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Lord Williams of Mostyn: My Lords, we are reaching the conclusion of our consideration of the Bill. I take the noble Baroness's point that she remains doubtful about whether £2,500 will be sufficient. As she rightly says, we must wait and see. She may well be right.

I am grateful for the constructive approach which has informed our debates. The amendments made by your Lordships' House are comparatively few and perhaps I may deal with them briefly. The Bill is necessary because of the judgment of the European Court of Human Rights in the case of Chahal, mentioned by the noble Baroness. As she said on Second Reading, a Bill along generally the same lines would have been brought forward by the party opposite had circumstances been different after early May.

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It is not suitable that I should speak at length on this occasion. The most important amendment was made as a result of anxieties expressed on Second Reading by the noble Baroness and the noble Lord, Lord Lester of Herne Hill. They suggested--and rightly, we thought, on consideration--that it was not clear on the face of the Bill as introduced whether the commission would be in a position to make decisions which would be binding on the Home Secretary. That had always been our intention and my amendment in Committee, which is now Clause 4, puts the question beyond dispute.

The Bill has also been improved by your Lordships as a result of a government amendment to Clause 2. That introduces an appeal right in certain entry clearance cases where Article 8 of the European convention, which guarantees the right to respect family life, may be relevant. The Bill helps us to ensure that our procedures for dealing within the immigration context with those alleged to be terrorists meet accepted standards of fairness.

As I said on Second Reading, it is fairly easy to give decent civil rights treatment to decent, reasonable people. It is much more difficult to give the same kind of treatment to those who may have behaved extremely badly. It is the mark of our society, which we hope to be civilised, that we accept the need to do so. The new special immigration appeals commission will ensure that the rights of those suspected of terrorist activity will be protected within the framework which safeguards our national security.

On Question, Bill passed, and sent to the Commons.

Wireless Telegraphy Bill [H.L.]

3.15 p.m.

Report received.

Clause 2 [Charges for wireless telegraphy licences]:

Lord Inglewood moved Amendment No. 1:

Page 2, line 22, after ("fit") insert ("and subject to subsection (2A).").

The noble Lord said: My Lords, the amendment relates to certain anxieties drawn to my attention by mobile telephone operators, in particular by two firms: Orange and One 2 One. As your Lordships will no doubt know, the mobile operators have committed billions of pounds of investment during the past 10 years or so and they have created a competitive, efficient and world-class mobile telephone sector which has contributed significantly both directly and indirectly to the fortunes of this country.

One 2 One is an operator licensed in 1993 to provide personal communications network or mass-market-type services. Since it began it has invested approximately £750 million in constructing its mobile telecommunications network. It plans to invest up to a total of £1.3 billion by 2001. Last year, One 2 One traded at a lost of £276 million and it does not expect to break even until 2001. Orange, which is owned by Hutchison, is in a similar category. Both have been operational for only three years. They face strong

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competition in the form particularly of Cellnet and Vodafone at a time when, due to the buoyant and competitive market, the average revenue per subscriber is declining rapidly.

I do not believe that there is anything between us on either side of the House about being in favour of competition. We can agree that we wish to see the evenhanded treatment of players on this playing field--that is, those who have been allocated spectrum--in order that they can compete against each other. The anxiety which I wish to draw to the attention of the House is the problem that is inherent where the allocations of spectrum and the consequent investment necessary to utilise that spectrum are not synchronised. Rather, they are happening at different times so that there are several different business cycles in play at one time.

The previous government, which I had the honour to serve, affirmed at paragraph 4.6 of their White Paper Spectrum Management into the 21st Century that the framework of spectrum pricing to be put in place would be:

    "predictable in order to help users plan ahead".

It also stated that there would be:

    "transitional arrangements to avoid disrupting existing business plans and investment already committed to by users".

The personal communications network operators obtained great comfort from that statement, although they questioned whether a three-year transitional period was sufficient because they are some years behind Vodafone and Cellnet in reaching profitability.

