Security of tenure transitional plan guidelines

Guidelines - May 2008

1. Introduction
2. Analysis
3. Submission

1. Introduction

In September 2008, the Ministry of Economic Development (The Ministry) published Draft Guidelines on Security of Tenure Transitional Policy seeking the views of industry. The draft guidelines were issued to the public by publication on the Ministry’s website, and direct notification to potentially interested parties through the MED Business Update newsletters and email. This document summarises the submission received and publishes the guidelines.

2. Analysis

The Ministry received one submission from the Radio Broadcasters Association (RBA). The submission was generally supportive of the guidelines but raised concerns in relation to two specific issues.

The RBA has indicated concerns about the effectiveness of the use of moratorium provisions. This concern relates primarily to a recent moratorium placed on the licensing of Studio Transmitter Links (STLs) and other services in the band 915 MHz to 921 MHz. The RBA also notes that some radio licences have transitional rights granted under the Radiocommunications Act 1989.

The Ministry notes that the use of moratorium provisions in relation to the Security of Tenure Transitional Plans is to ensure the proposed timeframes are able to be met. In circumstances where new radio licences are granted after the development and implementation of the transitional plan, these licences will be of fixed term duration ensuring they are compatible with the transitional plan.

Transitional rights provided by the Radiocommunications Act to receive a spectrum licence for a specific period upon the creation of a management right will be met wherever applicable.

The RBA also expressed concerns relating to the financial compensation provisions. It would like to see the provisions extended to cover more than exceptional circumstances. The RBA claims that the process of transition would result in significant costs and notes that the depreciation of STL equipment is carried out over a 20 year period which is longer than the 5 year notice of revocation to be issued. The RBA position is that the transition period should be 10 years. The RBA is also concerned that an incumbent could claim hardship that is created by factors unrelated to the process of transition. The RBA suggests that the either new users of a band or the Crown cover the cost of moving the incumbents.

It is current government policy for financial compensation to paid in exceptional circumstances only. In the case of The Chief Executive may recommend financial compensation only when satisfied that revocation of the licence caused:

(i) a significant financial hardship; and

(ii) the financial compensation is in the public interest.

To ensure that the hardship is directly related to the revocation of the licence, the Ministry requires certification by a chartered accountant. Hardship created by factors unrelated to the revocation of the licence will not be eligible for financial compensation. The issues of: the time period of the notice of revocation; and for new users of a band to cover the costs for incumbents to move, are outside the scope of this paper, and were considered as part of the earlier policy decision.

3. Submission