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Radiocommunications Amendment Bill 2010

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2010

 

 

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

HOUSE OF REPRESENTATIVES

 

 

                  

 

 

 

 

 

RADIOCOMMUNICATIONS AMENDMENT BILL 2010

 

 

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Minister for Broadband, Communications

and the Digital Economy, Senator the Honourable Stephen Conroy)



RADIOCOMMU NICA TIONS AMENDMENT BILL 2010

 

OUTLINE

 

The Radiocommunications Amendment Bill 2010 (the Bill) amends the Radiocommunications Act 1992 (the Act) to implement the Government’s policies to:

  • provide the Australian Communications and Media Authority (ACMA) with a more flexible timeframe for the commencement of the spectrum licence reissue processes;
  • allow the ACMA to issue class licences in the same radiofrequency spectrum as expired or reissued spectrum licence allocations as well as spectrum in which a spectrum licence is not currently in force, where it is in the public interest to do so and conditional upon adequate interference safeguards;

 

Each of these matters is explained in further detail below.

 

Background

 

The Government commenced auctioning a number of spectrum licences designed to support a market-based approach to licensing the radiofrequency spectrum in the late 1990s.  The licences have a tenure of 15 years, flexible conditions and are fully tradeable.  Certain spectrum licences, used principally to deliver mobile phone and wireless internet services, will expire between 2013 and 2017.

 

The independent regulator, the ACMA, has primary carriage of the spectrum licence reissue process, including issuing the licences, developing the technical frameworks authorising the operation of devices under the spectrum licence and setting licence conditions.

 

When a spectrum licence expires there is a presumption in the Act that the licence will be reallocated by the ACMA via a price based method (e.g. auction). Under section 82(3) of the Act, the Minister may determine class(es) of services for which it would be in the public interest to reissue licences to that same licensee.

 

In April 2009, the Department of Broadband, Communications and the Digital Economy (DBCDE) issued a public discussion paper ‘Public Interest Criteria for Reissue of Spectrum Licences’ which sought comment on options for the reissue/reallocation of expiring 15 year spectrum licences. Respondents to the discussion paper supported the Minister using his powers under section 82(3) to initiate licence renewal in the public interest.

 

On 3 March 2010, the Minister for Broadband, Communications and the Digital Economy announced that spectrum licence renewal may be considered where licensees are using their spectrum licences to provide services to significant numbers of Australian consumers, or have in place networks capable of providing services to significant numbers of consumers, and where it is in the public interest to do so .  As part of a decision on whether or not to exercise his discretion under section 82(3) of the Act, consideration will be given, but not limited to, the five public interest criteria supported by industry in the 2009 consultation process.

 

The criteria are:

  • promoting the highest value use for spectrum;
  • investment and innovation;
  • competition;
  • consumer convenience; and
  • determining an appropriate rate of return to the community.

 

In May 2010, DBCDE commenced information gathering discussions with a number of spectrum licence holders to inform decisions on possible spectrum licence renewal.

 

Greater flexibility in preparing for licence reissue

 

The Bill amends the Act to provide the ACMA with greater flexibility in when it can commence licence reissue processes. This will be achieved by removing the restrictions on when the ACMA can publish a notice that a licence may be reissued and a draft spectrum licence containing licence conditions. The Act currently limits the ACMA to beginning this process no earlier than two years prior to licence expiry. 

 

This amendment is intended to maximise the flexibility afforded to the ACMA regarding the commencement of licence reissue processes.  In addition, this amendment will help reduce uncertainty for incumbent licensees close to licence expiry and encourage continued investment by incumbents in existing network services currently provided under these licences. 

 

Coexistence of class licences and spectrum licences

 

Spectrum licences can only be issued in specific parts of the radiofrequency spectrum that have been either designated for spectrum licensing under section 36 of the Act or declared for spectrum licensing under section 153B of the Act. 

 

New and developing technologies have the potential to greatly increase the technical and productive efficiency of spectrum use.  These new technologies may be authorised by the ACMA under class licences.  Such technological developments will potentially allow devices to share spectrum by utilising a variety of technically sophisticated methods to avoid harmful interference with other services and will be subject to the ACMA being satisfied that:

 

·          unacceptable levels of interference will not occur to the operation of radiocommunications devices operated, or likely to be operated, under spectrum licences; and

·          it is in the public interest to issue class licences, in spectrum designated or reallocated for spectrum licences, to authorise devices with the new sharing technology .

 

It is expected that, over time, there will be widespread adoption of the new technologies in an extensive range of devices developed overseas, including consumer goods that will become readily available in Australia.

 

In light of these technological trends, it is important that the Australian radiocommunications regulatory framework be sufficiently flexible to meet these upcoming challenges.  This Bill amends the Act to permit class licences to be issued in spectrum designated for spectrum licensing under section 36 or declared under section 153B.

 

The Bill also makes additional amendments which clarify the operation of the provisions relating to the variation of existing class licences to coexist with spectrum licences in the spectrum designated or declared for spectrum licensing.

 

These amendments are required to provide for future circumstances when spectrum is designated, allocated or reallocated under the Act to authorise the ACMA to issue or reissue spectrum licences in a spectrum band in which the ACMA has previously issued a class licence.  Before the ACMA issues new class licences, or varies pre-existing class licences where spectrum licences are proposed to coexist in the same spectrum allocation, the ACMA will undertake consultation and satisfy itself appropriately about relevant matters, such as interference and public interest considerations.

