Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

I beg to move amendment No. 318, in

clause 154, page 139, line 14, at end insert—

'(1A) OFCOM shall not issue any regulations under subsection (1) until they have consulted all interested parties, and considered any representations received, on whether the application of such regulations to any particular circumstances of use is appropriate and proportionate, having regard to all the circumstances.'.

I begin by welcoming you to the Chair, Mr. O'Brien, even though you are a replacement for a replacement. The ability of the Chair to draft in fresh horses is rather attractive, and we on the Opposition Benches envy that.

This morning, we rehearsed some of the arguments about recognised spectrum access in respect of the amendments to clause 151, but clause 154 is the main clause that introduces the principle of recognised spectrum access. The next group of amendments goes to the heart of that issue. The amendment is a taster of what is to come—its scope is much narrower than the group that follows it.

In his response this morning to my hon. Friend the Member for South Cambridgeshire (Mr. Lansley), the Minister defended the Government's insistence on proceeding with RSA, and laid great stress on the fact that the implementation of that concept would proceed only subject to close consultation with the industry. The hon. Gentleman said that both the Government and Ofcom intend to undertake further consultations beyond those that have already taken place to ensure that RSA would apply only in circumstances in which spectrum management was needed. On the question of the fees to be paid, he said that those would be no higher than were necessary for spectrum management purposes. We welcome that commitment, but the Bill as it stands does not require there to be consultation. I hope, therefore, that he will be willing to look sympathetically on an amendment that would simply introduce into the Bill a requirement in respect of which the Minister has, in many ways, already given a commitment. It adds a general consultative requirement to the legislation.

We continue to be apprehensive about the concept of RSA. We will discuss that subject shortly, but

before we do so, it would be helpful if the Minister said a little more about the consultation that he has promised, and considered whether he is willing to accept the amendment.

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

I, too, bid you a very warm welcome to the Chair of our Committee, Mr. O'Brien. You are not a replacement horse, as the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale) suggested, you are a welcome incumbent of the Chair during our deliberations this afternoon.

I have no difficulty with the spirit of the hon. Gentleman's proposal. It is desirable that Ofcom should consult before making regulations, take account of the views expressed, and ensure that the regulations that are introduced are appropriate and proportionate. As he said, I made some points along those lines during this morning's sitting.

I can assure the hon. Gentleman that the principles that the amendment supports are already firmly embedded in the Bill. Clause 154(9) refers to ''Section 388'', and clause 388 includes a requirement to consult and take account of the representations received. The principles that he supports are therefore included in the Bill, including ensuring that the application of the proposed regulations is appropriate and proportionate—the Committee has debated the general duty in clause 3(3)(b) that expressly requires Ofcom to have particular regard to those qualities. Clause 6 imposes a duty on Ofcom to avoid unnecessary regulatory burdens.

Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

The Minister refers to clause 388, but it deals with the regulations and orders made by Ofcom, whereas we are currently dealing with what he says will be a voluntary arrangement. I am therefore unsure whether clause 388 provides the requirement that he suggests it does.

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

I think that it would, and that is why clause 154(9) refers to ''Section 388''. It will be necessary to make regulations to put the arrangement in place and to make it work, even though RSA will be voluntary, as the hon. Gentleman rightly says. We will return to that point this afternoon, but the safeguards that clause 388 provides will apply. In the light of that assurance, I hope that that the hon. Gentleman will feel able to withdraw the amendment.

Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

The argument, ''Oh well, it is covered elsewhere in the Bill,'' is not wholly convincing if the Minister is not able to provide any good reason why it should not also be covered at this point in the Bill. As there is an element of doubt about this in some minds—if not in the Minister's—there are people who would like that commitment to be strengthened by the inclusion of the amendment. I will not press it to a Division at this stage, as we will have a more fundamental disagreement about the next group of amendments, but I hope that the Minister will ensure that his words are put into practice when the Government proceed on this matter. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

I beg to move amendment No. 320, in

clause 154, page 139, line 18, leave out subsection (3).

Mr Bill O'Brien (Normanton, Labour)

With this it will be convenient to take the following amendments: No. 321, in

clause 154, page 139, leave out subsections (5) to (7).

No. 337, in

schedule 5, page 355, leave out line 36.

Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

We now get back into the meat of the debate, which is about the principle of the introduction of recognised spectrum access. The amendments would remove some of the worst elements of the Government's proposals. I assume that you will adopt the practice of the two other Chairmen, Mr. O'Brien, which is that, when we have a substantial debate on a group of amendments to a clause, it becomes, in effect, the clause stand part debate. With your permission, I will to speak about the overall effect of clause 154 and the introduction of RSA.

It is probably worth reminding the Committee of some of the ground that we covered this morning. We should consider the reasons the Government have given for proceeding as they propose to do—an argument that the Minister repeated this morning. Like so much else in this part of the Bill, the measure originates from the review conducted by Professor Martin Cave, who rightly points out that, at present, transmissions to satellites from installations within the United Kingdom are licensed, but there is no requirement for the licensing of transmissions back down from the satellite.

In justification of the principle that he recommends, Professor Cave says that

''the users of the spectrum could face some uncertainty that their services would be protected from interference if they shared bands with other (usually terrestrially-based) services'',

and suggests that

''Spectrum access licences could be introduced as a way of providing such certainty.''

He says that that

''would have the advantage of defining the interference protection afforded to satellite and terrestrial systems operating in the same or neighbouring bands. It would also provide greater clarity to operators of satellite systems''.

