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Lord Clement-Jones: My Lords, I feel somewhat like the Ancient Mariner at this part of the Bill. I am hoping that the Minister will give me a better reply than he has to previous clause stand part debates. The purpose behind this clause stand part debate is to ensure that the Government put on the record their spectrum policy to deliver 4G mobile telecoms and set out their key objectives. Consultations are currently

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taking place on the report by the Independent Spectrum Broker, Kip Meek. He clearly has tried to reconcile a number of interests within the confines of his brief from Government. A key assumption underlying his conclusions was that there is adequate competition in the mobile market. Are the ISB's conclusions still valid now in the light of the reduction in the number of mobile operators through the merger of T-Mobile and Orange? The Government have acknowledged this to a degree in their extension of the consultation period.

Will there be an adequate portfolio of spectrum between the various competitors as a result of an auction process for the 800 megahertz freed up by analogue TV switchover-the so-called digital dividend-and the currently unused 2.6 gigahertz spectrum? This is one of the key questions. Will the proposals really have the maximum possible effect in terms of promoting competition in the mobile sector, as claimed by the impact assessment? Why is there no proposed special provision for new entrants as there was when the 2.1 gigahertz spectrum was auctioned? Does this not mean that the auction process is essentially a closed one, confined to existing operators? Why auction the 800 megahertz at the same time as the 2.6 gigahertz? Why not auction the former before the 800 megahertz is freed up from digital TV switchover? Why deal with our spectrum wholly separately from the process on the continent? Should we not be looking at this on a pan-European basis?

Are the emergency channels properly dealt with? Will there be adequate free spectrum for the Olympics, as the Government guaranteed in their bid? Save Our Sound highlighted the problems faced by the programme-making and special events sector, where a whole range of wireless radio microphones and similar equipment will be rendered obsolete by the auction of the 800 megahertz spectrum. The Government made reference to the issue in the Digital Britain White Paper, but what concrete proposals are there now by Government to meet their costs of enforced migration from 800 megahertz, which will add up to tens of millions of pounds? What justification is there to extend the 2.1 gigahertz 3G licences? Is that really necessary to stimulate further investment? Why have the expected financial benefits not yet been quantified in the impact assessment for the Bill? Will the annual licence fee, the administrative incentive pricing arrangement, be charged and will those charges reflect the true value of the use of the spectrum after 2021? What assurances will there be that the spectrum-trading model envisaged will actually work, when it has not worked so far?

What the Government propose is complicated, but some want to unpick it. BT, for example, may take legal action via judicial review. What view have the Government taken on its chances of success? The Government need to articulate very clearly why their proposals are necessary to deliver next-generation mobile and why the provisions in Clause 38 are required to implement them.

Lord Young of Norwood Green: My Lords, Clause 38 is intended to support the Government's proposals to achieve the spectrum modernisation programme set out in the Digital Britain report. I am having trouble

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with the noble Lord's transformation from handmaiden to ancient mariner; that is a terrible ageing process in the space of a few minutes.

The proposals, recommended by the independent spectrum broker, have been developed with the objective of enabling the early release of significant amounts of new spectrum into the market, offering the opportunity for existing operators and new entrants to acquire sufficient spectrum holdings that will allow them to deploy next-generation wireless networks, delivering high-speed mobile broadband services to businesses and consumers. An example of the licences that could be affected by the changes enabled by this clause are 3G licences which were auctioned in 2000 and are due to expire in 2021. The Government propose to direct Ofcom to make these licences indefinite, but that annual licence charges will be applied from 2021. The Government believe that this is an appropriate step to take.

Further investment is required in 3G networks, but with the licences due to expire in 2021, operators face a difficult decision at a time when capital expenditure budgets are under pressure. By making the licences indefinite, the operators can invest with greater certainty and confidence, to the benefit of consumers and businesses alike.

Some have argued that we are giving these licences away. This is not the case. The intention is to apply annual licence fees to these licences from 2021, which will reflect full market value. The amount of the charges will be set by Ofcom at the appropriate time. Of course, they will be required to exploit the spectrum that they have efficiently and effectively. At the moment, we have only one remedy-to remove the licence. We think that this gives us more flexibility.

