Chapter 2

Chapter 2

Issues for consideration

2.1        The bill's significant provisions, which are expanded below, are:

Exemptions from disallowance

Minister's determinations concerning reissue of licences (item 4)

2.2        At present the ACMA may reissue a spectrum licence to the previous licensee without an auction or competitive tender process under certain conditions. One of the possible conditions is that the licence was used to provide a service which is the subject of a ministerial determination that reissuing spectrum licences to the same licensees would be in the public interest (see paragraph 1.9).[1]

2.3        A determination by the minister under this provision is currently a disallowable legislative instrument.[2]

2.4        The bill amends this provision so that the minister's determination, though still a legislative instrument, would not be disallowable.[3]

2.5        The explanatory memorandum justifies this change as follows:

This instrument is being exempted from the disallowance regime because any delay stemming from a potential disallowance of such a ministerial determination would severely impact upon the successful conclusion of licence reissue discussions between the Government and the relevant incumbent licensees. There would also be adverse follow-on impacts on commercial and investment certainty for incumbent licensees if reissue discussions are delayed.[4]

Comment of the Scrutiny of Bills Committee on item 4

2.6        The Senate Scrutiny of Bills Committee is required to review all bills in relation to (among other things) whether they inappropriately delegate legislative powers or insufficiently subject the exercise of legislative power to parliamentary scrutiny.[5]

2.7        In relation to this proposed exemption from disallowance, the Scrutiny of Bills Committee commented:

The Committee’s view is that removing parliamentary oversight is a serious matter and that a comprehensive justification for it should be provided. In this case, the explanatory memorandum at pages 3 and 18 includes a detailed outline of the justification for the approach, including that (at page 18):

'This instrument is being exempted from the disallowance regime because any delay stemming from a potential disallowance of such a ministerial determination would severely impact upon the successful conclusion of licence re-issue discussions between the Government and the relevant incumbent licensees. There would also be adverse follow-on impacts on commercial and investment certainty for incumbent licencees if re-issue discussions are delayed.'

The Committee notes this explanation, the fact that determinations will be published on the Federal Register of Legislative Instruments and also that the disallowance process provides a timeframe of 15 sitting days within which to give a notice of motion to disallow a legislative instrument (section 42 of the [Legislative Instruments Act]).

2.8        The Scrutiny of Bills Committee concluded that 'in the circumstances the Committee leaves to the Senate as a whole the question of whether exempting any instruments made under section 82(3) is appropriate'.[6]

Minister's directions concerning spectrum access charges (item 10)

2.9        Under section 294 of the Act, the ACMA may make determinations fixing spectrum access charges. Under subsection 294(2) the minister may give directions to the ACMA about the matters dealt with in determinations. A direction by the minister is currently a disallowable legislative instrument by virtue of subsection 294(5).

2.10      To avoid doubt, Item 9 of the bill clarifies that a direction by the minister could cover the amount of the spectrum access charge. The government has signalled that 'the government will seek a fee that reflects the scarcity and value of this important public resource.'[7]

2.11      Item 10 of the bill provides that a ministerial direction on spectrum access charges will no longer be a legislative instrument; thus it will not be made public and will not be disallowable.

2.12      The explanatory memorandum justifies this change as follows:

It is appropriate that sensitive pricing information contained in such directions remain confidential until the discussions with licence holders and licence reissue processes are completed.

If the amendment was not made, it would mean that the direction would, among other things, be published on the Federal Register of Legislative Instruments (making it public, amongst other things) and be subject to disallowance, which would have an adverse material impact upon the Commonwealth’s position in discussions for the issue and reissue of spectrum licences.

Notwithstanding that the ministerial direction will no longer be published as a result of the amendment at Item 10, it is the expectation of the Government, consistent with current practice, that prices paid for licences would be published by the ACMA after discussions and the ACMA completes its licence reissue processes. Availability of price information is an important element in facilitation and encouraging a spectrum secondary market.

Furthermore, instruments of this kind (that is ministerial directions to persons, Commonwealth Authorities) need not have been disallowable in the first place, on the basis that they would be a class of instruments that ordinarily would be exempt under the Legislative Instruments Act 2003.[8]

2.13      The committee notes that concerns about reducing parliamentary oversight of the minister's determinations and directions through these amendments were expressed during debate on the bill in the House of Representatives.[9]

Comment of the Scrutiny of Bills Committee on item 10

2.14      In relation to this proposed exemption from disallowance, the Scrutiny of Bills Committee commented:

The justification for this approach at page 4 of the explanatory memorandum is that:

'The intention of this amendment is to protect commercially sensitive pricing information relating to the reissue of 15 year spectrum licences. By giving a written ministerial direction to the ACMA, under subsection 294(2), which is not a legislative instrument and not subject to disallowance, it will protect this information during licence reissue discussions.'

The explanatory memorandum also states at page 4 that although the direction will not be published the Government intends to continue its current practice of publishing the prices paid for licences once the licence re-issue process is complete.

The Committee’s view is that removing parliamentary oversight is a serious matter and that a comprehensive justification for it should be provided. In this case the Committee notes that instruments of this kind are a class of instruments that ordinarily would be exempt from disallowance under table item 41 of section 44 of the Legislative Instruments Act 2003.

