Executive Summary

In early 2004, the Associate Minister of Communications requested the Ministry of Economic Development (MED) to provide a review of radio spectrum policy. This report is the Ministry's response to that request.

The Review is designed to inform the Minister on:

• the radio spectrum management environment in New Zealand and its effectiveness;
• the factors that influence that environment; and
• existing and emerging policy issues warranting consideration in 2004/2005 and beyond.

This document is intended, therefore, as an overview of current radio spectrum policies and management, and as a mechanism for identifying and prioritising policy issues for future action. These issues are identified throughout the text and summarised in the final chapter.

The radio spectrum policy environment is delineated primarily by the Radiocommunications Act 1989 ("the Act") that, in addition to providing the framework for radio spectrum management, recognises New Zealand's obligations to the world-wide radiocommunications community as a signatory to the International Telecommunications Union (ITU) convention. Other Acts, Regulations and Cabinet decisions further influence the ways in which radio spectrum is managed and allocated. The responsible Minister is the Minister of Communications, acting through the Ministry of Economic Development (MED).

In passing the Act and its subsequent amendments, New Zealand was the first country to redefine radio spectrum in terms of property rights, and to assign it in a tradable form. After fifteen years it is now appropriate to review the effectiveness of the Act in the context of the current radio spectrum environment, and to determine whether new issues have arisen that require its revision.

New Zealand's radiocommunications sector encompasses:

• commercial service providers, notably in radio, television, information technology and cellular telephony;
• government-supported public broadcasting services at national, regional and community levels;
• providers and installers of radio sensors, locking and control devices, short-range communication systems, and similar low-power short-range technology;
• defence forces, police, emergency services and other public safety and security providers;
• aeronautical, maritime, and land-and satellite-based communication, location, navigation and anti-collision facilities; and
• radio-astronomy, meteorology and other science services.

Radio spectrum is managed under three complementary regimes that reflect the diversity of objectives contained in legislation and Government policy.

Radio spectrum policies and their administration fall within broader Government initiatives to improve the economic, social and cultural environment. These include:

• the Growth and Innovation Framework (GIF), whose purpose is the delivery of sustainable growth that improves the lives of all New Zealanders; and
• the inclusive society, within which inequalities are reduced and opportunities provided for all.

• promoting competition;
• maximising the value of spectrum to society;
• satisfying growing demand; and
• meeting Government's economic, social and cultural policy outcomes.

Spectrum in commercial demand is, in general, assigned competitively under the Management Rights Regime (MRR). Spectrum allocated for other commercial purposes and for use in the "public interest" by, for example, public safety and security services, is normally assigned administratively under the Radio Licence Regime (RLR). Such low power, ubiquitous devices as garage door-openers and CB radio, also known as "public park" applications, are assigned spectrum under General User Licences.

Each has particular constraints and requirements in terms of ITU obligations, enabling legislation, government policies, optimum spectrum allocation and licensing mechanisms.

To assist in promoting economic objectives, selected spectrum used for commercial purposes has been moved from its historical administrative assignment under the RLR to the MRR. New Zealand has been a world leader in this area. Management rights spectrum can be sold to service providers ("right-holders") and subsequently traded between them. An underlying assumption, that market mechanisms will ensure spectrum is allocated to its highest value use, has not necessarily been realised in practice. Various approaches that might be employed to optimise the spectrum market, including auction design, ownership limitations and implementation requirements, are considered in this report.

Social and cultural policy objectives that utilise spectrum are, in general, met through administrative assignment, including the reservation of frequencies for possible future "public interest" use. In the broadcasting sector, and to a lesser extent in telecommunications, there are allocation and funding issues, as the demand often exceeds the supply for community, regional, national, ethnic, and special interest spectrum. Spectrum for public safety and security purposes appears to be adequate in supply but could be better coordinated in use. A comprehensive independent audit may be one way to identify inefficient utilisation.

New technologies impact on spectrum use and management. There is a general shift away from hard-wired voice and data services to various types of wireless delivery, some of which operate most effectively in "public park" spectrum. Convergence in technology is notable in cellular telephony (text, pictures, internet, and handheld data) and in television broadcasting (interactive digital TV carrying internet and programming-on-demand). There are opportunities and tensions for New Zealand in these developments. New technologies operating in public parks are designed to use spectrum efficiently, are self-managing as regards interference and attract little in the way of compliance costs, to the benefit of users. On the other hand, they are difficult to identify and regulate.

Resolution of such issues will contribute considerably to the creation of a communications technology infrastructure that enhances New Zealand's economic performance and social achievements. The economic, efficient and rational use of the radio spectrum offers significant opportunities to reduce costs, raise productivity and enhance the quality of life.

Major themes that have emerged from the Review are:

• the effectiveness of current legislation in achieving Government's objective in the deployment of spectrum;
• the relative effectiveness of the MRR, the RLR and GULs, and the desirable balance between them;
• the mechanisms by which the benefits of competitive assignment can be maximised and its drawbacks moderated;
• the degree to which Government intervention is necessary and effective in ensuring that social and cultural objectives are met;
• the implications of new technologies for spectrum management; and
• the need to further enhance international co-operation.

The issues identified in this report are to be incorporated into the Ministry work programme. The timing of any future work on the issues will be agreed with the responsible Minister in the annual Output Agreement, taking into account related work streams in the Ministry and other departments.

The report is presented in seven Chapters and an Appendix.

The report was compiled by the Radio Spectrum Policy and Planning group, in the Resources and Networks Branch of the Ministry of Economic Development. Valuable content and commentary was received from other branches within the Ministry, and from the Ministry for Culture and Heritage, Te Puni Kōkiri and the Treasury. The document has been peer-reviewed by Professor Martin Cave of the United Kingdom and Professor Henry Ergas of Australia, whose comments and suggestions are gratefully acknowledged and incorporated.