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EQUITY RESPONSE TO THE OFCOM CONSULTATION DOCUMENT "PROGRAMME-MAKING AND SPECIAL EVENTS: FUTURE SPECTRUM ACCESS"

INTRODUCTION

1. Equity is a trade union representing 37,000 performers and creative personnel who work across the whole spectrum of entertainment in the UK, including visual broadcasts, sound recordings, film and live performance.

2. Equity welcomes Ofcom's decision to conduct a further consultation on spectrum access for programme making and special events (PMSE). As stated in our submission to the digital dividend review (DDR) we believe that the success of new and existing media will depend on the provision of high-quality content. This content can only be produced to modern standards with technology that also relies upon the availability of spectrum, including radio microphones, in ear devices and other short-range wireless devices.

3. Therefore it is vital to address the unintended consequences of the original proposals to auction off packages of spectrum, which failed to make adequate allowances for the needs of Programme Making and Special Events.

BACKGROUND

4. Equity's written response to the DDR provided Ofcom with an outline of the key objections of our members, as the end users and practitioners who play a key role in providing entertainment in the UK. At that time we stated that the priority for our members will continue to be the need for affordability, accessibility and continuity of technology that supports the entertainment industry.

5. Ofcom's original proposals failed to meet these concerns. In particular, the entertainment industry was concerned about the use of an open auction process. This was considered likely to lead to a large commercial organisation acquiring the spectrum and seeking to maximise its return on this investment by leasing it out to the highest bidder.

6. Applying this purely commercial approach to spectrum management could lead to a market failure and facilitate a breakdown in the ability of PMSE users to operate, due to limits on affordability and access. This was the fundamental problem with Ofcom's proposals.

7. It would appear from the responses that are summarised in the latest consultation document that these concerns were shared by other stakeholders. In particular, we note the concern that "these developments would destroy the economic viability of PMSE-related activity, which would be unable to withstand the dramatic increase in costs or limitation or spectrum access" (para 4.36).

CONSIDERATION OF THE ISSUES

8. In the latest document Ofcom is at pains to demonstrate the need to continue with its proposed market-based approach to future spectrum access. These points are made throughout the document, but are covered in detail within Section 5. In relation to these arguments, Equity would simply suggest that the justification for this approach is largely theoretical, with little practical evidence of exactly how any prospective improvements will be delivered in this area.

9. Conversely, PMSE users have been clear in providing a range of information to demonstrate that disruption could be disastrous for those sectors which depend on radio microphones and other wireless devices. However, to its credit Ofcom does acknowledge that the consultation process has enabled it to learn more about PMSE and the entertainment industry, as well as the potential problems of the approach outlined in the DDR.

10. In particular it recognises the risks that have been highlighted when it states that "the risk of moving too quickly is costly disruption to the PMSE sector at a time when the spectrum that it accesses and the means by which it gains access are facing significant change". It is also significant that Ofcom accepts that "this risk is not just to PMSE users themselves but also to all of their customers who depend on their services". (para 5.34).

EQUITY'S POSITON

10. In its original submission Equity stated that it would support a proposal to reserve specific channels of radio spectrum for PMSE use, prior to any proposed auction process. This spectrum would still need to be licensed and managed in order to minimise disruption to this important sector. This preferred approach would therefore require the establishment of a band manager for this designated spectrum, to ensure that access was affordable, accessible and continuous and would meet the needs of PMSE users.

11. The above approach would offer the highest level of certainty for the entertainment industry and for Equity members, as well as citizens and consumers. While these principles could be implemented in a number of ways, this remains Equity's preferred approach.

12. An alternative (but less preferable) way of dealing with future spectrum access, put forward by Equity, was for Ofcom to impose protection for PMSE users through strict conditions in the licence acquired at auction.

13. Equity felt that this would need to go well beyond the plans to provide protection and assurances to 2012. It would involve rules on access to spectrum for PMSE use, with any associated costs capped at an appropriate level, regulated (but not managed) by Ofcom. These conditions could then be implemented by the band manager on behalf of the successful bidder to ensure proper licensing and efficient use of spectrum for PMSE.

OPTIONS FOR THE FUTURE

14. In the light of the responses received to the DDR consultation Ofcom has put forward a number of options for how the PMSE sector could make use of the digital interleaved spectrum in future.

• Option 1: Status quo.
• Option 2: Status quo with Administrative Incentive Pricing (AIP) control.
• Option 3: Beauty contest (comparative selection) with AIP.
• Option 4: Auction with additional safeguards.
• Option 5: Auction with DDR safeguards.
• Option 6: Auction without safeguards.

15. These options focus on the structure and management of spectrum going forward. However, they fail to address the profound disruption to PMSE users caused by terminating access to analogue interleaved spectrum so abruptly, in line with the regional process of digital switchover from 2008. The inadequate time for transition will lead to a shortage of PMSE equipment in these regions as switchover occurs. In order to avoid severe disruption, the PMSE sector should be given guaranteed transition access to analogue interleaved spectrum until the end of 2013.

16. Once this level of protection has been established, Ofcom will also need to ensure that its preferred options (Option 3 and Option 4) contain measures and additional protection necessary to ensure the level of affordability, accessibility and continuity required by PMSE users. At a minimum this should include a mechanism for ensuring that the single band manager will be truly sympathetic and will understand the PMSE sector's interests. As a result the PMSE must be represented in some capacity within the band manger organisation.

17. Equity is pleased to see that Ofcom has listened to the concerns of the entertainment industry and has made a genuine attempt to minimise the risk of disruption for PMSE users. However, it must now ensure that the new proposals are properly adjusted in line with some of these principles. In our view it would be preferable to implement these principles within a structure that ensured controlled management of spectrum (along the lines of that outlined in the new Option 1 or Option 2).

18. If Ofcom continues to pursue its preferred options, there must be an appropriate level of regulatory control. For example, the proposed appointment of a spectrum manager through a "beauty contest" (or comparative selection process) under Option 3 should include strict conditions on the successful applicant. Ofcom refers to these as "a need for detailed 'backstop' provisions to protect PMSE users" (para 6.47). This protection is necessary in order to ensure that spectrum is accessible to PMSE users. It can also ensure that the demand for PMSE use is correctly managed and being licensed to users for a price that is reasonable and proportionate.

19. Similarly, Option 4 must include "protection in the conditions of the licences offered to auction", as well as "a pre-qualification process for bidders" to ensure that the necessary expertise existed within an organisation (para 6.56).

20. This level of protection must be underscored with an extension in the period of access guaranteed to PMSE users of the digital interleaved spectrum. The decision to provide this protection up until 2018 (from 2012) is a significant move in the right direction. However, this does raise inevitable questions about the situation after that date. Consequently it will be all the more important for Ofcom to give itself the ability to continue to regulate this matter and keep it under review.

CONCLUSION

20. Ofcom has demonstrated an admirable ability to listen and engage constructively with stakeholders on this important issue. However, due to the concerns expressed by PMSE users, Equity does not believe that the current options under consideration offer the best spectrum access arrangements for the future. Nevertheless, if Ofcom pursues its preferred options it is essential that there are safeguards in order to ensure the production standards of entertainment.

21. Therefore Equity could only support the transition to a single spectrum manager under either of Ofcom's preferred approaches (Option 3 or Option 4), if the licence conditions and access arrangements were in place that enabled Ofcom to ensure that spectrum is truly affordable, accessible and continuous for PMSE users.

28 August 2007

For further information contact:
Matthew Payton
Research and Parliamentary Officer
Equity
Guild House
Upper St Martin's Lane
London
WC2H 9EG
020 7670 0260
mpayton@equity.org.uk

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