Well, ladies and gentlemen, a barrel of oil is a barrel of oil. You know the size of it, you know the weight of it, you know its wealth making properties. Property owners understand boundary peaks and fences but the spectrum, well, you can’t see it, it doesn’t behave itself with respect to manmade laws, it’s governing laws are the laws of physics rather then economics or political lines in the sand, so it’s difficult, difficult to describe in a legal sense of what is your right. I have a title for my property, making a title for spectrum is difficult.
So is the application of property rights appropriate for the radio frequency spectrum? Fundamental question. I believe it is, that in some segments of the radio frequency spectrum the management is better off being the responsibility of the party to which excess of the spectrum gives the greatest value.
Take the similar radio bands for example, management of interference with these bands by the service provider allows for a dynamic approach to engineering. There are -- [inaudible] -- to my own country where the antennae patent has changed between morning and night to make up for the capacity, drive time, extra capacity needed. Can’t apply for a license like that, that people are doing it need to be master of their own destiny, management rights allows people to be masters of their own destiny, property rights.
One of the roads to excellence in spectrum management, like virtually any other activity of mankind, is through competition.
Imagine that you want to put a fixed link between point A and point B. You need a license, you go along to one spectrum manager and he gives you a proposal, but then if you can get another proposal the quality of engineering is driven up and the costs down, fundamental part of competition. And you all know it, have it seen applied to every other field.
So what is needed to bring this about? How do we get there? Let me use the example of my own country, New Zealand. In the early 1980s the New Zealand economy was racing to the back door. In just 30 years we’d managed to move from one of the wealthiest nations per head per population to about 20th on the OECD list. There were many reasons for this, New Zealand is a small country, it did not have the ability to determine its own future economy, we were a pointer(?) in the falling of the European Community and many other things that caused it. But nevertheless our economy was racing to third world status.
The country was amassing huge debt and as I said the economy was sliding backwards. In 1984 the new labor government at the time under the Prime Minister of David Longey(?), upon being reelected to power opened the books and finding the cupboard rather bare decided change was needed. At that stage ladies and gentlemen about 48 percent of the workforce were either directly employed by the government or in government agencies. At that stage
the government owned the New Zealand Post Office, the railways, the airline, the tourist bureau and so on and so on and so on. The government of the day looked at what it owned and decided to undertake a zealous program of government asset sales. The theory was that the revenue from the sale of assets would help alleviate the national debt. It would also bring market forces to the provision of services and the excellence that such forces would bring.
As a first step the government formed state owned enterprise with the government as owner. Each state owned enterprise had a commercial mandate and the body of business law applied to it, they were no longer under the umbrella of protection of government. The SOE was required to provide a dividend to its owner and the government, which was the government which also helped to round the budget.
When the opportunity is right the state sold some of the SOEs and used the money mainly for the national debt. Not all SOEs or state owned enterprises end up being sold, some were too difficult. And in a couple cases, notably in the airline industry and in the railway industry, the whole theory fell flat in the face and the government had to come involved again. It wasn’t a completely wonderful story all the way through but generally it was. The sale of Telecom New Zealand was quite a success story for example.
But it was in this environment of the need to privatize, to look at the business efficiencies in every sector, that the government officials of the 1980s looked at the opportunities to enhance the value of the radio frequency spectrum to the nation by overcoming the problem of a monopoly supplier, the then New Zealand Post Office. In 1988 the government contracted the NERA, N E R A, Organization of the United Kingdom, to report on what the possibilities were. This was a major turning point and even though history has shown that the issues were rather oversimplified and there’s a tendency always for people to oversimplify spectrum management issues that the basic concepts were of great merit even today.