7.3 Fees and/or resource charges

118. An issue that needs consideration is what type of fees or resource charges should apply for use of a MSP. (The option or options selected for allocation and implementation - see next section - will also affect costs and the ability to impose fees or resource charges.)

119. At minimum the Ministry will be expected to cover its costs, both in terms of initial allocation and engineering and ongoing administrative and enforcement costs. It will be difficult to estimate costs accurately in advance (not least because the number of applicants and what they want is unknown).  However, this will need to be done so that applicants know the likely fees they will face. 

120. A further issue is whether to impose resource charges on applicants to reflect the value of using a limited resource. The resource charge could be related to the value placed at auction on lots in the 2.3 GHz and 2.5 GHz spectrum or some other method of ascribing value to use of the spectrum in the managed parks. The arguments in favour of a resource charge include:

• It recognises the value of rights to use spectrum (which would otherwise be auctioned).
• It minimises what may otherwise be seen as “unfair” competition in a local area or region (including major metropolitan centres like Auckland) between those who have paid for a nationwide management right and those operating in a region using the MSP who would potentially face much lower spectrum costs.
• It ensures that applicants are serious and provides a disincentive to gaming. There is a risk in some of the MSP design options canvassed below that parties will be encouraged to apply in order to have the opportunity to be offered deals (to withdraw or modify their applications) in situations where demand exceeds supply.
• It encourages (particularly if it is an annual charge) licensees to use rights or to relinquish them (which frees up spectrum for new entrants and other licensees).

121. If a resource charge was to apply, it may need to be customised to reflect:

• the extent to which MSP rules ensured quality of service (see discussions under the options below);
• the extent to which there was scarcity (in some regions there may be plenty of available spectrum relative to demand);
• the local or regional nature of use of MSPs compared to nationwide rights;
• the extent of geographical coverage and quantity of spectrum used.

122. Thus the calculations for a resource charge would be complex and potentially contentious. Also, arguably, a resource charge is inconsistent with the “spirit” of a MSP, which has its origins in the concept of a spectrum commons available to all.