Communications Legislation Bill

We are very pleased to resume the debate on this legislation. There are three issues that we would like to bring to the attention of the Committee. First is the issue with regard to the position advised by the officials that stereos in second-hand Japanese cars that may not receive radio signals would not be considered an inappropriate device that would interfere with the allocation of radio frequency. National agrees with that position. In my hand I am holding a copy of the Ministry of Economic Development’s information leaflet on the FM reception problem, and the Commerce Committee is quite comfortable for that education approach to be taken.

I would like to seek comments or commitments from the Minister in the chair, Pete Hodgson, on the next two issues that I bring to the attention of the Committee, because National members on the select committee were assured of some conditions before we agreed to continue to support this part. The first issue is the introduction of the possibility that, in future, the allocation of radio frequency will be conducted by means other than a competitive process. Some submitters showed a lot of nervousness about what the Labour Government could do in terms of interference and the introduction of a lack of transparency into the process. For example, one submitter suggested that these provisions allow the Government to allocate radio frequency by means other than a competitive process, which means that the Government can choose whom they negotiate with. Some commercial operators, indeed, feel very nervous. They reckon that under the existing legislation there is provision for Government to do that anyway. The submitter reckoned that this new provision was introduced to allow the Crown to require further payment to be made when radio licences are allocated by those other means, because under Part 13 of the existing Radiocommunications Act the Crown could allocate those radio frequencies anyway. So is it an issue of introducing further levy payments by stealth? I think the Minister in the chair should take a call to assure those submitters that the introduction of this new provision to allow radio frequency to be allocated by arrangement or agreement is not an underhand way of charging further fees to those organisations who may be the successful recipient of frequencies.

The other prospect of introducing this flexible mechanism raised a concern by others about the Government allocating those very sought-after radio frequencies in a very non-transparent manner. We heard the Minister not too long ago announce two additional frequencies for commercial use and two for community use in the various regions. Putting the community frequencies aside, if the allocation of commercial frequencies is to be awarded without a transparent competitive process, some people are concerned about what the criteria are and who is likely to receive those frequencies. They are a very marketable product. In fact, people in the market to acquire radio frequencies could find that they attract very high prices. I believe that the Minister in the chair should take a call to assure the public that the introduction of new frequencies does not have a hidden agenda for interference by Government.

The second issue I would like to raise before my other colleagues take a call—and once again I urge the Minister to rise and give the public an assurance—is the issue raised by the Radio Frequency Users Association of New Zealand. This association is a non-profit organisation consisting of members such as local government authorities and transport, communications, courier, forestry, farming, taxi, and consultancy organisations. These members use a number of different radio bands, mainly for non-profit purposes. They are very anxious that, in the first instance, they were not consulted on this legislation, and they were very, very unclear as to what the impact would be on them. They are seeking an assurance that they will have security of tenure. During the select committee process I recommended, with the support of all the members, that the chair ensure that officials carry out further consultation with this group. But at the time we came to deliberate, the issue had not really been resolved. That association wrote to us again and said it was nervous and had not been reassured of the tenure of those frequencies for non-profit users.

The association also suspects that the driving reason for officials not supporting its amendment to secure its tenure is that the officials are already planning further conversions of some of the spectrum to other uses. I tell the Minister that National has agreed to support the bill only on the assurance of the officials that the Government is in the process of reviewing, in this financial year, the security of tenure for all radio licences. The officials said that this would address the concerns raised by that association. The officials have said that the proposition to offer great certainties of tenure to holders of the radio licences is a good argument, because that might facilitate the increased investment in radio infrastructure. However, they claim that at this stage policy work on this issue needs to be undertaken, with full consultation.

I tell the Minister that I think this is a very, very serious issue. The Radio Frequency Users Association is responsible for a lot of the transmitted emergency community news. The fact that it was not consulted in the first instance has led to the select committee requesting the officials to go back to the association and hold a consultation. I understand that at this stage it has not been fully resolved. I would like to see the Minister in the chair take a call to reassure the public and the Radio Frequency Users Association that the policy work is genuinely under way and there is no hidden agenda to assign the frequencies currently operated by it for other usage.

