Australian Broadcasting Corporation. Australian Communications and Media Authority

Transcription

1 Australian Broadcasting Corporation submission to Australian Communications and Media Authority Opportunity cost pricing of Spectrum June 2009

2 ABC Submission to the ACMA Consultation Paper IFC 12/2009 Opportunity Cost Pricing of Spectrum: Public Consultation on administrative pricing for spectrum based on opportunity cost Introduction The Australian Broadcasting Corporation (the Corporation) welcomes the opportunity to contribute to the Australian Communications and Media Authority s (ACMA) public consultation on administrative pricing for spectrum allocation based on the opportunity cost principle. The Opportunity Cost Pricing for Spectrum paper invites comment in relation to ACMA s proposal to use opportunity cost pricing in setting prices for administratively allocated spectrum to address congestion issues in the 400 MHz band; and other priority areas where opportunity cost pricing offers benefits in spectrum allocation. The ABC response below presents general views before providing further comment in relation to technical elements of the opportunity cost proposal as presented in the Consultation Paper. While the Corporation is concerned about the implications for increased charges for its spectrum use in the 400 MHz band, of greater concern is the potential for this method to be applied in the broadcasting service bands (BSBs) in the future. Such a possibility would greatly increase costs of spectrum use in this band. Further, it would potentially have significant impacts on the ABC s content creation capability as well as the delivery of ABC services to Australian and international audiences. ABC comments are provided in the context of these concerns. The ABC s use of spectrum As the national broadcaster, the Corporation is a major user of spectrum, employing frequencies in the BSBs to deliver analog and digital television and radio services. In addition, the ABC s free-to-air activities depend upon a range of critical support activities for content creation and additional service delivery that are conducted using non-bsb spectrum. Such activities include supporting content acquisition, satellite up- and downlinks, communications and data transfer, international short wave broadcasting and domestic short-wave broadcasting to remote regions. Page 1

3 The ABC s legislative requirements The ABC operates its national broadcasting services in accordance with section 6 of the Australian Broadcasting Corporation Act Section 13 of the Broadcasting Services Act 1992 covers those services. Section 31of that Act provides that the Minister may reserve spectrum capacity for the national broadcasters and notify the ACMA in writing that capacity in the broadcasting services bands is to be reserved for a specified number of national broadcasting services. The ABC is then issued broadcasting licences for those transmitters and pays a nominal spectrum tax. Any changes to that process, which would impact on ABC s ability to deliver the services covered by the Australian Broadcasting Corporation Act 1983, may impact on the ABC s ability to serve its audiences. The ABC s access to sufficient spectrum is ever more crucial, given the ABC must deliver on its obligation to increase production, distribution and transmission of content in a complex, multi-channel, multi-platform environment. As the ABC has noted in previous submissions, Australian broadcasting regulation has long sought to maximise public benefit from the use of spectrum. As such, economic efficiency while important is one element within a regulatory suite that includes diversity requirements, planning regimes and conditions on the activities of broadcasters to ensure that the Australian public receives the greatest possible benefit from the allocation of spectrum resources. 1 Diversity and Public Interest While the ABC is aware of other processes for providing comment on the role of public interest in relation to spectrum licence allocation, it is important that the issues of public interest and public goods be included in the discussion of an opportunity cost model. The broadcasting industry is subject to certain conditions that distinguish it from other industries and should be taken into account. In particular, Australian media policy seeks to ensure that the community is able to receive information from a diverse range of sources. In the broadcasting industry, this diversity is preserved and enhanced by the balance of complementary national, community, commercial and subscription broadcasting sectors. This sectoral balance should continue to apply to any new approaches to utilising spectrum. 1 Australian Broadcasting Corporation Submission to Australian Communications Authority Discussion Paper Private Management of Encumbered Spectrum Bands, ACA, May 2005 Page 2