In the circumstances, the Committee makes no further comment on this item.[10]

Coexistence of class licences and spectrum licences

2.15      'Coexistence' refers to allowing devices and services not owned by the primary licence holder to operate in a spectrum-licensed band under certain conditions.

2.16      Developing technologies may allow devices licensed under class licences to share spectrum using sophisticated methods to avoid interference. This has potential to greatly increase efficient use of spectrum.[11]

2.17      At present, the ACMA cannot issue class licences in spectrum designated for spectrum licensing under section 36 of the Act.[12] The only way of accommodating these new technologies would be under a third party authorisation by the incumbent spectrum licence holder. However, according to the explanatory memorandum, 'there are significant impediments to new operators gaining third party authorisations':

2.18      The bill removes the prohibition on issuing class licences in spectrum designated for spectrum licensing on condition that, before issuing a class licence, the ACMA is satisfied that:

2.19      In response to an April 2009 discussion paper which explored this issue, coexistence drew mixed reactions from stakeholders: it was generally opposed by major incumbent licence holders, but supported by some others who anticipated benefiting from it.[16] The explanatory memorandum noted that 'the main concern [of opponents] was the erosion of a primary licence holder's rights as a result of interference from spectrum sharing technologies.'[17]

2.20      The government points out that 'the legislative prohibition on coexistence seems unique to Australia':

In many other countries, technologies with a low potential for interference are provided with licence exempt access to licensed spectrum. It is expected that there will be widespread adoption of the new technologies in an extensive range of devices developed overseas, including in consumer goods that will be readily available in Australia, which makes an efficient method of authorisation an important issue. It is important that the Australian framework adapt to changes going forward so that Australia will not be left behind in adopting these important future technologies.[18]

2.21      The government has undertaken that 'implementation of coexistence will be subject to the development by the ACMA of regulatory provisions that ensure that interference concerns are fully addressed. This will be done in consultation with industry.'[19]

2.22      Statutory safeguards for spectrum licensees would include:

2.23      The amendment would not affect current licences. It would only apply to reissued or newly issued spectrum licences.[22]

Timing to prepare for reissue of spectrum licences

2.24      At present the ACMA may start its preparations to reissue a spectrum licence (for example, releasing information and inviting expressions of interest) no more than two years before the date of reissue.[23]

2.25      The bill removes the two year time limit.[24] According to the explanatory memorandum:

This amendment is intended to maximise the flexibility afforded to the ACMA regarding the commencement of licence reissue processes. In addition, this amendment will help reduce uncertainty for incumbent licensees close to licence expiry and encourage continued investment by incumbents in existing network services currently provided under these licences.[25]

Committee comment

Exemptions from disallowance

2.26      As a general proposition the committee does not support provisions that reduce the Parliament's oversight of ministerial discretions.

2.27      In relation to item 4 (exempting minister's determinations concerning reissue of licences to the same licensees from disallowance), the committee notes the concerns of the Senate Scrutiny of Bills Committee. The committee accepts the government's explanation that the changes are necessary to provide more certainty for licensees, and to protect the Commonwealth's position in commercial negotiations with licensees, but also agrees that it should be left to the Senate as a whole to decide whether this exemption is appropriate.

2.28      The committee further notes the minister's commitment, when considering public interest determinations under subsection 82(3), to have regard to the five public interest criteria which emerged from the 2009 consultation (see paragraphs 1.12, 1.13).[26] The committee also notes that the Minister, when exercising his discretion under subsection 82(3), will not necessarily be limited to the five public interest criteria already identified.[27]

2.29      To provide industry with greater certainty, the committee recommends that the government should publish more detailed advice for industry on these and any other public interest criteria which the minister expects to consider when using his power under subsection 82(3).

Recommendation 1

2.30      The committee recommends that government should publish more detailed advice for industry on the public interest criteria noted in the explanatory memorandum of the bill, and any other public interest criteria which the minister may consider when using his power under subsection 82(3).

2.31      In relation to item 10 (exempting ministerial directions concerning spectrum access charges from disallowance), the committee notes that the Scrutiny of Bills Committee has accepted the government's explanations. The committee notes the government's undertaking that pricing information would be published after the ACMA has completed its licence reissue processes. The committee agrees that the 'availability of price information is an important element in facilitation and encouraging a spectrum secondary market'.[28] However, the release of this sensitive information during negotiations could genuinely hamper efforts to achieve an appropriate rate of return to the community. 

Coexistence of class licences and spectrum licences

2.32      The committee notes the concerns of some stakeholders in submissions to the government's April 2009 discussion paper, and the government's comments in reply.

2.33      The provision will allow coexistence in future subject to suitable safeguards. It does not imply that the ACMA will allow coexistence in any particular case or by any particular time. If the technologies that allow safe coexistence are immature,[29] then the committee expects that the ACMA will take this into account in considering applications or setting conditions. The committee encourages the ACMA to approach coexistence in a technically conservative manner to ensure that the concerns of major incumbents about possible interference are fully addressed.

Timing to prepare for reissue of spectrum licences

2.34      This part of the bill has the committee's support.

Recommendation 2

2.35      The committee recommends that the bill be passed.

Senator Doug Cameron
Chair

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