Mr Andrew Lansley (South Cambridgeshire, Conservative)

I beg to move amendment No. 293, in

clause 151, page 137, line 30, leave out '3A' and insert '3'.

Mr Roger Gale (North Thanet, Conservative)

With this it will be convenient to discuss the following:

Amendment No. 294, in

clause 151, page 137, line 31, leave out from 'licences' to end of line 32.

Amendment No. 322, in

clause 156, page 140, line 45, leave out subsection (3).

Government amendment No. 306.

Amendment No. 323, in

clause 159, page 143, line 10, leave out

'and grants of recognised spectrum access'.

Amendment No. 324, in

clause 159, page 143, line 13, leave out

'and grants of recognised spectrum access'.

Amendment No. 325, in

clause 159, page 143, line 17, leave out

'and grants of recognised spectrum access'.

Amendment No. 326, in

clause 159, page 143, line 18, leave out 'or made'.

Amendment No. 327, in

clause 159, page 143, line 20, leave out

'or grants of spectrum access made'.

Amendment No. 328, in

clause 159, page 143, leave out lines 34 to 36.

Government amendment No. 307.

Amendment No. 305, in

schedule 17, page 498, line 40, at end insert—

'(2A) The provisions of subsection (2) shall not apply to charges in respect of grants of recognised spectrum access.'.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

Of this group of amendments, Nos. 293, 294 and 305 stand in my name. In debating them, we anticipate to some extent the debate on recognised spectrum access, which we first encounter in clause 151, but this may be the right time.

Amendments Nos. 293 and 294 would remove from the directions that the Secretary of State can make reference to what will become section 3A of the Wireless Telegraphy Act 1998, which is about bidding for grant of recognised spectrum access. One would need subsequently to remove the relevant part of clause 156. The amendments would remove the references to recognised spectrum access and the potential for the Secretary of State to make directions in that respect. This is the first of a series of amendments, and we will deal with the views to which they relate in our consideration of subsequent clauses. One needs to disentangle and remove recognised spectrum access from subsequent clauses in order to accomplish the task effectively, which is what amendments Nos. 293 and 294 would do.

The Joint Committee considered recognised spectrum access only briefly, and many of my colleagues found it difficult to understand the nature of the Government's intentions. The Minister assures us that it is not the Government's intention simply to raise money. However, if that is so, it should be clear that the Government seek to achieve better spectrum management by granting recognised spectrum access. That should be apparent not only to the Government, but to the people who use spectrum and in whose interests the more efficient use of spectrum management lies. Most of those who would be affected by the granting of recognised spectrum access say that they see only difficulty and expense arising from it.

I shall not talk at great length about the issue, but it is difficult to build an incentive based on opportunity costs on to a system such as recognised spectrum access that is, in effect, voluntary. Those who want to comply with it will do so happily, because they secure some benefit. However, they may then be charged substantially more than the cost of providing that service. Those who do not see any benefit to them can simply walk away from it. The Government are therefore proposing only to deny them a service with which they were previously provided. We easily return to a situation in which it appears that the Government, by denying a service to people who currently have access to the spectrum, require those people to pay money to the Government to continue receiving a service at levels that are designed not designed simply to recover the costs involved in providing that service, but to reflect the opportunity costs of spectrum, which is not in the Government's gift to give.

The Trade and Industry Committee, of which I am a member, adopted the language of someone who gave evidence to us when it described that system as a protection racket. Where Government undertake the task of allocating spectrum that is in their gift to allocate, it is entirely reasonable that it does so on the basis of efficient use and opportunity costs through administrative pricing. To do so in relation to spectrum that it is not in their gift, however, is excessive. Amendments Nos. 293 and 294 are based on the proposition that the Government should simply give up recognised spectrum access, which many other amendments echo.

Amendment No. 305 applies if the Government believe that there is a continuing purpose for recognised spectrum access, if the material supplied to the Joint Committee and the Trade and Industry Committee seeks to offer illustrations of that in relation to those who receive Met Office data, and if it is conceivable that there are users of spectrum who are not required to have a licence but who receive benefits from the Radiocommunications Agency, or from Ofcom in due course. The amendment also applies if it is reasonable that those people should make some contribution and want to have a handle on the service that is being provided to them.

The amendment relates to schedule 17, which amends section 2 of the Wireless Telegraphy Act 1998 and provides that Ofcom can prescribe sums that are payable for grants of licences and recognised spectrum access. That would enable Ofcom

''to prescribe sums which would be greater than those that would be necessary for the purposes of recovering costs incurred by them in connection with functions under the enactments''.

