Licensing of harmonised government spectrum in the 400 MHz bandDiscussion paperSEPTEMBER 2015

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Executive summary

IntroductionSpectrum Review 3NCCGR

3

Licensing solutionDesirable features of a licence 4Desirable features of a licensee 4Advantages 5Disadvantages 6

Implementation elements and issuesLicensing 7HGSA licence—what it is 7HGSA licence—how it works 7HGSA licence—what it covers 8

HGS users 8Non-government entities 8Government entities 9New services 9

Area-wide licences 9Licensee requirements 9Licence transfers 10

Applications for licences in HGS 10Technical coordination 10Regulatory—governance and licence conditions 12Licence conditions 12

PricingPricing principles 14Desirable features of HGSA pricing 142014 taxation amounts 14

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Contents (Continued)

Taxation adjustments 15

Methodology 16A practical example 18Pricing instruments 19Charges 19Taxes 19

Invitation to commentIssues for comment 20

Making a submission

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Executive summary

The ACMA commenced a review of the 400 MHz band in 2008 (400 MHz band review), which led to the identification of certain spectrum in the 400 MHz band as ‘harmonised government spectrum’. These spectrum segments have been identified for exclusive licensing to government entities, primarily to support national security, law enforcement and emergency services, but also to support broader government use. The ACMA has developed arrangements for the licensing of this harmonised government spectrum in close consultation with individual stakeholders, relevant committees and peak industry groups. The final arrangements complement the objectives developed by these groups and the National Framework for Improved Radiocommunications Interoperability that was agreed by the Council of Australian Governments (COAG) in 2009.

The ACMA is now proposing a licensing solution for harmonised government spectrum that aims to reduce the complexity of management of this part of the 400 MHz band under the Radiocommunications Act 1992 (the Act). The goal is to offer state and territory governments the option of coordinating the use of harmonised government spectrum and manage the use of radiocommunications devices in this spectrum within their borders, through a new licensing approach where most government use in the harmonised government spectrum would be authorised by one licence. The ACMA has developed these arrangements in consultation with the National Coordinating Committee for Government Radiocommunications (NCCGR).

The ACMA proposes to create a new kind of land mobile licence, known as a Harmonised Government Spectrum Area (HGSA) licence. An HGSA licence would authorise the use of land mobile and point-to-multipoint stations in every part of a state or territory. A single HGSA licence would be issued to an entity for each state or territory, covering some or all of the harmonised government spectrum segments in the 400 MHz band. Any government entity seeking to operate a device in spectrum covered by an HGSA licence would need to approach the licensee for the relevant state or territory, to be authorised to operate a device under the licence in accordance with section 114 of the Act.

This paper discusses the proposed licencing, engineering, governance and pricing arrangements for HGSA licences, and asks for submissions about specific matters related to those arrangements. In particular, comment is sought on the proposed policy document Harmonised government spectrum area licences in the 400 MHz band at Attachment A, and the amendment to RALI LM08 at Attachment B.

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IntroductionOne of the outcomes of the 400 MHz review, completed in 2010, was to provide Harmonised Government Spectrum (HGS) for Federal, state and territory government users, primarily to support national security, law enforcement and emergency services. The 400 MHz band plan (MS22)1 was amended in 2011 to provide specific segments for government use and segments for non-government use.

To enable the jurisdictions to optimise their use of HGS, the ACMA has developed more effective licensing arrangements, which reduce the complexity of licence management and provide additional technical flexibilities.

BackgroundThere is a longstanding and widely acknowledged requirement for improved radiocommunications interoperability between federal, state and territory national security, law enforcement and emergency service agencies. The need for improved interoperability, while important in day-to-day activities, becomes paramount in the response of government agencies to major incidents including natural disasters and terrorist attacks.

The 400 MHz review is an example of the ACMA undertaking its spectrum management function in support of improved interoperability. The identification of harmonised spectrum for government needs is an important enabler of interoperability, although it is the case that harmonised spectrum arrangements alone are not sufficient for a complete interoperability solution. Broader support, guidance and commitment from all Australian governments and individual government agencies is essential for comprehensive interoperability objectives to be realised.

Under the arrangements being implemented in the 400 MHz band, 10 segments (frequency ranges) have been identified for the exclusive use of government, primarily to support national security, law enforcement and emergency services but also potentially able to support broader government use once these critical requirements are met. The ACMA developed these arrangements in close consultation with individual stakeholders, relevant committees and peak industry groups. The final arrangements complement the objectives developed by these groups and the Council of Australian Governments (COAG) agreed National Framework to Improve Government Radiocommunications Interoperability (the National Framework).2

The National Framework was developed by the National Coordinating Committee for Government Radiocommunications (NCCGR). The National Framework was agreed to by each of the members of the NCCGR and subsequently endorsed by the Council of Australian Governments (COAG) on 7 December 2009.3 The purpose of the National Framework is to provide the guiding principles and key areas of work for jurisdictions to achieve radiocommunications interoperability. This includes encouraging jurisdictions to adopt the same technology and operating procedures across their networks.

