Executive summary

2. Commercial spectrum rights (management rights and spectrum licences) created under the Act - generally for a term of 20 years - start to expire from 2010. The Act provides that rights revert to the Crown on expiry, but is silent on how they should be reallocated.

3. On 5 November 2001, Cabinet agreed to interim decisions outlining a policy for the reallocation of commercial spectrum rights on expiry. The interim decisions are that commercial spectrum rights be reallocated five years before expiry for a further 20 years, subject to a review on a case by case basis to ensure consistency with New Zealand's international radio obligations and the general objective of maximising the value of the spectrum to society as a whole. The Crown will receive a fair financial return for the use of spectrum in the future period to be determined by price-setting formulae that estimate the market value of the spectrum rights. If existing rightholders do not wish to pay this price, the respective rights will be reallocated by way of auction.

4. Cabinet also agreed that a final decision on the policy for dealing with commercial spectrum rights at their expiry would be subject to progress on the broadcasting issues of local content on radio and radio services for young people [POL Min (01) 29/8&9 refers]. The former Minister of Broadcasting has reported that adequate progress has been made on these issues, clearing the way for the confirmation of the interim decisions [POL Min (02) 4/9 and POL Min (02) 14/1 refer]. On 11 December 2002 the Cabinet Policy Committee deferred further consideration of the proposed policy until further decisions have been made on radio services for young people [POL Min (02) 22/5 refers]. It is now considered appropriate for the issue of youth radio to be decoupled from expiry policy, in light of the widespread economic impact of the latter and the disadvantages of ongoing delay in finalising expiry policy.

5. This paper therefore recommends that the interim decisions be confirmed and announced as soon as possible so that rightholders have the certainty they require to plan and invest effectively, and to allow sufficient time for the policy to be implemented. It is recommended that officials from the Ministry of Economic Development report to the Cabinet Policy Committee by 30 September 2003 with recommendations on suitable price setting formulae, including how these are best implemented.

6. The paper recommends a policy for dealing with the expiry of commercial spectrum rights (management rights and spectrum licences) only. It is recognised that a policy will also be required for dealing with spectrum rights reserved for the promotion of Māori language and culture and the achievement of the Government's public broadcasting objectives. The paper recommends that the Ministry of Economic Development, Te Puni Kōkiri and the Ministry for Culture and Heritage report to the Cabinet Policy Committee by 30 September 2003 with policy proposals for dealing with non-commercial spectrum rights when they expire.