Professor Cave claims that he is suggesting the RSA concept for the benefit of the satellite operators and that they would see some advantage to be gained from obtaining RSA. That is not the view of the satellite operators. It becomes clear in the report that there is another motive—not dishonourable in any way—for such proposals. Professor Cave makes the matter plain when he says:

''There may also be scope to use spectrum pricing to ensure that satellite operators face the opportunity cost of the UK spectrum which they occupy.''

There is a suspicion that the system is more about raising revenue than assisting satellite operators.

As was said this morning, the proposals have encountered strong resistance and opposition from those currently operating in the satellite market. All the European and United States of America satellite

industry associations are opposed to the proposals. The industry has repeatedly made clear its strong opposition at each stage of the consultative process. The Minister said this morning that the satellite industry had expressed concerns, but that is putting it very mildly.

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

I am listening carefully to the hon. Gentleman's argument. He made a strong point this morning about the effectiveness of market mechanisms in helping spectrum allocation decisions to be made. Does he accept that the principle that he enunciated must apply also to that part of the spectrum used by satellite broadcasters?

Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

It is different when dealing with a section of the spectrum that it is not within the power of the British Government to licence, whether or not they wish to do so. The Minister said that the arrangement would be voluntary, but it is not only Britain that receives such satellite broadcasts. We are debating broadcasts from satellites that cover a large area of Europe. For Ofcom to take it upon itself to say that we will somehow give recognition at a price does not offer a concrete advantage to the satellite operator. It is not possible to make the comparison with other areas of the spectrum in which, quite plainly, it is wholly within the power of Ofcom—and rightly so—to allocate bands for particular purposes. A market-based solution is much more appropriate for dealing with that.

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

Does the hon. Gentleman accept that there is a possibility of damaging interference between use of spectrum for satellite broadcasting and use of spectrum for other things? The licensing arrangements provide protection for terrestrial users in those circumstances, so surely it is right that satellite broadcasters should have access to comparable safeguards on similar terms.

Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

The question whether there is potential for damaging interference is subject to considerable debate. Satellite operators do not accept that there is such a risk. They point out that

''in shared bands, satellite space-to-earth transmissions are made at very low power levels governed by the International Telecommunications Union . . . regulations, and . . . there is no risk of interference with terrestrial transmissions.''

There are already some arrangements for ensuring avoidance of interference in the regulations agreed by the ITU.

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

The hon. Gentleman is generous in giving way, and I shall not continue to interrupt him. I accept that there is not much danger of interference with terrestrial communications from satellite broadcasting, but there certainly is real danger of interference the other way round. The arrangements will help to provide a safeguard for the satellite broadcasters.

Mr. Whittingdale rose—

Mr Andrew Robathan (Blaby, Conservative)

Will my hon. Friend allow me to intervene?

Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

Let me respond to the Minister, and then I shall of course give way to my hon. Friend.

The Minister suggests that the provision is a safeguard for the satellite operators, and that as it is they who face the risk of interference, they should welcome with open arms the protection that the Government will give them. However, the fact that the satellite operators themselves do not think that there is any danger suggests that if anyone is to be concerned about possible danger, it is not them. If they do not think that there is a risk, the Minister's argument is somewhat undermined.

Mr Andrew Robathan (Blaby, Conservative)

I am grateful to my hon. Friend for giving way to me. I think that our hon. Friend the Member for South Cambridgeshire would also like to speak on this subject. Paragraph 31 on page 13 of the third report of the Select Committee on Trade and Industry on radio spectrum management says:

''The satellite operators and broadcasters did not need or want such protection from interference as the Government was offering.''

That seems pretty clear.

Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

My hon. Friend is absolutely right—that is precisely my point. The Trade and Industry Committee has done a valuable service in making that plain and obtaining that evidence.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

The Select Committee was relying not on its prejudices, but on the evidence that it took. On the matter under discussion, we relied on the evidence of Mr. Amiel, the director of European affairs for SES Global. He was asked about quality of spectrum, and said:

''We do not cause interference but we may potentially get interference from the others. It has not been the case in the past. Until now, we have not been aware of any problems of interference. That was the case because the Radiocommunications Agency, under its obligations following the ITU rules, has ensured the co-ordination between the different radio operators and that no interference occurred.''

The final sentence is probably the key one for my purpose:

''We do not really understand why suddenly there should be such a charging mechanism for a service which has been guaranteed for years.''

Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

That clearly makes our point. The contributions of both my hon. Friends demonstrate that although the measure might be for the protection of the satellite operators, it is not being introduced because they have said that they need that protection. Indeed, they regard the measure not as advantageous, but as deeply disadvantageous.

Mr Michael Fabricant (Lichfield, Conservative)

This morning, we very quickly considered clause 150—in fact, I think we did not debate it because it was so clear and so desirable. The clause is headed ''Advisory service in relation to interference'', and in it reference is made to the Wireless Telegraphy Act 1949. My hon. Friend will know that in that Act there are powers to protect legitimate broadcasters not only from interference from cars and electrical equipment, but from co-channel interference from other broadcasters. That protection already exists.

Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

The Radiocommunications Agency has long experience of dealing with matters of interference, which work would, as my hon. Friend suggests, be continued by Ofcom.

Having spent a little time on the question of whether it was necessary to have protection against interference, I will move on to some of the arguments that have been advanced by the Government. The Government have said that the new ability to obtain RSA will be voluntary and that there will be further consultation by Ofcom on precisely how it will be priced and on the methodology of its introduction. However, for all the Minister's claims that the scheme is entirely voluntary and that there is no coercion involved, that is not how the industry sees it.