The amendment that I have tabled to Clause 2 is intended to reaffirm what was said by the previous Administration. It places a positive obligation on the Secretary of State in setting administrative pricing to allow an appropriate transitional period. The amendment to Clause 2 (2)(c) provides for the scale of existing investment to be a matter to be considered by the Secretary of State in determining administrative pricing, thus offering all mobile operators--I hasten to add not only One 2 One and Orange--significant comfort in knowing that the scale of their investment will not, as it were, be used against them in setting the level of the prices of the spectrum.

The amendment is intended to be a probing amendment and it may well be that the Minister will say that it is not necessary. He may also tell me that it is in some way defective in its drafting. However, I hope that I have clearly made the point about which I am anxious. I hope that he will consider it to be serious and one about which he can give some comfort to the industry. I beg to move.

The Minister of State, Department of Trade and Industry (Lord Clinton-Davis): My Lords, I am grateful to the noble Lord for putting the position as he has. He says that this is a probing amendment. I think it is right that he should have tabled it for that purpose because it gives me an opportunity to express the Government's view on the issues.

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The noble Lord may be right in saying that I shall argue that the amendments are not necessary. However, I wish to hold the House in suspense because I know that noble Lords are awaiting my remarks with great eagerness. I should never use the argument against the Opposition that something is wrong with an amendment simply because it is defective in its drafting. I have suffered all too often from those arguments and I do not propose to inflict them on the noble Lord. He does not have the facilities for drafting that we have. That does not mean to say that there cannot be a cock-up now and then but the noble Lord is more likely to have one than I am.

The noble Lord expressed concerns which I know he has discussed with parts of the industry. Therefore, it is appropriate that I should deal with the amendments. He is right to say that operators have invested very large sums of money in their systems and, not unnaturally, they wish to be able to make a reasonable return on them. The last thing in the world they want is to have their carefully considered business plans disrupted by violent swings in the level of licence fees.

I am now able to put the minds of your Lordships at rest. The noble Lord was right to anticipate that I would say that I cannot accept the amendments. The first amendment is really introductory, so perhaps we may look first at Amendment No. 2. The main concern is that the duty to have regard to sums invested in any telecommunications system would be extremely impractical to observe and to carry out. There are large numbers of telecommunications systems. The term includes not just the networks of the large operators but tens of thousands of small private systems. Ascertaining the amount of investment made in each individual licence system would be a gargantuan task and would also be a significant burden on licensees. I am sure that that is the last thing in the world the noble Lord would want.

Even if the data could be obtained, vastly differing amounts of investment and depreciation would be shown. I know that the amendment does not refer to depreciation but I believe that that is a factor which would be highly relevant. Having regard to substantially different investments would lead to considerable difficulties. For example, should it be the case that licensees in the same licence category are charged different amounts dependent on the stage reached in their investment cycles? I am advised that that might lead to a charge of being discriminatory. The noble Lord will know that that is not acceptable under the regulations. Nor is it acceptable in terms of the Treaty of Rome which does not define the words "discriminatory" or "arbitrary". In the final analysis the courts--the European Court of Justice--decide whether discrimination is practised.

There is the further point that the aim of the Bill is to permit the value of the spectrum to be reflected in licence fees. Logically, the value of the spectrum does not depend on the amounts that the licensee happens to have invested. I hope that the noble Lord will have been carried by that argument, which is forceful and practical.

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I turn now to the proposed new subsection (2A). We intend that fee changes should be phased in gradually so as not to disrupt business plans. But I do not consider that adding the proposed provision would be helpful or advisable. The amendment refers to "an appropriate transitional period". As I indicated, I do not wish to appear to be unduly critical of the draftsmanship, but that is a vague expression. What is appropriate? It will differ from case to case. In my submission, that suggests strongly that such a detailed matter should be left to the regulations rather than appear on the face of the Bill. For example, the proposals that are currently the subject of consultation suggest a phasing-in period of three years. I do not know whether, at the end of the day, following the consultations, that will be regarded as sufficient. That is the whole purpose of any consultations. I have underlined over and over again in the course of our debates, although I know that they have been short, that the consultation must be full and relaxed and an exercise in which people feel that their views are properly taken care of. We want them to be able to make those representations freely.