1 www.acma.gov.au/theACMA/400-mhz-plan 2 http://nccgr.govspace.gov.au/publications/3 http://www.coag.gov.au/node/90

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The ACMA was closely involved in the development of the National Framework. This nationally agreed document provides the necessary commitments, and when combined with the complementary ACMA spectrum management arrangements, should provide all Australian governments with a genuine opportunity to achieve improved interoperability.

Improved radiocommunications interoperability is not the only objective that the identification of harmonised spectrum for government aims to achieve. The arrangements surrounding the identification of harmonised spectrum for government will provide certainty to government users and provide incentives for the consolidation and efficient use of government spectrum. In addition, by consolidating government users (the largest group in the 400 MHz band) into a block of spectrum, and providing incentives for them to use the band efficiently, the spectrum efficiency dividends that result will benefit all users of the band, including non-government users.

Spectrum ReviewThe Minister for Communications announced the Spectrum Review on 23 May 2014, and the government’s response to it on 25 August 2015.4 The government has agreed to implement the recommendations of the Spectrum Review. The review was conducted by the Department of Communications in conjunction with the ACMA and included extensive stakeholder consultation. The licensing arrangements developed for harmonised government spectrum in the 400 MHz band are consistent with the review outcomes to the extent allowed by existing legislation. Ultimately, the proposed arrangements will transition to the single licensing framework envisaged by the Spectrum Review in accordance with the implementation arrangements that are to be developed over the next 18 months. The ACMA believes the proposed arrangements are consistent with the objectives of the review, to the extent enabled under current law.

NCCGR The NCCGR was established in 2003 to address multi-agency and cross-jurisdictional issues relating to the coordination of government radiocommunications, including the effective and efficient use of radiofrequency spectrum. It is the peak body representing government radiocommunications interests in the Commonwealth, the states and the territories. The ACMA has been in discussion with the NCCGR on the proposed arrangements in the 400 MHz band since 2013. Feedback from the NCCGR has been taken into account in the development of the proposed approach.

4 Next stage of spectrum reform to commence

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Licensing solutionThe ACMA began its development of the licensing solution by consulting with the NCCGR about how to best support efficient and effective management of HGS. These discussions resulted in the establishment of a list of desirable features for HGSA licences. The HGSA licensing approach developed by the ACMA was informed by this list of ‘desirable features’ as well as further consultation with stakeholders.

Desirable features of a licenceThe following is a list of desirable features for the licensing solution, developed in consultation with the NCCGR:

> Flexibility to allow self-management—the licence should be designed to allow the licensee to manage the HGS and its use within the relevant state or territory, while taking into account services adjacent in frequency or located in other states and territories.

> A single licence to authorise the use of devices throughout a particular state or territory in the HGS segments—ideally there should be one licence per jurisdiction for all segments.

> Ability to authorise different types of radiocommunications systems—for example, the licence should authorise the use of land mobile, ambulatory and point-to-multipoint type systems.

> Technology flexibility—the licence should not unduly restrict the technology to be used.

> The tax imposed on the licence should be independent of the number of devices used under the licence—the licence should not increase in cost when usage increases, to incentivise productivity.

> Annual payments—given government budget cycles, it is likely that annual payment of fees, rather than a single up-front payment, will be easier for the licensee to manage.

> Encourages the states and territories to adopt the licensing solution—the added responsibilities of administering the licence should be recognised and the fee structure adjusted accordingly.

Desirable features of a licenseeIn deciding whether to issue an HGSA licence to an applicant under section 100 of the Act, or whether to transfer a licence into the name of a person under section 131AB of the Act, the ACMA will have regard to whether the applicant or person has the following features:

> whether the applicant is a government entity5

> whether the applicant or person is empowered to hold licences for all government services in the relevant state or territory

5 See Establishing the status of a licensee in the context of the 400 MHz band, government or non-government guideline, www.acma.gov.au/Industry/Spectrum/Spectrum-projects/400-MHz-band/latest-developments-1 .

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> whether the applicant or person has demonstrated that they have the ability to exercise effective supervision and control of all devices, networks and systems operating under the licence

> whether the applicant or person has demonstrated sufficient competence and preparedness to authorise Commonwealth entities requiring access to HGS

> whether the applicant is in a position to perform, or arrange the performance of, the following functions:

> authorising entities to operate devices under the licence, under section 114 of the Act

> coordinating services to be authorised under the HGSA licence

> addressing interference issues occurring between services operating under any licences to be held by the applicant, and interference issues between the state or territory and any neighbouring state or territory

> negotiating authorisations, access and other matters with licensees in the 400 MHz band HGS in other states and territories.

AdvantagesThe advantages for states and territories that utilise HGSA licences include:

> Long-term planning benefits including investment certainty—through the government entity that is the licensee, states and territories will have more flexibility and control over how HGS is used.

> The flexibility to adopt a different planning model—HGS services will not have to comply with the limitations in Radiocommunications Assignment and Licensing Instruction (RALI) LM08 in relation to devices operating under the HGSA licence.

> The potential improvement of the coordination of radiocommunication assets within a state or territory, by having a single entity responsible for authorising the operation of devices under the licence.