4 It should be noted that different industry sectors utilising spectrum operate on different funding models; as a result of which, price-based mechanisms may discriminate against non-commercial services such as the ABC and undermine the objective of diversity. ACMA s proposal to use opportunity cost pricing The ABC notes that the ACMA states the Opportunity Cost Pricing of Spectrum paper has been developed to illustrate the implications of the ACMA s Principles for Spectrum management 2. It notes two principles the ACMA believes will deliver a more efficient allocation of spectrum: spectrum should be allocated to the highest value use or uses; and the need to enable and encourage spectrum to move to its highest value use or uses. The Corporation recognises there may be value in developing an understanding of how market-based allocation of spectrum, such as opportunity cost, is in the national interest. However, in developing this understanding there must be appropriate recognition of spectrum use which has public good characteristics and where open market methodologies do not provide the most complete and reliable indicators for decision making. Any exercise in seeking mechanisms for maximising potential benefits through market based allocations must identify all implications, especially those which may have an impact on the delivery of public services. This includes the potential impact on the cost of delivering public good services through utilisation of the opportunity cost method. While application of the opportunity cost model might envisage a mechanism where economic value (price) is determined and the impact on public goods delivery met through public financing mechanisms, this involves significant assumptions about the capacity for such finance to be secured. The ABC uses the 400MHZ band for fixed point to point and point to multipoint links. Proposed changes in pricing of 400MHZ band spectrum are of concern to the Corporation, especially noting the need to either seek budgetary supplementation to meet new charges or to reduce service delivery if these changes result in increased charges to the organisation. However, of greater concern are their implications, if the approach is applied more generally. For example, the ABC is concerned about the implications in the 2.5GHZ band 2 ACMA, Opportunity Cost Pricing of Spectrum, p ii Page 3

5 used for news gathering and the 700MHZ band used for television transmission. There is no specific discussion of these more important areas in the Consultation Paper. Questions regarding the opportunity cost method As noted above the ABC recognises the value of investigating the potential for the opportunity cost mechanism, properly estimated, in gaining an indication of the true market price of spectrum as well as being an indicator of its social value. However, the ABC believes that in the bands currently subject to apparatus licences, such as the 400MHZ band, identifying the opportunity cost for spectrum may prove difficult. This is because market information about the value of apparatus licence spectrum slots is incomplete, whether considering the value for uses of existing apparatus, or the value for uses not confined in that way. Proper market information on the value of apparatus spectrum for public good purposes (existing or future public good, with whatever equipment), is particularly scarce. This means, for example, that the market price at which existing spectrum slots are leased, in the so-called secondary market, is not necessarily a reliable measure of its opportunity cost. This may occur due to apparatus limitations or licence tenure. Further, potential uses of apparatus licensed spectrum may have a public good character that generates benefits that remain unpriced for example, in the form of public safety, defence or cultural diversity. These uses may not be able to gain access to the quantity of spectrum their economic importance warrants. The estimated opportunity cost of spectrum will depend on constructed and natural features of the environment that are assumed to prevail. A number of questions arise: Should it be assumed that past constraints on apparatus slots in particular will continue? Will tenure continue as before, whether for apparatus or spectrum licences? Will there be reserved public areas? What pace of parallel movement to spectrum licences (which do not have apparatus constraints) should be assumed? The scenarios outlined in the Plum Consulting report, to which the Consultation Paper (Figure 4) refer, are based on particular scenarios for the short and medium term future of Page 4

6 spectrum management. They contain both implicit and explicit judgements about policy and technology. In addition, it is not clear how the fee structure would operate in bands subject to opportunity cost based pricing, especially relating to the derivation of other fee components. The question of what other taxes or charges will accompany the proposed opportunity cost based fee requires clarification. In particular, it is important to know whether there is an intention to retain the normalisation factor. Conclusion It is difficult to assess the full implications of the opportunity cost pricing proposal presented in the ACMA Consultation Paper without consideration of other aspects of spectrum management, planning and policy. The range of required considerations is significant and the assessment task complicated by the unsettled nature of key policy areas. In this context, it is important that the general principle of public goods is recognised in the development of administrative pricing mechanism. In particular, it is critical that the range of spectrum use to meet public broadcasting policy objectives is recognised. Page 5