Spectrum rights legislation

30. Cabinet considered the NERA report at is meeting on 12 December 1988³⁴ and agreed to adopt in principle a spectrum management regime providing for 'a mixture of administered licences³⁵ and the creation of property rights in the form of both spectrum products³⁶ and spectrum bands³⁷ enforceable by statute'. Drafting priority was given for a Radiocommunications Bill, reflecting the NERA recommendations, to come into effect on 1 April 1989. Cabinet also decided, as a matter of policy, that the Crown should retain spectrum bands and products "to enable social defence and security obligations to be met, with an administered licence and pre-determined resource cost being charged'.
31. In introducing the Radiocommunications Bill in August 1989, the Rt. Hon. Jonathan Hunt Minister of Broadcasting stated³⁸:
    'The Government's decision to permit competition in telecommunication network services was implemented on 1 April this year by the Telecommunications Amendment Act 1988. Major changes to the structure of broadcasting were implemented under the BCNZ restructuring legislation enacted late last year, and the Broadcasting Act 1989, which came into force on 1 July. These reforms, as foreshadowed in the Government's announcements last year, and during the passage of the amendments to the telecommunications and broadcasting legislation, also require the reform of the present legislative management regime for radio spectrum.'
32. The Bill closely followed the NERA recommendations however a 20 year maximum term, rather than rights in perpetuity, was implemented, and no industry-specific competition measures were adopted³⁹.
33. The Bill made no specific spectrum provisions to meet the requirements of public safety and security services, public broadcasting, Maori broadcasting or other social policy objectives. Rather, Government decided that these were matters best taken into account at the time when decisions are made to create spectrum rights over particular bands. This flexible approach was considered more appropriate to avoid such services being restricted to particular frequencies or constrained by 'sunset' technologies.
34. While the Bill did not specify any particular allocation process an owner of a management right must use, the Government had already signalled that, as the initial owner of all management rights, it intended to adopt the 2nd price, sealed bid tender method. This was with some opposition and subsequent auctions based on this method were subject to criticism⁴⁰.
35. With the earlier abolition of the Broadcasting Tribunal there was no mechanism for allocating radio and television broadcasting licences. Following the Bill's enactment by Parliament on 19 December 1989, a media statement was released the next day which stated:
    "Mr Hunt said that it would take time to bring radio frequencies for all telecommunication and broadcasting services under the new legal rights regime, but that priority would be given to new broadcasting spectrum. Tenders for UHF [television] frequencies are to be called shortly by the Secretary of Commerce. Expressions of interest for FM and AM sound radio broadcasting frequencies will be evaluated by the Ministry of Commerce in the new year."

Footnotes

³⁴ CM 88/47/39 refers.

³⁵ More commonly referred to as apparatus licences and now known as radio licences.

³⁶ Now known as spectrum licences.

³⁷ Now known as management rights.

³⁸ 1st Reading 17/8/89 (Hansard Vol 500, 12027-12047); referred to Planning and Development Committee 5/12/89 (Vol 503, 14080-14090); 2nd Reading 5/12/89 (Vol 503, 14090-14113); Committee Stage 12/12/89 (Vol 504, 14468-14473); 3rd Reading 12/12/89 (Vol 504, 14473-14479).

³⁹ Under clause 125 of the Bill, spectrum rights were deemed to be assets employed in connection with a business for the purposes of s47(1)(c) of the Commerce Act 1986.

⁴⁰ Some years later the allocation process was changed to a 1st price sealed bid and, latterly, to a multiple-round ascending-bid auction.