On the specific question of the Olympics, I can guarantee that a suitable spectrum has been identified and will be available for the Olympics. I am pretty sure that the same guarantee could be assured for emergency services as well.

Lord Mackay of Clashfern: The noble Lord, Lord Clement-Jones, mentioned BT being somewhat upset about these arrangements and threatening judicial review. Has the Minister considered whether the Bill is as robust as it can be in relation to that threat?

Lord Young of Norwood Green: We were certainly aware of BT's intention. If BT wishes to challenge it, we believe that it is a fair and effective process. I understand from the affirmative nod from the Box that the answer is that, yes, it is robust.

Lord Clement-Jones: My Lords, I thank the Minister for that reply, but he barely touched the surface of the policy. I hope that he has read the independent spectrum progress report; it is the subject of consultation, which has been extended because of the Government's concern about the merger of Orange and T-Mobile affecting the competitive situation. I do not think that the Minister used the word "competition" in his answer to me. What is the Government's view about the new element introduced by the merger of T-Mobile and Orange? Has it affected the spectrum broker's

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recommendations? Do the Government still believe that their package is viable in the face of going down from five operators to four?

Lord Young of Norwood Green: Whether the joint venture between Orange and T-Mobile takes place is a matter for the relevant competition authorities. Whatever decision they arrive at will need to be accommodated within our proposals for the spectrum modernisation programme.

Lord Clement-Jones: My Lords, that is an extraordinary answer. The Government are making policy on the basis of certain assumptions. The Minister is telling me that that is in the hands of the competition authority; of course it is, in terms of the commercial practices of those particular mobile operators. However, I asked whether the Government's assumption about the level of competition in the mobile sector still stood, so that there would be a proper portfolio of spectrum available to keep competition within the mobile sector. The auctioning of the 800 megahertz and 2.6 gigahertz is going to have a considerable impact on the mobile operators' ability to deliver fourth-generation mobile.

Lord Young of Norwood Green: In the opening part of my contribution I did specifically refer to the point that the noble Lord made when I said that the proposals recommended by the Independent Spectrum Broker have been developed with the objective of enabling the early release of significant amounts of new spectrum into the market, offering the opportunity for existing operators and new entrants to acquire sufficient spectrum holdings that will allow them to deploy next-generation wireless networks, delivering high-speed mobile broadband services to businesses and consumers. I specifically addressed the point about new entrants and competition, and I wish that the noble Lord would perhaps pay a little more attention to what I am saying rather than criticise me for not giving answers.

Lord Clement-Jones: My Lords, I was listening very carefully and I took note of exactly what the noble Lord said, but he did not say that five competitors moving down to four made any difference to the Government's proposals. That was the point that I was making. Of course, he said that that was the Government's belief, but he did not say whether the Government had changed their view as a result of changes in the number of mobile operators. The other aspect was the Save Our Sound campaign. There have been assurances from the Government, but it seems that there is nothing concrete yet to help it in terms of replacing all the equipment which currently uses the 800 megahertz spectrum, which it will have to deal with. I was listening carefully to what the Minister had to say-but again, if I have misinterpreted the Minister, I apologise. I think that I have been listening pretty carefully, and I certainly did not hear the Minister say anything of that sort or anything about whether spectrum should be dealt with on a European-wide basis. That seems a rather important point. I do not know whether the Minister has any crumbs of comfort or scraps of paper or anything else that he cares to deliver in these

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circumstances. He shakes his head, so clearly not. We shall just have to wait until Report for further enlightenment.

Clause 38 agreed.

Clause 39 : Enforcement of licence terms etc

Amendment 242

Moved by Lord Young of Norwood Green

242: Clause 39, page 42, line 38, at end insert-

"( ) In section 400 of the Communications Act 2003 (destination of licence fees and penalties), in subsection (1)(d), after "42" insert "or 43A"."

6 pm

Lord Young of Norwood Green: This government amendment rectifies an omission in the Bill.