> Potential improvement to the coordination of services between states and territories through a streamlining of processes.

> The incentive for states and territories to maximise the use of HGS—licence fees would not increase with the increase in devices authorised under the licence, allowing the licensee to make use of different planning models without an increase in cost.

DisadvantagesPotential disadvantages for states and territories include:

> Taking up a single HGSA licence will bring additional responsibilities and some risk.

> An HGSA licensee would need to plan, coordinate and manage the use of HGS amongst the entities it authorises under section 114 of the Act.

> For agencies that have been individually licensed in the HGS, there will be a corresponding loss of autonomy in spectrum arrangements. These agencies will depend on the new entity to coordinate and authorise use of the HGS, and the new entity will require the resources and expertise to discharge these roles effectively. This applies not only to agencies of the relevant state or territory, but to

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Commonwealth agencies or other third parties requiring access to HGS where the state or territory holds an HGSA licence.

Individual states and territories are best-placed to weigh up these new responsibilities, opportunities and risks for themselves—and consulting where appropriate with third-party users. The ACMA recognises that moving to HGSA licences may not be appropriate for all states and territories at this time.

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Implementation elements and issuesThe licensing solution has four main elements:

1. Licensing

2. Technical coordination

3. Regulatory: governance and licence conditions

4. Pricing

LicensingWhile the development of a new licence type would offer the maximum flexibility, including the ability to authorise other uses of HGS such as point-to-point services, it would require considerable time and effort to implement. Furthermore, as the vast majority of services that would operate in HGS are land mobile and point-to-multipoint systems, the degree of flexibility offered by a new licence type is not necessary and the small number of point-to-point services in HGS will continue to be individually licensed at this point.

The ACMA proposes to issue land mobile licences as the HGSA licences. In particular, the licences will be the land mobile licence (land mobile system station) sub-type referred to in the Radiocommunications Licence Conditions (Land Mobile Licence) Determination 2015. This licence sub-type is fit for purpose as it authorises the use of land mobile systems, ambulatory systems and point-to-multipoint systems.

A state or territory entity would be able to apply for an HGSA licence at any time after the ACMA implements this proposal.

HGSA licence—what it isAn HGSA licence is a land mobile licence available to states and territories in the HGS. The licence will be issued to an appropriate entity in each state and territory. The licence would authorise the use of devices across the entire state and territory, and would not limit the number of systems that may be used under the licence. The licensee would be able to authorise other government entities seeking to operate devices under the licence, under section 114 of the Act. The HGSA licensee can apply to use one, some, or all of the harmonised government-band segments. When an HGSA licence is issued, the apparatus licences that it is replacing would be cancelled by the ACMA.

HGSA licence—how it worksAn entity seeking access to a segment of the HGS in a state or territory that is covered by an HGSA licence is expected to approach the HGSA licensee, who may then authorise the entity to operate a device under the licence, under section 114 of the Act. This applies whether the entity is of that state or territory, another state or territory or the Commonwealth. HGSA licensees will be expected to make appropriate provision in their planning, deployment and operational activities for Commonwealth entities requesting authorisation to operate devices in the 400 MHz band. The Register

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of Radiocommunications Licences would have to be updated each time new devices were used under the licence (see the Radiocommunications (Register of Radiocommunications Licences) Determination 1997).

An HGSA licence may only be used to authorise the use of devices within the relevant state or territory. The ACMA will continue to consider licence applications for Australia-wide and other cross-border services, as outlined in the document Harmonised government spectrum area licences in the 400 MHz band at Attachment A.

Once an HGSA licence is issued for a particular segment in a given jurisdiction, the ACMA would not expect to issue additional licences for land mobile and point-to-multipoint services in that jurisdiction and segment.

HGSA licence—what it coversThere are 10 HGS segments in the 400 MHz band as indicated in the 400 MHz Plan (MS22). These are segments A, C, F, I, K, L, N, O, Y and T. Parts of segments F and N are designated for use by the rail industry along rail corridors, but are available for use by government services elsewhere. Because government use is allowed away from rail corridors, the ACMA proposes that these two segments be included in the HGSA licensing arrangements.

5. The ACMA seeks comment on whether the rail industry portions of segments F and N should be able to be authorised under an HGSA licence.

HGS usersStates or Territories will not be required to apply for HGSA licences. In states and territories that do not take up an HGSA licence, there will not be any changes for entities in those states and territories.

Where a state or territory is issued with an HGSA licence, the licensee will be responsible for authorising all use by government entities in that state or territory. However, a state or territory may choose to apply for an HGSA licence that covers some but not all HGS segments. In that case, government entities operating in the harmonised government segments included in the HGSA licence will be subject to the changes.

Where a state or territory and segment of the HGS are covered by an HGSA licence, other entities operating devices in that spectrum would normally be authorised to do so by the HGSA licensee under section 114 of the Act. The ACMA does not expect to issue a separate licence for the entities in this case, and expects that existing licences would be cancelled, with the agreement of the licensee, when the HGSA licence is issued.