 

Ministerial determinations and directions

 

Subsection 82(4) of the Act currently makes ministerial determinations under subsection 82(3) disallowable instruments for the purposes of the Acts Interpretation Act 1901 .  The Bill amends the status of determinations made by the Minister under this subsection to make them legislative instruments that are not subject to disallowance.  Such determinations, however, will be published on the Federal Register of Legislative Instruments.  This amendment is proposed in order to facilitate 15 year spectrum licences discussions.  In May 2010, the Commonwealth Attorney-General provided policy approval for this amendment.

 

The timing of determination(s) under subsection 82(3) of the Act will be significant in these discussions if the Government is to provide the necessary investment certainty sought by incumbent licensees to renew their licences.

 

Potential delay stemming from the possible disallowance of a determination is likely to have a material negative impact on the completion of discussions and the consequential reissue of licences.

 

The Bill also amends the Act concerning written directions by the Minister to the ACMA about determinations made by the ACMA under subsection 294(1) of the Act concerning spectrum access charges.  The proposed amendment to subsection 294(5) of the Act will specifically provide that such a direction is not a legislative instrument. 

 

The rationale for this amendment is that instruments of this kind are not legislative in nature and fall within an exemption provided for under the Legislative Instruments Act 2003 (LIA) .  The Commonwealth Attorney-General, in providing his policy approval for this amendment in May 2010, advised that this approach is consistent with the LIA.

 

The intention of this amendment is to protect commercially sensitive pricing information relating to the reissue of 15 year spectrum licences.  By giving a written ministerial direction to the ACMA, under subsection 294(2), which is not a legislative instrument and not subject to disallowance, it will protect this information during licence reissue discussions. 

 

Consistent with established practice, it is expected that prices paid for licences will be published by the ACMA once discussions and reissue processes are completed.

 

The Bill also provides clarification that a direction under subsection 294(2) may require that the spectrum access charge reflects the value of the spectrum that the Minister considers appropriate.

 

FINANCIAL IMPACT STATEMENT

 

The amendments have been assessed as having no direct financial impact on the Australian Government or affected parties.



 

REGULATION IMPACT STATEMENT

 

 

 

REGULATION IMPACT STATEMENT -

AMENDMENTS TO SECTIONS 78, 79, 82, 136, 138 and 294 OF

THE RADIOCOMMUNICATIONS ACT 1992

 

In the late 1990s the Australian Government commenced auctioning a number of spectrum licences designed to support a market based approach to licensing the radiofrequency spectrum. The licences had 15 year tenure, flexible conditions and were fully tradeable. Australia was amongst the first countries in the world to issue licences on this basis.

 

Spectrum licences in Australia can only be issued in specific parts of the radiofrequency spectrum that have been either designated for spectrum licensing under section 36 of the Radiocommunications Act 1992 (the Act) or declared for spectrum licensing under section 153B of the Act. 

 

Spectrum licences have been issued in the 500MHz, 800MHz, 1800MHz, 2.1GHz, 2.3GHz, 3.4GHz, 20GHz, 27GHz, 28GHz, 30GHz and 31GHz bands. 

 

The first of the key spectrum licences will expire in 2013, with the remainder expiring by 2017.  ‘Key spectrum licences’ in this context  refers to those licences in the bands 800MHz to 3.4GHz  which are primarily used to provide 2G and 3G mobile communications services.

 

Under the Act there is a presumption that when a spectrum licence expires it will be reallocated by the Australian Communications and Media Authority (ACMA) via a price based mechanism (e.g. auction) unless it is in the public interest to do otherwise. 

 

There are also two licence renewal options.  The ACMA has a limited power to renew individual licences if it is satisfied that special circumstances exist such that it would be in the public interest for a licensee to continue to hold the licence.  The Minister for Broadband, Communications and the Digital Economy has the power to issue a determination to the ACMA specifying a class of services for which renewal of spectrum licences to incumbents is in the public interest.  Under both options the ACMA retains the discretion whether or not to renew the licences and is responsible for reissuing the licence(s).

 

The expiry of 15-year spectrum licences is occurring for the first time in Australia.  This provides an appropriate point for the Australian Government to consider measures to enhance the effectiveness of the legislative framework for these important licences.  In addition, the Act gives the ACMA the power to vary the core conditions of spectrum licences that it reissues, even where the licences are reissued to the incumbent. This flexibility allows the ACMA to address a range of issues, such as changes to the technical framework to plan for future technologies.

 

While all licences will be reissued under the current legislation and regulatory framework, it is proposed that legislative amendments to sections 78, 79, 82, 136, 138 and 294 of the Act are made to enhance the effective management and efficient allocation of spectrum. 

 

The amendments are designed to prepare for the adoption of future spectrum sharing technologies and to provide the ACMA with greater flexibility when reissuing spectrum licenses, including formally commencing the reissue process earlier than two years prior to licence expiry. The proposed amendments are also intended to facilitate the on-going spectrum licence reissue process while providing certainty to existing spectrum licensees and protecting Commonwealth interests.

 

These amendments will not affect current spectrum licences and licencees, they will only affect any new or reissued spectrum licences that may be issued in the future. 

