Version

383 views

Published on

Published in: Technology, Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
383
On SlideShare
0
From Embeds
0
Number of Embeds
3
Actions
Shares
0
Downloads
3
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Version

  1. 1. One 2 One Response to Independent Review of Radio Spectrum Management One 2 One September 2001
  2. 2. CONTENTS EXECUTIVE SUMMARY........................................................................................................4 Government’s proposals.........................................................................................................4 One 2 One’s Concerns............................................................................................................4 One 2 One’s Proposals...........................................................................................................4 Legislative framework............................................................................................................5 ONE 2 ONE DETAILED RESPONSE ....................................................................................6 1 Concerns..............................................................................................................................6 2Proposals...............................................................................................................................8 2.1 Strategic aims and objectives for spectrum management and assignment.......8 2.2 Decisions based on Economic, Social and Competition Impact studies...........8 2.3Accounting for both technical efficiency and economic efficiency..................9 2.4 Central co-ordination of spectrum management...............................................9 2.5 International dimension...................................................................................10 3Legislative framework........................................................................................................11 3.1 Voluntary hand-back of unused spectrum.......................................................11 3.2 Rules against hoarding of spectrum................................................................11 3.3 Licensing based on access rather than apparatus ...........................................11 3.4 Spectrum trading.............................................................................................11 3.5 Spectrum Auctions..........................................................................................12 One 2 One Response to ‘Independent Review of Radio Spectrum Management’ September 2001 -2-
  3. 3. One 2 One Response to ‘Independent Review of Radio Spectrum Management’ September 2001 -3-
  4. 4. EXECUTIVE SUMMARY Government’s proposals The consultation document, entitled Independent Review of Radio Spectrum Management, seeks views from interested parties on a number of important issues such as:  What incentives should be introduced to improve spectrum efficiency;  How spectrum should be allocated;  What mechanisms should be put in place to enable spectrum users to realise the opportunity cost of their spectrum;  Whether spectrum assignments should be technology specific or technology neutral. One 2 One’s Concerns The overall objective of the review is to devise and recommend a legislative framework, which will enable the government to manage radio spectrum in a way, which increases the level of competitiveness in the UK, maximises benefits to consumers and ensures that public services are still provided. A danger of this approach is that it could potentially lead to a situation where the government targets specific spectrum use to raise revenue. Also, One 2 One considers that the competition policy implications of all spectrum management decisions need to be examined fully. One 2 One’s Proposals  Decisions regarding allocation or pricing of spectrum should give due regard to economic, social and competition impacts. When reallocating spectrum, it should be ensured that any new allocation does not distort competition. There is a general duty on all Member States not to permit acts that may lead to significant distortion of competition in any particular market.1 • Government should, in consultation with industry, set out co-ordinated and coherent strategic aims and objectives for spectrum management and assignment. This should include plans for the next 5 years and for 10 years out, which should be updated on a regular basis; 1 Article 10, Treaty of Rome. One 2 One Response to ‘Independent Review of Radio Spectrum Management’ September 2001 -4-
