Spectrum sale – potential Māori returns: omnibus excerpt
Spectrum sale – potential Māori returns
This week Vodafone suggested that Māori should receive cash from the sale of ‘fourth-generation’ radio spectrum. This spectrum will become available for reuse and sale once the analogue television network is closed in 2013. Communications Minister, Steven Joyce, has indicated that the auction is expected to raise at least $120 million.
Vodafone made this proposal because in their opinion Māori interests are now aligned with one telecommunication company – 2degrees. Given this, Vodafone suggests it is not appropriate for the Government to allocate spectrum directly to Māori. In our view, Vodafone raises two key issues. First, how much, if any, funding should be set aside for Māori from spectrum sales? Second, what are the best stewardship arrangements for any funding and/or spectrum provided? (Is 2degrees the only Māori option?)
We advise that there are complexities to consider relating to spectrum, but that the topic does have importance to Māori cultural and economic development. For your noting a succinct summary is provided below.
Spectrum matters are about the ability to send electronic-magnetic radio waves. The sending of radio waves is used in many technologies such as television, cell phones, garage door openers, etc. The ‘spectrum’ is the range of frequencies available for allocation, to ensure the waves being sent do not clash with each other. (Clashes would mean the technology would not work.) This means there is a finite allocation of spectrum.
Since deregulating the broadcasting sector in 1989, the Government has been on-selling the rights to use frequencies of spectrum, through a series of auctions. Spectrum is purchased by radio stations, telephone companies, etc. The sale prices vary widely, but to date, total sales exceed $50 million, and may be above $200 million.[1]
Throughout this period various Māori groups have expressed interest in the spectrum. Initially these interests centred on cultural and Māori language rights, to ensure spectrum was made available for iwi radio stations, and later for Māori television. In recent years however, Māori interest groups have sought a broader treaty-partnership right, in recognition of the on-going economic return being actualised from the spectrum auctions.
Treaty of Waitangi claims and court action have been used in support of Māori spectrum interests (referred to as ‘the radio wave claims’). Amongst others, a key consistent participation in these actions has been the New Zealand Māori Council. There is a current treaty claim, although this has been “put on hold” while Crown / claimant discussions take place. The cumulative effect of past litigation has been some recognition of Māori interests in spectrum matters by the Crown. However there has never been a formal treaty settlement.
In 2000/2001 Te Huarahi Tika Trust was established with $5 million in Crown funding, to advance Māori interests in the telecommunications sector. (The Trust was also granted the right to purchase spectrum below market value.) With this funding, Te Huarahi Tika Trust established a subsidy Trust, Hautaki Trust, and Hautaki entered into partnership with others which ultimately saw the establishment of the 2degrees telecommunications company.[2] Hautaki currently holds approximately 10% of shares in 2degrees. 2degrees has yet to make any return to shareholders, recently announcing a $77 million loss for 2010.
There are significant issues with the current approach to recognising Māori interests relating to this resource. First we note the amount provided for the Huarahi Tika Trust likely equates to between 2% and 10% of spectrum sales to date, plus some spectrum being available for Māori radio and television usage. (By comparison the fisheries settlement provided for 20% of the fisheries quota, plus $150 million in establishment funds.) Second, Te Huarahi Tika Trust never acquired pan-iwi support through a formal mandating process to act for Māori. (This is again unlike the process used for other collective resource settlements.) Third, settlements are full and final, ensuring durability. That has not been achieved with the spectrum either, and currently there is no agreed proportion of new spectrum, or auction returns, being set aside for Māori. (By comparison the fisheries settlement provides 20% Māori quota ownership for any new species.)
In addition, it is not clear how Māori (or iwi) could benefit from the funding provided to date to Te Huarahi Tika Trust. The Trust’s public accountability documents are silent on this matter. This concern is not aided by the use of a stepped-remove trust (Hautaki) which reduces information availability; the heavy financial loses being recorded by 2degrees; nor some of the Trustees being appointed as ‘advisors’ to the Government for broadband initiatives.[3] These types of matters contribute towards a level of disquiet amongst Māori involved in this sector.
- In our assessment, spectrum is a resource that warrants the collective attention of iwi. Given the history of treaty claims, it is curious that it does not feature further in iwi-based settlements that are currently taking place. At a minimum, use of the spectrum is required to broadcast te reo. Furthermore it has high economic potential for Māori development. To date the overall approach to acknowledging Māori spectrum interests has been ad hoc. We advise a pan-iwi settlement approach would likely be useful, along with a pan-iwi settlement entity. Or an alternative might be the inclusion of spectrum usage rights, or compensation, within individual iwi settlements. Either way, the management approach should, ultimately, be able to articulate how a return to Māori / iwi can be made. To date, Te Huarahi Tika Trust has not provided this level of stewardship assurance.
From week ending 22 July 2011
[1]Not all auction results are available from the Ministry of Economic Development, so the total amount is likely to be significantly higher, particularly as ‘3G’ spectrum sales information has not been released. There is no explanation as to why this information is not available.
[2] Te Huarahi Tika Trust established a company, Hautaki Ltd, which then established the Hautaki Trust.
[3] Some Māori in this sector have expressed concerns about conflicts of interest, although we believe these are manageable through the right processes.