Martin Cave

1
Universidad Francisco Marroquin Guatemala
Telecommunications WorkshopJune 9-10 2005
Spectrum ReformAn Overview

• Martin Cave
• Warwick Business School, UK
• Martin.Cave_at_wbs.ac.uk

2
The familiar tool-kit

• Command and control (possibly supplemented by
  administrative pricing)
• Tradability and liberalisation
• Various types of commons (with different level of
  regulation)

3
The liberalisers pitch

• Spectrum gravitates to its most profitable and
  productive use
• Reduces barriers to entry in spectrum using
  services
• Permits speedier innovation without lengthy
  allocation and assignment process
• (Problem 1 this will take time
• Problem 2 you cant (shouldnt) promise
  specific benefits, as you dont know where they
  will be found
• Problem 3 studies showing estimated aggregate
  benefits are vulnerable to criticism, but large
  numbers have magical powers in debate)

4
Playing the technology card

• New technologies enable services to be provided
  by intelligent dynamic hopping over a range of
  frequencies, thus increasing utilisation
• This may create role for intermediaries, selling
  access rights, not spectrum capacity
• It could reduce the market clearing price to
  zero, facilitating a commons
• See www.ieee-dyspan.org

5
Confounding the sceptics/overcoming the vested
interests

• Their criticisms focus on
• Pressure on interference (greater economic
  incentives to economise, switch from equipment
  licensing to more broadly defined property
  rights)
• Hoarding, speculation and abuse of market power
• Fragmentation
• Conflicts with international harmonisation
• Windfall gains
• (Emphasis on difficulties is often accompanied by
  claims that the existing allocation is close to
  perfection, and improvements to ITU processes
  will soon solve any outstanding problems)

6
How ambitious should the liberalisation be?

• the size of the reserved sector
• the timetable
• the fungibility of property rights
• the tenure of the licensee
• means of compulsory purchase
• treatment of on the shelf spectrum

7
Liberalisation and the Commons

• Currently 5-6 of spectrum in many countries is a
  commons- with freedom of entry, usually subject
  to restrictions on power etc.
• The success of Wi-Fi has shown the potential of
  no permission required spectrum but also raised
  the question of QoS guarantees.
• New commons such as UWB are now under
  consideration.
• Commons are difficult to reverse and there is a
  case for caution, combined with encouragement of
  wholesalers or band managers to facilitate
  access.
• (Commons advocates are often an unwitting
  stalking horse for the do-nothing brigade wait
  a few years and the problems will vanish)

8
A success story (so far- in conception) the UK
Spectrum Strategy

• Objectives of the 2003 Communications Act include
  efficient use of spectrum and trading
• Management function assigned to independent
  agency - Ofcom
• Governments reserve power of direction limited
• Ofcom has already produced a strategy, an
  implementation plan and trading procedures.

9
Components of the Strategy

• - Changing the balance ()
• CC Market Commons
• 2000 96/96 0/0 4/4
• 2010 22/21 74/69 4/10
• (former figure below 3GHz, latter figure 3-60
  GHz)
• Facilitating change of use from equipment
  licensing to policing of boundary emissions
• Releasing spectrum off the shelf

10
Co-ordinating public and private sector use

• On-going study for UK Treasury
• Need to sharpen, deepen and cascade pricing
  incentives in the public sector (higher prices
  for spectrum, ensuring prices influence
  investment eg. military procurement decisions)
• Development of sharing technologies (eg. radar
  and communications) satisfying public sector
  concerns about pre-emption
• Creating combined high-level public/private
  institutions to challenge current or new public
  sector assignments.

11

• However, the pace of reform elsewhere in Europe
  is slow
• entrenched bureaucracy
• reliance on ITU
• powerful public sector users
• no Commission spectrum powers
• lack of demonstrated success among liberalisers.