The industry has suggested that the RSA scheme will afford purchasers a right to use the spectrum and that that will necessarily restrict the rights of those users who decide not to purchase the protection associated with it. The industry feels that operators are likely to be forced to purchase RSA simply so that they do not lose existing rights of use of certain frequencies and to guarantee against the possibility of interference and a consequent loss of quality. That aspect led one of the witnesses to the Select Committee to say that it was essentially a protection racket, with users being told, ''Unless you pay me something, I will do nothing to stand in the way of someone else coming along and causing you a great deal of harm.'' It was right that the Select Committee took up that analogy in its report and described the Government's proposal as a protection racket.

There is a feeling that if the United Kingdom were to proceed down that road and introduce such a requirement, other countries would almost certainly do the same, regarding it as a useful, new source of revenue that they could obtain from satellite operators. If satellite operators required protection in the UK, why should they not also need similar protection in France, Germany, or any of the countries within the footprint of the transmission footprint from the satellite? One begins, therefore, to talk about the satellite operators being required to pay a substantial sum of money. The Government have already published indicative prices, which are substantial. If those are reproduced across the rest of Europe, we are talking about a significant additional cost burden on the satellite operators.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

Before we move on from the ''protection racket'' issue, it was not simply that the proposal was so described. When taking evidence from the Radiocommunications Agency, I asked whether if someone did not seek a grant, or did not bid, for RSA it that would mean that the Radiocommunications Agency would offer them no service, in which case they would not be protected. The answers to that were,

''We would not be obliged to'',

and

''We will not consider them in the planning process. We might put other things, terrestrial, in that place.''

We were led to our conclusion in part by the manner of the Radiocommunications Agency's evidence.

Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

That is most illuminating. While I congratulate the Select Committee on getting its report out, the full minutes of evidence are, sadly, not yet available. My hon. Friend is—

Mr Andrew Lansley (South Cambridgeshire, Conservative)

I have the document here.

Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

Trying the Vote Office is clearly hopeless—it denied that it had it. Happily, my hon. Friend is here to provide me with the information that I seek. His intervention is helpful, because the Minister suggested this morning that whether or not someone had decided to participate in the voluntary agreement would have no effect on the service provided by Ofcom. However, operators who did not would suspect that their concerns would be dealt with at 5 o'clock on a Friday afternoon, long after every other person's concern had been addressed. I am afraid that the evidence quoted by my hon. Friend supports that view and must cast an element of doubt over the assurance that the Minister gave earlier today.

Let me return to the issue of cost, because satellite operators already have to pay for the uplinking that takes place. That is a licensable service. The country in which the operator is based is, rightly, entitled to impose a charge for the licence granted. If operators are to be required to pay an additional fee for downlinking, that is double pricing, which will result in substantial extra cost.

On the basis of figures supplied so far, it is estimated that the introduction of recognised spectrum access will impose an annual cost on Astra—the biggest operator—of £7.5 million, which is a substantial sum. That sum is calculated on the basis that the 47 existing UK transponders will all be charged a rate of £160,000, which is the figure in the document published by the Radiocommunications Agency.

There is also concern about how the scheme fits in with European legislation and policy, the direction of which has been to reduce and eliminate barriers to the transmission of satellite services. Under the proposed RSA scheme, the digital reception of television programmes by satellite will be charged in a way that does not feature in any other member state of the European Union.

Moreover, the effect would conflict with the general ban on restrictions on the freedom to provide services within the European Community established under article 49 of the treaty. Under that provision, member states are prevented from introducing national restrictions that are liable to prohibit, impede or render less advantageous cross-border economic activities. There is already a precedent in case law because the transmission and broadcasting of television signals falls within the rules of the treaty relating to the provision of services.

The concept also runs counter to the television without frontiers directive, which aims to establish the conditions necessary for the free movement of television broadcasts. The directive states:

''Member States shall ensure freedom of reception and shall not restrict retransmissions on their territory of television broadcasts from other Member States for reasons which fall within the fields coordinated by this Directive.''

There is concern that the direction in which the Government are going appears to be precisely opposite to the one promoted by the European Union.

Finally, we have discussed digital switchover and the take-up of broadband services, which the

Committee agrees are highly desirable public policy objectives. There is no doubt that satellite platforms offer a wide range of services, including digital broadcasts and the possibility of access to broadband services. If our aim is to promote digital switchover and, at the same time, extend broadband access, especially to those areas where fixed-wire access is not available, it is odd that we should be adding burdens to the very operators that we hope will supply those services.

For all those reasons, we regard the introduction of recognised spectrum access as unnecessary, inappropriate, unfair and potentially highly burdensome to an industry that will be of great importance to this country in the future. My amendment seeks to reduce the impact, but our objection to the measure is far more fundamental: we do not support the clause and will not vote in its favour.

Mr Richard Allan (Sheffield, Hallam, Liberal Democrat)

The amendments are designed to reduce the impact of recognised spectrum access and encourage the Minister to elaborate on the meaning of his earlier comments. There is still confusion about the way in which the scheme would be implemented. If it were implemented in the wrong way, as described by the hon. Member for Maldon and East Chelmsford, considerable costs could be incurred for what appears to be little benefit.