To provide further guidance and clarity around the process for accessing HGS that is able to be covered by an HGSA licence, the proposed policy of the ACMA is set out in the document Harmonised government spectrum area licences in the 400 MHz band at Attachment A.

Non-government entitiesExisting non-government entities operating in HGS will be allowed to continue operation until the relevant milestone compliance date of the 400 MHz Plan or until the end of an ACMA-approved exception.

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The HGSA licensee may authorise non-government entities to operate devices under the HGSA licence after considering whether continued operation of the service would have a detrimental impact on existing or planned government services to be provided under the HGSA licence.

Government entitiesExisting government licensees operating in a state or territory and HGS segment covered by an HGSA licence are expected to transition from individual apparatus licences to being authorised under the HGSA licence.

The ACMA expects that any application for an HGSA licence would be accompanied by information about the services that are to be authorised under the licence when it is first issued, and advice about the existing licences that are to be cancelled when it is issued.

New servicesAny person not currently operating a device in the HGS in a state or territory and segment covered by an HGSA licence, but wishing to do so, should contact the relevant licensee for an authorisation under section 114 of the Act.

Area-wide licencesState or territory-wide services operating in a segment covered by an HGSA licence would be authorised by the HGSA licensee under section 114 of the Act. The ACMA will continue to consider licence applications for area-wide services with coverage areas that include areas in more than one state or territory. In the event that the relevant spectrum in one or more of the states or territories in question is held by an HGSA licensee, the ACMA would consult with the HGSA licensee(s) when considering applications for these services.

However, where the intended operation area is entirely within a single state or territory, and within frequencies covered by an HGSA licence for that state or territory, the HGSA licensee should be approached for authorisations to operate devices under the HGSA licences, under section 114 of the Act, in the first instance.

Licensee requirementsIn deciding whether to issue an HGSA licence to an applicant under section 100 of the Act, or whether to transfer a licence into the name of a person under section 131AB of the Act, the ACMA will consider the following matters:

> any submissions made about the applicant or person by the NCCGR representative for the relevant state or territory

> whether the applicant or person is a government entity

> whether the applicant or person has demonstrated that it has the ability to exercise effective supervision and control of all devices, networks and systems operating under the licence

> whether the applicant or person has the legal authority to hold licences on behalf of all government services in the relevant state or territory

> whether the applicant or person has demonstrated sufficient competence and preparedness to authorise Commonwealth entities requiring access to HGS

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> whether the applicant is in a position to perform, or arrange the performance of, the following functions:

> authorising entities to operate devices under the licence, under section 114 of the Act

> coordinating for services in the 400 MHz band HGS covered by the licence

> address interference issues occurring between services operating under any licences to be held by the applicant, and interference issues between the state or territory and any neighbouring state or territory

> negotiate authorisations, access and other matters with licensees in the 400 MHz band HGS in other states and territories.

Applications for HGSA licences, and for transfers of HGSA licences, should be in the approved form and accompanied by documentation that addresses these matters, such as legislation, published government policies, or inter-agency agreements.

Licence transfersAn existing HGSA licence will only be transferred to an entity that meets the licensee requirements outlined in this document.

Applications for licences in HGSBefore applying for an HGSA licence, applicants should consider how existing government services operating under individual licences will be transitioned onto the HGSA licence. It is recommended that applicants make a list of licences that will be transitioned onto the HGSA licence at the time of application for the HGSA licence. The ACMA can then arrange for the cancellation of the licences in the list to coincide with the issue of the HGSA licence replacing them.

6. The ACMA seeks comment on the draft policy document Harmonised government spectrum area licences in the 400 MHz band at Appendix A.

Technical coordination The ACMA considered the development of new coordination criteria to allow maximum flexibility to the jurisdictions, however this approach would have taken an excessive amount of time to implement. It may also have required changes to the software tools used by accredited persons. The ACMA also considered the application of RALI LM08 as is, however this approach would not allow any additional flexibility of use to the jurisdictions.

A combination of the best elements of these two approaches is considered to be the most appropriate. The proposed coordination methodology is based on RALI LM08. Therefore, the existing coordination criteria in LM08 and all power restrictions will apply in the following cases:

> in high- and medium-density areas6

> within 120 km of the geographical boundary of the licence

> within 200 kHz of the frequency boundaries of the licence

6 http://www.acma.gov.au/theACMA/About/Making-payments/Apparatus-licence-fees/apparatus-licence-fees-acma#schedule

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> when coordinating with other licences in HGS.7

In all other cases, the power must not exceed an EIRP of 1000 W. However, the HGSA licensee is free to specify the coordination methodology and criteria that is to be applied between services operating under the same HGSA licence in all cases. HGSA licensees in neighbouring jurisdictions may also reach agreement with each other on the coordination methodology and criteria to be applied when coordinating with services operating under each other’s licences.

This approach will not require much time to implement as it largely reuses the existing coordination criteria, it will not require many changes to software tools and it provides flexibility to the jurisdictions.

