2.3.3 Spectrum management considerations

The review has also considered the licensing regime under which the different sub-bands are managed and whether it provides for the optimum allocation of spectrum to the most valued use. In particular, the Ministry has considered which of the two spectrum management regimes – administrative licensing and management rights – is most appropriate, and in the case of the latter whether management rights should be sold or retained by the Crown and, if retained, how licences should be allocated.

The administrative radio licensing regime, where any one user may apply for a licence, grants licences on a first-come, first-served basis for an initial fee and annual renewal charge. A radio licence has no value as an asset and no tradability. This system provides an effective means of allocating spectrum when the spectrum available for use exceeds the quantity demanded for the duration of the planning period.

The management rights regime is a tradable property rights regime, which encompasses two tiers of spectrum rights:

• A management right, which gives right-holders (the managers) exclusive rights to a nationwide band of spectrum for a period of up to 20 years; and

• A tradable spectrum licence, which is assigned by the owner of the applicable management right (right-holders are entitled to license radio spectrum for use by their own organisation or by external organisations), and permits the licensee to transmit radio waves within the range of frequencies specified on the licence, and/or to receive no interference.

Management rights give right-holders a high degree of choice concerning levels and timing of investment, and in the type and configuration of the service provided. Management rights are typically allocated on a competitive basis initially (normally by auction), as a market-based mechanism of competitive allocation and subsequent trading is recognised as ensuring the most efficient allocative outcome for spectrum in high demand over time.

In addition, there is a class of licence called a general user licence (GUL), which may be created under either the radio licensing or the management rights regime. A general user licence allows any number of operators access to a specified band without a requirement for individual radio licences or fee payments. The licence carries the basic technical specifications of the equipment and the conditions of use. The technologies employed, their conditions of operation, and their minimal operating radius normally limit the likelihood of interference with other services. However, applications operating under a general user licence must not create interference to other licensed services and have no protection from interference caused by other users of the spectrum.