EXECUTIVE SUMMARY

The Association of European Radios (AER) is a Europe-wide trade body representing the interests of private commercial radio operators in France, Germany, Greece, Italy, Portugal, The Netherlands, Spain, Sweden and the UK.

AER welcomes the initiative taken by the European Commission through the proposal for a “Decision on a Regulatory Framework for Radio Spectrum Policy in the EC”. This issue is essential for the development of the radio sector as a whole and, in particular, for private radios that historically have always enjoyed fewer privileges than their public competitors in terms of access to frequencies.

However, AER has certain concerns and comments that may be summarised as follows:

I. General Remarks

• Taking into account that we believe that spectrum allocation should remain under the responsibilities of Member States following the subsidiarity principle, the European Commission still has a role to play in co-ordinating the 15 Member States’ positions in order to strengthen the defence of European interests at international level.
• It is in the Commission’s remit to safeguard the European single market. Therefore, this institution should make sure that the technical decisions taken in the CEPT are properly implemented in the different Member States without causing any distortion in terms of competition.

II. Spectrum Management

• AER is concerned that the Commission gives a positive view to the use of spectrum auctions and secondary trading by National Regulatory Authorities (NRAs). In our view, the Commission is somehow ignoring in its proposals the fact that most operators reject a purely economic valuation of spectrum.
• Because of the great importance of content, frequencies should not become goods open to trade without some assurance regarding content. AER firmly believes that spectrum assignment should be based not only on financial issues but also on the type of service provided or proposed.
• The existing spectrum management framework for telecommunications services cannot be automatically transposed to the broadcasting sector.
• As far as secondary trading is concerned, AER members believe that Member States should guarantee that the use of spectrum does not change after economic transactions. Sub-licensing may be allowed but only if it is done in the public interest. Public interest criteria that guarantee the use of spectrum should be clearly detailed.

III. Digital Radio

• Professionals in the sector have identified the shortage of frequencies for digital radio as one of the main obstacles for the digitisation of this medium.
• It is important that the European Union considers radio as a political and public interest priority for which is necessary to ensure sufficient radio spectrum. Private radios should have at least equal access to spectrum/multiplexes to that given to public radio broadcasters
• The Commission should play a role of “co-ordinator”, making sure that the transition takes place in all Members States in a coherent and harmonised way.

IV. Institutional Arrangements.

• AER recommends the inclusion of radio industry representatives in the two consultative groups that will be created to give political advice to the Commission on spectrum policy issues. This would allow transparent debate and would prevent certain industry agencies to have greater influence than others depending on national interests.
• There is not either any clear statement on how these groups are to be composed or who will decide the composition; neither are the working procedures or rules for adopting positions mentioned. This should be further detailed.

I. GENERAL REMARKS

In principle, AER generally agrees with the Commission’s aim to ensure the harmonised availability and efficient use of radio spectrum, where required to implement Community policies in areas such as communications, broadcasting and others.

We believe that spectrum allocation should remain under the responsibilities of Member States following the subsidiarity principle and we want to stress once again that, in our view, the European Commission has a role to play in co-ordinating the 15 Member States’ positions in order to strengthen the defence of European interests at international level. On one hand this should protect European technologies from being overtaken by those of foreign competitors and, on the other, it should defend those public interest objectives that are important to European citizens.

It is also in the Commission’s remit to safeguard the European single market. Therefore, it should make sure that the technical decisions taken in the CEPT are properly implemented in the different Member States without causing any distortion in terms of competition. In the coming pages, we will elaborate our views on certain points in the Commission’s proposals and related issues.

II. SPECTRUM MANAGEMENT

AER members have shown great concern about the Commission’s proposals included in the draft Directive “A common regulatory framework for electronic communications networks and services” (COM (2000) 393) concerning spectrum allocation practices which are directly linked to the present draft Decision on Spectrum Policy. The fact that the Commission gives a positive view on the use of spectrum auctions and secondary trading by National Regulatory Authorities (NRAs) is most worrying for private radios.

This is also surprising to AER since, by and large, during the debate over the Green Paper on Spectrum Policy and the 1999 Communications Review, operators were not in favour of auctioning spectrum. The Commission appears to be ignoring in its proposals the fact that most operators reject a purely economic valuation of spectrum.

While we are not in favour of close format regulation by a third party, nevertheless a service-based criterion should be applied to the awarding of radio spectrum (that is the granting of authorisations to transmit broadcast signals). Historically, AER has not been in favour of separating the awarding of radio spectrum and the granting of service authorisations or licences. Because of the great importance of content, frequencies should not become goods open to trade without some assurance regarding content.