It is incumbent on the Government to give that assurance to ensure the continued support of National on this issue. We have accepted the words of the officials at this stage, but it would be helpful if the Minister could take a call to assure us that in the meantime, before the policy work and the consultation is undertaken, there is no hidden agenda or plan to convert the spectrum that at the moment is operated by the Radio Frequency Users Association for other purposes. Otherwise, National will continue the Committee stage. I am sure that my good colleagues will support me. I can see that Chris Tremain is ready to charge on furthering that questioning.

I rise to speak to Part 2 of the Communications Legislation Bill. Members of the public who are listening will be aware that it has probably been a couple of weeks since we have spoken in the Committee stage of this bill. As a quick reminder of where we have got to, I point out that the Communications Legislation Bill is an omnibus bill that attends to both the Telecommunications Act 2001 and the Radiocommunications Act 1989. Listeners may recall, if they were listening to the debate on this earth-shattering legislation, that in Part 1 we dealt with the Telecommunications Act. Right now we are looking at the Radiocommunications Act 1989 and some amendments to that Act.

As Minister Cunliffe said in the first reading, the bill is aimed at maintaining a commercial environment of certainty and confidence for both telecommunications services and use of the radio frequency spectrum. So from that point of view the National Party certainly supports that and is behind the bill in that regard.

Both parts of the bill are narrow in scope. That is demonstrated in Part 1 by there being only one substantive clause, which amends the Telecommunications Act. The wider bill is not related to the decisions of the broader telecommunications legislation that is currently before the Finance and Expenditure Committee, so members of the public should not be confused by that. That bill is proceeding. At the Finance and Expenditure Committee we are dealing with the local loop unbundling and we should be reporting to the House on that particular bill in, I believe, early December.

In terms of Part 2, there are two key things on which we need to focus. One matter that my colleague Pansy Wong discussed earlier is the issue of inappropriate receivers. If we look at the purpose of the bill set out in Part 2, we see that it deals first with inappropriate receivers. Clause 6 states: “The purpose of this Part is to … (a) provide that radio engineers and others considering questions of interference and technical compatibility should not have regard to the reception of radio waves by inappropriate receivers:”. To many people that might sound like a heck of a lot of gobbledygook, so I will attempt to explain exactly what we are talking about here because it is somewhat confusing. In fact, it all comes down to property rights and whether people who own parts of spectrum are receiving their property rights. CanWest took a court case back in 2004 in Christchurch. The case was between two radio stations, More FM at 92.1FM and Niu FM at 104.1FM. CanWest, the owner of More FM, took legal action against Niu FM for infringement of its property rights because it believed that there was significant interference being emitted on its signal and it was being confused with the Niu FM signal. As a result of that the two signals were combining in the same radio frequency and, therefore, More FM believed that it was losing a property right.

Part 2 of this legislation aims to overcome that. It states that irrespective of that particular situation it will not change the actual law. It comes down to the actual receivers in cars. The situation that has arisen with Japanese cars is that in Japan, the frequency on which FM stations are received is between about 76 and 90 megahertz, whereas in New Zealand we receive it on the frequency between 87 and 108 megahertz. Since Japan uses a different spectrum band for radio broadcasting—as I have said, 76 to 90 megahertz—the radios that turn up in New Zealand in imported cars are incapable of reception above 90 megahertz. So, for instance, we were talking 92.1FM, which was above that level so it became a problem. It also includes the majority of New Zealand stations, which are in the higher band spectrum. If we think about our own FM stations—in Hawke’s Bay, for instance, we have 92FM—

💬 Craig Foss: Hauraki.