 

Background for amendments to sections 136 and 138 (Coexistence)

Coexistence allows for devices and services not owned or managed by the primary licence holder to operate in a spectrum-licensed band under specified licensing arrangements and technical parameters. Class licences are often used for low-powered wireless devices such as cordless telephones, remote garage door openers and Bluetooth applications. 

 

Section 138 of the Act states that the ACMA cannot issue class licences in spectrum designated for spectrum licensing under section 36.  While there is no similar section prohibiting class licences being issued in spectrum that has been declared for reallocation for spectrum licensing under section 153B of the Act, it is likely that there is such a prohibition consistent with section 138.

 

New technologies that have the potential to greatly increase the technical and productive efficiency of spectrum use are being developed. They are generally known as “underlay”, “overlay” and “white space” technologies and include Ultra Wideband (UWB), cognitive radio and dynamic spectrum access techniques. These technologies are intended to allow devices to share spectrum with more traditional forms of radiocommunications. They utilise a variety of technically sophisticated methods to avoid harmful interference with other services.

 

There is a very active community of researchers and major wireless technology companies developing a wide range of emerging and spectrum sharing technologies that promise great gains in spectrum productivity and reduced costs to operators.  While generally not yet at a commercial level, commercial deployment is expected to occur before 2030 - or before the expiry of the spectrum licences that will be issued or reissued over the next several years.

 

In bands subject to spectrum licensing, the only way of accommodating these new technologies under current legislation would be under a third-party authorisation by incumbent spectrum licensees. However, experience to date suggests there are significant impediments to new operators gaining third party authorisations including:

●        technical reasons (inconsistent with the technical framework but not an actual interference problem);

●        commercial reasons - e.g. incumbents blocking technologies offering competitive services;

●        economic reasons - e.g. transactions costs may be too high for either or both of incumbent or access seeker;

●        risk aversion by spectrum licensees; and

●        in geographic areas or parts of the spectrum where spectrum licences have not been taken up, the lack of a licensee to provide a third party authorisation (which leaves the spectrum in question idle).

 

Section 136 of the Act deals with consultation that the ACMA must undertake when proposing to vary or revoke a class licence. The proposed amendments to section 136 of the Act are designed to provide clarity in future circumstances when spectrum is designated, allocated or reallocated under the Act to authorise the ACMA to issue or reissue spectrum licences in a spectrum band in which the ACMA has previously issued a class licence.

 

The amendments will ensure in such circumstances that the ACMA undertakes consultation and satisfies itself appropriately about relevant matters, such as interference and public interest considerations, before it issues new or varies pre-existing class licences where spectrum licences are proposed to coexist in the same spectrum allocation. The amendments to section 136 are consequential amendments stemming from the proposed changes to section 138 of the Act.

 

The legislative prohibition on coexistence seems unique to Australia. In many other countries, technologies with a low potential for interference are provided with licence exempt access to licensed spectrum. It is expected that there will be widespread adoption of the new technologies in an extensive range of devices developed overseas, including in consumer goods that will be readily available in Australia, which makes an efficient method of authorisation an important issue. It is important that the Australian framework adapt to changes going forward so that Australia will not be left behind in adopting these important future technologies.

 

Background for amendments to sections 78 and 79 (removal of two-year reissue restriction)

Section 78 of the Act requires the ACMA to publish a notice advising which spectrum licences are due to expire within the next two years and inviting expressions of interest in the spectrum.  Section 79 restricts the ACMA from issuing draft spectrum licences as part of their marketing plan until two years prior to licences expiry.

 

While the ACMA can make many prior preparations, the impact of these sections is that at a practical level, spectrum licences cannot be reissued more than 12 months prior to expiry. 

                                            

Incumbent licensees have consistently called for greater certainty about licence reissue. Without such certainty it is claimed that there will be a reluctance to maintain investment in infrastructure and service provision with adverse impacts on coverage and service quality.  Decisions on the introduction of new services may be delayed or abandoned until reissue outcomes are known.  Current licensees facing such uncertainties close to licence expiry may also be reluctant to take decisions on future communications needs. 

 

Background for amendment to sections 82 and 294 (streamline the treatment of ministerial directions and determinations)

 

Section 82 of the Act deals with the reissue of spectrum licences to incumbents in the public interest. Section 294 of the Act deals with spectrum access charges on the issue of spectrum licences.

 

The proposed amendments to sections 82 and 294 are designed to streamline the treatment of possible future ministerial determinations and directions in relation to spectrum licence reissue processes.

 

The proposed amendments to section 82 will make ministerial determinations, issued under subsection 82(3) of the Act relating to the class of services for which it would be in the public interest for ACMA to consider reissuing a 15 year spectrum licence, legislative instruments that are not subject to disallowance. Any determinations will be in the public domain and published in due course on the Federal Register of Legislative instruments. This amendment is required to avoid delays, stemming from a potential disallowance of a determination, to the Government’s current consideration of the reissue of some spectrum licences. The Commonwealth Attorney-General has provided policy approval for this amendment.

 

The proposed amendments to Section 294 of the Act will have the effect of making ministerial directions issued to the ACMA under subsection 294(5) relating to  spectrum access charges  not legislative instruments and therefore not subject to disallowance.

