Radio regulation in NZ

By Wayne Wedderspoon

This document has been compiled from many sources, both public and private, including the Internet. It makes no claim to originality, accuracy or completeness of the subject matter concerned.

In 1865 a Scottish physicist, Maxwell, demonstrated mathematically the theory of electromagnetic energy. This was confirmed in 1888 when Heinrich Hertz, a German, caused an electrical discharge between two metal balls spaced very close together. Hertz’s achievement was to project the charge from the space between the balls across a distance of some feet to detection apparatus consisting of a wire loop with a similar gap. Hertz had demonstrated the ability to convert electricity into another form, electromagnetic energy, which could be conducted over distance without wires. This energy came to be known as radio waves, Hertzian waves or, simply, wireless.1

Many others contributed to the improvement of transmission and reception devices,2 including New Zealander Ernest Rutherford who, in 1894, developed a more sensitive receiver known as a magnetic detector for radio waves.

It was left to a 21-year-old Italian-Irishman, Guglielmo Marconi, to realise the communication possibilities of artificially generated radio wave energy.3 In 1895 he experimented on the family farm near Bologna with a home-made transmitter and receiver and, most importantly, added a telegraph morse key. With this primitive equipment he managed to send the letter ‘S’ in morse over a distance of 3 kilometres.

The Italian Minister for Post and Telegraph declared that the new technology had no potential for communication purposes so Marconi took his ideas and equipment to England where the British Government backed his work. In 1899 he sent a message across the English Channel, and by 1901 he had spanned the Atlantic. The technology was primitive and the concept of frequency management as a means of enabling simultaneous radiocommunications was still largely unrealised.

Government monopoly

The first official mention of radio in New Zealand is a 17 October 1902 notification to mariners of a list of stations established by the Marconi Wireless Telegraph Company, albeit there were none in the southern hemisphere, let alone New Zealand.

Nevertheless the New Zealand Government was reputedly first in the world to take control of the use of the new technology by way of the New Zealand Wireless Telegraphy Act 1903. In essence, only the Government was permitted to receive and transmit wireless communications and anyone else who did so without permission was liable to a £500 fine and confiscation of equipment. As Albert Pitt, the Attorney-General, stated to Parliament at the time: “the whole principle of the Bill is that the Government intend to acquire a monopoly of this system in the colony.” One of the main concerns, as outlined by the Postmaster-General of the day, was that the new wireless telegraphy technology might render the wired telegraphy network obsolete and thereby deprive the Government of revenue.

The first public demonstration of radio in New Zealand was given by the Marconi Company at the 1906 Christchurch International Exhibition. The military and maritime potential of radio was spurred by the Radiotelegraph Convention signed at Berlin on 3 November 1906, which the New Zealand Government ratified the following year.

The first message by wireless from New Zealand to another country was sent on 3 February 1908 from Sir Joseph Ward aboard HMS Pioneer berthed at Wellington. The message was relayed by HMS Powerful in the Tasman Sea to HMS Psyche berthed at Sydney.

In 1909 an Australasian Telegraph Conference was held in Melbourne and this led to a New Zealand Government decision to establish a number of marine radio coast stations: at Auckland (VLD), Wellington (VLW) and the Chatham Islands (VLC).4

The first station, a 2.5 kilowatt ‘spark’ transmitter, opened on 26 July 1911 and operated from a tower at the General Post Office in Wellington.5. In October of that year the station was transferred to Mount Etako (also known as Mt Wakefield and latterly as Tinakori Hill) where it provided a wireless telegraph service to ships within a 600 mile radius.

Two high-power stations with a range of 1250 miles were also planned, one at Awanui (VLA) in the north and the other at Awarua (VLB) near Bluff.6

The frequency of early radio transmitters and receivers was not able to be controlled to any significant degree, thus only one wireless communication at a time could take place in any given geographical area. With the tragic circumstances surrounding the loss of Titanic in 1912,7 it was realised that a management framework for radio transmission and reception was necessary to ensure the potential of the technology could be realised. Although the upper range of frequencies suitable for wireless communication was unknown, the concept gradually emerged of the radio spectrum8 as a public and economic resource, and licensing the generation of radio waves as a management tool for the prevention of radio interference.

