More privatisation of spectrum

By ADAM GIFFORD

The Ministry of Economic Development is planning to privatise more blocks of spectrum.

According to discussion papers released to spectrum users last week, the intention is to continue converting spectrum from the administrative regime, where the Government issues licences, to a property-rights regime.

In the past this has involved auctioning management rights to spectrum suitable for radio or television.

Critics say this will create monopolies or duopolies and make it harder for minority voices to get heard without Government intervention.

The ministry says the regime will give spectrum users the benefits of tradeability, security of tenure and flexibility.

"From a wider societal perspective, [the regime will] ensure that spectrum is indeed put to its highest-value use by allocating it initially through an open, competitive process in which those who value it highest succeed [ie. through auction] and allowing allocated spectrum to migrate to higher value uses through spectrum trading."

Hamilton-based radio engineer Vern Talbot said the ministry had no way to assess benefits to society, so was proceeding as if the issue could be ignored.

"Rogernomics still rules in the heart of Government.

"Strange, I thought we had got rid of all that," Talbot said.

"I think it is clear from what we have learned over the past decade that society should retain the ability to decide who benefits.

"It used to be the issue of benefit was dealt with by the Broadcasting Tribunal.

"That got very litigious, and no one wants to go back to it, but it was the only place societal values were exercised.

"The Commerce Commission has been relied on to be the anti-competitive mechanism and it has proved itself ineffectual."

Economist David Hay, who has studied broadcasting policy over the past 15 years, said the emergence of a duopoly in commercial radio came as no surprise, and a similar trend would emerge with other spectrum areas.

"When the market was opened up for 50 radio stations, the money to fund them - the pool of advertising dollars - didn't suddenly increase 50-fold," Hay said.

He said the limited revenue pool led to consolidation of ownership, the reliance on a limited number of station formats and an increase in networking, so local content and involvement disappeared.

"It didn't lead to innovation - look at how long it took for the duopoly to come up with an idea like Channel Z, which aims to soak up some of the youth market which was being inadequately served by student radio stations," he said.

At a seminar last week on the spectrum allocation plan, users were told that auctioning was seen as the best mechanism to ensure spectrum "is allocated to the uses which businesses and consumers value the most [as measured by their willingness to pay for them]".

Other criteria included whether creating management rights would increase choice in the way spectrum was used; the contribution services may make to the economy; and its effect on growth.

Existing uses and international agreements would need to be taken into account in many spectrum bands, and in some bands there was a perceived need for a "neutral" landlord, which may or may not be the Crown.

Radio engineers and user representatives at the seminar questioned whether the plan came to grips with issues such as societal choice, the encouragement of competition and the shift to new technologies.

There were concerns about the compatibility of fixed and mobile services - the issue underlying the dispute between Government-owned transmission company BCL and broadband internet provider Walker Wireless - and about how the regime would cope with the shift from analogue to digital technologies.

There was also a fear from radio operators that they could get squeezed out of preferred frequency bands by other industries who might find some "higher-value" use for the spectrum.

There seemed to be no provision to stop large companies from warehousing frequencies, locking them away from potential competitors or alternate users.