Fifield releases spectrum legislation overhaul consultation paper

The Australian government has published its consultation paper on the proposed new spectrum licensing, regulation, and pricing legislation.
Written by Corinne Reichert, Contributor

Australian Minister for Communications Mitch Fifield has announced the publication of the federal government's consultation paper concerning the overhaul of the legislation, licensing, and pricing of spectrum, saying the old legislation was so outdated as to be rendered "redundant".

The Legislative Proposals Consultation Paper: Radiocommunications Bill 2016, published on Thursday, is the next step in the government's announcement in August last year to reform outdated spectrum legislation.

In redrafting the legislation, the government had acquiesced to the recommendations outlined in theSpectrum Review Report [PDF] published by the Department of Communications and the Australian Communications and Media Authority (ACMA) in May 2015.

Speaking at the ACMA's RadComms event in Sydney on Thursday, Fifield provided greater insight into the reasons behind the replacement of the existing legislation.

"If regulation is redundant, it should be removed," Fifield said.

"A new Radiocommunications Bill will modernise our regime, and allow industry greater scope to respond quickly in the market to emerging technologies and services.

"The simpler, more clearly structured Act will remove unnecessary process and prescriptive detail. It will better support new investment in spectrum-based networks by allowing new technologies to be deployed and spectrum to be allocated more quickly."

Spectrum frequency, geographic location, duration, whether a licence can be renewed, conditions where the ACMA would not renew a licence, terms for changing and revoking licences, payment mechanisms, and amounts to be charged will all be updated under the new legislation.

The Bill overall aims to "streamline" the process of licensing spectrum, with the three licence types to be replaced by a single system.

Fifield said that as communications minister, under the Bill he would be more involved in strategy and less involved in the day-to-day activities of spectrum management, which would fall to the ACMA. The government agency would also be permitted to delegate functions to third parties, effectively allowing industry to manage their own spectrum holdings.

The government is also undertaking a review of spectrum pricing to make it more consistent, transparent, and efficient.

"This review is considering all aspects of pricing exceptions, decisions, and administrative taxes and charges to ensure that they are consistent, transparent, and supportive of the efficient use of spectrum," the minister said.

Overall, the legislation overhaul is "designed to remove barriers to innovation and to encourage industry to manage spectrum in different ways", Fifield said, and to modernise regulation.

"Since the Act commenced in 1992, significant change has occurred in the communications industry, and the spectrum management market has continued to mature. It is proposed that the Bill will retain the use of objects; however, these will be drafted to ensure clarity and their usefulness to guide administration and application of the legislation," the consultation paper says.

"It is proposed that the stated object of the Bill will be to promote the long-term public interest derived from the use of radiofrequency spectrum by: facilitating efficient, flexible and innovative allocation and use of spectrum; and providing arrangements for the provision of spectrum for public or community purposes."

According to Vodafone Australia's chief strategy officer and director of Corporate Affairs Dan Lloyd, the simplification of licensing arrangements and better pricing structures will help it maintain its network.

"Vodafone Australia's invested AU$3 billion in capex and opex in its network over the last three years," Lloyd said at RadComms.

"Our ability to keep investing in the network when we have to manage these lumpy, massive investments in spectrum could make it quite difficult to maintain that capital investment."

Lloyd also raised three concerns that Vodafone has about the proposed changes: The objects of the Bill, which he said are not clear on meaning and application; competition issues, which Lloyd said are "first and foremost in this critical area"; and the renewal terms of the licences, which would be specified within each individual licence rather than as a blanket term in the legislation.

As to the latter issue, Lloyd said it "could mean greater flexibility, but we could also end up with a multiplicity of different renewal terms, making it very difficult to manage long-term investments".

Fifield said the rapid, unprecedented growth in demand for spectrum had led to the decision to allow the ACMA to specify within each licence the specific renewal terms.

"As licences become more generic in nature, they are more easily shared, traded, and leased," Fifield explained.

"To this end, the legislation will set out core parameters that a licence must address, such as frequency and geographic area of operation, licence duration, rights of renewal, and pricing. The ACMA would then be free to create conditions relevant to the licence in question."

Competition concerns are relevant in the face of the pricing of spectrum during the 1800MHz auction, which went "orders of magnitude higher" than spectrum pricing overseas, Lloyd argued.

The 1800MHz band auction was completed in January, with a total of AU$543.5 million spent between the four major telecommunications providers. Optus spent the most, at AU$196 million, followed by Telstra, at AU$191 million; TPG, at AU$88 million; and Vodafone trailing, at AU$68 million.

"We need to be very careful that we don't drive an environment in which the price of spectrum forces spectrum to be consolidated into just one or two hands, and to ensure that we balance the consumer benefit that you can get from competition in ensuring that there's fair prices for spectrum," Lloyd said on Thursday.

The Communications Alliance welcomed the consultation paper, saying reform is "long overdue", and calling the paper "a very positive step".

However, Comms Alliance CEO John Stanton also identified the expansion in the ACMA's powers as a potential cause for concern.

"There's a proposal to expand the powers of the ACMA to be able to gather and indeed to publish the prices of secondary or third-party trades, and we raise a question mark about that one -- not sure what that achieves, and there's a question about whether that goes too far," Stanton said.

The economic value of spectrum could contribute up to AU$177 billion to Australia's economy, according to the paper, with Fifield also emphasising the importance of spectrum in the world today.

"Spectrum ... is essential to digitally network the economy," Fifield said.

"Spectrum now facilitates activities in virtually every corner of the marketplace, forming I guess what you'd call the hidden backbone of communication, commercial transactions, and machine-to-machine interactions that are the drivers of global economic growth."

While it originally detailed plans to have the new legislation passed by mid-2016, with the regulations to come into effect by mid-2017, the paper has yet to receive and respond to submissions, with an exposure draft to be written before the Bill itself is put before Parliament.

The government is accepting submissions on the paper until April 29.

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