Government regulation of the transmission of radio waves thus had a two-fold purpose: to protect Government revenue (by ensuring there was a Government monopoly on telecommunications), and to organise and allocate frequencies to prevent interference. While the first objective disappeared with the progressive de-regulation of New Zealand telecommunications in the 1980s, spectrum management, albeit within a market allocation framework since 1990, has become increasingly important in maximising the societal benefits and commercial opportunities of radiocommunication technologies.

The first wireless transmissions, including those of Marconi, employed spark technology. Everyone knows the effect of switching a light on or off when an AM radio receiver is in the room: the spark in the switch causes radio wave energy that the radio picks up – regardless of the frequency the receiver is tuned to. The spark transmitter did the same thing, though with a modicum of tuning. Not enough, however, to enable the use of spark transmitter today as it would cause interference across many frequency bands.

To create a spark you needed a large voltage difference – the bigger the voltage difference, the bigger the spark. There were no valves to amplify the signal so the bigger the spark, the more radio energy created. The more radio energy created, the further you could transmit a signal. However another early experimenter, Fessenden, recognised that continuous wave (CW) transmission was required for speech, and he felt that he could better transmit and receive Morse code and voice by the CW method.

Fessenden was right and actually transmitted voice and music as early as 1906, but “King Spark” was slow to die. Eventually though, the Marconi spark transmitter was replaced by the CW system, which in turn was replaced by vacuum tube (valve) transmitters.

By 1924 spark was banned except as a back-up for distress messages on the international distress frequency of 500 kHz (600 metres). By the end of World War II spark was all but forgotten.

Development of broadcasting

By 1907 the work of two men, John Fleming and Lee De Forest, had resulted in the development of a device to amplify and detect weak electrical signals – the vacuum tube (or “valve” as it was also known). This laid the foundation for radiotelephony and De Forest was quick to see the opportunities. His diary records the following comments: “My present task is to distribute sweet melody broadcast over the city and sea… some day the news and even advertising will be sent out over the wireless telephone.”9

Both radiotelegraphy and radiotelephony were used during World War I, but the military were slow to relinquish their hold on it for civilian applications. Even home construction of radio receivers was made difficult because valves were not freely available. It wasn’t until the Post and Telegraph Amendment Act of 1920 that provision was made to licence receivers independent of transmitters, and this set the scene for broadcasting as we know it.

In 1921 a Wellington businessman, Charles Forrest, began transmitting gramophone recordings from a room in the Hope Gibbons building. Although he had no formal permit or licence he had a verbal understanding with the Chief Telegraph Engineer such that whenever his transmissions were causing reception problems at the nearby marine radio station, he would cease until the ship-to-shore communication was concluded.

Professor Robert Jack of Otago University became the first licensed broadcaster when, on 17 November 1921, he transmitted the first of a series of concerts that included live music and gramophone recordings. His transmissions were heard as far afield as Auckland.

In July 1922 a radio station commenced in Wellington that was licensed to operate on a wavelength of 275 metres (~1000 kHz). The operators were even invited by the P&T to broadcast the 1922 election results. In 1923 the Government decided to promote private broadcasting, and regulations were introduced which divided the country into regions, specified frequencies and transmitter power, but banned advertising. The first station licensed under the new regulations was 1YA in Auckland. A licence, costing 5 shillings, was required to receive broadcast transmissions, and applicants had to supply a character reference and proof of British nationality.

[missing content]

THE NERA REPORT

The contract was won by NERA who noted that the imminent “deregulation of the telecommunications and broadcasting industries on 1 April 1989, and future growth in demand for spectrum will mean [the DTI] will increasingly have to make choices between competing uses and users of spectrum”. The NERA report went on to analyse the costs and benefits of spectrum regulation versus spectrum markets.

NERA noted that “a market’s most conspicuous advantage is that decentralisation allows those parties who have the most information, the individual users, to make the decisions”. More cautiously, NERA also observed that “a market in itself does not solve the potential problem of dominant suppliers of downstream services hoarding spectrum in order to prevent the development of competition… ultimately, the success of the market will depend on the strength of competition law and other appropriate measures to prevent abuse of a dominant position in spectrum ownership”.

In addition to advocating market allocation of spectrum, the NERA report went on to propose a “system of spectrum management and allocation based on tradeable spectrum rights, that is, designed to take advantage of market mechanisms whereever there is good reason to consider that the resultant efficiency gains will be significantly greater than any potential increase in administration, transaction, and enforcement costs”.