I approach the matter from the angle of the consumer, which I hope is shaping the whole debate on the future of the communications industry. The consumer has two interests, the first of which is not to have to pay unnecessary charges. We have discussed the costs that will fall on the satellite industry. It is estimated that Astra would have to pay an additional £7.5 million per year for RSA. That cost would have to be recouped from the consumer through satellite television services

Sitting suspended for a Division in the House.

On resuming—

Mr Richard Allan (Sheffield, Hallam, Liberal Democrat)

Before we were whisked off to deal with the problems of health in Wales, I was about to discuss our approach to recognised spectrum access such as the consumer interest in not having to pay more than is necessary. When we refer to charging businesses, we must recognise that they pass on charges to consumers. Ultimately, we are talking about charging our constituents for recognised spectrum access, if it were to be expensive. If the broadcasters for whose services they subscribe felt that they had to take it on board and pay the costs, the costs would eventually be transferred to our constituents.

The second interest of our constituents is to receive signals that are not subject to undue interference. We must try to balance the two interests. The hon. Member for Maldon and East Chelmsford said that the satellite industry does not consider that it is necessarily in need of additional protection and, therefore, suspects that there are ulterior motives.

The proposals can be implemented over a broad spectrum, if I can use that word in such a context. RSA could be considered compulsory by the satellite broadcasters and something for which they have to pay. That is similar to a terrestrial broadcasting licence to enable terrestrial broadcasters to use the normal frequencies for which they have to pay a licence fee.

When the Minister uses phrases such as a ''level playing field'', it comes as no surprise that people in the business gain the impression that that is precisely what the Government intend, and that they are talking about fees that are equivalent to those that are paid for using terrestrial frequencies. If that were not the case, such a phrase would become worrying and inappropriate. One end of the spectrum is that RSA is something that everyone considers that they must have, while at the other end, we end up with a free for all whereby no one takes it up. We must decide whether we are debating a new mechanism for Ofcom that will not be implemented.

Satellite broadcasters have clearly suggested that, to date, they have not suffered significant problems with interference with their signals and that they do not anticipate that happening. If the regulator—in future, Ofcom—requires people to conform to international standards, such as the ITU standards, in particular, satellite broadcasters say reasonably that there should be no reason for interference if everyone is conforming to those standards. Clearly, when policing the airways, Ofcom has within its remit the fact that it should require compliance with international standards.

The crunch question is the difference in the level of protection that will be afforded to satellite operators, in particular. What additional protection will they receive under the recognised spectrum access arrangements, owing to the fact that, presumably, Ofcom will require everybody, including potential interferers, to conform? The Minister has referred to people putting in local wireless network loops. If potential interferers will be robustly policed by Ofcom to conform to international standards that are designed to prevent interference from anyone else, what is the difference between an RSA protection regime and the regime that people would expect to receive anyway by virtue of Ofcom doing its job and implementing international standards?

The hon. Member for Maldon and East Chelmsford asked whether we were double charging. We are in the European market, so let us suppose that satellite broadcasters, in particular, pay a fee to the Radiocommunications Agency—Ofcom, in future—for the fact that they have an uplink service leaving the United Kingdom and also pay a fee to the authorities in Luxembourg from where they uplink to the satellite. If they chose to use a service in Luxembourg and pay a fee for using the airwaves there, that should not be charged again in another country. We in the European Union try to encourage the free movement of goods and services, so companies should have the choice to operate in that way. If they are paying somewhere in the EU, there is a serious question as to whether they should be required to pay again within it for something that is broadly comparable. It does not matter whether they have paid large fees in

Luxembourg, Belgium, the UK or anywhere else in the European Union; they have paid for the use of airwaves within the EU.

There are genuine questions to be asked about the extent to which everybody should add additional charges, particularly given—as the hon. Member for Maldon and East Chelmsford said—the nature of a satellite system whereby one is potentially broadcasting into a range of countries, regardless of whether they have chosen to receive those broadcasts.

I hope that the Minister can satisfy us about the way in which this could operate. Specifically, I wish him to answer this key question: if the industry is correct in its assumption that it does not need additional protection, and therefore chooses not to take up the offer of being able voluntarily to purchase RSA, and that does not happen at all, because the industry does not need it, would the Minister be content with that? Are the Government happy that that should be the case, or are they positively trying to push everyone to adopt this new mechanism regardless of whether they need it? In other words, should we be looking for any other motive? Is this purely for the benefit of the industry and the consumers? If the industry does not need to take it up because it is not necessary for operators or consumers, will the Minister leave things alone and say, ''Well, that's fine; we have offered it to you, but you do not need it, so we will let it sit on the statute book and it will never really be brought into play?'' That is the test that needs to be applied to discover whether we are debating a measure that is towards the more compulsory end of the spectrum or one that is more towards the ''if necessary'' end of it where, as the Minister has suggested, if there are cases in extremis where Ofcom needs to carry out extensive work to protect an area of spectrum and, for valid reasons, a reasonable charge is made against that. To refer to the helpful comments of the hon. Member for South Cambridgeshire, that reasonable charge is about the work that Ofcom has to do to protect the spectrum rather than an opportunity cost—as he described it—for some notional value of what that spectrum could be worth.

Mr Brian White (North East Milton Keynes, Labour)

The exchange between the Minister and the hon. Member for Maldon and East Chelmsford about the need for satellite operators to be protected reminded me of something that I read in the Cave report over the Christmas break:

''These developments could enable MOD in future to access a wider range of its communications services . . . A key challenge facing the RA and MOD jointly is to reconcile the increasing demands for both civil and military spectrum.''

