Digital Economy Bill

Lord Fox Excerpts

Committee: 1st sitting (Hansard - continued): House of Lords
Tuesday 31st January 2017 Lords Chamber

[Lord Stevenson of Balmacara]

My Lords, this is an interesting issue which has been drawn to our attention, and we thought it would be worth putting a probing amendment down. I am grateful that grouped with it is a more substantial amendment in many ways tabled by our colleagues from the Liberal Democrat Benches. Both bear on much the same thing.

It is quite common in commercial arrangements to find that there are limits set on ownership and control in proportions which are often around 30%, to reflect the ways in which people might control a market. Yet the way in which the Governments of the day have set up regulations to control the spectrum has not introduced any official cap. Amendment 54 suggests that it might be time now, given the intensity of concern about how much the spectrum is valued and how it is used, to have some form of competition cap, of about 30%. This probing amendment is there to invite the Government to comment on that.

Having said that, I am sure the Minister will want to cover another point, which I think will be the subject of other amendments later. We will come back to this, but I want to flag up now that the spectrum is not a single thing—I cannot think of the right word—and its value depends on which part of the spectrum we are talking about. Lower frequencies and higher frequencies are different, so to impose a 30% limit on the spectrum that any company can own would be slightly perverse, but the issue is important enough to raise the point. Future amendments may deal with the dispersion of the higher-value spectrum among operators, particularly in mobile telephony, where there is concern—I am sure that the Minister expects us to raise this at the appropriate point in the Bill—over the current way in which spectrum has been allocated among the existing players in this field, so that the larger ones tend to have more of the higher-value spectrum. This is an issue we will need to come back to, but it is not the subject of this amendment, which deals with a general concern about the possibility of a monopoly operating within this area, which might be dealt with perfectly properly by a regulator, but where it might also help if there was a specific cap. I beg to move.

[Lord Fox (LD)]

As the noble Lord, Lord Stevenson, intimated, Amendment 54A comes out of the same concern, but takes a slightly different view of the problem, placing the onus on the Secretary of State rather than Ofcom. The noble Lord, Lord Mitchell, spoke about fixed and mobile convergence, and at the heart of the concern here is that we are not talking about two separate markets when we talk about broadband and wireless; with the approval of BT’s acquisition of EE, one player not only has a dominant position in fixed line but already has the lion’s share of the spectrum already allocated, at 42%. As the noble Lord, Lord Stevenson, has said, this may come up in a different place, but it is at the heart of concerns expressed here.

Clearly the two weaker players were not allowed to join together, so we have an asymmetry in the wireless market, with two strong players and two weaker operators, which adds to the imbalance of spectrum allocation. We should be aware that spectrum allocation imbalance can clearly affect prices. It could affect access and also the speed with which technologies are rolled out: a land bank, or the equivalent, could be created.

It seems that Ofcom has already recognised this issue and is seeking to limit access to one of the bandwidths—the 2.3 gigahertz—but has not covered bands in the 3.4 gigahertz range so the principle appears to have been acknowledged by Ofcom but the measure has not been fully thought through. In a sense, we are debating how much of a problem this is, given that Ofcom has acknowledged that it is a problem.

This is, therefore, also a probing amendment, and it would place a requirement on the Government, rather than Ofcom, to assess the situation and come back with a thorough review of whether this really is an issue. Clearly there is a perception, but we need to measure that perception and publish some sort of assessment of whether 30% is the right limit and, indeed, whether there is a problem at all. I therefore ask your Lordships to consider this as a way of teasing out issues that, if they are not dealt with now, will come back to haunt us much later.

[Lord Ashton of Hyde]

My Lords, these two amendments concern the allocation of spectrum for mobile telephone networks. There are two main issues: the percentage amount of the cap; and the role of Ofcom as opposed to the Secretary of State, as dealt with in the amendment of the noble Lord, Lord Fox.

First, on the amendment of the noble Lord, Lord Stevenson, the Government have released a considerable amount of spectrum for mobile broadband. Ofcom has just concluded a final consultation on rules for allocating it through an auction. The intention of the amendment—to ensure that Ofcom can enforce competition in the mobile market—is a worthy one. Ofcom already has the power to set appropriate rules for its spectrum licensing, taking due account of competition implications. Ofcom must award licences by processes that are open, objective, transparent and proportionate in what they are intended to achieve, without unduly discriminating against particular persons or a particular description of persons.

In principle, Ofcom could make a similar rule for its forthcoming auction to that proposed in the new clause. Indeed, it considered a number of possible spectrum caps in its consultation. The provision allows Ofcom to reject some possible results of the auction on competition grounds. Ofcom already has competition powers which would bear in such a situation. It also strikes us as unlikely that Ofcom, having determined appropriate rules for an auction, would immediately nullify the results.

Amendment 54A, from the noble Lord, Lord Fox, proposes that the Government commission an evaluation of the current usage and allocation of mobile spectrum. Ofcom already has a responsibility, when carrying out its functions, to consider competition issues and whether radio spectrum is being used efficiently. Ofcom considered many of these issues in its recent consultation on the forthcoming auction. In future, it may well wish to review the state of competition in the mobile market—perhaps on similar terms and to a similar timescale to those proposed by the noble Lord—but in our view, that is for Ofcom to decide.

Given those issues, it seems to me that the proposed new clauses do not help Ofcom to carry out its duties, and I hope that noble Lords will therefore agree not to press them.