CHRIS TREMAIN:—and Radio Hauraki, which Mr Foss listens to—they tend to be at the higher end of the spectrum. When Japanese cars come over here, with their bands at between 76 and 90 megahertz, in order to pick up 92FM in Hawke’s Bay people need to do one of two things. Firstly, they can put in a new radio.

I rise on behalf of the National Party to speak on the Communications Legislation Bill. Previous National speakers have alluded to the fact that, yes, we are supporting this bill. First, though, I have to declare an interest, having lived in Japan for a couple of years. Frustratingly and sadly I brought home a few Japanese radios and what at the time I thought were flash stereos, and I cannot pick up anything after 90 megahertz. I cannot even pick up Radio Kahungunu, The Rock, Radio Hauraki, and so on. So I learnt a lesson there.

In doing a bit of research for the Committee stage today I was looking at the Minister’s first reading speech. I have here a couple of interesting quotes from the Minister when he introduced the bill. Minister Cunliffe talked about Part 2, which we are dealing with now. He said that the changes in Part 2 were “largely of a technical nature, but they are critical for the efficient functioning of the regulatory environment for services that require use of the radio frequency spectrum.” Then—and this is most important—he spoke of the underlying spectrum licences that are created for periods of up to 20 years, which gives certainty of investment for services using the radio spectrum. Those comments, on their own, are fine. It is nice rhetoric, but as with so much of the current administration, they are nice ideas but there is hopeless, hopeless execution.

As I said, I would like to speak on Part 2, and in particular on clause 6. Clause 6 deals with radio licensing, spectrum management, etc. I would like to touch on the WiMAX spectrum, of which our Ministry of Economic Development has been undertaking auctions over the last couple of years. It is the 2.5 to 3.5 gigahertz part of the spectrum. For the uninitiated out there, they come in pairs.

Members will remember that the Minister said we need certainty of investment and that these spectrum licences were for 20 years. I would just like to quote from a couple of written questions that I asked the Minister, and his replies. They are quite illuminating. This is a reply I received on 10 March when I asked the Minister whether he was satisfied with the distribution of the 3.5 gigahertz WiMAX spectrum, and, if so, why. The Minister said that yes, he was satisfied that the spectrum in question had been allocated appropriately. I thought that was interesting and I will tell members why in a minute. Another question I asked was whether he was satisfied with the process of the allocation of the 3.5 gigahertz WiMAX spectrum; if so, why. The Minister said that yes, he was satisfied that the allocation process to date had been fair and equitable and that it met the policy intentions of the Government. Again, that reply was received on 10 March 2006. Finally I asked the Minister what the original time frame was for the allocation of the 3.5 gigahertz WiMAX spectrum and whether any adjustments had been made to that timetable; if so, why. The Minister answered—and I ask members to bear with me—“The process for allocation of area spectrum licences in the two remaining Crown-retained management rights”—they are the ones that are up for auction—“was originally planned to be completed in late 2005. It is now expected that this will be completed in April or May 2006.”

Well, I say to the Minister that we are in October 2006 now, so that was 6 or 7 months ago. The WiMax auction—the allocation—is still going. The result has been an absolute shambles. There has been delay upon delay upon delay. There have been cancelled auctions. There have been suspended auctions. There have been further investigations of auctions. Winning bids—as part of the spectrum, as part of this efficiency and certainty that the Minister speaks of—have not been able to prove, and they do not have the resource to come up and pay for their winning spectrum or auction. I wonder whether the Minister is even aware of that, because in the telecommunications industry, in the sectors, on the blog sites, etc., it is pretty easy to find out that stuff. Again, I think the execution of what is a good idea is absolutely hopeless. Not only can the winning bids not even afford to pay a deposit now, but they have no resource whatsoever to pay the balance. I believe that the minimum was 17c per head per region. Some of the winning bids have no background whatsoever in telecommunications. They have no network in the telecommunications industry. How on earth will New Zealand move its infrastructure forward, when after virtually 2 years, when this auction was first started, we really have no one off the ground? We have nothing but a few headlines.