That is the gateway to the incentive and opportunity cost pricing of the grant of a licence, or the grant of recognised spectrum access. The intention behind my amendment is that section 2(2) should be disapplied in respect of grants of recognised spectrum access. Hon. Members will see on page 489 of the amendment paper that the mechanism for that is a new subsection (2)(a), which disapplies subsection (2) in respect of the grant of recognised spectrum access.

Ofcom would still be able to prescribe sums greater than the costs incurred in respect of the grant of a

licence, so administrative incentive pricing would be unaffected in relation to the grant of licences. Ofcom could make a charge for recognised spectrum access, but only in relation to costs incurred. It would not, therefore, be possible for the whole rigmarole of incentive and opportunity cost pricing to be applied to recognised spectrum access.

In effect, the whole protection racket element would be removed. If someone wished to apply for recognised spectrum access that would be fine. If they wanted a service that Ofcom could provide, it would have the power to charge for the costs that it incurred. There would be no point in bidding, so amendment No. 292, which would remove bidding for grants of recognised spectrum access, would still apply and clause 154, which enables people to apply for recognised spectrum access, would still be in place. Amendments Nos. 293 and 305 are connected in that sense, and they are needed to achieve the objective of depriving the Government of their protection racket and enabling them, through Ofcom, to provide a service to those who want to purchase one.

Mr John Greenway (Ryedale, Conservative)

My hon. Friend the Member for South Cambridgeshire hints that it might be in the interests of progress if our main contributions in respect of recognised spectrum access are deferred until we reach clause 154. With your agreement, Mr. Gale, my hon. Friends on the Opposition Front Bench and I would certainly prefer that.

My hon. Friend the Member for South Cambridgeshire proposed eloquently, displaying his incredible depth of knowledge of technical matters that I greatly admire, that clause 156(3) should be deleted, and amendment No. 322 does precisely that. Amendments Nos. 323 to 328 are consequential to the proposal that my hon. Friend has outlined. It will be obvious from what he and I have said that the Opposition are implacably opposed to recognised spectrum access. Having made that point, it would, perhaps, be better if we allowed the Minister to respond to what has been said and reserve our fire on the wider issue until we reach clause 154. That would, of course, be subject to your agreement.

Mr Stephen Timms (Minister of State (e-Commerce & Competitiveness), Department of Trade and Industry; East Ham, Labour)

Since the amendments cover many of the aspects of recognised spectrum access, it might be helpful to explain the thinking that underlies the concept of recognised spectrum access. I hope to deal with some of the criticisms advanced by Opposition Members, and perhaps anticipate points that might be raised in the future debate to which the hon. Gentlemen referred.

RSA is a new spectrum management tool that will meet a need identified during the passage of the Wireless Telegraphy Act 1998. We have already referred to some of the events of 13 November 1997 and I notice from my record of the consideration of the Wireless Telegraphy Bill in Standing Committee A on that date that an amendment was tabled by the hon. Member for Sevenoaks (Mr. Fallon), who was leading for the Opposition at that time, which called for something similar to RSA. I shall return to the debate in a few moments.

More recently, a similar point was made in the independent review of radio spectrum management carried out by Professor Cave. Radio spectrum is a finite resource and without some requirement to authorise its use, transmissions would interfere with each other and the value of the spectrum as a communications medium would be severely damaged.

Licensing under the Wireless Telegraphy Act 1949 is the mechanism for giving permission to use the spectrum, but not all radio equipment can be licensed. The transmitter may be outside UK jurisdiction, as in the case of satellites transmitting to the UK from space. The user may be a Crown body, thus exempt from licensing, or, as with radio astronomy, the user may want to receive radio signals without transmitting them. If the problem cannot be dealt with through licensing for one of those reasons, how do we deal with it?

The spectrum management regime has a significant gap in that formal recognition of spectrum use in such cases cannot be offered. Neither can we use pricing or trading to provide incentives to use spectrum more efficiently, which is particularly problematic when licensed and other services share spectrum and the deployment of one constrains that of the other. That happens in some frequency bands where satellites share spectrum with terrestrial fixed communications links.

We all agree that market mechanisms will help with spectrum allocation licences, but what do we do when licences are unavailable? The answer is recognised spectrum access. Professor Cave recommended that a form of spectrum licensing and pricing should be applied selectively to satellite services in such cases and that Crown bodies and radio astronomers should be given pricing and trading incentives to use spectrum more efficiently.

Terrestrial spectrum use for fixed communications can readily interfere with satellite broadcasting. The hon. Member for South Cambridgeshire made the point that satellite broadcasters appear not to be aware of these difficulties, but at the moment, efforts are made on an ad hoc basis to avoid licensing links that would damage satellite broadcasting. How can we replace the current ad hoc arrangement in the new circumstances where spectrum has a well-understood value and choices have to be made between conflicting spectrum uses? RSA will enable that to be done. It is a potentially versatile spectrum management tool, which Ofcom could deploy selectively to help manage the radio spectrum more effectively.

