Options for structural reform in spectrum management: Highlighting the submissions

1. Options for structural reform in spectrum management: Highlighting the submissions Kirsten Harley Network Insight Institute www.ni.rmit.edu.aukirsten.harley@rmit.edu.au

2. The Options Paper • Options for Structural Reform in Spectrum Management (DCITA, Aug 2002) • Two issues • Spectrum management: taking up PC recommendations from Broadcasting Report (2000), draft Radiocomms Report (2002) • Structural change to regulators • Several submissions express concern that focus on spectrum management limits broader discussion about regulatory structure and comms policy • 3+ structural options • A: Merger: Combine ACA and ABA into single body (cf OFCOM) • B: Transfer spectrum mgmt: ABA planning, licence allocation and enforcement  ACA • C: Transfer planning: ABA b’casting planning  ACA • PLUS:Status quo

3. Players’ views on options * plus ACCC ^Vodafone - single spectrum regulator, separate content etc review process + includes FFC, ASDA, AWG, Film Australia, MEAA, AusFILM Other submissions (ACCC, Doug Coates, OFLC/AG’s Dept) did not advocate particular structural option.

4. Option A: Full ABA/ACA merger • Option Paper proposal: • Merger of ABA and ACA into single body responsible for telecomms, broadcasting and online regulation • Reflects UK OFCOM approach (structure not yet clear) • Variation: • Also include telecomms (ATUG) and broadcasting/media (Optus, ABA?) specific functions of ACCC • Supporters: ABA, ACA, AFC +, ASTRA, ATUG, Ericsson, Govt of WA, Optus, ScreenWest, SPAN, Vodafone (?) • Arguments/issues: • Spectrum management: distinct BSB approach and retention of social/cultural broadcasting objectives OR unified, market-based spectrum management; scope for further review • Scope: capacity to deal with industry/tech convergence, boundary-crossing and other complex emerging issues, variety of perspectives/policy issues, greater coordination, consistency • Scale: attracting expert staff & office holders, flexibility, some efficiencies, independence • Policy framework/process: need careful implementation; broad communications-wide policy context (OFCOM); structural integration as first step?; advisory group? • Avoids Option B/C problem of overly small ABA

5. Options B/C: Transfer most • Variation: • Combine remainder of ABA with OFLC (ACA fallback position: carriage regulator plus viable content-oriented organisation) • Supporters: B - Telstra, AIIA, AEEMA; C - Motorola • Arguments: • Unified spectrum approach appropriate in convergent environment, encourages innovation, avoids broadcasters’ unfair advantage and market distortion • ACA has relevant spectrum expertise - focus on technical merit, efficiency, tech neutrality, transparency; Motorola - ACA not qualified to issue b/c licences • Content/carriage distinction - more relevant than broadcasting/radio/telecomms, ABA retains important role • Telstra: ACA could weigh BSA social policy goals against costs of allocating spectrum to other uses

6. Option status quo • No immediate change to regulatory structure • Supporters: ABC, ACTF, Broadcast Australia, CCRG, DMG Radio, FACTS/CRA, IRB, Peter Tate, SBS • Arguments: • Support for existing ABA/BSA approach - inclusion of social/cultural objectives in spectrum planning; ACA fully market-based model is at odds with this • Licensing and enforcement powers crucial to ABA’s regulatory power • Concern that any of proposed options would put pressure on BSA objectives and ABA independence • Concerns about auction method - maximising licence fees can have negative effect, does not necessarily maximise public benefit (eg regional b/c) • Broadcasters’ investments in b/c licences • It ain’t broke • ABA and ACA have distinct roles and responsibilities (broadcasting vs personal communication) • Consider convergence in broader, longer-term policy context, eg Convergence Executive (CCRG)

7. Spectrum questions (1) • Merit in replacing current b/c licence fees with transmitter licence fees that reflect amount of spectrum used? • GovWA, Motorola: yes - encourage efficiency • ABA: may be appropriate longer term, but: b/c licence fees reflect spectrum value; costly with no windfall before digital switchover; equity considerations (closure unprofitable translaters, incumbents outbid, retransmission services) • ABC, CCRG, FACT/CRA: no- less certainty, increased costs, possible uses of BSB inconsistent with international assignment + existing equipment, adverse effect on broadcasting specially in regional areas, no guarantee of increased revenue • Pricing spectrum - incentive to retain/improve existing coverage levels? • ABC, CCRG, FACTS/CRA: spectrum pricing inconsistent with maintaining coverage; existing planning regime works • Motorola: not through artificially lowering cost of accessing spectrum • Vodafone: coverage specifications, direct subsidy may be appropriate

8. Spectrum questions (2) • Stronger statutory imperatives on regulator to optimise returns from sale of b/c spectrum? • ABC, CCRG, FACTS/CRA, GovWA, Motorola, Vodafone: No! goal is efficiency/public benefit, not revenue; potential negative outcomes - delayed licence allocations to create artificial scarcity, overly high prices -> reduced services; existing commercial radio licence auctions have yielded high returns • FACTS/CRA: if adopted, broadcasters should also be able to maximise returns - no content restrictions • How to determine value of existing b/c licences if spectrum pricing introduced? • CCRG: appropriate international and historical comparison • FACTS/CRA: liable to be problems; can’t support possible reduction in b/c services • Motorola: separate cost will encourage efficient distribution, inc alternative means • How to reconcile with desirability of promoting diverse b/c services? • ABC, FACTS/CRA, GovWA: not reconcilable, diversity should come first • CCRG: require that coverage plans be one of licensing criteria • Motorola: non-radiofrequency means will increasingly become available • Vodafone: direct subsidy, rather than subsidising spectrum costs - transparency