Perhaps the conspiracy theorists should congratulate the Department of Trade and Industry on finding this novel way to ensure protection against the wiles of the Ministry of Defence in grabbing the satellite operators' spectrum.

I have several concerns about RSA, so I want to ask the Minister a couple of questions about them. I asked about the role of the United Kingdom Spectrum Strategy Committee—the committee that reconciles spectrum use between the Ministry of Defence and different civilian organisations. At present, that power

comes about because the Radiocommunications Agency is part of the DTI; therefore the DTI is represented by its Secretary of State and the Ministry of Defence is, in effect, represented by the power of the Secretary of State for Defence. Given that Ofcom is an independent regulator that is also now a part of the UKSSC, which directs spectrum use, I suspect that there might be a conflict of interest, and I am concerned about that, especially when we come to recognised spectrum access.

I would appreciate it if the Minister would address that, assuming that I have missed the point, there is no conflict of interest, and everything is wonderful.

Similarly, I am concerned about Ofcom having a duty to deal with competition law and to make sure that competition works. The satellite operators argue strongly that the provision is not necessary, but they also argue that it could distort competition. If Ofcom is arguing for RSA and for being the body that determines it, but is also supposed to reconcile issues of competition, will there be any internal conflict within Ofcom, and how would it resolve that? I should be interested in the Minister's comments on how that will work.

The hon. Member for Maldon and East Chelmsford stated that there is a considerable body of legal opinion in Europe that the provision will fall foul of various European Union directives. If we go ahead with the provision, there is likely to be a legal challenge. Will the Minister outline the argument that convinces the Government that they will not fall foul of EU law? What will be the fallback position either during the legal case, or if the satellite case should prove to be valid? Do we have a fallback position, or is it the provision itself?

The Minister will be aware that the ORBIT—Open-market Reorganization for the Betterment of International Telecommunications—Act in the United States forbids spectrum auctions. The satellite operators strongly argued that we had misunderstood the system in the United States. I am sure that the Minister has seen the letter sent to members of the Committee that makes that point. Perhaps the Minister could point out where the satellite operators have not got the position right.

Finally, I am concerned about how Ofcom will operate across Europe with the other EU regulators. Will RSA be a UK provision, or will it be discussed with the other EU regulators? If that is the case, will RSA be a European common standard, or will it be UK-specific? If it will, what is the implication for satellite footprints that cross more than one country?

Mr Michael Fabricant (Lichfield, Conservative)

It seems to me that the system is very irregular as far as the European Union is concerned. I want to mention a couple of my fears, in addition to those outlined by my hon. Friend the Member for Maldon and East Chelmsford.

My main concern is that on the margins a number of satellite operators will think that RSA is in effect a compulsory system. That is borne out by the quotes that my hon. Friend the Member for South

Cambridgeshire read from the evidence that the Radiocommunications Agency gave the Trade and Industry Select Committee. The agency said that it would not offer protection from interference to companies that did not take up RSA. As I said earlier, I would have thought that that was in breach of the Wireless Telegraphy Act. If satellite operators think that RSA is compulsory, they may well take the view that they need to take up RSA for the sort of costs that we have discussed, and far from being an optimal system, RSA will become a compulsory system.

Let me remind the Minister, if he is not already aware of the fact, that although satellite broadcasters might enjoy spectrum free of interference at the moment, they might not in future. Additional sources of radio frequency—RF—might arise from additional transmissions. Also, I draw to the Minister's intention the increasing use of the national grid and other main electric lines for data transmission. He may well be aware that that is giving rise to considerable concern, as it already causes interference in the HF—short wave or high frequency—bands. The same could happen with VHF and super high frequency, and that would be getting very close to the sort of frequencies used by satellite broadcasters. Those frequencies may be interference free now, but they may not be in future. What could be the effect of that, if satellite broadcasters consider that RSA will end up compulsorily if they are successful in providing their service, interference free? The result will be that satellite operators will have an increased cost. They will want to maintain their profits and, when the negotiations are renewed for the renewal of contracts with operators of the satellite, the costs will be passed on.

What will follow from that? Provision of services at the financial margin may be discontinued in the United Kingdom. It may not be worth while providing them. I am talking possibly about arts programmes that are currently available on satellite, which may not be very profitable and may fall into unprofitability if the charges increase. I am also drawing attention to the increased use of satellite both geostationary and low earth orbit constellation systems for the provision of broadband internet connections, to which my hon. Friend the Member for Maldon and East Chelmsford alluded. They are the only way in which to achieve internet connection in certain rural areas in of the United Kingdom.

That brings to mind a scheme operated by BT with great success in the Outer Hebrides. The costs already are high. That is not because BT is greedy, but BT with so few subscribers finds the charges high. What will be BT's choice? It will either have to subsidise the service under the provision or it will have to pass on the costs, which will make the service prohibitive. It will also be in total breach of the Government's laudable aim—although it has not been very successful so far—of spinning out broad broadband throughout the United Kingdom. That will not happen in rural areas, which

will be dependent on satellite if the provisions are accepted.

The Minister must answer the question that was so pointedly made by the hon. Member for Sheffield, Hallam (Mr. Allan). What will be the advantage to the operator of subscribing to RSA? Does he agree that the costs to some operators could be as high as £7.5 million? If he does, where does think that that £7.5 million will come from? It will come from us. We may be living in the Outer Hebrides or another rural area and want broadband access via satellite or be interested in watching programmes of a marginal, not popular, nature. I am trying to think of a popular satellite service, but I shall not name one because that will imply that it is not a good service. I was referring to a popular and good service. The Minister must answer such questions clearly.