NERA proposed a new regime comprising nationwide spectrum bands (for flexibility) and spectrum products (for certainty). The owners of nationwide frequency bands should be able to create spectrum products for specific frequencies within their bands and allocate them to whomever the owner wished. NERA envisaged that commercially used spectrum would eventually transition, by way of auctions, from public sector to private sector management over a period of time. Public sector management, either under administrative licensing or spectrum rights, should continue wherever deemed necessary to meet public policy objectives or international treaty requirements.

Within this broad framework NERA made 20 specific proposals, the key ones summarised as follows:

1. Auction Bands – Spectrum bands for auction should be chosen to reflect existing New Zealand allocations and future demand. Where bands are characterised by local use (eg FM broadcasting and mobile radio) spectrum products should be planned to reflect known local demand.

2. Duration Of Rights – On economic grounds alone, spectrum rights should be granted in perpetuity although the efficiency loss associated with fixed period rights is likely to be small if rights for future periods are issued well in advance of the termination of existing rights. If the Government chooses to issue fixed period rights these should take the form of 20 year rights with new rights issued, via an auction, no fewer than 5 years in advance of the time they take effect.

3. Legal Definition – There should be a registration system similar to a land registry.

4. Internationally Determined Distribution – Where spectrum is allocated by international agreement, the Ministry of Commerce (or other Government administered agencies) should continue to plan and administer the bands concerned.

5. Lawful Interference – Where two (or more) right holders exercise their rights in accordance with their respective licences and create unexpected interference, the parties should negotiate a solution to the problem with the costs being borne equally by the parties involved. If there is no technical solution, ‘first-in-time’ rules should apply.

6. Unlawful Interference – In cases where a party is acting unlawfully, that is transmitting other than in accordance with a licence, ajudication should be by the courts alone.

7. Enforcement Role for Ministry – The Ministry should continue to have a role, either directly or by agency authorisation, in the protection of small spectrum users – for example the detection and resolution of electromagnetic compatibility (EMC) requirements and international spectrum agreements are other appropriate roles.

8. Anti-competitive Behaviour – There is potential for some organisations to ‘dominate the spectrum market and hence stifle competition in the main downstream markets of telecommunications and broadcasting’. Three proposals were made to mitigate this possibility:

  • Apply an ‘essential facilities’ doctrine to spectrum property rights
  • Limit the amount and nature of rights that may be acquired by any one organisation at auction
  • The sale of spectrum product licences to facilitate access to spectrum by small users, or to avoid monopoly power (such as might occur with the auction of the VHFTV spectrum bands used by TV1, TV2 and TV3).

Sinet also decided, as a matter of policy, that the Crown should retain spectrum bands and products “to enable social defence and security obligations to be met, with an administered licence and pre-determined resource cost being charged”.

Cabinet considered the NERA report at its meeting on 12 December 198810 and agreed to adopt in principle a spectrum management regime providing for a mixture of administered licences11 and the creation of property rights in the form of both spectrum products12 and spectrum bands13 enforceable by statute’.

Drafting priority was given for a Radiocommunications Bill, reflecting the NERA recommendations, to come into effect on 1 April 1989. Cabinet also decided, as a matter of policy, that the Crown should retain spectrum bands and products “to enable social defence and security obligations to be met, with an administered licence and pre-determined resource cost being charged’.

In introducing the Radiocommunications Bill in August 1989, Rt Hon Jonathan Hunt, Minister of Broadcasting, stated:
“The Government’s decision to permit competition in telecommunication network services was implemented on 1 April this year by the Telecommunications Amendment Act 1988. Major changes to the structure of broadcasting were implemented under the BCNZ restructuring legislation enacted late last year, and the Broadcasting Act 1989, which came into force on 1 July. These reforms, as foreshadowed in the Government’s announcements last year, and during the passage of the amendments to the telecommunications and broadcasting legislation, also require the reform of the present legislative management regime for radio spectrum.”14

The Bill closely followed the NERA recommendations, however a 20-year maximum term, rather than rights in perpetuity, was implemented, and no industry-specific competition measures were adopted.15

The Bill made no specific spectrum provisions to meet the requirements of public safety and security services, public broadcasting, Maori broadcasting or other social policy objectives. Rather, Government decided that these were matters best taken into account at the time when decisions are made to create spectrum rights over particular bands. This flexible approach was considered more appropriate to avoid such services being restricted to particular frequencies or constrained by ‘sunset’ technologies.

