Article - Issue 6, November 2000
Spectrum supply and demand – space oddity
The old Mark Twain maxim of buying land, as it’s not being made anymore, could be applied to spectrum. The difference is that until around 100 years ago we knew very little about Spectrum’s existence, properties or even the ability to use/buy (license) it. It was viewed by many as an ‘oddity’ or black art. The current interest in mobile or UK 3rd Generation (3G) spectrum, which raised £221⁄2 billion for five 20-year licences, illustrates how times have changed. This article reviews some of the factors affecting the demand and supply for spectrum, looking at relevant examples and some forecasts for the future.
Regulating the supply of spectrum
The traditional users of spectrum have been mostly in the Defence, Broadcasting, Civil and Telecommunications areas. The frequency tables/plans encourage harmonisation by type of use, at the international (or ITU) level, to maximise spectrum efficiency, minimise interference and help with (manufacturing) economies of scale. There are pressures all the time to improve on these objectives, often within the application of new (or digital) technologies.
The recent Radiocommunications Agency/Nervewire Report (Ref.1) explains the national responsibility for spectrum assignments:
The RA is currently responsible for management of most of the civil radio spectrum while management of military spectrum is the responsibility of the Ministry of Defence (MoD). The Home Office/Scottish Executive manage emergency service spectrum, while in the case of spectrum for TV and radio broadcasting, the RA shares management responsibilities with the Secretary of State for Culture, Media and Sport. Policy governing the planning and co-ordination of all frequencies is formulated through an inter-departmental Cabinet Office committee, the UK Spectrum Strategy Committee, which is jointly chaired by the RA and MoD.
The RA has in some cases ‘delegated’ management of civil spectrum to user groups or representatives, largely for quality of service reasons for example:
the joint Frequency Management Group (JFMG) undertake day to day management of spectrum allocated to services ancillary to broadcasting
the Joint Radio Committee (JRC) of the fuel, power and water industries plans the use of spectrum for these services although the RA issues licences
Wray Castle manages maritime licensing
major service operators (e.g. public mobile operators) manage blocks of spectrum that they have not been assigned.
Under the current UK Communications White Paper discussions, the balance of responsibility, policy and associated regulations are being reviewed. This arises from a significant blurring of service boundaries particularly when the definitions of Fixed, Mobile, and Broadcast communications are all being affected by Internet developments and the possibility of receiving wider voice/content through this medium. Spectrum deregulation will play a key part in these deliberations.
Increasing demands for spectrum
Even though spectrum may be an ‘oddity’ to some, there are few signs of demand slowing down. The convergence of the wireline and wireless worlds, around the Internet, is providing more and more options for radio based communications, at the public access (see Figure 1) and international levels.
There are also solutions in the private access (Figure 2) sphere, which may use these wireline or wireless access arrangements.
The wireless world needs to consider when it is more efficient to compete with wireline access as well as when to complement wireline access. The public/private usage (and licence) boundaries are also blurring, as the attributes of wireless help with deployment options to offer greater personalization and location based services. Whilst wireless prices have come down significantly the relative costs and data rates for wireless (traditionally higher/lower respectively than wireline) are a key business consideration. However, innovation in wireless is booming in most areas. The economies of scale in GSM for example are tremendous, now that it has been adopted in over 120 countries, with largely compatible spectrum (see Figure 3 – for total Cellular and GSM Cellular Market Share).
GSM is one of the best illustrations of industrial/regulatory co-operation that can be traced back in Europe to 1987 (and some would say earlier). The GSM Association was formed then to implement GSM, with first networks opened – in 1991 and the rest is history, but held up as a real exemplar of demand led regulatory/industrial cooperation.
It is to be hoped that such cooperation will assist other spectrum based industries to grow on the international stage with technologies such as DECT, TETRA, Digital TV, Digital Radio, 3G, Broadband wireless, Bluetooth, Wireless LANs, Home Area Networks and eventually Personal Area Networks.
Licensing of 3rd Generation (3G) spectrum marked a new departure for the wireless world into auctions, varying spectrum valuation methodologies and in the UK more money was raised than expected by most. It was highly visible as both a public auction on the Internet and a first foray into a new mobile multimedia world – the incumbents’ and challengers’ valuations were all assessed internationally. The benefits the auctions had were partly associated with more bidders than licences, linked to clear and transparent spectrum rules. It will be interesting to see if all these factors follow elsewhere in other 3G auctions, particularly elsewhere in Europe.