 

This measure is required in order to protect the Commonwealth’s interests during licence renewal processes. In order to facilitate secondary trading of spectrum by informing the potential market of prices paid it is expected that the ACMA will make known the prices paid for licences after licence renewal processes are complete and with any licences reissued. The Commonwealth Attorney-General has advised that this amendment is consistent with the approach taken in the treatment of directions in the Legislative Instruments Act 2003 .

 

Subsection 294(3) of the Act provides that the Minister may give written directions to the ACMA about the matters dealt with in determinations. Subsection 294(3) lists three examples of things that a ministerial direction could cover. The list is intended to be inclusive, rather than exhaustive. For the avoidance of doubt, an additional example is to be included in subsection 294(3) which makes it clear that a direction by the Minister to the ACMA relating to a spectrum access charges, payable by a person to whom a specified spectrum licence is issued or reissued reflects the value of the spectrum that the Minister considers to be appropriate.

 

 

Objectives of government action

 

The broad policy objectives of spectrum management, based on the objects of the Act, include maximising the overall public benefit from use of the spectrum, providing a responsive and flexible approach to meeting the needs of spectrum users, and encouraging the use of efficient radiocommunications technologies.

 

The specific aims of this proposal are to:

●        provide sufficient flexibility in the legislation to ensure the most efficient and effective use of the radiofrequency spectrum by providing for the ACMA to authorise sharing technologies that will not cause harmful interference to the primary service; and

●        maintain sufficient certainty for spectrum licensees so that investment and service quality can be maintained by removing the reissue timing restrictions in sections 78 and 79 of the Act.

 

Options

 

Option 1 - Status Quo

No change to the legislation.  This option does not achieve the objectives of Government action.

 

Maintaining the status quo relating to section 138 of the Act will result in delays in the adoption of future spectrum sharing technologies such as UWB and cognitive radio which increase the efficiency of spectrum use and provide new service to consumers.  In addition, the status quo does not enable the ACMA to allocate the radiofrequency spectrum in the most effective way, which is inconsistent with the objectives of the Act. 

 

Increased uncertainty for current users of class licences is likely to result if consequential changes to section 136 stemming from the proposed amendments to 138 do not eventuate.

 

If sections 78 and 79 remain unchanged, in practice the ACMA will continue to be restricted to reissuing spectrum licences approximately one year prior to licence expiry.  This does not promote industry certainty and it is likely to detract from continued investment in mobile communications infrastructure and innovation. 

 

Failure to amend sections 82 and 294 would increase investment uncertainty and put at risk Commonwealth’s interests in the on-going spectrum licence renewal process due to:

●        potential delays stemming from the possibility of a motion of disallowance relating to section 82 class of service determinations; and

●        spectrum access charge information being made public prematurely or before the process renewal process is complete.

 

Option 2 - Removing sections 78, 79, 82, 136, 138 and 294 from the Act

 

Removal of sections 82 and 294 of the Act would have unintended negative consequences for incumbent licensees, Government and the ACMA in terms of the reissue of spectrum licences in the future. Deletion of section 82 would remove the provision under the Act for the ACMA to renew spectrum licences. These consequences include the possibility of a delay in concluding the licence renewal process and the ACMA reissuing licences if there was a motion of disallowance of section 82 determinations. Such delays would affect incumbents and potential new licensees.

 

Further, Commonwealth interests would be put at risk if spectrum access charge information is made public prematurely prior to the conclusion of the licence renewal process.

 

While removing section 138 would eliminate the prohibition on coexistence conditions, it would not address important interference protection measures that incumbents would likely seek. It was clear in responses to DBCDE’s discussion paper on public interest criteria in April 2009 stakeholders would only be amenable to amendments which would provide for coexistence if appropriate safe-guards were put in place.

 

By replacing this section with legislative interference safe-guards, and not just removing the prohibition, it would protect a potential incumbent from unacceptable interference.  It would also support the market approach to spectrum licensing through offering as much certainty as possible to licensees. 

 

Removing section 136 would add further uncertainty for class licence users, with no public benefit.

 

Option 3 - Amending sections 78, 79, 82, 136, 138 and 294 of the Act

Sections 78 and 79 provide industry with an opportunity to submit expressions of interest in upcoming expiring spectrum licences and view draft spectrum licences prior to purchase.  It is considered appropriate that public consultation and transparency of the reissue process remain legislative provisions to promote the market based approach to spectrum licences.  

 

The third option involves legislative amendments to ensure that appropriate measures are in place to support spectrum licensing and efficient spectrum management.

 

Third-party authorisations will remain a first choice to allow spectrum sharing technologies. Intervention by the ACMA - by way of class licensing - would occur to further the public interest.

 

Amending section 138 will ensure appropriate safeguards for licensees while allowing the ACMA to issue class licences in spectrum that has either been designated or declared for spectrum licensing, subject to:

 

●        mandatory consultation with all affected spectrum licensees prior to issuing a class licence; and

●        allowing the ACMA to issue class licences with the agreement of all affected spectrum licensees; or

●        allowing the ACMA to issue class licences without the agreement of affected spectrum licensees where the ACMA determines that the operation of devices authorised by the class licence would:

o    not result in unacceptable levels of interference to the networks and systems operated by, or likely to be operated by, spectrum licensees; and

o    be in the public interest; or

●        where there is no existing spectrum licensee, but the spectrum has been designated or re-allocated for spectrum licensing, allowing the ACMA to issue class licences where it is in the public interest to do so; and

●        class licences in spectrum licensed space being issued via legislative instruments.

