 |
Spectrum Management: Into the 21st Century
|
|
Spectrum Management: Into the 21st Century
|
8.1 At present, Wireless Telegraphy Act licences are not assignable. This means that it is not possible for a licensee who no longer has a need for a licence to assign to another person for payment some or all of the rights granted by the licence. If it were possible to assign licence rights for payment, this would provide a further incentive for spectrum efficiency and an additional market mechanism for transferring licence rights to another user who could use them more productively.
8.2 Licences can effectively be bought at present, but only where the existing licensee is a company and the purchaser buys a controlling interest. The licence may then continue in force under the new owner, subject to regulatory review by the RA. But this is a cumbersome procedure and is, in any case, not available where the purchaser acquires the business and goodwill without the share capital of the company.
8.3 The Government sees considerable attractions in allowing greater freedom for secondary trading. Secondary trading has the potential to provide a mechanism for assignments to be transferred to those who can make more productive use of them, additional incentives for the release of under-utilised spectrum and flexibility for spectrum usage to adapt to changing conditions. However, one important difficulty is that, if spectrum were priced below its full market value, there would be an immediate prospect of windfall gains on the secondary market. This would be at the expense of radio users and the taxpayer. There would probably be a flood of speculative applications, which would reduce the assignment process to a lottery. This would not be conducive to rational or effective spectrum management.
8.4 For this reason, it is difficult to see how full secondary trading could be introduced during the proposed transitional period for administrative pricing. Secondary trading would have to be limited to spectrum that had been auctioned, for example to a commercial SMO with freedom to introduce prices at market clearing levels. This would raise a number of complex issues concerning oversight of the market that had been created and the nature of, and the degree of security inherent in, the new legal rights attached to licences. For example, it would be necessary to provide a regulatory framework to prevent anti-competitive practices. It might also be necessary to replace the present basis of licensing by a system of spectrum access rights, the nature of which would be closer to that of property rights in land. This would require more fundamental legislative changes. The Government intends to adopt a progressive approach to spectrum management reform and will continue to keep these further options under review, as described in more detail in the following chapter.
8.5 Although there is no present intention to legislate for secondary trading, the Government has taken careful note of the views expressed in the responses to the consultation that present restrictions on transfers of licences are excessive. The RA will be taking steps administratively within the present legislation to make the process of transferring licences when businesses are bought less burdensome and cumbersome.
8.6 The RA is also considering the particular difficulties faced by ships radio licence holders who sell their vessels. At present, the licence is issued to a named individual for a particular ship. If the ship is sold, there is no provision to transfer the unexpired portion of the licence to the new owner or to give a refund to the vendor. The RA is looking into whether the licence might in such a case be made transferable or whether refunds could be given.
8.7 The introduction of spectrum pricing, and especially auctions, raises the issue of whether users will require greater security of tenure. At present, spectrum licences may, in theory, be revoked at the discretion of the Secretary of State. There is no provision for the Secretary of State to fetter his discretion by stating in advance the circumstances in which individual licences will or will not be revoked. The sole exception is that, under section 3A of the Wireless Telegraphy Act 1949, the Secretary of State may fetter his discretion in relation to licences for certain public telecommunications operators.
8.8 In practice, licensees enjoy considerable security. The Secretary of State has an obligation to act reasonably, to consult and to consider representations. As a matter of policy, the RA endeavours to give as much notice as possible of changes in spectrum planning that require licences to be revoked or varied or frequencies to be reassigned. Except in cases of non-payment of fees or serious or wilful failure to comply with licence conditions, revocation is extremely rare.
8.9 The Government has considered whether it would be advantageous to provide more formal guarantees. In doing so, it has been mindful of the recommendation of the Stage 3 Spectrum Review that the RA should investigate mechanisms for providing users with greater confidence. This was in the context of giving users confidence to invest in equipment. The introduction of spectrum pricing will add weight to arguments for greater security, especially where there is a competitive tender.
8.10 Accordingly, the spectrum pricing legislation will extend section 3A of the Wireless Telegraphy Act 1949. This will enable legally binding guarantees of security of tenure to be given to licensees other than public telecommunications operators. But it will not automatically apply to all licences. It will be necessary to balance users' desire for greater security against the need to retain a degree of flexibility in spectrum usage. This will be done on a case by case basis. It should also be noted that security of tenure cannot be absolute. It will be necessary, for example, to provide for the implementation of any changes in allocations that are required by international obligations
|
