Options

Regulatory Options - Use of Statutory Powers

Voluntary Options

30. Two broad approaches have been identified to address the challenges of coordination - regulatory options and voluntary options.

Regulatory Options - Use of Statutory Powers

Reference Standards

31. One way of prescribing coordination between managers is to publish a generic standard on coordination, applicable to all managers. Necessarily, such a standard would be wide in scope but it could present information on principles and procedures to support effective coordination.

32. It has been suggested that the Ministry issue reference standards under section 133 of the Act to require, or guide, managers in coordinating use of their management rights. Reference standards issued under that Act are taken into account in two situations:

• a matter relevant to a radio engineer's certificate (section 72A of the Act); and
• a matter relevant to arbitration (section 109A of the Act).

33. There are no situations outlined in the Act that require a manager to have regard to reference standard when making decisions relating to the operation or use of a management right. On this basis, changes to the Act would be necessary if it is determined that coordination between managers should be prescribed; and that a reference standard is an appropriate means of achieving the prescribed coordination.

34. In creating such a prescribed coordination requirement, consideration would need to be given to available remedies where parties are dissatisfied. Remedies could potentially include:

• reference to mediation;
• reference to arbitration;
• directions on the use of radio spectrum; or
• a requirement to surrender a portion of spectrum held.

Other Regulatory Options

35. A number of options have been identified that are "variations on a theme" in terms of ensuring parties are able to discuss and satisfy their coordination needs prior to use of the spectrum by either party, rather than attempting to deal with issues after the identification of harmful interference.

36. Introduction of a pre-licensing coordination process within the Act would provide an opportunity for parties to discuss their intentions and issues prior to implementing more formal processes such as mediation or arbitration. The nearest legislation providing similar opportunities for this type of forum is the Resource Management Act (RMA).2 The benefit of this process is that parties have an opportunity to discuss and reach agreement on a mutual basis. While this opportunity exists presently, a structured form of agreement such as may be present in legislation may ensure that sensible, fair, agreements can be reached, even in situations where there is unequal bargaining power.

37. The introduction of a mediation step prior to arbitration would ensure that parties have an opportunity to discuss and resolve any issues. If necessary, this could be completed in a neutral setting and with a view to enabling a mutually satisfactory outcome. Parties may be encouraged to resolve any issues during mediation if compulsory arbitration (with a binding outcome on the rightholders) is a subsequent step where mediation is unsatisfactory.

38. Currently, the Act provides for the arbitration procedures to be invoked only once licences have been granted and registered. This process also requires the spectrum licences to have been assessed in terms of technical compatibility with already existing radio and spectrum licences. These procedures are largely unhelpful to managers considering overall system design and implementation. The Act would need to be modified to allow arbitration to be invoked at an earlier stage to assist rightholder coordination prior to the registration of spectrum licences.

39. In a situation where the Act's provisions have been widened to allow a manager to invoke arbitration if they can't create licences due to the location, frequency or service provided by an adjacent manager's licences, it is clear that the burden of coordination may shift from the manager creating new licences to the manager who has existing licences. This is likely to be an untenable situation for the manager with existing licences in a situation where he or she has been unable to identify the likely technology to be used by an adjacent manager.

40. As outlined above, there is some uncertainty as to how a manager should interpret and apply Schedule 1 of the Act relating to the IRR. For example, the IRR provides for member states to register assignments in the Master International Frequency Register and provides processes for managing interference issues that arise between member states. The extent of a manager's involvement with, and understanding of, the IRR may affect their ability to coordinate services. It has been suggested that Schedule 1 of the Act should be modified to provide greater clarity of the applicability of the IRR to managers and its role in technical coordination.

41. It has been suggested that the introduction of prescriptive co-location requirements would assist with the introduction of mobile services. Management rights are created in frequency bands and the managers are adjacent to each other in frequency terms. Interference, however, occurs as a consideration of spectral (frequency), spatial (geographical) and temporal (time) dimensions. The coordination between managers to minimise interference between proposed services may consider resolution in one or all of the dimensions outlined above. Co-location requirements may provide a means to assist with the introduction of new services in a timely manner, however it is not clear how they alone provide a means to address issues relating to coordination.