Coordination requirements will be set up in RALI LM08 to cover band edge and geographical border scenarios, where:

> services will be required to follow the coordination processes in RALI LM08, unless agreement is reached with the NCCGR representative or HGSA licensee in the potentially affected state or territory

> issues about interference are to be raised with the relevant HGSA licensee or relevant state or territory representative in the NCCGR in the first instance.

As with all land mobile systems in the 400 MHz band, systems operated under an HGSA licence are expected to coordinate with systems operating under other licences using the methodology specified in RALI LM08 and RALI FX01.8 Services operating under an HGSA licence should also align with the 400 MHz Plan and have regard to FAP4.9 HGSA licences are subject to any applicable licence conditions imposed by the Radiocommunications Licence Conditions (Land Mobile Licence) Determination 2015.10

7. The ACMA seeks comment on the draft amendment to RALI LM08 at Attachment B.

Regulatory—governance and licence conditionsExisting non-government users operating in HGS will be allowed to continue operation until the relevant milestone compliance date of the 400 MHz Plan or until the end of an ACMA-approved exception.

When the continued operation of the service can be supported by the HGSA licensee without detrimental impact on existing or planned government services, the service may, at the discretion of the HGSA licensee, continue to operate under third-party authorisation.

7 Licences that have yet to reach their milestone compliance deadline or those granted exceptions by the ACMA.8 www.acma.gov.au/Industry/Spectrum/Spectrum-planning/Current-APs-info-and-resources/frequency-assignment-requirements-spectrum-planning-acma 9 www.acma.gov.au/Industry/Spectrum/Spectrum-planning/Current-APs-info-and-resources/frequency-assignment-practices-i-acma 10 https://www.comlaw.gov.au/Details/F2015L00831

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Licence conditionsThe proposed policy of the ACMA is that the following special conditions will be applied to HGSA licences:

General conditions> The licensee must not require the payment of consideration for the authorisation of

a person under section 114 of the Act, or refuse to authorise a person under section 114 of the Act because the person has not paid any consideration, if the person is a person mentioned in subregulation 5(5) or 5(6) of the Radiocommunications Taxes Collection Regulations 1985.

Conditions relating to interference management> In these conditions, managing interference includes but is not limited to:

> investigating the possible causes of interference

> taking all steps reasonably necessary to resolve disputes about interference

> taking steps (or requiring persons authorised to operate devices under this licence to take steps) reasonably likely to reduce interference to acceptable levels

> negotiating with other persons to reduce interference to acceptable levels.

> The licensee must manage interference between:

> radiocommunications devices operated under this licence; and

> radiocommunications devices operated under this licence and under each other licence held by the licensee; and

> radiocommunications devices operated under this licence and under another HGSA licence.

> If interference occurs between:

> a radiocommunications device operated under this licence; and

> a radiocommunications device operated under another licence;

when the measured separation between the phase centre of the antenna used with each device is less than 200 metres, and if:

> that interference is not the result of operation of a radiocommunications device in a manner that does not comply with the conditions of the relevant licence; and

> either the licensee of the other licence, or any person authorised under section 114 of the Act to operate a device under the other licence, wishes to resolve the interference;

the licensee must manage interference with:

> the licensee of the other licence; or

> if a site manager is responsible for managing interference at that location, that site manager.

Advisory note> This licence enables the authorisation of devices in HGS in the 400 MHz band

consistent with the arrangements specified in the Australian Radiofrequency Spectrum Plan for national security, law enforcement and first and second responder agencies (for more information, see Australian Footnote AUS98).

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8. The ACMA seeks comment on the proposed licence conditions and advisory note.

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PricingUnder the Radiocommunications (Transmitter Licence Tax) Act 1983 (Transmitter Tax Act), tax is imposed on all transmitter licences, at an amount to be determined by the ACMA.

Pricing principlesThe ACMA proposes to determine an amount of tax for HGSA licences that would facilitate government radio interoperability at the state and territory level. In determining the amount of tax for an HGSA licence that would facilitate this, the ACMA will consider the following pricing principles:

> The approach for determining the amount of tax should be transparent and easy to understand.

> The amount of tax should provide an incentive for the jurisdictions to adopt the licensing solution of HGSA licences.

> The amount of tax should be equitable between licensees in HGS, and other licensees.

> The amount of tax should be independent of the number of transmitters authorised to be used under an HGSA licence, though not the amount of spectrum authorised, to promote the use of HGSA licences by states and territories. That is, the amount of tax should provide more opportunities for more services to be deployed in each state or territory.

Desirable features of HGSA pricing The proposed HGSA licensing arrangements in the 400 MHz band will establish area wide licences for HGS. Determining an amount of tax by reference to a ‘$ per MHz’ tax rate is consistent with such a licence. This manner of determining the amount of tax is similar to other area-wide licensing arrangements used for mobile/mobile broadband services, such as the PMTS Class B licences in the 900 MHz band.

The ACMA proposes to use the amount of tax that each state and territory is paying now for their current licences in the 400 MHz band as a base to calculate the $ per MHz tax rate. However, in addition to the amount of tax currently being paid, there are a number of factors than can determine the value of the harmonized government spectrum licensing arrangements. These factors include the flexibility, public policy and efficiency benefit that the new licensing arrangements may promote and the transition incentives or equalising opportunity incentives. These benefits and incentives and the related adjustments to the proposed taxation rates are discussed in more detail below.