  5. 5. • The strategic aims for spectrum management and assignment should be consistent with international standards. Also, they should not place the UK in a disadvantaged position vis à vis other European countries; • Spectrum pricing should be carried out on a consistent basis across all bands and should not be used purely as a mechanism to raise revenue; • OFCOM (in taking over spectrum responsibilities for spectrum management) should co- ordinate all radio spectrum (i.e. including MOD, Home Office, broadcasting etc). This should enable greater transparency with respect to the spectrum holding of other government departments and should also improve efficiency enabling further release of spectrum; • The spectrum management objectives should take into account technical efficiency as well as economic efficiency. • All government and regulatory policies should take into account the implications of spectrum management and allocation. Legislative framework • Ofcom should develop a range of rules to prevent hoarding of spectrum; • Mechanisms should be available to enable users to hand back spectrum; • Licensing should be based on spectrum rights rather than apparatus; • Spectrum trading should be introduced; • A range of allocation mechanisms should be available (e.g. auctions, direct assignment) One 2 One expands upon these points in the following sections. One 2 One Response to ‘Independent Review of Radio Spectrum Management’ September 2001 -5-
  6. 6. ONE 2 ONE DETAILED RESPONSE 1 Concerns The overall objective, set out by the Treasury Spectrum Management Review team, is to devise and recommend a legislative framework for spectrum management that will assist government in: • increasing the level of competitiveness in the UK; • maximising benefits to consumers, and; • ensuring that public services are still provided. Percentage of prime spectrum allocated to each service Source: RA Broadcasting TV Fixed links Maritime 3G Mobile Broadcasting Radio Private Business Radio Total Mobile Defence and Emergency Other Mobile 2G Mobile Aeronautical Percentage of fees per service out of total fees paid for prime spectrum Source: RA Private Business Radio Maritime Fixed links 3G Mobile Broadcasting TV Total Mobile 2G Mobile Broadcasting Radio Other Mobile Defence and Emergency Aeronautical Figure 1, Allocation of prime spectrum and fees paid per service. One 2 One is concerned that these objectives can be conflicting. A potential outcome of this, is that a situation could be created where the government targets specific spectrum use to raise revenue. This concern is clearly illustrated by the graphs presented in Figure 1, Allocation of prime spectrum and fees paid per service. Even though only 16 % of the prime spectrum is allocated to mobile services, the total fees paid for this spectrum by mobile network operators accounts for over 80 % of total fees received for prime spectrum licences. This One 2 One Response to ‘Independent Review of Radio Spectrum Management’ September 2001 -6-
  7. 7. demonstrates the large disparities between fees paid for the different uses of the prime spectrum. An additional concern lies in the fact that the mobile industry consists of multi-billion pound ventures and changes that impact on investment strategies should be undertaken with a great deal of caution and certainly should not be treated as an academic exercise. In particular, the long-term nature of investment in the communications industry needs to be taken into account. A stable spectrum management and in particular spectrum pricing regime is required by industry. The mobile industry is currently characterised by high levels of debt with significant additional investments required for the rollout and development of 3G services. Creating added uncertainty to the mobile industry or increasing fees for mobile operators would seriously jeopardise the future profitability of the industry and could result in a slow- down of investment and innovation. Targeting specific spectrum use would, therefore, hamper rather than enhance the government objectives outlined at the beginning of this section, and create spectrum scarcity rather than increase the usage or availability of spectrum. One 2 One Response to ‘Independent Review of Radio Spectrum Management’ September 2001 -7-
  8. 8. 2 Proposals 2.1 Strategic aims and objectives for spectrum management and assignment One 2 One is of the view that government should, in consultation with industry, set out co- ordinated and coherent strategic aims and objectives for spectrum management and assignment - this should include plans for the next 5 years and for 10 years out, which should be updated on a regular basis. The reason underlying this view, is that spectrum management should apply the following two principles, required to resolve the current problem of spectrum scarcity: Clear communication on spectrum assignments and time horizons At the moment, a large amount of spectrum is either being used inefficiently, lying fallow, or awaiting allocation. Furthermore, a great deal of uncertainty currently exists around the RA’s plan for allocation various tranches of spectrum. Setting out when and how spectrum, for example, 3.4, 10 and 40 GHz, will be allocated, has the positive effect of sending clear messages to potential users of the spectrum. As a consequence, this would:  Reduce uncertainty;  Give all parties involved the opportunity to proactively discuss issues arising from spectrum assignments, and;  Enable users to place a more realistic value on the spectrum. Consistency across all users In setting out a spectrum management strategy, government should ensure that it is consistent across all spectrum bands and across all spectrum users. Regulation and pricing mechanisms should apply to both commercial and non-commercial users. Spectrum pricing should be carried out on a consistent basis across all bands. All users of spectrum should be treated equally. This would increase spectrum efficiency and potentially free up more spectrum. Applying these simple principles through setting out a clear long-term strategy would help solve the problem of spectrum scarcity and actually make the transition to market based mechanisms, such a spectrum trading, less problematic. 