, I hope that the noble Lord, who has, as I say, appropriately put down the amendment because it is useful to have the amendment and the discussion on the record, will feel able to withdraw it.

Lord Derwent: I thank the Minister for that reply. I suspected that there might be what I would call accounting difficulties because the funds obviously belong to the Consolidated Fund. If the Minister could give me some comfort that when considering these various charges he will be regarding each part of the spectrum, as it were, by itself and that we need not fear as a matter of policy that the Government would seek to cross-subsidise, that would give me considerable reassurance.

Lord Clinton-Davis: I cannot go beyond saying what the Secretary of State is required to do. That is already set out. I do not want to say anything which would in any way depart from that state of affairs. The situation is clear. I hope therefore that the noble Lord will not pursue the matter.

Lord Derwent: I thank the Minister. It is useful to have this short debate on the record. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No.5 not moved.]

Lord Haskel moved Amendment No. 6:

Page 2, line 37, leave out ("services which use wireless telegraphy") and insert ("telecommunication services").

The noble Lord said: I shall speak at the same time to Amendments Nos. 8 and 9. In Clause 2 we deal with matters to be taken into account when setting fees.
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The amendments have been tabled to meet concerns expressed by the industry that the competition considerations to be taken into account in setting fees have been defined too narrowly. We have been listening. The present wording is restricted to the supply of services using radio, but it may also be relevant for the Secretary of State to consider modern developments such as competition between radio and non-radio telecommunications services; for example, the use of radio to make the final connection from a telecommunication network to subscribers in competition with a wired network.

The amendments are self-explanatory. The definition of "telecommunications service" is a broad one taken from the Telecommunications Act. I beg to move.

On Question, amendment agreed to.

Lord Inglewood moved Amendment No. 7:

Page 2, line 38, at end insert—
("( ) the interests of consumers, purchasers and other users in respect of the prices charged for, and the quality and variety of, services provided by means of wireless telegraphy or apparatus supplied in connection with such services.").

The noble Lord said: This is a probing amendment which I believe is self-explanatory. It is supported by Oftel, the Consumers' Association and the NCC. If the Minister were to resist the amendment, I hope that it will be because he tells me that it is unnecessary bearing in mind the other wording of the Bill. I beg to move.

3.45 p.m.

Lord Clinton-Davis: The noble Lord has put a powerful argument in favour of the amendment. I shall deal with it in a rather longer way than the noble Lord sought to deploy. The amendment raises some important issues. Among those important issues are consumer issues. They need to be taken clearly into account when setting fees. I argue that the amendment is unnecessary, and I cannot support it for reasons that I shall give.

The amendment is unnecessary because Oftel and the Secretary of State have a duty under the Telecommunications Act 1984 to promote the interests of consumers, purchasers and other users in relation to telecommunications services which cover the important business radio services. In fact, the proposed amendment is based on wording from that Act, as the noble Lord will recognise. After all, if he does not recognise it, who will?

The Act concerns the regulation of telecommunication services and networks. It is the appropriate place therefore for the duty and the powers to enforce it. The Wireless Telegraphy Act 1949, on the other hand, concerns the management of the radio spectrum. Adding a similar duty to that Act could lead to duplication and there would then be a risk of confusing the roles of the agency and Oftel. My officials have consulted Oftel, which does not support the amendment. We consulted also the NCC, and it has no comments on it. I am not seeking to snub the noble Lord. He knows that well. However I think it right to point that out because concerns were not expressed by those organisations.
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The amendment is not appropriate in the context of spectrum pricing which is concerned with the pricing of the raw material to provide a wide range of services. Some of those are self-provided—for example, private business radio—and others, such as mobile telephony, are provided for end customers.

Whether licence fee increases or reductions are passed on to radio users' customers, and how that is done, should surely be a matter for their own commercial judgment. For example, a mobile telephony operator may decide to absorb fee changes or to pass them on in the form of call charges or rental. The effect on subscribers will be different in each case. It would be difficult for the Secretary of State to predict and have regard to the interest of consumers, purchasers and other users in the degree of detail required by the amendment.

Consumers' and users' interests are already catered for in the context of spectrum pricing by Clause 2(2). For example, economic benefit in paragraph (c)(ii) includes the benefits to both consumers and users. Work carried out for the Radio Communications Agency on the economic impact of radio contains broad estimates of the quantity known as "consumer surplus" which measures the benefits for consumers and the efficiency gains accruing to users which could be taken into account.

In addition, consumer interests will be promoted by virtue of the duty to have regard to the development of competition which is a potent force working to consumers' advantage. The Government are fully committed to consumer protection and consumer interests within the Bill and under the existing provisions of the Telecommunications Act. The amendment is therefore unnecessary. It is not altogether appropriate, and I hope that the noble Lord will feel able to withdraw it.

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