Clause 39 of the Bill inserts proposed new Section 43A into the Communications Act 2003, giving Ofcom a new power to impose financial penalties in certain circumstances. This technical amendment adds a reference to the penalties imposed under new Section 43A to Section 400 of the Communications Act 2003. Section 400 requires specified licence fees and penalties paid by operators to be paid into the Consolidated Fund. This amendment therefore ensures that any such penalties are dealt with in a consistent fashion to other amounts and penalties paid to Ofcom. I beg to move.

Amendment 242 agreed.

Clause 39, as amended, agreed.

Amendment 243

Moved by Lord Lucas

243: After Clause 39, insert the following new Clause-

"Electromagnetic spectrum: access for European emergency service

(1) OFCOM must set aside a spectrum band or bands amounting to not less than 15 MHz in total and lying within that part of the spectrum that is expected, under Council recommendation 10141/09 or subsequent proposals, to be agreed upon for the extension of European emergency service access.

(2) OFCOM may not release any of the spectrum so set aside unless it sets aside equivalent spectrum, or determines after due consultation that the emergency services have no reasonable likelihood of requiring the spectrum to be released."

Lord Lucas: My Lords, this amendment picks up a point raised minutes earlier by the noble Lord, Lord Clement-Jones, and not replied to by the Minister: what are we doing to protect the interests of the emergency services, and our national interests, when it comes to allocating spectrum for them? This has two prongs to its attack.

It is clear that the emergency services will, over time, require substantial additional spectrum. I have put in 15 megahertz here just as an illustration of the magnitude of the requirement. Although the current emergency services systems are generally operating well, if near capacity-there have been points in recent times when that has got very close-they were designed 10 years ago. All of us, even those with parliamentary communication systems, are operating at a much more advanced level than the emergency services are able to.

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If, as I think is inevitable, we give the emergency services the ability to use streaming video-so that the situation on the ground could be immediately communicated to the centre by the constable on the beat, or so that that constable could see immediately the recipe required to free a person from an obstacle or deal with a situation, as would be common on commercial networks that have to deal with such situations-we will require substantial additional spectrum to handle it.

If we are going to do that, there is great advantage in harmonising that spectrum across Europe. We achieved this with the current system, and greatly to our benefit. There have been two benefits. One is that because the system operates at common frequencies the kit is much less expensive. Secondly, by being an early adopter of the system, we have been able to take a very large share of the equipment manufacture market for the current system as it is spread out worldwide. It has been a great benefit to us in both those ways.

We now appear to be in a situation where a harmonisation process is under way in Europe for future emergency services spectrum. The noble Lord, Lord West, has very sensibly signed up to it on behalf of the Home Office, but Ofcom is doing its best to derail it, because it thinks that it can sell the bit of spectrum that Europe is looking at for more money. That is an extremely short-sighted view. Ofcom may get a bit more money for it now, but it will cost us a great deal more in the future both in terms of the cost of our kit and in terms of lost markets.

In this amendment, I am asking that this bit of the Government sign up as the other bit of the Government has. In other words, I ask that we are wholeheartedly part of the European co-operation on finding common spectrum for the next generation of emergency services' kit, so that we benefit, or have a very good chance of benefiting, as we have from the current system. I beg to move.

Amendment 244 (to Amendment 243)

Moved by Lord Clement-Jones

244: After Clause 39, line 3, leave out "amounting to" and insert "commensurate with the requirements of the UK critical national infrastructure in addition to spectrum"

Lord Clement-Jones: My Lords, the noble Lord, Lord Lucas, has made some very useful points. I must confess that the reason why we tabled amendments to the noble Lord's amendment-which I am sure is fully formed and perfect-is lost in the mists of time. Nevertheless, a more general statement would be appropriate in the Bill, rather than something this specific about the actual use of parts of the spectrum; I suspect that was our motive in tabling these two amendments. They are all about the critical infrastructure.

In debating the Bill, we need to consider the public benefit of reserving a small amount of radio spectrum for use by the critical infrastructure, which is crucial to our well-being, compared to the incremental benefit of using this spectrum to provide more entertainment services and marginally quicker broadband communications.

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Thirteen years ago, during the passage of the Wireless Telegraphy Act 1998, which introduced the concept of spectrum trading to the UK, the Government gave the assurance that,

Similar commitments have been made on subsequent occasions, and these should be honoured in the Bill to safeguard the operation of gas and electricity networks specifically.