It is intended that each state and territory will be subject to a separate tax rate.

2014 taxation amountsThe ACMA proposes to use the taxes collected under the Transmitter Tax Act in 2014 from each state and territory in the 400 MHz band in determining the amount of tax to be imposed on an HGSA licence. The 2014 calendar-year taxes were used, as they were the basis for the consultation with the NCCGR in early 2015.

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This approach is simple and reflects the market value that an HGSA licensee would have paid if all government licences in this band were grouped under one licence type. It also provides certainty to HGSA licensees.

Taxation adjustmentsHGSA licences are intended to be more flexible in terms of accommodating more services at no additional cost, and for more services to be deployed for each state or territory. Therefore, it is proposed that the 2014 taxation amounts be adjusted to reflect the flexibility of the new licensing regime and provide transition incentives.

Public policy, flexibility and efficiency The ACMA is proposing an ongoing net 20 per cent reduction to the 2014 taxation amount as it provides a reduction that the ACMA considers is sufficient to create an incentive for jurisdictions to take out licences on an ongoing basis. The COAG’s endorsement of the Framework recognises the importance of the HGS in the 400 MHz band and validates its public interest application. Consolidating government sector users in the HGS means more opportunities for non-government users to make efficient use of spectrum in other parts of the 400 MHz band. The licensing solution also provides greater flexibility for government users within each state and territory, and promotes inter-jurisdictional use of radio networks, which implies the value of an HGSA licence would be greater than the existing licensing arrangements.

In proposing a net 20 per cent reduction to the tax level, the ACMA notes the NCCGR suggestion of an alternative discount level of 50 per cent during earlier consultations. It was argued that the 50 per cent discount would be consistent with approaches taken in other cases, including the reissue of spectrum for rail use in the 1800 MHz band.11 However, those initiatives related to spectrum for high-value mobile broadband services where the infrastructure had yet to be installed and required a greater degree of support and incentive for the relevant agencies to undertake the projects. In contrast, the 400 MHz HGSA licences is an optional approach for states and territories that are already benefiting from the availability of HGS.

In addition, the proposed licensing solution arrangements promote greater flexibility than the existing licensing arrangements and are therefore considered to be of greater value to each of the states and territories. The current licensing arrangements require that each land mobile service be authorised and taxed separately. In contrast, the proposed HGS licensing arrangements allow jurisdictions to take up all or some of the HGS segments, and taxes are charged based on the segments authorized irrespective of the number of land mobile services deployed in those segments. This implies that states and territories are able to plan services in the HGS to maximize the use of the spectrum and benefit from reductions that are greater than the 20 per cent reduction proposed in their tax rates.

Transition incentives and equalising opportunity incentivesA discount to act as an incentive to transition to HGSA licences, and to equalise opportunity between states and territories, is included in the proposed tax rates. The ACMA recognises that states and territories will incur some costs as they coordinate use of the harmonized government spectrum and facilitate third-party authorisations. Transition incentives are informed by the savings that states and territories should make by becoming responsible for the authorisation of all government use of the harmonised government spectrum within their borders. The ACMA proposes that adjustments to the taxation amounts to be paid by New South Wales, Queensland,

11 Rail licensees were given 50 per cent reduction on spectrum access charges for spectrum up to a maximum of 20 MHz of spectrum and an undiscounted spectrum access charge applied to bandwidth in excess of 20 MHz. A copy of the Radiocommunications (Spectrum Access Charges) Direction 2013 is available at http://www.acma.gov.au/theACMA/ministerial-directions .

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South Australia, Victoria and Western Australia would be reduced by a further $100,000 in the first year after the ACMA introduces these new arrangements, and $50,000 in the second year. These adjustments are removed from the third and subsequent years.

The ACMA also recognises that some smaller states and territories currently pay very low amounts of tax under the Transmitter Tax Act. The Australian Capital Territory, the Northern Territory and Tasmania currently hold licences in the 400 MHz band on which less than $100,000 of tax is imposed. A ‘one-size-fits-all’ approach would provide little incentive for these states and territories to apply for an HGSA licence. The ACMA has therefore included an ‘equalising opportunity incentive adjustment’ in the assessment of the tax rates to create an opportunity for these states and territories to take advantage of the HGSA licensing regime. The taxation rates of the Australian Capital Territory, the Northern Territory and Tasmania will be reduced by a further 40 per cent (that is, in addition to the 20 per cent for the public policy, flexibility and efficiency incentive) in the first year after the ACMA introduces these new arrangements, and 20 per cent in the second year. These adjustments are removed from the third and subsequent years.

The transition and equalising opportunity incentives for all jurisdictions are summarised in Table 1.