Comment

42. By prescribing actions to be taken by managers with respect to coordination, there is an increase in certainty, however there is also a corresponding loss of flexibility for managers to exploit their management rights.

43. The introduction of reference standards, or the creation of a regulatory process that must be used before a manager is able to introduce new services creates a barrier to investment as a result of the timeframes required. The cost of such barriers could be significant. These costs need to be offset by the gains that would accrue from the processes implemented.

Voluntary Options

Management Right Conditions

44. It is possible that some form of coordination guidance could be provided through the inclusion of suitable conditions on management rights. While not strictly a regulatory option as the content of the condition is a matter to be determined by the Crown, or between the Crown and a manager, it is acknowledged that there is an element of compulsion associated with this option.

45. The Act is largely silent on the contents of a management right, however the Radiocommunications Regulations 2001 (the Regulations) provide for management rights conditions "that apply to licences created in relation to the record of management rights". One view is that only conditions applying to licences may be considered suitable for inclusion on a management right. This view has not prevented conditions relating to issues such as foreign ownership appearing on management rights.

46. In one example, the Crown could place an obligation on a management right requiring a particular technology, or system, to be employed within the management right. Suitably identified technologies within the management right conditions would direct a manager in the use of the band, albeit at the expense of flexibility of choice.

47. An alternative approach would be for a condition to require the manager to consult and coordinate with neighbouring managers, perhaps without providing specificity. Conditions such as this are likely to be difficult to enforce should difficulties arise.

Contractual Obligation

48. Most transfers of management rights from the Crown have involved a sale process, typically through a competitive tender or auction. These processes provide the Crown with an opportunity to create specific coordination obligations as part of the sale process. Spectrum caps and limitations on commercial associations are examples of purchase conditions the Crown has employed in recent years.

49. One example of a contractual condition could include limiting the creation of licences near a management right boundary unless a coordination agreement has been reached with the adjacent manager. Effectively, this would provide a de facto guard band at the management right boundary. A similar approach has been employed in relation to geographical boundaries between licences in the Crown management rights at 3.4 GHz and 3.5 GHz.

50. Contracts could include requiring the formation of a group of managers soon after completion of a spectrum auction. This group would undertake any necessary coordination prior to implementation of services within the bands. It is likely that a time limit would need to be applied to encourage a timely conclusion of coordination.

51. Contractual obligations have the benefit that:

• they may be employed immediately (no legislation changes required);
• there is no risk that they may be outside the legislative framework;
• they are not limited in terms of complexity or content.

Voluntary Coordination

52. Voluntary coordination could be promoted through the publication of one or more "standard" coordination agreements that could be used by managers in any coordination. Using a real estate analogy, this approach would be similar to the standard agreement drafted by the Auckland District Law Society and widely used by real estate agents when completing contracts for the sale of land.

53. Various ideas have been proposed in relation to implementing a voluntary coordination process. These include:

• Making agreements public, thus avoiding any potential for managers to be accused of dealing in "bad faith";
• Ensuring that coordination agreements are flexible for the managers.

Other Voluntary Options

54. Ensuring that smaller managers have access to the same information as the larger managers would help ensure that no party is disadvantaged when negotiations are taking place.

55. Ensuring that Approved Radio Engineers (AREs) are well informed would ensure that, in detailed discussions, each party is able to discuss issues on their merits and on an equal footing, rather than being concerned about issues that may be either irrelevant or of relatively low importance. This would include ensuring that information relating to best practice engineering is available to AREs.

56. Allocating spectrum access rather than specific frequency bands may provide suitable opportunities for the implementation of new services while obviating the need for coordination relating to the differing uses of bands. This mechanism for management of the radio spectrum is referred to as "managed spectrum parks" and is under active consideration by the Ministry.

Comment

57. While voluntary processes provide greater flexibility in exploiting management rights, a company's strategic interests may still tend to dominate the coordination process.

58. It is noted that the type of agreement that may be reached between parties can vary based on the services proposed and the resulting potential for harmful interference to occur. Accordingly any process adopted must be both robust, but flexible.

2 It is noted that the RMA provides for all potentially affected parties to provide submissions on issues, not just immediate neighbours.