Mr Andrew Robathan (Blaby, Conservative)

My question follows on from what was said by my hon. Friend the Member for Maldon and East Chelmsford and the hon. Member for Milton Keynes, North-East (Brian White) about EU legislation. Have the Government taken legal advice on satellite tax and EU regulations? I shall quote from the Select Committee report. Did the Government say whether RSA would meet

''the criteria of justification and proportionality within the context of the EU Internal Market rules, specifically Article 49 of the EU Treaty on the freedom to provide services and Article 3 of the Electronic Commerce Directive''?

It would be unfortunate if the Government turned up with egg on their face, having pushed through the provision and then discovered that it was illegal.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

The arguments are piling up against the Government. I wish to clarify one or two matters. I refer first to the pricing issue. The illustrative calculation of administrative pricing that was attached to the Government's document in July when introducing recognised spectrum access is where the figure of £160,000 for each earth station that is shared with terrestrial fixed links is derived. That may be an expression of the opportunity cost. It would helpful at this stage if the Minister could provide further guidance on what the Department regards as the illustrative cost of RSA, because, as far as I can see, that was intended to reflect a figure that was above cost recovery, as distinct from cost recovery. It would be interesting to know what the respective figures are.

I am especially worried about the figure of £160,000, which applies if the spectrum is shared. It is surprising that where the spectrum is used exclusively, the figure of £80,000 is quoted for a large earth station. I cannot imagine that it would cost the Radiocommunications Agency £80,000 to provide a service for that purpose. Elsewhere in the Cave review it is clear that the charge for exclusive use involves nothing more than a theoretical opportunity cost. In practice, there is no opportunity cost, because the spectrum would be designated for that purpose and could not be allocated for other purposes. How could an opportunity cost could be calculated and then applied to an exclusive use of spectrum? That seems strange.

My hon. Friend the Member for Lichfield (Michael Fabricant) referred to the cost to broadband users. It is helpful that SES Astra, in its evidence to the Committee, illustrated what that cost might be. If the cost per transponder were £160,000, and there were a maximum of 20,000 broadband users, the cost to each user would be £8 per year. We can see where that cost would arise and to what extent that would fall on users. That is anything but an aid to the development of innovative services, especially, as my hon. Friend rightly said, in rural areas and it raises the issue of whether that is consistent with the development of innovative services, which is one of the duties that it is intended should be secured.

I want to finish with a straightforward question that arises from evidence presented to the Select Committee. What would happen if the Government instituted a process of RSA and a satellite operator chose not comply with it and simply ignored it? What would the Government do about that? Would they withdraw services? Either the Government will comply with their ITU obligations, in which case there will be a continuing obligation to coordinate between radio operators and to provide a service without a mechanism for recovering costs, because no grant of RSA has been applied for, or they will withdraw that service and contravene their ITU obligations and all that flows from that. Both those routes are inherently undesirable.

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

I have had a number of discussions with different groups of users about spectrum charging and I have found that a similar, twofold point of view is always expressed, which is that spectrum charging is regarded a good idea, but not when it would be applied in the case of the person with whom the discussion took place. This morning the hon. Member for Maldon and East Chelmsford argued the case for spectrum charging. All the arguments that he and other Opposition Members have marshalled this afternoon against the proposals for spectrum charging could equally be applied against the principle of spectrum charging. The hon. Gentleman will find that the same applies if he discusses the matter with other spectrum users.

It is not that satellite operators do not want the safeguards that are envisaged in the RSA mechanism; they want those safeguards but they do not want to pay for them. One can be sympathetic about that. Others in the same position would also say that they did not want to pay for the safeguards, but that does not make them right. If we accept, as we did this morning, the principle that the market mechanism is the right one to use, that principle also applies in this case. We agreed this morning that we should move to a system in which the value of spectrum is recognised and acknowledged. Therefore, there cannot be a substantial group of spectrum users completely outside that system. If that were the case, there would not be a robust arrangement.

Mr Michael Fabricant (Lichfield, Conservative)

Following that argument, the Minister is saying that the arrangement is compulsory.

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

That is not what I am saying. RSA is certainly an option, but it will be entirely a matter for the operators whether they take it up. If operators

want access to the safeguards provided to licence holders, that opportunity should be available on an optional basis, as it is to others. That is the basis on which we can look forward to the arrangements promoting efficient use of the spectrum.

The hon. Member for Sheffield, Hallam asked some interesting questions. He asked whether I would be happy if there were no take-up of RSA. Operators might decide that there was no benefit. It would depend on where they were in the spectrum, and I anticipate that some would take that view. It is entirely a matter for them as to whether they wish to avail themselves of the opportunity and pay the associated costs.

There will be demand for new terrestrial communications links in some parts of the spectrum. Several hon. Members have mentioned rolling out broadband and I would expect demand for terrestrial links to do that. However, how can we decide whether to permit such links if they interfere with satellite broadcasting? In other cases, we agree that the charging mechanism is a helpful way of making such decisions. The same applies in this case.

Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

But is it not the case that demand from terrestrial users is falling? They are finding it better and cheaper to invest in fibre-optic links rather than use wireless.

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

There has been a downturn in the past two years, but demand is rising for broadband infrastructure. We passed the 1 million mark of broadband users in October and there are 30,000 new broadband connections every week. The legislation plans not only for current market conditions, but for those expected to develop over the next decade or more. There will be rising demand for fixed-wireless access for terrestrial communications links using parts of the spectrum that are already in use and decisions about access will have to be made.