Table 1: Transition and equalising opportunity incentives

Jurisdictions NSW, VIC, QLD, SA and WA ($) ACT, NT and Tasmania

Year 1 100,000 40 per cent

Year 2 50,000 20 per cent

Year 3 - -

MethodologyIn 2014, the ACMA collected a total of around $6.5 million from states and territories from services authorised in the 400 MHz band. These services are expected to be provided within the HGS in the 400 MHz band. The revenue figures used in the calculation of the area-wide licence tax exclude revenues from point-to-point and point-to-multipoint services occupying shared point-to-point or point-to-multipoint spectrum.

Revenues collected as at December 2014 are listed in Table 2.

Table 2: Revenue from states and territories operating in the 400 MHz band in 2014

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Jurisdictions Revenues collected in the calendar year at Dec 2014 ($)

Australian Capital Territory 26,932

New South Wales 2,284,241

Northern Territory 52,570

Queensland 1,801,192

South Australia 288,089

Tasmania 8,102

Victoria 1,724,370

Western Australia 319,613

Each state and territory’s revenue is adjusted for each of the incentives in Years 1, 2, and 3, and the resulting tax rates are provided in Table 3.

Table 3: Proposed tax rates per jurisdictions for Years 1, 2, 3

Jurisdictions Tax rate—$/MHz(2016)

Tax rate—$/MHz(2017)*

Tax rate—$/MHz(2018)*

Australian Capital Territory 786 1,048 1,310

New South Wales 105,009 108,048 111,088

Northern Territory 1,534 2,045 2,557

Queensland 81,517 84,556 87,596

South Australia 7,931 10,971 14,010

Tasmania 236 315 394

Victoria 77,781 80,820 83,860

Western Australia 9,464 12,504 15,543

*Tax rates will be subject to yearly CPI

The above tax rates have been calculated on a $ per MHz price to reflect the area-wide nature of the HGSA licence. The tax rates are derived by dividing the revenues for each state or territory by the base transmit segments of 16.45 MHz in the HGS. The transmit segments are to be licensed for Commonwealth, state and territory government purposes and include 0.4 MHz of spectrum reserved for rail users. The use of transmit segments is consistent with how other land mobile licences are taxed.

It is the ACMA’s intention that the $ per MHz price be adjusted for CPI on an annual basis to ensure incentives towards efficient use are not eroded over time by general inflation, and to maintain equity with pricing for spectrum other than the HGS.

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A practical exampleDetails of how the HGSA licence tax rate has been calculated for Year 1 are provided in Table 4, using New South Wales as an example. In this example, NSW has elected to take out a licence for all HGS segments.

Table 4: Example HGS licence tax calculation

Description Year 1

Revenue collected by the ACMA for NSW α $ 2,284,241

Less: Public policy discount (20%) β = 20% x α -$ 456,848

Revenue after public policy discount Ψ = α – β $ 1,827,393

Less: Transition incentives* δ -$ 100,000

Adjusted revenue (net of public policy discount and transition incentives) ε = Ψ – δ $ 1,727,393

Bandwidth required (Total transmit segments) ζ 16.45 MHz

Tax per MHz ε / ζ # $ 105,009 / MHz

* For the Australian Capital Territory, the Northern Territory and Tasmania, the 40 per cent discount is applied on Ψ – Revenue after public policy discount in Year 1 and 20 per cent in Year 2

# To the nearest dollar

The proposed $ per MHz tax rate for New South Wales in Year 2 is $108,048 and $111,088 in Year 3. Let's assume that in January 2016, the New South Wales Telecommunications Authority (NSWTA) takes up a 400 MHz HGSA annual licence for all transmit segments (I paired with A, K paired with C, L, N paired with F, O and Y paired with T). For illustration purposes, the ACMA has assumed the following CPI rates: 2016: 1.5%, 2017: 2%, 2018: 2%) and these are used to increase tax rates in April every year.

NSWTA ends up paying the following tax amounts:

> In January 2016, the total tax for six transmit segments will be $105,009 x 16.45 MHz = $1,727,398.

> In January 2017, the $ per MHz rate will be [$108,048 x (1+1.5%)] =$109,669 (round to the nearest dollar). Total tax for six segments would be $109,669 x 16.45 MHz = $1,804,055.

> In January 2018, the $ per MHz rate will be [$111,088 x (1+1.5%) x (1+2%)] = $115,009 (round to the nearest dollar). Total tax for six segments would be $115,009 x 16.45 MHz = $1,891,898.

Please note that the CPI rate used will depend on when the licensee applies for a licence.

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Pricing instrumentsCharges Charges are set by the ACMA under subsection 60(1) of the Australian Communications and Media Authority Act 2005. These charges are set to recover the direct costs of spectrum management. The current determination is the Radiocommunications (Charges) Determination 200712, and charges under that Determination will apply for the issuing and variation of the HGSA licences.

TaxesTo implement the HGSA licensing arrangements, the ACMA proposes to amend the Radiocommunications (Transmitter Licence Tax) Determination 2015 to reflect the pricing arrangements outlined in this paper.

The HGSA pricing will be reflected in Part 3A of Schedule 2 of the Radiocommunications (Transmitter Licence Tax) Determination 2015. Details are included in the draft amendment to the Radiocommunications (Transmitter Licence Tax) Amendment Determination 2015 (No. 1) at Attachment C.