However, I do not wish to pre-empt those consultations. The Bill as amended already provides sufficient checks and balances against fees being raised too quickly. We have discussed that previously and I did not notice any sign of dissent. A statutory duty to consult has been added to augment the ongoing and extensive non-statutory consultation practised by the agency. That will provide ample opportunity to assess the effects of changes on businesses.

The Secretary of State is required to have regard in particular to factors including the economic benefits arising from the use of wireless telegraphy. That covers the effect on licensees' businesses of either the amount or the speed of fee changes and provides ample scope for licensees to make representations if they consider that the changes are proceeding too rapidly and that their businesses will suffer in consequence. The effects on businesses will be taken into account also and published before the regulations are made along with the compliance cost assessment which was published with the Bill. In fact, phasing is an issue only when there is a sizeable shift in fees. That is likely to occur only when we are moving from the present regime to the new one.

We have already made proposals in the consultative document to phase in the initial changes over three years. Thereafter, I envisage a process of rather more gradual adjustment. Phasing in such circumstances would be unnecessary. It would slow the ability to use the pricing powers to respond to changes in spectrum demand and usage, making them a less effective spectrum management tool. I believe that the noble Lord and I agree that having an effective spectrum management tool goes to the very heart of what we are seeking to do.

Businesses which feel that their interests have not been properly taken into account or that their businesses will suffer have a remedy: they can approach Members of your Lordships' House or Members of another place

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to raise the issue in Parliament. That is not impossible. Indeed, having seen how this matter has progressed in its own small way, I perceive that it is very possible.

Finally, the drafting has some unintended effects. I do not seek to make a point about the drafting but I wish to point out that the proposed subsection (2A) appears to rule out any possibility that fees might be reduced or remain the same. In practice, the proposals on which the Radiocommunications Agency is currently consulting would involve most licence fees either staying the same or being reduced by as much as nearly 50 per cent. in many cases.

I believe that our approach to spectrum pricing so far and the proposals in the consultative document demonstrate that we are sensitive to the concerns of businesses. We have certainly not been unmindful of the representations made to us either directly or through Members of your Lordships' House. I can assure noble Lords that we shall continue to take proper account of matters such as existing investment and the phasing in of fee changes. Nevertheless, for the reasons that I have given, I hope your Lordships will agree that it is neither necessary nor appropriate to introduce such details into the Bill. Therefore, in the light of my explanation and the assurances that I have given, I hope that the noble Lord will feel able to withdraw the amendment that he quite properly moved.

3.30 p.m.

Lord Inglewood: My Lords, I thank the Minister for taking such a thorough look at the problem, which I believe we all agree is, in his words, difficult. I am sure that it was helpful to your Lordships to have canvassed the legal context widely, bearing in mind the European and other considerations that must be brought into play.

I should like to make just two points before I withdraw the amendment. The first is in terms of the value of spectrum. The latter only has a value to someone if it is of some use. A person may have a use for spectrum solely by virtue of having invested an enormous amount of money in infrastructure to enable him to use that spectrum; and, indeed, may only have carried out such investment on the understanding that he would subsequently be able to take advantage of the spectrum.

Secondly, as the allocations that we are discussing were made by government in pursuance of their own policy to effect competition in a particular market place, it would be perverse for changes in the general regime to directly undercut the competition that the original allocations of spectrum were intended to bring into effect. Finally, it is important for the long-term future of the industry--and, indeed, for all industries--that there should be investor confidence; namely, that those who lay out such very large sums of money can, as the Minister said, see a proper return in due course. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 2 and 3 not moved.]

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