Sharing, selling and standardizing - the great spectrum conundrum

With the World Radiocommunication Conference currently underway in Egypt, it’s timely to discuss some of the spectrum issues facing the industry today.

Spectrum is and will probably remain a hot-topic for the industry due to its critical importance. The success of a telco is partly defined by the spectrum licences it is able to horde, and depending on where you are in the world, the scarcity of these assets varies. That said, to describe anywhere as having an abundance would be foolish to say the least.

Starting with the idea of selling spectrum, this is a topic which is under constant debate, review and criticism.

“When you talk about spectrum, the price you have to pay always has an impact on the rollout strategy,” said Jasper Mikkelsen, Director of Public and Regulatory Affairs for the Telenor Group, during a panel session this week.

This is where the balancing act is at its finest. The regulators will argue they need to charge for access to spectrum for several reasons, but the price of spectrum is often the centre of criticism in various markets. Mikkelsen pointed out during the auctions in Thailand earlier this year, many of the spectrum assets went unsold due to the reserve prices assigned to the lots.

However, according to Donald Stockdale of the FCC, the complaints from telcos might have some merit. If spectrum is unsold at the end of the auction, this is most likely due to the auction being badly designed. Perhaps not enough was released, the channels hadn’t been cleared effectively, the reserve price was too high, or the obligations attached to the winning assets were deemed unreasonable by the telcos.

Telcos will always complain and point to markets where spectrum is effectively given away for free, however there are cases where they have a point. If such a valuable asset is remaining unsold, despite the pleas of telcos to free-up more spectrum, there is perhaps something wrong with the product itself.

What is worth noting is that the auction process is not perfect. There will always be complaints and criticism, though it is currently the least worst option. It is certainly better than the ‘beauty contest’ concept, which leaves the door wide open to corruption.

How to design and manage spectrum auctions is more of a ‘trial and error’ process, which will come as little comfort to those shelling out the investments, however the idea of standardising is something which should certainly be given more traction.

This will of course be a topic of conversation for at the World Radiocommunication Conference, especially concerning the higher frequency airwaves, though there is still a lot of work to do on the spectrum licenses which are already a hotch-potch of complexity.

While there is work being done to standardise spectrum across various different regions, this is a lot more complicated than just simply creating new rules. Bureaucrats have to deal with the dreading concept of legacy.

As Michael Sharpe, Director of Spectrum and Equipment Regulation at ETSI, pointed out there are 48 countries in Europe, all of which have been assigning spectrum to different usecases, products and services over the last few decades. Harmonisation is a topic of conversation now but unravelling the maze of red-tape which already exists in each of these nations is a very complex task.

First and foremost, there are some very attractive benefits from standardisation. In a region like Europe, the risk of interference is present, driving the case, while there are also be benefits driven through interoperability or economy of scale, however there will always be a downside.

Looking at Europe once again, the congestion of certain bands will vary depending on the demands of the nation, while the cost assigned to clearing these costs will certain vary quite considerably. Then you have to look at the idea of flexibility.

Politicians generally don’t like being told what to do, and they like it even less when it comes from bureaucrats over which they have very little influence. In designing a harmonised approach to spectrum allocation and usage, flexibility will need to be built into the process to ensure each nation can address the specific needs of dominant industries and the nuances of societal variance.

This is of course very difficult to judge the right balance, but it is a critical element not only to ensure economic prosperity in each of the nations, but to make sure the rules are adopted by the Governments in question. If it is too much of a hinderance or costs too much to clear the bands, who is to say these suggestions are not just simply ignored, these are sovereign states after all.

The final area which is attracting some attention out of the US is a spectrum sharing initiative out of the FCC.

Focusing specifically on the valuable 3.5 GHz spectrum band which is being championed in Europe to deliver the first 5G services, the FCC is trialling a dynamic spectrum sharing project. Known unofficially as the ‘Innovation Band’, it offers a palatable compromise between high-speed data transmission and extended coverage. However, the US has found itself in a bit of a pickle as the current incumbent on this spectrum band is the Navy.

The spectrum is currently utilised by the Navy in offshore radar operations, however it is not being used all the time, such is the nature of naval operations. For such valuable spectrum, this is largely viewed as a waste.

Stockdale highlighted the team has created a three-tier, demand-orientated system, where spectrum is utilised dependent on the presence of those in the tier above. The Navy has the right to use the band first and foremost, though when it become unutilised, mobile service providers can purchase licenses to gain access for the second tier. Should the Navy or the telcos not be making use of the spectrum, it can be assigned for general use for those approved in the third-tier.

Although this is only a trial for the moment, it demonstrates the point made above. Flexibility needs to be built into spectrum harmonisation initiatives, as it is unrealistic to repurpose this band in the US. The cost and effort are unlikely to be justifiable when you consider the size of the US Navy.

This is an excellent example of innovation when looking at spectrum, and regulators around the world should be paying attention to the lessons learned through this experiment. The idea of dynamic spectrum sharing could be huge if the fundamentals are validated here, such is the demand for this valuable and increasingly scarce resource.

This is of course not the only example of spectrum being repurposed in regions where it is not being utilised. In the UK, Ofcom has introduced rules which dictate unused spectrum must be released, assuming there is demand.

Vodafone recently announced it entered into a three-year agreement with StrattoOpencell to share the use of it 2.6 GHz spectrum assets to deliver connectivity in Devon. The spectrum licences are being used in highly-urbanised areas, but not in the countryside, therefore it is inefficient use of the asset without these rules from the regulator.

Although spectrum is a topic which has been the centre of many debates, it does appear it will be an ever-lasting ebb and flow. The World Radiocommunication Conference will likely free-up some more spectrum, but the TMT industry is very good at finding ways to use it. Scarcity is most likely going to persist, though there are some interesting conversations evolving to improve this niche of the mobile segment.