While the Bill did not specify any particular allocation process an owner of a management right must use, the Government had already signaled that, as the initial owner of all management rights, it intended to adopt the “2nd price, sealed bid tender” method. This was met with some opposition and subsequent auctions based on this method were subject to criticism.16.

With the earlier abolition of the Broadcasting Tribunal there was no mechanism for allocating radio and television broadcasting licences. Following the Bill’s enactment by Parliament on 19 December 1989, a media statement was released the next day which stated:

“Mr Hunt said that it would take time to bring radio frequencies for all telecommunication and broadcasting services under the new legal rights regime, but that priority would be given to new broadcasting spectrum. Tenders for UHF [Television] frequencies are to be called shortly by the Secretary of Commerce. Expressions of interest for FM and AM sound radio broadcasting frequencies will be evaluated by the Ministry of Commerce in the new year”.

First auction

During the months preceding the coming into force of the Radiocommunications Act 1989, the Ministry of Commerce had been evaluating public submissions in regard to UHF television, and engineering auction lots accordingly. This enabled the first call for bids to tender for spectrum licences to be released just three days following the passage of the legislation.17

Sky Network Television, a pay-TV company, had constructed a transmission network and were anxious for the tender to commence as soon as possible. In keeping with the recommendations of NERA, seven lots were configured as nationwide networks18 while the balance of the lots were individual licences. Sky won four of the nationwide network lots. Not all UHF television spectrum was offered for auction, however. A block of frequencies was retained to meet future requirements for non-commercial broadcasting and the promotion of Maori language and culture.

By the time the results of the first auction were announced,19 planning was already well advanced for two further auctions. The first of these was, primarily, the auction of management rights for cellular services. Telecom already had incumbency rights to one of the two AMPS cellular bands and, after various legal actions following the auction, was allowed to uplift the management rights to the other. Bellsouth and Telstra each acquired the management rights over a GSM cellular band in the same auction.20

Notes

[1] Radio waves were also known as airwaves because its was originally thought that air molecules conducted radio energy, or in other words radio waves could not propagate in a vacuum. Although this was proved incorrect, and satellite and spacecraft radicommunication today confirms it, the term remains in common use.

[2] Righi (Italian), Lodge (English), Branly (French) and Popov (Russian)

[3] Naturally occurring radio wave energy, such as that emitted by stars and other objects in the universe, has no known utility for communication purposes.

[4] Opened 18 September 1913.

[5] The first Australian coast radio station opened in Melbourne on 8 February 1912.

[6] Both opened 18 December 1913. Awanui closed on 10 February 1930.

[7] A wireless-equipped ship, Californian, was only 10 miles away but the sole wireless operator had gone to bed and there was no international agreement for radio watch-keeping and frequencies of operation.

[8] The range of frequencies of electromagnetic energy capable of sustaining radiocommunications

[9] The Radio Years – A History Of broadcasting In New Zealand, Patrick Day, Auckland University Press 1994, ISBN 1 86940 094 1

[10] CM 88/47/39 refers

[11] more commonly referred to as apparatus licences and now known as radio licences.

[12] now known as spectrum licences.

[13] now known as management rights.

[14] 1st Reading 17/8/89 (Hansard Vol 500, 12027-12047); referred to Planning and Development Committee 5/12/89 (Vol 503, 14080-14090); 2nd Reading 5/12/89 (Vol 503, 14090-14113); Committee Stage 12/12/89 (Vol 504, 14468-14473); 3rd Reading 12/12/89 (Vol 504, 14473-14479).

[15] Under clause 125 of the Bill, spectrum rights were deemed to be assets employed in connection with a business for the purposes of s47(1)(c) of the Commerce Act 1986.

[16] Some years later the allocation process was changed to “1st price sealed bid” and, latterly, to a multiple-round ascending-bid auction.

[17] Friday 22 December 1989.

[18] Each lot was a package of some 30 licences.

[19] A significant number of licences were won by Sky Network Television Ltd who proposed providing a new pay-tv service.

[20] At the time of the auction an analogue technology, known as TACS, was still the primary application overseas, but this technology was never implemented in New Zealand. BellSouth established service with the new digital GSM technology.