Therefore, AER is against the principle of auctioning frequencies that are currently occupied by stations because this will reduce investment in content and lead to inefficient use of spectrum. AER firmly believes that spectrum assignment should be based not only on financial issues but also on the type of service provided or proposed.

 The existing spectrum management framework for telecommunications services cannot be automatically transposed to the broadcasting sector. When allocating spectrum for radio, factors such as pluralism, cultural diversity, right of information, freedom of speech and others should be taken into account. Furthermore, because radio is “free to air” at the point of reception, auctions cannot guarantee radio services for every citizen.

In what concerns secondary trading, AER members believe that Member States should guarantee that the use of spectrum does not change after economic transactions. Broadcasters should be given spectrum in response to the obligation to broadcast. Sub-licensing may be allowed but only if it is done in the public interest. The criteria that guarantee the use of spectrum should be carefully detailed in the Commission’s proposals.

Concerning public interest, AER strongly believes that all radios, public and private, participate in the same way in the objectives of pluralism, ethics of information, respect of moral and democratic values, protection of the individual, as well as promotion of consumer interests. Therefore, both private and public radios should have at least equal access to frequencies. The current situation in Holland, where the authorities intend to reallocate by auctions all frequencies in 2001 is a clear example of the disadvantageous position imposed on private radios when this practice is used.

AER asks the European Institutions to prevent methodologies and practices, which endanger the whole European radio sector. Auctions should not be a practice used for allocating spectrum for the radio sector. Furthermore, the Commission should clearly state in the draft Decision a clear definition of the concept of “spectrum efficiency” and the criteria that need to be respected to achieve it. These criteria should take into account public interest objectives.

III. DIGITAL RADIO

Private radios have historically supported the testing and development of digital radio – using the standard Eureka 147 DAB – in several European countries, being aware of the consumer benefits of the new technology. However, in AER’s opinion, there are still some points of uncertainty to be resolved before the successful launch of DAB transmissions.

As AER has stressed in the past, spectrum policy is crucial when evaluating the transition from analogue radio to digital radio. Professionals in the sector have identified the shortage of frequencies for digital radio as one of the main obstacles for the digitisation of this medium. Therefore, for the successful launching of digital radio, European solutions to frequency shortages need to be sought as a matter of priority.

This will protect radio from becoming an obsolete medium in a convergent world. The role of radio in the political, economical, cultural and social life of the EU should remain undiminished. Its economic importance in terms of advertising revenues and audience makes this medium a very valuable one.

Without a solution to the spectrum shortage issue, confidence in this European technology and its credibility will be questioned with a significant downside for the future of digital radio. Therefore, it is important that the European Union considers radio as a political and public interest priority for which is necessary to ensure sufficient radio spectrum, as it has been done in the past for systems such as GSM or UMTS.

AER considers that the European Commission could play a very important political role in promoting the benefits of the transition from analogue to digital radio. As we said earlier, the Commission should play a role of “co-ordinator”, making sure that the transition takes place in all Members States in a coherent and harmonised way.

 In the digital world, and since all radio broadcasters offer services of general interest, private radios should have at least equal access to spectrum/multiplexes to that given to public radio broadcasters.

IV. INSTITUTIONAL ARRANGEMENTS

AER is disappointed with the Commission’s new proposals concerning institutional arrangements. In the initial proposals presented in the Green Paper on Spectrum Policy, the creation of a radio Spectrum Policy Expert Group (SPEG) was foreseen to make sure that Community policy in this field was guided by political considerations as well as technical ones. The group was to be composed of Member States’ representatives as well as sector representatives. AER thought that this was a good proposal that would help to open a transparent debate among governments and spectrum users.

We see now that in the new Commission’s proposals this group has not been maintained but instead two structures are proposed: A Senior Official Spectrum Policy Group (“The Group”), composed of Members States and the Commission; and a Radio Spectrum Committee with the same type of representation. Therefore the presence of the industry in these consultative bodies has completely disappeared.

It is true that the Commission states in Article 3 of its proposal, that “The Group shall consult, as it may deem appropriate, representatives from the various sectors of activities and citizen representatives affected by or requiring the use of radio spectrum”. Despite this, and what is stated in Recital 5 and Article 1, the text as it now stands does not guarantee that all operators will be consulted and also listened to in the same way. “The Group” must consult all radio spectrum users. This is especially important because both “The Group” and the Radio Spectrum Committee will advise the Commission when presenting harmonisation proposals.

There is not either any clear statement on how this group is to be composed or who will decide its composition; neither are its working procedures or rules for adopting positions mentioned. It seems to us that the proposal needs further detail that guarantees transparency once its consultation starts.

AER therefore recommends that the Commission includes a fixed representation of industry representatives in these two groups. This would also allow a transparent debate and would prevent certain industry agencies have greater influence than others depending on national interests.