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Thursday, 28 October 2010
Page: 2014

Ms ROWLAND (11:10 AM) —Some members might not be aware that this proposed piece of amending legislation, the Radiocommunications Amendment Bill 2010, really is of the utmost practical significance to everyone in this place and to everyone we know. That is because mobile communications use spectrum as a fundamental input. This bill deals directly with the ability of mobile communications providers to continue utilising those parts of the radiocommunications spectrum that are currently authorised by their respective spectrum licences. Spectrum is in one of those special categories of scarce resources—it is finite and it is used but not consumed, and therefore it must be subject to an allocation system that recognises its value and directs how it can be used but at the same time provides sufficient flexibility so that the value of its use can be maximised by the person who is authorised to use it.

It is hard to believe it is approaching 15 years since Australia granted its first spectrum licences under the processes set out in the landmark legislative reforms of the early 1990s in radiocommunications and telecommunications. We have come an incredibly long way. Lives have been transformed, new jobs and new industries have been created and the digital dividend is now approaching. We are now approaching what a lot of people call 4G, or long-term evolution. We are able to maximise the reutilisation of what is called the sweet spot in radio spectrum bands that can be used for things we would not have imagined 15 years ago. There has been some discussion in this place about how far we have come on different issues in the communications space. There has been discussion about why we need, for example, 100 megabits per second broadband.

The lesson that I think has been drawn from radiocommunications and from what mobile spectrum has been used for in the last 15 years is that we should never underestimate the future. This is demonstrated by the development of mobile technologies, uptake, the development of competition in the sector with the managed duopoly of the early 1990s and then the open carrier licensing and carriage service provider authorisations, the development of resellers, mobile virtual network operators, prepaid options—and the list goes on.

I point to the Access Economics June 2010 report, Economic contribution of mobile telecommunications in Australia. It is instructive in showing how much this single part of the sector contributes to Australian society. The mobile telecommunications industry contributed $17.4 billion to the Australian economy in 2008-09. As at 30 June last year, there were 24.22 million mobile subscribers in Australia. There has been a huge growth in mobile data. The GSM Association has charted the enormous growth in mobile data, and in Australia 3G has finally overtaken 2G or 2.5G.

I doubt the members in this place at the time licence terms were established could have foreseen what technological and consumer regulatory frameworks would look like when those licences expired. Like many others in this place and in our communities, I am constantly fascinated by how far we have come and how much we take for granted. I remember very early on in my career as a telco regulatory lawyer going to a briefing about on-the-horizon issues in the early 2000s. I had someone telling me that in a few years we would be looking at our mobile device much more than we would hold it to our ear. I could not comprehend what he was talking about. I recall drafting intercarrier service schedules in the early 2000s for the exchange of SMSs between carriers, and I could not think why anyone would want to communicate with another person in 120 characters. I remember the first time I used a laptop with an inbuilt modem. And who could have foreseen the development of what now looks like a whole new market in applications for smart phones?

One thing has remained constant: the basic building blocks of the radiocommunications regulatory landscape in Australia enabled those adaptive technologies to develop and thrive. Other aspects of the communications sector have proven to be more challenging, and it has long been recognised that the structure of the telecommunications industry is in dire need of reform. We will continue to discuss at another time in this place the next stage of telco reform in this country. That next stage has issues that the rest of the world has been grappling with too, such as the importance of getting the regulatory environment right so that we avoid the shortcomings of the past and future-proofing against the risks to competition and the long-term interests of end users in the future as far as possible. We have had more than a decade of near constant inquiry into the state of competition in the telco sector. Both technological developments and the delivery of strategic policy for the public good will require a fundamental transformation of the industry’s structure, which will culminate in the separation of the wholesale and services layers of our own next generation broadband network.

I think it is useful to reflect on the regulatory journey which has led Australia to this point in terms of the bill we are looking at today. The current spectrum licences held by wireless operators, including carriers which provide public mobile telecommunications services, were allocated via an option process which started in the late 1990s using the procedural framework set out in chapter 3 of the Radiocommunications Act 1992. Those licences could be granted for a term of up to 15 years. I think there was foresight in the methodology granted to the Spectrum Management Agency at that time in the exercise of its powers. In addition to the ability to grant long-term tenure to maximise certainty for licence holders, spectrum licenses were required to include a set of technically logical core conditions. Those conditions included the relevant parts of the spectrum in which the operation of the radiocommunications device would be authorised under the relevant licence, the geographic area within which the operation of the device would be authorised and the maximum permitted level of radio emissions outside the boundaries of the licence.

Today, we are witnessing what is actually a historic milestone in the management of radcoms frequency in Australia, because those spectrum licences originally allocated in the late 1990s are now approaching the end of their term. We are about to activate a provision in the Radiocommunications Act—namely, division 4 of part 3.2—which has lain there patiently for 18 years, waiting to be activated, and we have come to this point of reissuing spectrum licences. The people who sat in this place 18 years ago conferred powers on the minister of the day and the regulatory authority to do certain things when this day arrived. Honourable members have come and gone, the regulatory agency has changed in structure and name and here we are today, taking the next step to activate this particular section of the statute and provide some long-term business and investment certainty to existing spectrum licence holders.

