4.1.3.2 Proportions of Crown and private management rights

The Ministry considers that most of the rights should be allocated to the market, but recognises that there will be parties who would need licences in this spectrum but for whom it would not be economical to purchase a nationwide block of spectrum. These licences might be for new uses or to replace services operating in other bands, such as the 915-921 MHz band, as equipment ages.

Therefore, it is proposed that a portion be retained by the Crown as a management right, in order to ensure the availability of spectrum licences for parties which do not hold management rights. The Ministry preference would be to allocate spectrum licences for digital links only, in order to maximise the efficiency of the Crown’s spectrum. The remaining spectrum would be subject to competitive allocation as 20-year management rights to the market.

Crown-managed spectrum licences should be allocated on a commercial cost basis to avoid distortions and undercutting private providers (with the cost of spectrum licences to be derived from the market allocation process). The Crown currently reserves spectrum that is required to provide broadcasting services to meet objectives that may not be met through commercial broadcasting, and does not charge a resource rental for this spectrum, but only recovers administrative costs. These policies facilitate various non-commercial broadcasters such as Radio New Zealand, Access radio, iwi broadcasters and the like. Current policies only provide for reservation of actual broadcasting spectrum, and not any other spectrum a broadcaster may choose to use, such as for studio-to-transmitter linking, because such spectrum is a substitutable resource and the service might be obtained via various alternative technologies. As such, a subsidy by means of not charging commercial cost to non-commercial broadcasters would be inappropriate as it would not promote efficient use of resources. However it would also undermine the Government’s public broadcasting objectives if the Crown did not retain spectrum to ensure the availability of licences, and thereby force all new STL licences to be obtained through commercial negotiations with management right-holders.

The Ministry would welcome feedback on the appropriate amount of spectrum that should be reserved by the Crown and that should be sold. Based on the current profile of licences in the 915-921 MHz band¹⁷ , the Ministry considers that approximately 25 per cent of the spectrum should be reserved, and the remainder allocated to the market, i.e. 2 MHz retained, 6 MHz allocated.

Question 16

Do you agree with the proposal that the Crown retains and commercially manages 2 MHz of spectrum in a management right in the 841-849 MHz band in order to allocate licences for STLs to non-rightholders? If not, what portion if any do you consider should be retained and how should it be allocated? Please explain your reasons.

 Footnote

¹⁷ There are 278 licences in this band. The Register of Radio Frequencies indicates that 97 have been granted to the Radio Network, 87 to RadioWorks, and the remainder to mostly non-commercial and iwi broadcasters, as well radiocommunications service providers.