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digital dividend review consultation - CMA
This is the response from Community Media Association to Ofcom's Digital Dividend Review consultation:

"Question 1: This executive summary sets out Ofcom’s proposals for the release of the digital dividend. Do you agree with these proposals?

We cannot agree with these proposals as they do not contain any commitment to using released spectrum to benefit public purposes. Our definition of what constitutes public and citizen-centric purposes are clearly laid out in the response submitted by Public Voice. Throughout the Digital Dividend Review, Ofcom appears only to consider people as “consumers” and this is in conflict with their principal statutory duty.

We are not convinced in any way by Ofcom’s argument that a market-led approach, auctioning off spectrum usage with no intervention, will ensure public benefit and citizens’ interests are well served. There are no mechanisms envisaged to enable smaller players, providing high public value, to take part in an auction process, other than by “assisting” them to find the resources to do so. This will have a negative effect on the growth and sustainability of community broadcasting.

We welcome the apparent commitment in the DDR to local television, but have major concerns about Ofcom’s analysis of public demand, the public benefits it might deliver and the technical options proposed, which would preclude local television ever being available to the majority of people throughout the UK. We are also concerned that there is a lack of understanding of the current low level of television-quality broadband coverage in the UK, making it unsuitable as a prime vehicle for local and community television. We are also concerned that radio has not been considered as one of the potential users of the spectrum, as there are frequency issues for community radio stations in many parts of the UK."

"Question 5: Do you have any comments on the analysis of the choice between a market led and an interventionist approach to the release of this spectrum? Do you agree with the analysis of different mechanisms for intervening to remedy potential market failures?

We note Ofcom states its primary aim is to create a process to award the available spectrum which maximises the value to society, secures “optimal use” of the spectrum and certain public policy aims, while observing its regulatory principle, to intervene as little as possible.
It then goes on to assert that “a market-led approach to the award of spectrum will generally lead to the optimal allocation of spectrum being achieved,” through spectrum release, trading and liberalisation. The economic argument appears to be that the market will sort everything out and deliver on public and citizen interests and maximise value to society. Furthermore, even if it could be demonstrated that this would not be the case, Ofcom appears to be more concerned with the possible “costs” of regulatory failure (by intervening in the market) than with the opportunity costs to citizens and society through market failures.

We strongly disagree with this analysis:

• The market led approach is unlikely to ensure economy of spectrum use as larger operators will block-buy spectrum and keep it until they may wish to use it. This will lead to large portions of spectrum being unused, especially as Ofcom appears to not want to impose any “use it or lose it” conditions for potential buyers (citing this as interference in the market).

• The market for spectrum trading is unlikely to become a tool for ensuring good use of spectrum, rather a new “futures market” for making money.

• Ofcom asserts that it will assist Public Service and other broadcasters (and other groupings wishing to use spectrum for public purposes) to find the resources they need to compete at auction. This is totally unrealistic as the level of co-ordination and the amount of money required will be enormous. It is unclear as to where Ofcom considers these resources will come from, either for Ofcom to provide such assistance or for the finance required to bid on a level playing field.

• European legislation is moving towards the reservation of spectrum for certain uses, which will override Ofcom’s wish for a market-led approach.

• Ofcom asserts that intervention will create a tendency towards favoured services, however non-intervention in the market led process will create a tendency for the financially favoured."