 

These safeguards will provide sufficient certainty for spectrum licensees to freely use the spectrum.  They ensure that underlay or overlay technologies can operate without the risk of causing unacceptable levels of interference to services provided by incumbent spectrum licensees. 

 

‘Unacceptable levels of interference’ is a phrase already used in the Act (section 145) and it is considered appropriate that it also be applied to any legislative amendments allowing coexistence.

 

The proposed consequential amendments to section 136 of the Act provide for enhanced consultation by the ACMA with class licence spectrum users, interference mitigation measures and the ACMA would ensure that any proposals to allow that the coexistence of class and spectrum licences in the same spectrum allocation are in the public interest.

 

Legislation would be introduced to amend sections 78 and 79 of the Act to remove the current timing constraint which restricts the ACMA to publishing notices about expiring spectrum licences and publishing draft spectrum licences to two years prior to licence expiry. 

 

Removal of this time constraint will provide greater flexibility for the ACMA to determine when licence reissue can occur. The ACMA would still be required to seek expressions of interest for spectrum licences prior to expiry.

 

This option supports continued investment and innovation in mobile communications technology by allowing ACMA to provide certainty of reissue decisions to occur more than two years’ prior to licence expiry. 

 

Amending sections 82 and 294 of the Act will streamline the treatment of certain ministerial determinations and directions relating to the reissue of spectrum licences and provide necessary investment certainty. It would also protect the Commonwealth’s interests and facilitate spectrum licence renewal processes.

 

Impact analysis - costs, benefits and risks

 

Benefits

The objects of the Act include:

●         maximising the overall public benefit derived from using the radiofrequency spectrum by ensuring the efficient allocation and use of the spectrum;

●        providing a responsive and flexible approach to meeting the needs of users of the spectrum; and

●        providing a regulatory environment that maximises opportunities for the Australian communications industry in domestic and international markets.

 

Amending sections 136 and 138 to provide for coexistence of class licences in bands allocated for spectrum licensing supports all of these objects.  Importantly, it increases the public benefit from the efficient allocation and use of spectrum. 

 

In addition, coexistence could potentially lead to a greater choice of services and advanced technologies for the consumer.  It supports the introduction of new and innovative services that could, in turn, help increase economic productivity. Many of the advanced wireless services are ubiquitous in application and therefore have an extremely diverse licensee base within the community.

 

Amending section 138 to provide for coexistence would not affect current licences and licensees. It would only be applied to reissued or newly issued spectrum licences.  Licence conditions are always released prior to purchase and would include any change in the technical framework to allow coexistence conditions. 

 

Changes to sections 78 and 79 of the Act create greater flexibility for the ACMA to reissue spectrum licences.  Being able to reissue spectrum licences more than one year prior to licence expiry supports industry certainty leading to greater investment and public benefit.  This positively affects both the economy and the consumer.  This change would not place a further legislative or regulatory burden on either the ACMA or industry.

 

Streamlining the treatment of certain ministerial determinations and directions (under sections 82 and 294 of the Act) will facilitate the spectrum licence renewal processes. The amendments will avoid delays to licence renewal processes while providing investment certainty. Protecting sensitive pricing information, during licence discussions, will protect Commonwealth interest.

 

 

 

Risks

Coexistence conditions include a risk that parts of the market may claim that such a change will devalue the spectrum. However, this is mitigated by providing adequate legislative safeguards and acknowledgment that coexistence conditions are applied in similar licences in other countries. 

 

There may be an increase in administrative costs (to industry and Government) of considering and responding to specific class licensing proposals. However, these costs are expected to be low.

 

No risks have been identified with the proposed amendments to sections 82, 136 and 294.  Class of service determinations made under section 82(3) will continue to be placed on the Federal Register of Legislative Instruments.  Further, spectrum access charges paid for the issue of spectrum licences will ultimately be made public by the ACMA at the conclusion of the licence renewal process to inform the market of spectrum values to encourage secondary trading in spectrum.

 

Costs

There is a possibility that licensees may need to install appropriately tuned filters to meet the new technical licensing requirements.  The introduction of class licensed devices may increase the technical noise floor of spectrum licences, although incumbents will be protected from interference, which will mean that spectrum licensees will need to consider this in their planning and use of the spectrum. This would be would be known prior to purchase.  Ongoing costs may be incurred in order to ensure these updated technical requirements are maintained, however such costs would be quite low. 

 

Responsibility for compliance (and associated costs) will primarily lie with the ACMA under the current regulatory regime.  It will be the ACMA’s role to ensure that appropriate safeguards within the Act are adhered to, including for the proposed enhanced consultation and interference mitigation measures associated with coexistence of class and spectrum licences.

 

No additional costs to industry are foreseen with the proposed measures relating to the streamlining of determinations and directions relating to reissue of spectrum licences.

 

Consultation

 

In late 2008 a round of consultations with key stakeholders and incumbents on reissue of the 15 year spectrum licences was conducted.  All major incumbents participated in the process, including mobile operators, industry representative organisations, radio and television broadcasters as well as telecommunications consumer groups. 