I rise to make a contribution to the debate on behalf of my colleague the Minister of Communications, not that I am myself a person with great expertise in this matter, I might say. Following on from a contribution from Pansy Wong and, perhaps, National Party colleagues prior to her—I was not listening to the debate earlier—and certainly subsequent to her, it seems that the National Party is unaware of some recent developments. If I can give the tenor of those to the House, it might help progress the debate.

My colleague the Minister of Communications met with David Thompson, chairman of the Radio Frequency Users Association, last Monday and sent him a letter last Wednesday. If I put into the public record a couple of paragraphs from that letter, it may help. I will give the essence of it: “I have already agreed that the issue of security of tenure for radio licences should be addressed urgently, commencing with the release of a discussion paper.” He then goes on to point out that the discussion paper is due to come out later this year with decisions in June of 2007. The letter continues, importantly: “In the interim period, prior to the outcome of the discussion paper process being known, you may be assured that there are no plans to announce any further changes to the spectrum allocations in relation to land mobile bands (as set out in Public Information Brochure 21). I will seek to confirm this through a statement of general policy of Government under section 112 of the Radiocommunications Act 1989.”

I think that might answer the questions of Pansy Wong and other colleagues about whether the Government has a secret agenda. This letter has gone to David Thomson and I am happy that the essence of the letter is in the House.

I raise a point of order, Mr Chairperson. The Minister is reading from a letter that is quite important to our deliberation, so I seek leave for the Minister to table it.

You cannot seek leave for the Minister to do that. It is up to the Minister whether he wishes to do so. It is an official State document and you can request it, but you cannot seek leave for the Minister to do that.

This is probably a very appropriate time for New Zealand First to come into the debate, given that contribution by the Minister in the chair, Pete Hodgson, because it was New Zealand First that facilitated those meetings with the Minister. I can confirm that what the Minister was saying was absolutely correct, because I have a copy of the letter in front of me. It states that New Zealand First expressed its concern in the second reading with regard to this particular issue regarding the Radio Frequency Users Association of New Zealand and the radio mobile spectrum. We said at that time that we would be putting up a Supplementary Order Paper.

I can say that as a result of the meetings that have been held with David Thompson, the Minister, representatives of the Radio Frequency Users Association of New Zealand, and members of the Ministry of Economic Development, matters have been resolved. David Thompson has been in communication with me and said that the association is more than happy now that the issues its members raised at the Commerce Committee—which they considered had not been addressed appropriately through the select committee process—have now been addressed, as a result of the work by New Zealand First. I asked the association what the problem was. I found it was that New Zealand First did not have a member on that select committee to pick up the genuine issues that were raised there, so somebody outside the select committee needed to pick up those issues and genuinely run with them. I guess the situation was like this. The association had gone through the normal processes, put up its submission to the select committee, and been ignored. Its members had been shunned, and there is some reference to that in the report back. But they came to New Zealand First, and asked whether we could help them to fix that. We said yes, we could, and we have done that. So what the Minister said is correct.

The issues that revolve around this particular matter are not unimportant issues. The part of the spectrum that we are talking about is the part that was captured by the Radiocommunications Act 1989. All the other users of that spectrum got their incumbency tenure, except for the users of the land radio mobile part of the spectrum. Since 1989, even though it is in the sixth schedule of that Act, nothing has been done about that matter. Whereas the owners of the other parts of the spectrum have been able to get investment in there because there is security and they are secure in their future use of it, this legislation was creating a high level of insecurity. And not only was that the case but the legislation was also creating what could have been seen to be an environment in which there was no value in providing any long-term investment and the actual users themselves felt under threat.