It will not be compulsory, but up to the operator concerned to judge whether the benefits of RSA are worth the charges. It will be open to operators to continue with RSA, forgoing the benefits, but it is only fair that, if they want the same privileges of licensees—security and quality of spectrum—they should pay on a comparable basis.

Mr Richard Allan (Sheffield, Hallam, Liberal Democrat)

The Minister referred to the current activities that take place whereby the

Radiocommunications Agency will look at and deal with the fixed links that could interfere with satellite systems. Is he suggesting that only those satellite broadcasters who have purchased RSA under the new arrangement will benefit from that kind of intervention, and that therefore the protection racket that has been referred to does apply because the agency would say to those who have not bought RSA, ''Go ahead with the fixed link. We do not care whether it interferes with the satellite signal.''

Mr Stephen Timms (Minister of State (e-Commerce & Competitiveness), Department of Trade and Industry; East Ham, Labour)

I am not suggesting that. Ofcom will continue to be as helpful as possible to everybody—as is the Radiocommunications Agency at present.

However, there will be growing demands on the spectrum and difficult choices will have to be made. This is the key question: given those growing demands and the increasing importance of fixed wireless links for the roll out of broadband, how will some of these choices be made? We are saying that, if existing operators want the same sort of privileges that licensees currently have, they should pay for the spectrum on a comparable basis.

The point was well made on 13 November 1997 by the hon. Member for Sevenoaks, who was arguing in favour of an amendment for the official Opposition:

''there is growing concern among United Kingdom operators about the amount of spectrum being demanded by international operators . . . The international satellite operators will not pay the fees that the regulations will set. They will not pay tax for the use that they make of the spectrum in the United Kingdom—nor will they pay any other sort of tax because they are international operators. The amendment would enforce the principle of a level playing field.''—[Official Report, Standing Committee A, 13 November 1997; c. 59.]

These arrangements for RSA will provide that.

The Radiocommunications Agency has recently consulted on how and where RSA might apply, with particular reference to satellite systems. We are currently looking at the responses: we will take full account of all the views that were expressed, and there will be further consultation before decisions on the details are taken.

That consultation will cover three important areas, in particular. First, it will cover the areas where RSA will be available. RSA will be used selectively where there is a spectrum management need: the clause provides full flexibility to do that. RSA will be available only where Ofcom makes the necessary regulations.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

Does the Minister recall that on 13 November 1997 the Minister with responsibility for this matter at the time, now the Minister for Social Exclusion and Deputy Minister for Women, resisted the amendment of the hon. Member for Sevenoaks on the grounds that it would create bad law because it could not be enforced—that comment is recorded in column 65 of the volume of Hansard that the Minister quoted from. That is the same point that I am making about applying incentive pricing for people who would have to submit themselves voluntarily to this.

Mr Stephen Timms (Minister of State (e-Commerce & Competitiveness), Department of Trade and Industry; East Ham, Labour)

I recall that response vividly—as, I am sure, does my hon. Friend the Member for Milton Keynes, North-East. What my hon. Friend the then Minister said in response to that debate was absolutely right because at the time no mechanism was available

for issuing licences to people outside UK jurisdiction. That is why the concept of RSA has been developed; it is intended to fill the gap that the hon. Member for Sevenoaks and others referred to in that debate.

As we are referring to what was said in that debate, let me remind the hon. Member for South Cambridgeshire of his own comments. He made some telling points and I am very glad to remind the Committee of them. He said:

''We could become bogged down in the technological issues associated with the interaction of satellite and terrestrial transmissions, but the issue really comes down to one of equity between those services that can bring themselves under the ambit of international satellite agreements and those that are currently confined to terrestrial licensing . . . In those circumstances, it is right that the Government should ensure that the licensing requirement necessary for the use of the radio spectrum should apply to all users of that part of the spectrum including international satellite operators.''—[Official Report, Standing Committee A, 13 November 1997; c. 62.]

He was absolutely right about that.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

Will the Minister give way?

Mr Stephen Timms (Minister of State (e-Commerce & Competitiveness), Department of Trade and Industry; East Ham, Labour)

Let me finish. The point made by my hon. Friend the then Minister in response to the debate was that, at the time, there was no mechanism to allow that to be done. We have now developed the mechanism that will do precisely what all members of the Committee recognise is the right thing in order to ensure the equity for which the hon. Gentleman was calling.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

Let me finish that quote. It went on:

''The extent to which international satellite organisations are obliged to pay the fees that would imply the full valuation of that part of the spectrum is a separate and subsidiary matter.''