 

In April 2009 the Department released a discussion paper seeking comment on possible public interest criteria that the Minister might consider in any decision to reallocate or renew spectrum licences.  Twenty-two written submissions were received, including responses from all major incumbents.  The discussion paper specifically contained a question to elicit views on introducing a coexistence condition in reissued spectrum licences. 

 

Introduction of coexistence conditions drew mixed reactions from stakeholders and was generally opposed by major incumbent licence holders. The main concern was erosion of a primary licence holder rights as a result of interference from spectrum sharing technologies.  However, similar technical frameworks are already applied in other countries and introduction of these measures would be consistent with the objectives of the Act by facilitating the most effective and efficient allocation of spectrum. 

 

The discussion paper also sought responses on public interest criteria including the criteria ‘innovation and investment’.  It is clear that, in response to this issue, incumbents supported increased certainty upon expiry of the spectrum licences to ensure continued investment and innovation in their networks.  Amendments to sections 78 and 79 would be consistent with this feedback.  

 

In March 2010 the Minister announced an approach for the consideration of the renewal of some 15 year spectrum licences, including referencing the proposed amendments to sections 78, 79 and 138 of the Act.

 

In May 2010, the Department of Broadband, Communications and the Digital Economy (DBCDE) commenced information gathering discussions with a number of spectrum licence holders relating to licence renewal. These discussions are on-going.

 

Conclusion and recommended option

 

Reissued spectrum licences will have an impact on the Australian wireless communications market for the next two decades or more.  Therefore, it is important that any inefficiency in the licensing technical framework and reissue process is addressed now to provide for the ongoing management of the radiofrequency spectrum in line with the objectives of the Act.  In making the proposed changes to the Act it is important to have proper consultation with affected parties and to protect the Commonwealth’s interests in licence renewal processes.

 

Leaving the Act unchanged or removing sections 78, 79 and 138 are not considered the most effective approach to addressing these issues. Interference to the primary licence holder is an important concern and protection provisions should remain and be enhanced within the legislation.

 

The recommended approach is option 3 - that the Act is amended to:

●        enable the ACMA to issue class licences in parts of the spectrum that are subject to spectrum licensing;

●        enable the ACMA to reissue spectrum licences at any time prior to licence expiry by removing the time restrictions in sections 78 and 79 of the Act; and

●        facilitate licence renewal processes while protecting Commonwealth interests.

Introduction of these measures would be consistent with the objectives of the Act by facilitating the most effective and efficient allocation of spectrum and supporting the market based approach to spectrum licensing. 

 

Measures that introduce coexistence without the primary licence holder’s authorisation are only intended to be used by the ACMA when the public interest is considered greater than the concerns of the primary licence holder.  The ACMA would work closely with incumbents to ensure that adequate interference protection measures are in place prior to coexistence being introduced.

 

Implementation and review

 

Subject to Government views, it is intended that these legislative changes are introduced into Parliament as a priority, to provide investment certainty to spectrum licensees in the on-going licence renewal process. 

 

If the legislative changes are passed, the ACMA will be responsible for implementing the introduction of coexistence conditions and modifying the technical frameworks of reissued or newly issued spectrum licences.  It will also be the communications regulator’s role to manage any interference matters.  Under the proposed legislative amendments the ACMA would ensure full consultation with incumbents before the introduction of a class licence in spectrum either designated for spectrum licensing under section 36 or declared for spectrum licensing under section 153B of the Act. 

 

While ACMA has already begun work to reissue expiring spectrum licences, the amended sections 78 and 79 of the Act will allow ACMA to reissue licences as any time prior to licence expiry and as early as deemed appropriate. 

 

Subject to the outcome of the licence renewal process, the Minister may issue class of service determination(s) and spectrum access charge direction(s) to the ACMA.

 

 



 

ABBREVIATIONS

 

The following abbreviations are used in this explanatory memorandum:

 

 

ACMA:                                   Australian Communications and Media Authority

 

Act:                                         Radiocommunications Act 1992

 

Bill:                                         Radiocommunications Amendment Bill 2010

 

DBCDE                                  Department of Broadband, Communications and the Digital Economy

 

LIA:                                        Legislative Instruments Act 2003

 

Minister:                                  Minister for Broadband, Communications and the Digital Economy 

 



NOTES ON CLAUSES

 

Clause 1 - Short title

 

Clause 1 provides for the citation of the Radiocommunications Amendment Act 2010 (the Act).

 

Clause 2 - Commencement

 

Clause 2 of the Bill provides for the Act to commence on the day after it receives Royal Assent.

 

Clause 3 - Schedule(s)

 

Clause 3 provides for the Act to be amended as provided for in the Schedule.

 

Schedule 1--Amendments



Item 1 - Paragraph 78(a)

 

Item 1 repeals paragraph 78(a) and inserts a replacement paragraph.  The purpose of the change is to remove the reference to the time-frame of ‘2 years’, in order to provide the ACMA with greater flexibility in respect of the time in which the Authority can commence all necessary spectrum licence reissue activities.  Apart from this change, Item 1 will not make any other substantive change to the requirement for the ACMA to cause a notice to be published in the Gazette that states where information may be obtained about spectrum licences that will expire in a period specified in the notice and the parts of the spectrum to which they relate. 

