Review of the Radiocommunications Act

40. In 1991 the new Government emphasised its policy for telecommunications with the following statement⁴⁷:
    "The objective of the New Zealand Government is efficient markets in telecommunications goods and services. To this end, the Government has adopted policies and promoted statutory measures to facilitate competitive entry into those markets and to maintain the conditions for effective competition."
41. In April 1994 the Ministry of Commerce released a public discussion paper⁴⁸ on the Radiocommunications Act and the Government policies relating to its use. The principal purpose was to examine 'the effectiveness of the provisions and mechanisms of the Act in enabling the economic and social benefits from the use of the radio spectrum to be maximised'⁴⁹. The paper posed a number of key questions:
    1. Does the Act define property rights in a way which facilitates the most efficient use of the radio spectrum?
    2. Is interference managed in a way which produces the most efficient outcomes?
    3. Should the Act expressly address the issue of Crown allocation decisions?
    4. What is the best option for promoting competition in markets for radiocommunication services?
    5. What is the most effective and efficient approach to the registration of rights under the Act?
    6. What is the best approach to the regulation of privacy in radiocommunications?
42. Over the next 18 months the Ministry received and evaluated public submissions and held two workshops⁵⁰. Aside from the substantive issue of the administrative framework for spectrum rights, submissions and discussions covered a range of other issues. These were summarised in a further public document published by the Ministry of Commerce in December 1995⁵¹. Key issues addressed were:

Term of Rights⁵²

43. The report concluded that there is no compelling reason for rights to be limited to a maximum of 20 years⁵³. Further, it was stated that 'rights of indefinite length are more likely to enhance the value of the spectrum over time, and would obviate the need to resolve difficult succession questions in future.'

Competition Safeguards⁵⁴

44. The report concluded that no amendments to the Radiocommunications Act were necessary to restrict the amount of spectrum any one firm could acquire at auction. Such provisions could easily be included in auction rules. The report also concluded that: "Any consideration of the threshold for assessing dominance under the commerce Act is best undertaken in the context of the Commerce Act, and not separately for radiocommunications. The Ministry is not convinced that the characteristics of radiocommunications are such as to warrant individual treatment. In any case, such matters concern the Commerce Act directly and they are therefore outside the scope of this review".
45. The issue of 'use-or-lose' was reconsidered⁵⁵. While seemingly attractive in principle to prevent the hoarding of spectrum for anti-competitive purposes, the practical problems of defining, monitoring and enforcing such provisions were considered to be significant. The report also concluded that use-or-lose 'would impose barriers to new market entrants and thus be counter-productive to their purpose.'
    

Allocation Methodology⁵⁶

46. The costs and benefits of sealed bid tenders, open cry auctions and variations thereof were explored. Recent developments in the USA with 'multiple round, ascending bid' (MRAB) auctions led to the conclusion that 'there is no need, in the Ministry's view, to deal with methods of auctioning in the Act. The most appropriate method to auction spectrum can be decided by the government at the time.'

Non-Commercial and Maori Broadcasting⁵⁷

47. Although the Government policy objectives for non-commercial and Maori broadcasting were outside the scope of the Act and the review, difficulties with administrative processes relating to licensing of such services were addressed, particularly in terms of caveats and contracts restricting sale or transfer. The report concluded that proposed new provisions for amend, cancel and transfer authorities to be included in licences⁵⁸, would also significantly improve the administration of non-commercial and Maori broadcasting licences, without compromising the intent of the established policy.

Footnotes

⁴⁷ Reference CAB (91) M 51/32.

⁴⁸ 'Radiocommunications Act Review Discussion Paper'; Ministry of Commerce, April 1994, ISBN 0 478 002785.

⁴⁹ Chapter 1, Page 3.

⁵⁰ July and October 1995.

⁵¹ 'Radiocommunications Act Review: Preliminary Conclusions'; December 1995 ISBN 0-478-00311-0.

⁵² Chapter 5, Page 42.

⁵³ Radiocommunications Act s34g.

⁵⁴ Chapter 7, pages 67 - 79.

⁵⁵ The proposal was first discussed, and rejected, during the Select Committee hearings in 1989 on the Radiocommunications Bill.

⁵⁶ Chapter 8, pages 85 - 92.

⁵⁷ Chapter 12, pages 106 - 109.

⁵⁸ discussed in Chapter 5 .