I will quote from the Minister’s letter, because I am sure he will not mind that, in order to give members some understanding of just how important this part of the spectrum is. He wrote: “It is acknowledged that the land mobile service provides essential services to both Government and private industry, as highlighted during the recent severe snow storms in southern Canterbury, where for a lengthy period such services provided the only reliable form of communications.” It was that part of the spectrum that was under threat. National and ACT would probably say it should be sold to the highest bidder. New Zealand First has a much more responsible view of the whole thing; it believes that such things as social responsibilities have to be balanced against economic imperatives. New Zealand First, therefore, although we did not even have a member on the select committee that looked at this legislation, said that no, something had to be done about the issue. We facilitated the meetings, we achieved the necessary outcomes, and, as we say, we have once again fixed it. Thank you, Mr Chairman.

I raise a point of order, Mr Chairperson. Standing Order 368, “Quoting documents”, states: “Whenever a Minister quotes from a document relating to public affairs a member may, on a point of order, require the Minister to lay the document on the Table. The Minister must then lay the document on the Table unless it is of a confidential nature.”

The CHAIRPERSON (H V Ross Robertson): Is the member requesting—

I am seeking leave for that—

The ASSISTANT SPEAKER (H V Ross Robertson): No, the member cannot seek leave, but she can request that it be done.

I can request it? OK.

I am very happy to put the document on the Table. It is already on the Table, and Pansy Wong has already seen it.

The CHAIRPERSON (H V Ross Robertson): Thank you.

I rise to speak to Part 2 of the Communications Legislation Bill. I will speak about the position advised by officials of imported Japanese cars that would interfere with radio frequency, in addition to other aspects of the bill.

The introduction of the possibility of allocated radio frequencies resulted in a number of submissions. Mr Donnelly is quite correct that the Radio Frequency Users Association of New Zealand referred in its submission to the land mobile radio band, and I will be speaking to that point. It is not something that was ignored by the National Party members on the Commerce Committee. Some submitters, though, were concerned about the process to be used on the allocation of radio frequencies. I know that earlier speakers have already discussed this issue, but I intend to canvass it again, because I am not entirely sure that those who made submissions would be comfortable with what we have heard so far from the Minister.

Why we have a Government controlling allocation other than by competitive tender is the question. We have already been asked whether this is simply a means by which the Crown can hike the costs, whether it is a tax by stealth, or whether it is an underhand way of charging further fees. The Minister has given us a peep of a letter, which is now tabled and which he says is now in general circulation—well, he did not quite say that, but he said it was available—and I look forward to seeing that letter so that, as a member of the select committee, I can have some sense that all is being done as it should be.

That did raise a concern about the allocation being conducted in a less than transparent manner. It is unfortunate that we are now receiving ministerial letters after select committee hearings.

💬 Craig Foss: Same old, same old.

Same old, same old. If the allocation is to be made on a basis other than competitive tender, what will the criteria be? TelstraClear, in its submission to the bill, raised the same nervousness that has been commented on by those organisations referred to by my colleague Pansy Wong when it said that an allocation of radio licences by any means is a matter of concern to it. This is in section 116(1)(e), which is to be substituted by clause 30 of the bill. TelstraClear stated in its submission about the allocation of radio licences by any means: “TelstraClear opposes clauses 30 and 32 of the bill, which provide that radio licences may be allocated by any means, not just by competitive tender or auction. They would like to make it clear that they are talking about the allocation of spectrum for commercial purposes, not areas like scientific research. The proposed amendment creates uncertainty over the allocation method and opens up the prospect of arbitrary and non-transparent allocation of radio licences.” This is exactly the nub of the question that is now being discussed. “Providing allocation by any means will result in a party seeking to obtain a radio licence not knowing what requirements must be met in order to obtain a radio licence. Allocation by competitive tender or auction promotes economic efficiency, as these methods ensure that parties that place the greatest value on licences obtain them. Providing for allocation by any means opens up the possibility of allocation on a political basis, favouring some parties at the expense of others.”—and we all know about that—“This would be particularly problematic for those parts of the spectrum that are used by the service providers for telecommunications. TelstraClear accepts that its part of the radio spectrum may only have a limited number of users or have characteristics that mean that a non-financial method of allocation is appropriate. However, the Act should be clear about when these considerations should apply. TelstraClear submits that such considerations would not apply when there is competition for the spectrum when the spectrum has been determined to have a commercial purpose. In these circumstances, spectrum should only be allocated by competitive tender or auction.”