Spectrum planning is a multifaceted activity and it is conducted within an overarching international framework. In most countries, including Australia, planning starts at the international level through participation in the International Telecommunications Union. The spectrum licence regime under the Radiocommunications Act 1992 has served us well. Indeed, since the road to liberalisation of telecommunications in Australia began in 1991, I think it is fair to say that the principles of sound regulatory practice in the radcoms sector, consistent with the objects of the legislation and international practice, have been consistently maintained. These include: to maximise, by ensuring the efficient allocation and use of the spectrum, the overall public benefit derived from using the radiofrequency spectrum; to encourage the use of efficient radiocommunications technologies so that a wide range of services of an adequate quality can be provided; to provide an efficient, equitable and transparent system of charging for the use of spectrum; and to provide a regulatory environment that maximises opportunities for the Australian communications industry in domestic and international markets.

I want to make some brief comments about the spectrum-licensing framework to give some context for the amending bill before us. There are various forms of spectrum categories, and users need licences for each type. They are apparatus licensing, spectrum licensing and class licensing. Under the apparatus licence regime, a licence is granted for a specific use of both technology and transmitter characteristics which use the allocated spectrum. An apparatus licence is allocated for a year and there is no presumption of renewal of an apparatus licence. Spectrum licences are different. Under the spectrum licence regime, the licence is granted for any use of the allocated spectrum, provided that the boundary conditions set out in the licence are met. Typically, these boundary conditions limit the geographic extent of the licence and the adjacent channel interference requirements. Spectrum licences are usually allocated for a period of 15 years and licensees are able to permit other users to share their spectrum, and spectrum licences are also tradeable. Class licences are different again. Under the class licence regime, a licence is granted for a class of devices within the specified frequency band. The class is technically described in the class licence and class licence spectrum is used for a range of common services that you and I would use every day, Mr Deputy Speaker, such as garage door openers, CB radios and WiFi.

I want to talk briefly now about the consultation on the renewal process which has led to this bill. As I mentioned, unlike other categories of licences, spectrum licences have generally carried a presumption of renewal. In light of the impending expiry date of the existing spectrum licences, the department issued a discussion paper in early 2009. The focus of this consultation was the criteria for spectrum licences to be reissued upon expiry and the terms of that reissue. There are two grounds in the legislation that enable reissue of a spectrum licence. There is section 82(1)(a), which enables the reissue of a licence if it was used in the provision of a service included in a class of services determined by the minister. The practical effect of this approach is that the minister may determine that it would be in the public interest for a specified class of existing licence holders to have their spectrum licences renewed. And there is section 82(1)(b), which enables the reissue to occur if the Australian Communications and Media Authority is satisfied that special circumstances exist, as a result of which it again would be in the public interest for that person to continue to hold the licence. The practical effect of this approach is that ACMA may determine it is in the public interest for a particular licence to be reissued.

The discussion paper noted two policy choices for whether and how existing spectrum licences should be reallocated or renewed. These were whether spectrum licences should be reissued to the existing licensees by ACMA in accordance with the section 82 procedures or whether reallocation of the spectrum licence should be undertaken using a price based method. One of the key elements in the consultation was the question: what would constitute ‘public interest’ for the purpose of a spectrum licence being reissued? This was not a straightforward question and was problematic for several reasons: there had never been a ministerial determination to specify a class of services as being recognised as being in the public interest for spectrum licence renewal, a public interest test had never previously been exercised in this area before, there had never been challenges to the minister or the ACMA’s powers that could provide precedent value and there was scant guidance in the radcoms act itself as to what would constitute the relevant public interest criteria.

The discussion paper set out five possible public interest criteria, which were expressed not to be mutually exclusive or exhaustive. These were: promoting the highest value use for spectrum, investment in innovation, competition, consumer convenience and determining an appropriate rate of return to the community. Following this detailed consultation, the minister was able to announce in March 2010 a decision to undertake a process to provide long-term reissue of existing spectrum licences, including an appropriate price for their renewal. Under this bill, spectrum licence renewal will be contingent upon licensees satisfying the public interest test, which most respondents agreed with in consultation, and those criteria will be considered before the ACMA is given any directions on the spectrum access charges that will apply on renewal.

There are other elements to this bill that are worth noting for the improvements they provide in promoting investment certainty for incumbent licensees. These include flexibility given to the ACMA in its renewal process and removing the time limit of two years within which the ACMA can initiate reissue or renewal of 15-year spectrum licences. There will be provision for the coexistence of class licensed and spectrum licensed services within the same spectrum, but with the safeguard that such coexistence will not result in unacceptable levels of interference. I noted the member for Wentworth saying earlier that interference is an industry concern. Of course, minimising interference is fundamental to the efficient operation of the radcoms spectrum. I will say two things about that. The first is that one of the ACMA’s jobs is to manage interference, including interference disputes that are raised with it. So it will actually be nothing new for the ACMA to be dealing with any issues of interference. I would also point out, as noted by the Minister for Broadband, Communications and the Digital Economy in his announcement on 4 March 2010, that a 15-year spectrum licence pathway would be commencing and that the conditions of this coexistence would be to allow two or more wireless services to share the same spectrum, subject to the development of provisions to mitigate unacceptable levels of interference. This could be in the form of some regulatory guidance or direction. But, as I said, the management of interference is nothing new for the regulator; that is its job. I am confident that the concerns of industry will be heard by the regulator and will be addressed by the regulator.

Finally, I will give a clarification on ministerial directions that may be given to the ACMA about spectrum access charges to be payable upon reissue of specific spectrum licences. The intention here is that the minister will consult with the Treasurer, the Minister for Finance and Deregulation and the Prime Minister in establishing the value of 15-year spectrum licences and take into account the public interest before giving a direction to the ACMA. This is ongoing sensible management of a scarce, valuable resource, which should be supported by all members.