Yes, spectrum access should be recognised, but not on the basis of full opportunity cost pricing. It would not work on that basis because people cannot be charged, as opposed to offering something, which allows them to be considered as part of spectrum management. Opportunity cost pricing will effectively be unenforceable.

Mr Stephen Timms (Minister of State (e-Commerce & Competitiveness), Department of Trade and Industry; East Ham, Labour)

Mr Andrew Lansley (South Cambridgeshire, Conservative)

As a member of the Trade and Industry Select Committee, may I advise the Minister that it is clear in the Select Committee report—I do not have it in front of me—that not only was the Select Committee not persuaded of the case for the introduction of RSA, but it felt that if the Government wished to proceed with RSA, incentive pricing should not be applied to it. I fear that the Minister is praying the Select Committee in aid, even though it considered the issue and took the contrary view to the Minister.

Mr Stephen Timms (Minister of State (e-Commerce & Competitiveness), Department of Trade and Industry; East Ham, Labour)

The question is whether we should establish a level playing field. I believe that there is an overwhelming case for doing so. At the moment, it is not possible for satellite broadcasters and others that I have listed to benefit from the licensing regime. We have developed an arrangement that allows safeguards to be provided to spectrum users as well as licence holders, and the basis on which charges are set should be as similar as possible in both sets of arrangement. There is no case for a different set of considerations to apply to RSA from those that apply to licensing.

Mr John Greenway (Ryedale, Conservative)

I apologise for not being able to attend this afternoon's sitting. In case we do not reach amendment No. 318 before 11.25, will the Minister accept that his entire argument overlooks the fact that

RSA is to enable organisations that have satellite spectrum to enter into an arrangement voluntarily? I cannot understand why he says that charges should be similar to licence fees, when they are to be entered into voluntarily.

Mr Stephen Timms (Minister of State (e-Commerce & Competitiveness), Department of Trade and Industry; East Ham, Labour)

They are to be entered into voluntarily. It is a question of operators deciding whether it is worth the charge involved to obtain the benefits of RSA. It is a matter for them. However, licence-holders are paying on one basis, which is why we supported the safeguards. Others wishing to have the same safeguards should pay on a comparable basis. The arrangements allow for that to happen.

The two Government amendments correct a detailed drafting error in clauses 156 and 162, which concern arrangements for auctions of spectrum licences and RSA. New section 3A(8) of the Wireless Telegraphy Act 1998 which is inserted by clause 156, and new subsection (3)(6) which is inserted by clause 162, refer to sums payable under section 1 of the 1998 Act. In fact, sums will be paid under regulations made under that section, rather than under the section itself. The two amendments correct that error by adding a reference to regulations. I hope that those amendments, at least, will commend themselves to the Committee.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

I am grateful to the Minister for the courtesy of responding in detail to our arguments. There is an argument to be had over the desirability of spectrum access. The Government's argument is that there is conceivably a benefit in spectrum management terms of encompassing the whole of the spectrum in a system of management. It is perverse to suggest that parallel arrangements in relation to incentive pricing must apply. The Minister is essentially arguing that RSA should be granted on the same basis as licences.

Licences are different, however. The Government do not have control of the spectrum and there is no basis on which the Government can effectively deny spectrum to users. If people are charged an opportunity cost that they believe to be in excess of its economic value, they will walk away from the system and not seek recognised spectrum access. They will deny us spectrum management possibilities, or alternatively, contrive their business so that they are not subject to the Government's intervention. The risk is that people will walk away from the system.

I shall not wish press amendment No. 293, but I leave it to my hon. Friends to consider whether amendment No. 322 continues to have sufficient merit. I believe that it does in restricting bidding, which is a perverse additional way of allocating recognised spectrum access. However, when we reach amendment No. 305—probably sometime in February—I see every merit in continuing to constrain the charging to the level of cost incurred by Ofcom, rather that adopting the perverse idea that one can somehow impose incentive pricing. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr Roger Gale (North Thanet, Conservative)

If hon. Members wish to press amendment No. 322 to a Division, they should notify the Chairman at the appropriate time.

The Chairman, being of the opinion that the principle of the clause and any matters arising thereon had been adequately discussed in the course of debate on the amendments proposed thereto, forthwith put the Question, pursuant to Standing Orders No. 68 and 89, That the clause stand part of the Bill.

Question agreed to.

Clause 151 ordered to stand part of the Bill.

Clause 152 ordered to stand part of the Bill.

Mr Roger Gale (North Thanet, Conservative)

Eagle-eyed hon. Members will notice that clause 153 is missing from the selection list. It will appear later, when we debate broadcasting.

It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till this day at half-past Two o'clock.