As we move to a more interconnected society based around communications technology, the interdependence of the underlying electricity networks and communications must not be overlooked. It is not in the consumer's or citizen's interest for the integrity of the electricity supply network to be compromised by the lack of resilient communications infrastructure.

I have received a considerable number of briefings, all in language that I am sure the noble Lord, Lord Lucas, will understand, but I confess that I do not-particularly in terms of the emergency infrastructure. I hope the Government have taken all these matters into account, and that they can reply to say that they have done so. I beg to move.

Baroness Howe of Idlicote: My Lords, in listening to what noble Lords have said, I have been rather attracted by the arguments put forward, not least by the idea that we should perhaps go down the line advocated by the noble Lord, Lord Lucas, towards European spectrum.

We all know that there are too many, if not vast, areas where reception is appalling, about which one is currently very concerned, and where the likelihood is that it will not be perfect for quite a while to come. We would be pretty worried about whether the emergency services, if needed in these areas, would be accessible via the facilities they have.

I am certainly no more capable of understanding the technologies of this, but I hope that even though, as has been admitted, we may not have got it right, sufficient attention will be given to this point. Even during the cold weather we had recently, there were examples where the emergency services could not be accessed. This needs to be taken very seriously.

The Earl of Erroll: My Lords, I rise to support the amendment of the noble Lord, Lord Lucas, plus the amendments to it, because they are slightly different things. Taken as a package, the whole thing, though not essential, would be extremely useful for the UK and possibly the world.

Nowadays, in a global society where more things are happening and there is more international assistance, it seems silly that teams who go abroad should not be able to interoperate to a certain extent. If we operate on completely different frequencies, the kit has no hope of interoperating. It might be possible-I do not know-to get stuff to interoperate if we, for instance, dispatched a team to Haiti. If other international teams were there, we might find that we could, whereas the kit will not interoperate if we are working on

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completely different frequencies. Therefore the idea of organising this at a European level, for a start, is extremely sensible.

There has been quite a lot of debate on this around the scenes for the past year or so. When it has been raised at meetings with various people from the Civil Service, the general attitude has been, "Well, the emergency services have to bid for their spectrum like everyone else, and if that is wanted they will be given the budget to do so". What worries me is my suspicion that, with the current parlous state of the economy, they will not be given that budget. Because of a temporary crisis in our economy, we may well find ourselves regretting that in 10 or 15 years' time-or even at the Olympics. If there were a disaster then, it would be far better if we were operating on the European frequency. If teams were there with similar equipment, we might find it easier to operate together.

The point about the critical national infrastructure is that that is different. It would not be regarded as being for the emergency services. Again, however, it is important that they have spectrum allocated to them. More and more control systems-for power stations, for the grid and for other things-are running over radio frequencies. Those systems are not running down just wires or cables. We must make sure that those services have frequencies reserved for them that cannot be interfered with and that will not interfere with other transmissions. They should be dedicated to them. I therefore support all of these amendments.

Lord Young of Norwood Green: My Lords, the Government fully recognise the importance of access to spectrum for the emergency services. It is an essential tool, without which they would not be able to operate. The Government regard the safety and security of UK citizens as of paramount importance, and have consistently stated that spectrum management should pay due regard to that. The Government also note the additional amendments that would require spectrum to be set aside for critical national infrastructure.

It is important that we take account of the context within which these amendments are proposed. Spectrum is a finite resource; although technology advances have allowed greater use of the available spectrum, rising demand means increasing pressure on a fixed supply. Against this background, the Government commissioned an independent audit of spectrum by Professor Martin Cave in 2004, from which one recommendation was that any new spectrum requirements from the public sector should be met through the market. He recognised that that might not be possible in certain circumstances, so recommended that a process be established to determine whether an administrative allocation should be made. Government departments and their agencies act within this framework. Determining future spectrum requirements should be treated in the same way as any other resource.

I stress that the National Policing Improvement Agency is presently working on its future communications programme, part of which will address the emergency services' future spectrum needs. There is no way that those needs will be overlooked or that we will in any way undermine them. We will therefore be in a better

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position to determine what spectrum is required, and in what band, once that work has been completed and thoroughly assessed.

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