 

Item 2 - Subsection 79(1)

 

Item 2 makes a consequential amendment to subsection 79(1) as a result of the amendment under Item 1.  Subsection 79(1) deals with preparation of draft spectrum licences for reissue.  The effect of the amendment in Item 2 is that all ‘2 year’ time period references in section 79 are removed.  This will mean that the ACMA will be permitted to prepare at any time prior to a spectrum licence expiring:

  • a draft of a new spectrum licence that would wholly or partly replace that licence; or
  • drafts of two or more new spectrum licences that, taken together, would wholly or partly replace that licence.

 

This amendment will provide the ACMA with greater flexibility in terms of when it can commence preparing draft spectrum licences.

 

Item 3 - Subsection 82(3)

 

This item represents a minor amendment to correct the misspelling of the term, “licences” (as a noun).  It had erroneously been spelled as “licenses”.

 

Item 4 - Subsection 82(4)

 

Under the Act there is a power for the Minister to issue a determination under subsection 82(3) to specify a class of services for which it would be in the public interest to reissue the spectrum licences to the same licensee.  Subject to discussions, a number of determinations may be necessary for the ACMA to reissue individual licences.  As noted in the Background commentary, c ertain spectrum licences used principally to deliver mobile phone and wireless internet services will expire between 2013 to 2017.  In May 2010, DBCDE commenced information gathering discussions with a number of spectrum licence holders to inform decisions on possible spectrum licence renewal.

 

Item 4 repeals subsection 82(4) of the Act and inserts a new provision which provides that ministerial determinations made under subsection 82(3) will be legislative instruments but they will be expressly excluded from the Parliamentary disallowance process (under section 42 of the Legislative Instruments Act 2003) This instrument is being exempted from the disallowance regime because any delay stemming from a potential disallowance of such a ministerial determination would severely impact upon the successful conclusion of licence reissue discussions between the Government and the relevant incumbent licensees.  There would also be adverse follow-on impacts on commercial and investment certainty for incumbent licensees if reissue discussions are delayed.

 

In May 2010, the Commonwealth Attorney-General  provided policy approval for this amendment.

 

Item 5 - Subsection 136(1A)

 

Item 5 inserts a new provision after subsection 136(1).  This new subsection imposes additional matters which the ACMA must satisfy itself of, before the variation to the class licence can be made.

In addition to the amendment at Item 7 below, which will enable the ACMA to have the ability to issue a class licence in spectrum-licensed space (subject to the various conditions); the ACMA will be permitted to vary class licences to enable coexistence in spectrum-licensed space.  Such a variation is desirable for a range of reasons, for example to specify additional radiocommunications devices that might be subject to the class licence, or to specify additional bands to which the class licence applies.

The circumstances which would trigger the operation of new subsection 136(1A) are any instance where the proposed variation of the class licence would affect spectrum allocated, to be allocated, to be re-allocated, or to be reissued, by issuing spectrum licences.  In simple terms, the formulation “issuing spectrum licences” refers to spectrum that is designated for spectrum licensing under section 36 or re-allocated as a result of a declaration under section 153B.  

New subsection 136(1A) will only have application in cases where a variation to a class licence would have the affect of operating in a spectrum space where a spectrum licence is to be allocated, re-allocated, or reissued. 

Before varying the class licence in the specified instances, the ACMA must be satisfied that the variation of the class licence:

  • would not result in unacceptable levels of interference to the operation of radiocommunications devices operated, or likely to be operated, under spectrum licences (subparagraph 136(1A)(a)(i); and
  • would be in the public interest (subparagraph 136(1A)(a)(ii)).

 

The ACMA must also consult with all licensees of spectrum licences who may be affected by the proposed variation of the class licence.  In practice, the numbers of licensees that will be consulted and the scope of the consultation undertaken by the ACMA will vary, depending upon the proposed spectrum to be designated or allocated for spectrum licensing and the number of incumbent and future possible licensees in that spectrum licensed space.

 

Item 6 -Subsection 136(5)

 

Item 6 makes a minor amendment to subsection 136(5) by inserting after the words “subsection (1)” a reference to subclause 136(1A).  This amendment makes it clear that the new requirements of subsection 136(1A) are also considered by the ACMA in addition to the requirements of subsection 136(1) and (2).  This represents a minor consequential amendment.

 

Item 7 - Section 138

 

Currently, section 138 of the Act prohibits the ACMA from issuing class licences in spectrum designated for spectrum licensing under section 36.  Item 7 repeals section 138 of the Act and replaces it with an amended section 138.  This amendment is made to give full effect to the Government’s policy to allow for the coexistence of class and spectrum licences in the same spectrum space.

 

Through the operation of subsection 132(1) and new subsection 138(1), the ACMA will be able to issue new class licences in frequencies which are part of the radiofrequency band specified in issued spectrum licences.  The coexistence of class and spectrum licences within the same radiofrequency bands would allow devices and services not owned or managed by the primary spectrum licensee to operate in a spectrum licensed band under specified licensing arrangements and technical parameters.