I could absorb the time of the Committee by speaking of other protestations and concerns expressed by submitters, but basically the bill is small and technical. It was interesting to listen to the officials—and we did listen, I say to Mr Donnelly—and to submitters. They went to great lengths to try to explain their very complex submissions and to make them more easily understandable, and we certainly had a good understanding of the submissions.

National, of course, supports the bill’s laudable aspects, but we continue to have some concerns. One of them relates to Japanese imports, which have a 76 to 90 megahertz frequency. They are incapable of reception above that, so the majority of FM stations in New Zealand are excluded. This imposes some difficulties in terms of civil defence—and that was indicated by Mr Donnelly. In speaking to this issue, the officials mentioned that they sought to provide a reassurance that broadcasts in civil defence emergencies would be available on National Radio AM. Being a West Coast resident, I was able to advise them that we on the West Coast do not receive National Radio AM.

I move, That the question be now put.

Thank you for giving me the call, Mr Chairperson, because now that the Minister of Health has tabled the Hon David Cunliffe’s response to the Radio Frequency Users Association, I would like to make further comments.

First of all, I am just wondering why we did not bring the Reserve Bank Amendment Bill into this debate, because Part 2 of that bill talked about horse racing, and I think we are now talking a lot about horse-trading in debating Part 2 of the Communications Legislation Bill. I was looking forward to Barbara Stewart of New Zealand First taking a call on her Supplementary Order Paper that seeks clarification of security of tenure for the Radio Frequency Users Association. I now understand that that Supplementary Order Paper has been withdrawn.

Why I was particularly interested was that Mr Shane Jones, a Labour member on the Commerce Committee, went to great lengths at the select committee—and my very hard-working colleague can back me up on this—to try to resolve the longstanding uneasiness of the association. He actually went to discuss the matter with the Minister of Communications, Mr Cunliffe. We had to seek leave to delay the deliberations until Mr Shane Jones could come back to the select committee members and assure us that a secure path could be resolved. Well, after three attempts and a delay of about 3 weeks in our deliberation on the issue, he came back empty-handed, and we were left no clearer as to why. Well, I have bad news for Mr Shane Jones, the rising star of the Labour Party: his action, unfortunately, did not secure much and did not count for much with his Minister. I think he needs to learn to trade horses a little better. Maybe he should take a lesson from National’s senior whip, Lindsay Tisch, who is better at horse-trading and knowing how to secure a guarantee.

It was interesting to find that the letter went further. The Minister stated in the letter that he understood that the association was seeking “a 5-year window after the announcement of changes to the use of a land mobile band, during which time mobile licensees could not be compelled to relinquish radio licences … Further, you want to be assured that licensees will have access to alternative spectrum, that the frequencies provided for replacement licences are suitable, and that there is consideration of compensation for the related conversion costs.” I congratulate the association on very successful horse-trading through New Zealand First. But it does raise an issue. I think, in future, members on the Commerce Committee will certainly make sure that we do not easily accept any advice in good faith from the officials without every assurance that we will not be ambushed. We are actually happy with the outcome, but we are also disappointed that that clear assurance from the Minister could not have been communicated to us in the first place through the Labour member Shane Jones.

It is interesting: one never knows what one can discover in the Committee stage—last-minute horse-trading could prove to be quite fruitful for the Radio Frequency Users Association. I want to refute what New Zealand First’s Brian Donnelly was saying about the Commerce Committee members. We were of one mind in seeking the assurance, and we fought very strongly on behalf of the Radio Frequency Users Association.

Part 2 agreed to.

Clauses 1 and 2