Radio Telephone Services (Hansard, 25 June 1982)

§ Mr. Patrick Jenkin

My right hon. Friend the Home Secretary announced on 15 June the establishment of an independent review of the radio spectrum and his provisional decision that 30 MHz should be allocated to radio telephone services.

My right hon. Friend and I are convinced that manufacturing industry, transport, consumers and the economy generally can derive significant benefits from early and substantial expansion of radio telephone services, provided this can be arranged without prejudice to the interests of other users of mobile radio. I therefore intend to press ahead with preparatory arrangements for licensing the provision of radio telephone services in the event that the necessary frequencies are made available. My preparations are designed to permit the frequencies to be taken into service as quickly as possible once a final decision is taken about their allocation. They take account of the recommendations made to my Department by a working group representing public and private sector bodies with an interest in radio phones.

The Government's telecommunications policy is based on the need to introduce greater competition in the supply of telecommunications services. We think radio telephone services will develop more rapidly and user interests will be best safeguarded in a competitive environment. The number of competing radio phone networks which it is 182W possible to have, however, is severely limited by the need to ensure the efficient use of scarce frequency resources. The Government agree with the working group's conclusion that, subject to satisfactory commercial and technical arrangements between them, two competing networks may well provide the best balance between the benefits of competition and those of maximising spectrum efficiency.

The selection of the organisations to be licensed presents difficulties. Before any new radio telephone network can be licensed the Government will need to be satisfied that it incorporates the most modern celluar radio techniques and that there is fully automatic hand off between cells. The Government will want to be satisfied that applicants have the necessary technical and commercial resources to install and run a system and will require evidence of market research to show that proposals are commercially viable. Radio telephone networks may be highly profitable and at least four organisations have put forward firm proposals for running such networks. British Telecommunications submitted proposals two years ago and, subject to further analysis of technical details, these appear to be ready to be put into effect quickly. Recently a number of private consortia have put forward outline proposals to the Department in anticipation of more than one service being licensed. The Department has also received proposals for a simplex system confined to lorry and coach operators. The Government see a continuing role for both British Telecom and the private sector in this area.

I am therefore inviting the private companies and BT to develop their proposals on the basis that there will be two competing radio telephone networks in the United Kingdom, both to be licensed on equal terms and conditions by my Department, and each to be allocated half the available new spectrum. I shall review my provisional decision to licence two competing networks in the light of the technical and commercial assessments of the proposals put forward.

In order that at least half the frequencies can be brought into use quickly, I intend that a licence for half the frequencies should be issued to a subsidiary company of BT, in which the private sector would own at least half the shares, and that the company should be subjected to clear conditions to ensure fair competition. I have invited the chairman of BT to submit precise technical details of his proposals.

So far as the remainder of the frequencies are concerned, I invite private sector companies to provide detailed evidence about technical specification, fully worked out costings and evidence that they possess the financial backing, management resources and technical competence to run a modern radio telephone system. I shall require evidence of market research to demonstrate that a system using half the available frequencies is viable. My Department will shortly be sending a note giving guidance to the applicants known to them and other applicants may obtain copies of the guidelines from the Department.

I intend to appoint independent consultants to evaluate the rival bids and at the same time the proposals will be assessed by the radio regulatory department to determine whether they are technically suitable to be licensed under the Wireless Telegraphy Acts. The reports by the consultants and the radio regulatory department will be considered by independent advisers, who will submit 183W advice to me on how I should exercise my licensing powers under the British Telecommunications Act 1981. While the three private sector applications submitted so far and the separate proposal for a simplex system provide grounds for believing that a licence can be issued to a private sector firm, I must reserve the right not to grant a licence if, after detailed scrutiny, no application meets the necessary minimum standards.