2.2 Decisions based on Economic, Social and Competition Impact studies One 2 One is of the view that decisions regarding allocation or pricing of spectrum should give due regard to any economic, social and competition impacts. A danger exists in the analysis, carried out by the Review Team, that, in order to determine the value of spectrum, only spectrum licence fees are being taken into account. In fact, an analysis of the total system (technical, competition, economic and social) is required to understand the full national benefit. Furthermore, when assigning spectrum and making decisions on the method of allocation, it is important to again assess the potential economic, financial and competition impacts. For example, of particular concern to mobile operators, is that the impact on competition should not be overlooked with regard to licence-exempt spectrum. There is a general duty on all One 2 One Response to ‘Independent Review of Radio Spectrum Management’ September 2001 -8-
  9. 9. Member States not to permit acts that may lead to significant distortion of competition in any particular market1. If public use of licence-exempt spectrum is allowed for certain frequency bands, government must have regard to the duty not to act in a way that may lead to a significant distortion of competition in other markets, in this case the mobile market. The companies using the frequency bands exempted of licence will have the advantages over existing 3G operators in that they will not have the financial burden of having paid a huge licence fee. This may lead to a situation where operators do not develop new services because of the inability to obtain a reasonable return. This is not in the long-term interest of either consumers or businesses in the UK. 2.3 Accounting for both technical efficiency and economic efficiency • There is an assertion in the consultation document, that spectrum is not being used either technically efficiently or economically efficiently. It is difficult to see how the mobile industry can use spectrum more efficiently as it is using the latest available technology and is heavily involved in developing UMTS for 3G and GPRS for 2.5G. Moreover, the consultation document often refers to efficient use of spectrum without having defined the term. In fact, One 2 One is not aware of an agreed definition in the UK and probably, each market sector will derive its own definition. For example, in the GSM community, Erlang/km2/MHz may be an appropriate measure but this would probably not be applicable to the PBR or broadcast communities. Without a definition, it is difficult to determine the relative efficiency of classes of users. 2.4 Central co-ordination of spectrum management One 2 One is of the view that there should be only one body with responsibility for spectrum management. The most logical way of ensuring that there is a single spectrum manager, would be for OFCOM to take over spectrum responsibilities for all spectrum management. OFCOM should co-ordinate all radio spectrum (ie including MOD, Home Office, broadcasting etc). This should enable greater transparency with respect to the spectrum holding of other government departments. OFCOM should have clearly defined rules based upon being an open, transparent and accessible body. Under the present system, One 2 One has a good level of dialogue with the relevant bodies, such as OFTEL and the Radiocommunications Agency (RA). It is important to One 2 One that the current good relationships between operators and the RA, Oftel is carried forward into the new regime. One 2 One also believes that the regulation related to the spectrum efficiency should be focussed on achieving a more competitive spectrum market. The evolution of the telecommunication market is nowadays so rapid that the powers and duties of any new regulatory body has to be reduced as much as possible, in order to leave the existing and new actors to compete and stimulate the economy and technology. One 2 One Response to ‘Independent Review of Radio Spectrum Management’ September 2001 -9-