Mr Richard Allan (Sheffield, Hallam, Liberal Democrat)

I seek clarification on that point. Is the Minister suggesting that there is a prospect of people bidding for some of the spectrum currently in use by satellite to be brought into the terrestrial ambit, and that Ofcom could offer that part of the spectrum to a new service without being in breach of its other agreements, such as the ITU obligations to which the hon. Member for South Cambridgeshire referred? Is that a realistic possibility?

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

Yes, it is. At present there are links using parts of the spectrum used for satellite broadcasting. Whether permission can be given for the link to be operational depends on where in the country those links are and the position of the satellite relative to the area in question. Currently, if there appears to be a problem for satellite broadcasting, the link is not permitted. The question is should that be continued or should we allow such decisions and choices to be made on the same basis that we all agree should apply elsewhere in the spectrum? That is the principle before the Committee. RSA will allow those decisions to be made on the same rational basis that we all agree should apply elsewhere in the spectrum.

My hon. Friend the Member for Milton Keynes, North-East and a couple of Opposition hon. Members asked about the legal position. I do not believe that RSA is contrary to the treaty. It will be voluntary, as we have explained. Even if it were the case—as was suggested by either the hon. Member for Blaby (Mr. Robathan) or the hon. Member for South Cambridgeshire—that article 49 would be engaged, our view would be that the restriction is justified because it is in pursuance of a legitimate public interest, it is proportionate to achieving that aim and it will be applied without discrimination. We believe that that view will be sustained.

Mr Andrew Robathan (Blaby, Conservative)

This was my specific question: have the Government—and specifically the Minister's Department—taken legal advice that states that they were acting legally within the EU regulations on this matter?

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

I am pleased to say that, as the hon. Gentleman knows, we have the services of excellent lawyers; we have explicitly obtained their advice on this matter, and I am now giving him the benefit of that.

Reference was made to the TV without frontiers directive, which requires member states to ensure freedom of reception of broadcasts from other member states. However, it does not require that frequencies should be made available for those transmissions, so I do not think that there is a problem there either.

Several hon. Members have asked about the continuing protection for satellite services if they were not to avail themselves of the benefits of RSA. Satellite services would continue to be protected from interference from unauthorised sources on exactly the same basis as other legal users of the spectrum even if they did not have the benefit of RSA. However, they would not have the kind of arrangement that they currently enjoy, where when a particular terrestrial link is applied for, it will not be permitted if it looks as though it might conflict with satellite broadcasting. That protection would not be available in the future.

There has been some discussion about the fees that would be charged. I want to emphasise that no decisions have yet been made about them. In answer to the question of the hon. Member for South Cambridgeshire, I cannot give further details on about them, not least because this is one of the areas where there will need to be a lot of discussion with the industry before decisions are made. However, on the basis of the illustrative figure of £150,000 a year that has been mentioned, the sums would work out at rather less than £1 per year per Sky subscriber—to cite a specific case that Committee members are familiar with. The context of the sums that we are talking about must be emphasised.

I think that the hon. Member for Sheffield, Hallam asked whether those charges would be passed on to consumers.

Mr Richard Allan (Sheffield, Hallam, Liberal Democrat)

I wish to clarify the point about charging. The Minister has described scenarios where

he could envisage a potential problem: for example, someone might say, ''I want to put in this wireless network in my area, even though we know that it might interfere with satellites.'' Presumably, under the RSA scheme, if the satellite purchaser purchased RSA, they would be protected from that. Does that mean that we will create a market value where the person who wants to put in the new wireless network can say, ''I will pay this much for that bit of spectrum,'' and the satellite operator will have to bid against them, or are we talking about a fixed fee so that once that has been paid, it is protected for the duration?

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

Once the fee had been paid, the matter would be settled for the duration of the agreement that had been entered into. Ultimately, we want market valuation to be attached to spectrum use. That is a big part of the value of all the arrangements set out in this part of the Bill. We need to know the value of spectrum, and the price that people pay to use spectrum should reflect that value. That should apply to satellite operators as well as other spectrum users. I think that we all accept that.

Of course, fees will not necessarily be passed on to consumers. Operators will charge what a competitive market will bear. I come back to the point that if terrestrial sources are constrained by the need to protect satellite broadcasting, that will impose costs on consumers of terrestrial services. The cost of broadband provision increases if the establishment of terrestrial links is not permitted in those parts of the spectrum. We should take account of that, too. The mechanism provided in the Bill gives us the opportunity to do that.

Mr Andrew Lansley (South Cambridgeshire, Conservative)

Before the Minister moves away from the issue of the costs of granting recognised spectrum access, if he cannot give an estimate of how much RSA will cost, will he give us some idea of the order of the costs if charges were limited to cost recovery? For the sake of argument, let us take the example of a satellite operator such as Sky. How much would the costs be for the service currently provided by the Radiocommunications Agency, if not £7 or £8 million, on the basis of an opportunity cost analysis, and how much does it cost the RA to provide its service?

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

That is not the figure that I have. I should like to come back to a point that I made this morning. It is essential that the basis on which the charges are set is the same as that used for licensing. I certainly do not agree that there should be one basis for satellite operators and another for other spectrum users. The Trade and Industry Select Committee—and some members of this Committee—recognised the value of the approach that we have taken to licensing more generally. The same principles should be applied to the spectrum users under discussion as to others.