 

Under Item 7, the ACMA may issue a class licence within a part of the spectrum designated or re-allocated for spectrum licensing, if the ACMA is satisfied that:

·                 the proposed class licence would not result in unacceptable levels of interference to the operation of radiocommunication devices operated by, or likely to be operated, under spectrum licensees (subparagraph 138(2)(a)(i)); and

·                 it would be in the public interest to issue the proposed class licence (subparagraph 138(2)(a)(ii)).

 

New subclause 138(2)(b) provides that before issuing a class licence, the ACMA must consult with all licensees of spectrum licences who may be affected by the proposed class licence.  This mirrors the consultation requirements under new paragraph 136(1A)(b)- see the discussion at Item 5 above.

 

Item 8 - Paragraph 294(1)(a)

 

This item represents a minor amendment to correct the mis-spelling of the term, “licences” (as a noun).  The term had been erroneously spelled as “licenses”.

 

Item 9 - Subsection 294(3)

 

Subsection 294(1) of the Act provides that the ACMA may, by written instrument, make determinations fixing spectrum access charges and the times such charges are payable. 

 

Under subsection 294(2), the Minister is conferred with the power to issue a written direction to the ACMA relating to spectrum access charges for the reissue of spectrum.

 

Subsection 294(3) lists three examples of things that such a ministerial direction could cover. The list is clearly expressed to be inclusive, rather than exhaustive.

 

At the conclusion of the current information gathering discussions with certain incumbent 15-year spectrum licence holders, the Minister may make a direction to the ACMA under subsection 294(2) specifying the amount of the spectrum access charge payable for each issued or reissued spectrum licence. 

 

For the avoidance of any doubt, Item 9 inserts a new paragraph into subsection 294(3) which makes it clear that a direction by the Minister under subsection 294(2) may require that spectrum access charges, payable by a person to whom a specified spectrum licence is issued or reissued, reflect the value of the spectrum that the Minister considers appropriate.

 

This amendment would make it clear that a ministerial direction under section 294(2) could cover the amount of the spectrum access charge payable for any issued or reissued spectrum licence. 

 

Therefore, if the Minister were to make a direction to the ACMA in accordance with subsection 294(2) relating to the spectrum access charge, this would be a matter which would need to be dealt with by the ACMA in its written determination under section 294(1) relating to the setting of the spectrum access charge payable by the relevant licensees.  

 

Item 10 - Subsection 294(5)

 

Subsection 294(1) of the Act provides that the ACMA may, by written instrument, make determinations fixing spectrum access charges and the times such charges are payable.  The Minister may issue a written direction to the ACMA under subsection 294(2) of the Act, relating to spectrum access charges for the reissue of spectrum licences. 

 

Item 10 repeals subsection 294(5) of the Act and substitutes a new subsection 294(5).  The effect of this amendment is that a ministerial direction made to the ACMA under subsection 294(2) will not be a legislative instrument, and therefore will not be disallowable.  It is appropriate that sensitive pricing information contained in such directions remain confidential until the discussions with licence holders and licence reissue processes are completed.  

 

If the amendment was not made, it would mean that the direction would, among other things, be published on the Federal Register of Legislative Instruments (making it public, amongst other things) and be subject to disallowance, which would have an adverse material impact upon the Commonwealth’s position in discussions for the issue and reissue of spectrum licences. 

 

Notwithstanding that the ministerial direction will no longer be published as a result of the amendment at Item 10, it is the expectation of the Government, consistent with current practice, that prices paid for licences would be published by the ACMA after discussions and the ACMA completes its licence reissue processes.  Availability of price information is an important element in facilitation and encouraging a spectrum secondary market.

 

Furthermore, instruments of this kind (that is ministerial directions to persons, Commonwealth Authorities) need not have been disallowable in the first place, on the basis that they would be a class of instruments that ordinarily would be exempt under LIA. 

 

Item 11 - Application

 

Item 11 provides for the application of the amendments made by this Bill to the Act.  All the items of the Bill, unless stated otherwise, commence on the day on which the Act receives the Royal Assent.

 

Item 11(1) provides that an amendment made by Item 1 (re paragraph 78(a)), will apply to a notice published in the Gazette on or after the day the item commences.

 

An amendment made by Item 4 (subsection 82(4)), will apply to a determination made by the Minister on or after the day the item commences: refer Item 11(2)).

 

Item 11(3)(a) provides that the amendments made by Item 7 (coexistence of class licences and spectrum licences) will apply in relation to spectrum in which a spectrum licence is not in force on the day the item commences.

 

Item 11(3)(b) provides that the amendments made by Item 7 apply in respect of spectrum for which a spectrum licence is in force on the day the item commences—to the issue of a class licence after the day the spectrum licence expires; or on or after the day the spectrum licence is reissued.  The main intent of Item 11(3)(b) is to make clear that new coexistence arrangements under new section 138 apply prospectively, that is to new or reissued spectrum licences and new and revised class licences.  In effect, for spectrum licences in force on the day the Bill is enacted and until the expiry/reissuance of the licence, the new section 138 would have no operation.  This will mean that the provision preventing class licences under section 138 (prior to its amendment) would continue to apply to it. 

 

Item 11(4) provides that the amendment made by Item 9 applies to a ministerial direction made when the item commences, being the day after the Act receives Royal Assent.

 

Item 11(5) provides that the amendment made by Item 10 applies to a ministerial direction made when the item commences, being the day after the Act receives Royal Assent.