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Lord McIntosh of Haringey: There is no accounting for taste.

The Committee will forgive me if I do not repeat the arguments about the benefits of spectrum trading, nor those about the degree of regulation and the dangers of excessive regulation holding back the development of a market in spectrum to the detriment of everybody—communications providers, consumers and all of us.

Amendment No. 139 is a very attractive piece of special pleading—much more so than some of the special pleading that I have heard over the past few hours, without being too specific about that. I very much share the enthusiasm for music expressed by Members of the Committee, although when the noble Baroness, Lady Warnock, speaks about tastes in

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music, I remember that some years ago she allowed herself to undertake testimonial advertising for Classic FM. As a devotee of Radio 3, I was strongly resistant to that at the time. However, I have come round to her point of view to an extent, particularly when there is so much of what is called "world music" on Radio 3 in the evenings, to the detriment of proper classical music. However, that is the end of that bit of special pleading.

Music provision, of course, is only one of the factors that must be taken into account when Ofcom is making decisions about spectrum trading. If we singled out music, we would be in all sorts of dangers. It would also be unnecessary, because Clause 3 already sets out the context within which Ofcom will exercise its powers, including on trading. That specifically involves securing a wide range of high quality broadcast services, which includes music as well as non-music content.

The Committee will remember that when we refer to national radio licences, of which there is a scarcity, one condition is that one channel should be non-pop music. That is a negative condition, but it is a helpful one for securing diversity, and it is what allowed Classic FM to gain one of the three licences when it first started, to the great benefit of many of us.

I am very sympathetic to the idea of diversity and quality, but it would be undesirable to put music into the Bill at this place. Radio communications embrace a whole range of uses for which music is not appropriate, such as business radio used by taxi firms. We do not want to distort trading by mentioning music provision explicitly, when there is such good protection in Clause 3.

Baroness Wilcox: I personally welcome our Deputy Chairman, the noble Countess, Lady Mar, back to her place after her long illness. It is lovely to see her here.

I was very grateful for the support of the noble Baroness, Lady Warnock, who described radio stations that I remember so well. The noble Viscount, Lord Falkland, also supported the amendment, although he identified it as a probing amendment.

I listened carefully to the Minister's comments, and was interested in his rendition of a negative condition. I agree with him, as I remember how it has worked in practice. He will know that I am not very good at special pleading, because I am a rampant free trader, and it is unusual for me to stand up and plead cause for a particular area.

I cannot see that we shall get any further on this matter, so I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Avebury moved Amendment No. 140:

    Page 151, line 31, at end insert—

"( ) OFCOM shall require that the transfer from a service or content provider of rights and obligations under any wireless telegraphy licence (or grant of recognised spectrum access), has the approval of OFCOM in advance and that OFCOM will consider other parties and the provision of public services in their decision."

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The noble Lord said: We are concerned, as is the industry body called Spectrum, that when spectrum is traded, the original rights and especially the obligations attached to the grant of RSA may not be transferred to the new licensee. Therefore, we should like Ofcom to have a duty to preserve those rights in any transfer. We would go further than that and say that Ofcom should have a duty to approve all transfers made under the clause.

Subsection (3)(c) and (e) contains provisions allowing Ofcom to make regulations requiring its approval and consent to a transfer of a wireless telegraphy licence or grant of RSA, and to direct that a transfer be made only subject to any conditions that it may see fit to impose. We want to go further than that and say that, in every case, the transfer must be approved in advance by Ofcom. In doing so, it would have to consider existing users, third party licence holders and the provision of public services.

Leaving matters entirely to a free market in spectrum, without those safeguards, would be likely to concentrate spectrum in the hands of licence holders who can profit the most from it, to the detriment of the interests of third parties, existing users and public services. Even if services are maintained, trading will put upward pressure on consumer prices, because the cost of spectrum has to be recovered ultimately from the end-user. That may not mean that spectrum trading is not useful, but that if we have any sense, we should build extra safeguards into the Bill, which could be relaxed in a few years' time if experience showed that they were not needed. I beg to move.

Lord McIntosh of Haringey: Again, I shall spare the Committee my general remarks on the desirability of spectrum trading and the necessity for a certain degree of regulation. A spectrum market, like any other market, will require a regulatory framework to operate effectively and fairly, prevent distortions of competition, minimise harmful interference and ensure compliance with international obligations.

The balance between market forces and regulation will change over time, so the Bill gives Ofcom a wide measure of discretion in how to introduce and regulate spectrum trading. An essential element of the regulatory regime is Ofcom's power to require that spectrum transfers should take place only with its approval. The noble Lord, Lord Avebury, correctly identified that power in subsection (3)(c). However, that power needs to be exercised with a degree of flexibility if it is not to act as a drag on the development of a secondary market in spectrum. Such a secondary market would not necessarily be wrong; it could lead to improvement and freeing up underused spectrum, which would benefit consumers.

Amendments Nos. 140 and 141 would require Ofcom to clear certain spectrum transactions in advance and, in doing so, to consider other parties and the provision of public services. Amendment No. 141 specifies the relevant parties. That would be too inflexible. Spectrum transfers will be of many different types and on many different scales. There is a world of difference between a change of ownership of a taxi firm

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and the realignment of a national communications network. The degree of regulation will need to be appropriate to the size and characteristics of the people involved.

There is a concern that spectrum trading might lead to undesirable outcomes. That is why we need regulation. However, the sorts of cases that could be mentioned, such as a mobile telephone network withdrawing from a significant part of the country and thereby reducing competition, are unlikely. It would be too inflexible and burdensome to make prior approval mandatory in all cases. I appreciate that the amendment is limited to disposals of spectrum by service or content providers, and I applaud that caution, but those terms are not defined. Even assuming that they relate only to public telecommunications networks and broadcasters, the amendment would be disproportionate.

The matter of prior approval is better left for Ofcom to judge within the framework of the duties that it has. I am sorry that the noble Lord, Lord Currie, has left us, as I look for a metaphorical pat on the back whenever I say that. Surely, it is Ofcom that is making the regulations in the clause and, within the overall framework of its duties, the body will understand perfectly well the concerns expressed, perfectly legitimately, by the noble Lord, Lord Avebury. I hope that he will leave it to Ofcom, rather than impose an additional restriction.

Lord Avebury: The noble Lord gave the example of a mobile telephone network withdrawing from a rural area. He said that it would be unlikely to happen in practice and to introduce this kind of requirement would be to reduce the flexibility that Ofcom needs if it is to carry out its functions properly.

Clause 3 acts as a backstop to ensure that some of the points in the amendments would have to be considered by Ofcom in deciding whether to make use of the regulatory powers that it already has. The noble Lord pointed to subsections (3)(c) and (3)(e). It would be useful if we could have some greater knowledge of whether Ofcom does indeed think that these powers are adequate or whether it would prefer the kind of formula that we have suggested in the amendment.

We feel that, notwithstanding any protection that may exist for the public service broadcasting requirements and the rights of third parties, there remains the residual area of concern that the trading process will lead to an upward pressure on consumer prices because, as I have said, in every trade an increase in price has to be passed on to someone, and that is the end user.

However, I am sure that we shall not reach a solution to this problem this evening. We need to discuss it further with those outside the House who are advising us. So, in the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 140A to 141A not moved.]

Clause 165 agreed to.

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Clauses 166 to 172 agreed to.

Clause 173 [Amount of penalty under s. 172]:

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