Mr Michael Fabricant (Lichfield, Conservative)

The Minister gave the example of the system costing possibly £1 per subscriber for Sky, but as I have said, I am not as concerned about popular programming as about specialist programming and the provision of broadband. As I understand it, RSA is chargeable per transponder. The Minister will be aware that there are difficulties in using geostationary satellites for broadband access

because of the time taken to access the satellite, as the speed of light is the limiting factor. If RSA is chargeable per transponder, in future we will have low earth orbit satellite constellations, which might consist of up to 16 satellites that are not geostationary but whizzing around in low earth orbit.

At any one time, at least one satellite would be available to provide broadband service. However, each satellite would have a transponder. Therefore, there might be very few subscribers and up to 16 transponders. Surely the cost will be prohibitive, and that would be in total opposition to the Government's aim—which, as I said earlier, is laudable—of extending broadband to all areas of the United Kingdom, including rural areas.

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

I do not agree. I think that the approach that we are taking will be helpful in spreading broadband around the country for the reasons that I have given. Particularly in rural areas, there will need to be more use of the radio spectrum and more use of wireless broadband, because in many instances it is not yet economical to upgrade British Telecom exchanges for ADSL and there are not yet cables there. In such cases, we will need to use wireless, and the arrangements in the Bill will facilitate that.

I do not have calculations in front of me that allow me to outline the cost in a specific case, but the costs that have been quoted are only illustrative at this stage. Much discussion will be needed with the industry about the appropriate costs before the arrangements are introduced.

I should probably conclude quite quickly because I have not yet referred to the point raised by the amendments, although I am not unique in doing that. My hon. Friend the Member for Milton Keynes, North-East asked about conflicts of interest. I do not think that there will be conflicts of interest, but I think that the position will be no different from that which applies to licensing. That goes back to the point that was first made by the hon. Member for South Cambridgeshire about the need for a level playing field for different users of the spectrum.

Mr Richard Allan (Sheffield, Hallam, Liberal Democrat)

I hesitate to detain the Minister further but he said that he does not think that there will be any difference between this provision and that relating to spectrum licensing. There is an essential difference owing to the initial voluntary nature of the arrangements. For example, in the real world, the satellite broadcasters might choose not to take up a specific area spectrum but they could be informed at some point that a person has come along with a proposal to put in a local network meaning that 3,000 subscribers in area X would suffer damage to their services. That person might pay £20,000 to do that but say to the broadcasters, ''If you offer us £25,000, we won't do it.'' That is different from a stable situation in which everyone has a licence. The market is quite different if people do not have licences but somebody could come along and suddenly create a requirement for a licence.

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

I accept that there are differences. My point is that we should, as far as possible, treat all groups of spectrum users equitably. Several arguments

advanced by Opposition Members suggested that satellite broadcasters, for example, should be treated on an entirely different basis from other spectrum users, but that is not right.

In order to achieve effectively optimum use of the radio spectrum and to give RSA holders additional security of spectrum access and quality, RSA will have to include technical details about frequency, power levels, coverage, strength and type of signal for such reasons as to give operators assurances that they need about the levels of signals that might be expected to impinge on their services from transmissions on adjacent frequency bands. They will require the information in order to plan their coverage with the assurance that they will be able to provide the quality of reception that their customers demand because, without that, RSA holders would be in the dark about the technical quality that they could expect and might be subject to an unexpected shock such as that described by the hon. Member for Sheffield, Hallam. That would make RSA less effective as a spectrum management tool.

We want Ofcom to give operators greater certainty and the clause permits it to do that with the requisite amount of technical detail. In the interests of ensuring optimal use of the radio spectrum, Ofcom might also find it necessary to impose conditions on the strength and type of signal, the sharing of frequencies and the content of transmissions. Those factors might need to be regulated in order to manage the radio spectrum effectively and to ensure optimal use. The provisions mirror parallel provisions for wireless telegraphy licences.

Ofcom will determine how the powers need to be used. It would be premature to speculate about the detailed technical and regulatory content of RSA at this early stage of developing detailed proposals—a good deal more discussion is needed. However, restrictions, terms and conditions may well be necessary and, in view of the range of services that may be covered, the uncertainty about market conditions and technical developments, it is prudent to give Ofcom wide flexibility.

The exercise of the powers will be subject to the general duty on proportionate and appropriate regulation and to the clause 6 duty to avoid unnecessary regulatory burdens. It will also be necessary for Ofcom to consult about regulations governing the procedure for granting RSA, as we discussed earlier. I hope that, in the light of my explanation, Opposition Members will withdraw their amendments. I also hope that they will recognise the substantial benefits that will come with the introduction of RSA and the fact that the absence of such an arrangement would create a serious hole in the framework under the Bill. I hope that members of the Committee will agree that recognised spectrum access should be a feature of future spectrum management in the United Kingdom.

Mr John Whittingdale (Maldon & East Chelmsford, Conservative)

The Minister began his response by repeating that it would be a voluntary arrangement, which satellite operators are free to enter into or not to enter into. He said that he would not be concerned if no one entered into it. However, as he went on, the arrangement sounded less voluntary and the consequences of not entering into it seemed to increase. We will not agree. I am disappointed that the hon. Gentleman is not willing even to consider the safeguards suggested in the amendments and, given that there is considerable disagreement, we will press the amendment to a Division.

Question put, That the amendment be made:—

The Committee divided: Ayes 7, Noes 11.