The ACMA seeks comment on:9. The use of calendar year 2014 taxation amounts as a basis for calculating

the $ per MHz tax rates. 10. Use of the base transmit segment of 16.45 MHz, which includes rail

spectrum revenues in the calculation of the amount of tax to be paid.11. The proposed timeframes for the incentive discounts.12. Any other aspects of the pricing of HGSA licences.

12 www.comlaw.gov.au/Details/F2015C00341

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Invitation to commentThis paper proposes licensing arrangements for harmonised government spectrum in the 400 MHz band. Comment is sought on the proposals raised in this paper, which are consolidated below.

Issues for commentThe ACMA seeks comment on:

13. Whether the rail industry portions of segments F and N should be able to be authorised under an HGSA licence.

14. The draft policy document Harmonised government spectrum area licences in the 400 MHz band at Appendix A.

15. The draft amendment to RALI LM08 at Appendix B.

16. The proposed licence conditions and advisory note.

17. The use of calendar year 2014 taxation amounts as a basis for calculating the $ per MHz tax rates.

18. Use of the base transmit segment of 16.45 MHz which includes rail spectrum revenues in the calculation of the amount of tax to be paid.

19. The proposed timeframes for the incentive discounts.

20. Any other aspects of the pricing of HGSA licences.

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Making a submissionThe ACMA invites comments on the issues set out in this discussion paper or any other issues relevant to the 400 MHz band. Submissions should be made:

By email: 400MHzimplementation@acma.gov.au

By mail: The Manager400 MHz Project SectionSpectrum Operations and Services BranchAustralian Communications and Media AuthorityPO Box 78Belconnen ACT 2616

The closing date for submissions is COB, Friday 23 October 2015.

Electronic submissions in Microsoft Word or Rich Text Format are preferred.

Media enquiries should be directed to Emma Rossi on 02 9334 7719 or by email to media@acma.gov.au. Any other enquiries may be directed by email to 400MHzimplementation@acma.gov.au.

Effective consultation The ACMA is working to enhance the effectiveness of its stakeholder consultation processes, which are an important source of evidence for its regulatory development activities. To assist stakeholders in formulating submissions to its formal, written consultation processes, it has developed Effective consultation—a guide to making a submission. This guide provides information about the ACMA’s formal written public consultation processes and practical guidance on how to make a submission.

Publication of submissionsIn general, the ACMA publishes all submissions it receives. The ACMA prefers to receive submissions that are not claimed to be confidential. However, the ACMA accepts that a submitter may sometimes wish to provide information in confidence. In these circumstances, submitters are asked to identify the material over which confidentiality is claimed and provide a written explanation for the claim.

The ACMA will consider each confidentiality claim on a case-by-case basis. If the ACMA accepts a claim, it will not publish the confidential information unless authorised or required by law to do so.

Release of submissions where authorised or required by lawAny submissions provided to the ACMA may be released under the Freedom of Information Act 1982 (unless an exemption applies) or shared with other Commonwealth Government agencies and certain other parties under Part 7A of the Australian Communications and Media Authority Act 2005. The ACMA may also be required to release submissions for other reasons including for the purpose of parliamentary processes or where otherwise required by law (for example, under a court subpoena). While the ACMA seeks to consult submitters of confidential information before that information is provided to another party, the ACMA cannot

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guarantee that confidential information will not be released through these or other legal means.

PrivacyThe Privacy Act 1988 imposes obligations on the ACMA in relation to the collection, security, quality, access, use and disclosure of personal information. These obligations are detailed in the Australian Privacy Principles that apply to organisations and Australian Government agencies.

The ACMA may only collect personal information if it is reasonably necessary for, or directly related to, one or more of its functions or activities.

The purposes for which personal information is being collected (such as the names and contact details of submitters) are to:

> contribute to the transparency of the consultation process by clarifying, where appropriate, whose views are represented by a submission

> enable the ACMA to contact submitters where follow-up is required or to notify them of related matters (except where submitters indicate they do not wish to be notified of such matters).

The ACMA will not use the personal information collected for any other purpose, unless the submitter has provided their consent or the ACMA is otherwise permitted to do so under the Privacy Act.

Submissions in response to this paper are voluntary. As mentioned above, the ACMA generally publishes all submissions it receives, including any personal information in the submissions. If a submitter has made a confidentiality claim over personal information which the ACMA has accepted, the submission will be published without that information. The ACMA will not release the personal information unless authorised or required by law to do so.

If a submitter wishes to make a submission anonymously or use a pseudonym, they are asked to contact the ACMA to see whether it is practicable to do so in light of the subject matter of the consultation. If it is practicable, the ACMA will notify the submitter of any procedures that need to be followed and whether there are any other consequences of making a submission in that way.

Further information on the Privacy Act and the ACMA’s privacy policy is available at http://www.acma.gov.au/privacypolicy. The privacy policy contains details about how an individual may access personal information about them that is held by the ACMA, and seek the correction of such information. It also explains how an individual may complain about a breach of the Privacy Act and how the ACMA will deal with such a complaint.

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