  10. 10. 2.5 International dimension The mobile industry is a global business characterised by huge investment costs in technology development and network deployment. In addition, the ability for customers to use their phones around the world is considered to be very important and is one of the great attractions of GSM and UMTS technology. The mobile industry requires economy of scale and stability. To obtain these advantages and derive opportunity costs, it is important for manufacturers and network operators to have the stability and large marketplace arising from international spectrum agreements. Evidence of this was seen in the recent 3G auction where all entrants chose UMTS technology rather than the other numerous options available. This was facilitated by the ITU and by having a decision process on the EU level. In contrast, the USA spectrum approach has led to considerable problems, where great difficulty exists in finding suitable 3G spectrum. The opportunity to USA manufacturers and customers of deploying and using advanced mobile services in the USA will probably lag the rest of the world. This effect is also seen in the fixed link arena, where manufacturers are unwilling to develop equipment for new bands, unless, at least, an ETSI standard exists. Experience has shown that if spectrum outside the GSM bands were to become available only in the UK for e.g. GSM mobile use, it would be unlikely to be used. This is because infrastructure and terminal manufacturers prefer to use their resources to meet the larger unified global GSM and UMTS spectrum allocations. The global requirements mentioned above for the cellular mobile market mean that One 2 One does not support greater autonomy for UK spectrum management. The UK does tend to lead Europe in spectrum initiatives via the RA (e.g. spectrum trading). However, it is extremely important to the UK mobile industry that it has, as a minimum, regional (e.g. EU) and, preferably, global agreement in spectrum policy. One 2 One Response to ‘Independent Review of Radio Spectrum Management’ September 2001 -10-
  11. 11. 3 Legislative framework One 2 One is in favour of spectrum efficiency being enhanced through regulation that stimulates competition in the spectrum market. The Review Team should consider the following: • • 3.1 Voluntary hand-back of unused spectrum Spectrum management could be based on the licensee having the option, at its own discretion, to hand back particular spectrum that is not being used. When considering when and how to reallocate spectrum, OFCOM should have regard to the competitive impact of the reallocation and ensure that any new allocation does not distort competition. 3.2 Rules against hoarding of spectrum A clear priority by the Review team should be to investigate possible rules that would prevent hoarding of spectrum by certain users, and that would encourage spectrum users to hand-back spectrum. This would significantly increase allocation efficiencies of spectrum in the UK. 3.3 Licensing based on access rather than apparatus In its response to the RA’s 1999 Consultation ‘Managing Spectrum through the Market’, One 2 One stated that it favours all apparatus licences to be converted to spectrum property rights, with licensees being granted the ability to divide their licences, for the purposes of delegating or leasing part of the spectrum. The delegation/change of use would, nevertheless, need to be on a non-interference basis with the primary service in the band and should comply with international agreements. The conversion of licences to spectrum property rights is necessary to facilitate change of use and provide the opportunity for the development of new services eg in rural areas. 3.4 Spectrum trading Spectrum trading is another option to encourage the efficient use of spectrum, by introducing greater flexibility for spectrum users to acquire spectrum, to transfer spectrum to other users, and to change the use of spectrum themselves. A spectrum market would aim to increase efficiency in the use of spectrum, would also aim to increase speed of transaction and would reduce regulation. A policy framework should be defined and implemented by taking into account in particular the need to manage interference and to ensure that spectrum trading operate within the agreed framework of international regulations and EU regulation. One 2 One Response to ‘Independent Review of Radio Spectrum Management’ September 2001 -11-
  12. 12. The spectrum trading should allow the licences to be assigned, wholly or in part, from one person to another. The spectrum trading could take various forms for instance the spectrum could be sold or rented. The rules on organisations to which spectrum could be leased or traded have therefore to be defined. Effective controls have to be implemented in order to ensure that the trading will not lead to an operator having a dominant position in the relevant market. 3.5 Spectrum Auctions One 2 One believes that auction should be used, but only under specific conditions. Auctions should be used for relatively large bands where there are a greater number of applicants than assignments available in the band. The auction is, in that case, seen as a process for rationing spectrum and should be independent of frequency. For most spectrum users, however, it should be possible to find sufficient spectrum to meet demand, so that auctions would not be necessary. It is important to note that spectrum auctions impact on financial, economic and competition aspects of a sector. Therefore, all regulatory and government bodies involved should take into account the impacts of an auction on the sector, when making regulatory decisions. One 2 One Response to ‘Independent Review of Radio Spectrum Management’ September 2001 -12-
  13. 13. One 2 One Response to ‘Independent Review of Radio Spectrum Management’ September 2001 -13-
  14. 14. • One 2 One Response to ‘Independent Review of Radio Spectrum Management’ September 2001 -14-

×