I make no apology for listing Radio Communications technologies and applications as I am more familiar with these, where burgeoning demand is already apparent. What is also clear is that the demand for public services needs to be balanced in spectrum terms – this is partly the role of government but industry can also play a part. This extends beyond broader industrial consultation and Private Sector Funding initiatives, to assisting Public/Private service convergence. This may include spectrum-based services that may offer for example the same shared backbone network for both.
It will be important to see how combinations of wireless services will be allowed and/or encouraged, particularly as wireless link (e.g. Bluetooth) and Home Area Network technologies are virtually with us now, but perhaps stretching traditionally public/private licence boundaries.
Increasing the supply of spectrum
As new technologies become available, these increase the options to use spectrum more efficiently. This is particularly the case with digital technologies and for the UK to become an Advanced Digital Economy the digital adoption rate for spectrum needs to be carefully monitored, and benchmarked with other leading countries. Spectrum is a finite resource but efficiency gains need to flow through to the market place, but not in isolation from UK competitiveness or international economies of scale.
This in turn leads to licensing considerations. Many of these (such as Defence) may be subject to very longterm international obligations, as well as equipment life. However, with no national warfare foreseen the sterilisation of this spectrum needs to be viewed (perhaps with MOD preemption rights), in terms of the UK economy as a whole.
The historical link between Broadcast programming and infrastructure/spectrum needs has significantly changed over the last 20 years. The current spectrum for Broadcast infrastructure can generally be seen as quite generous when digital technologies are considered. It is hoped that the opportunities of the switch to digital from analogue TV will provide early new releases of spectrum for a variety of new services for the UK including some non-broadcast ones.
Above 2 GHz there are many new, largely unexplored, opportunities for new services as this area (compared to below 2 GHz) is relatively under utilised. It is hoped that 28 GHz (Broadband) licences will quickly be followed with appropriate licensing at 3.5 GHz, 5 GHz, 10 GHz and 40 GHz bands within the next 12–18 months.
New regulatory approach
The traditional release of spectrum has moved through ‘first come first served’, to cost based administration to (more recently) market testing. An auction is the most visible illustration of such testing. It is intended that the extension of market assessment into other areas of spectrum will, through the blunt instrument of spectrum pricing (rather than costing), encourage both more spectrum efficiency and the release of more spectrum for new uses.
Even if spectrum pricing becomes more prevalent, the licence duration may appear to be a further impediment to change of use. If for example the military hold spectrum for 30 years (or more), this could be viewed notably as stability but also as sterilisation. Spectrum pricing encourages all users to consider the economic benefit of holding spectrum. The Wireless Telegraphy Act (Ref.4) passed in 1998 was only the third UK parliamentary measure for spectrum regulation in over 100 years, and brought in, amongst other matters, spectrum pricing but did not allow for spectrum trading. Trading would be seen as the next logical step to help increase the supply of spectrum to those who value it most. Beyond these pricing/trading measures there are improvements generally foreseen in:
More open publication of current assignments – this principle, linked to Open Government, should lead to the publication of all assignments (with only agreed exceptions, perhaps for security reasons) to facilitate better understanding of what is really used, who by and where in the UK
Enhanced industrial dialogue. The WT Act 1998 established a Spectrum Management Advisory Group (for the SMAG annual report see www.radio.gov.uk). Other coordination measures such as World Radio Conference (WRC 2000) have demonstrated an improved UK regulatory/industrial dialogue in spectrum matters
Review of service definitions. This will be a key agenda item at WRC 2003, but co-operation is needed within a national and regional (European) setting. The ability to use (or not) Defence or Broadcast spectrum for other purposes is today heavily constrained by national and international regulations.
The availability of suitable wireless spectrum is key to the ‘next wave’ of the Information Age, and is vital for UK competitiveness in the Advanced Digital Economy. Wireless technologies can play a huge part in delivering content richness to many (as we see with Broadcast and Mobile today) but in line with international competitiveness this needs to take big steps forward. This will require a thorough review of how to optimise current regulatory methods, how to benchmark (internationally) spectrum pricing and trading, and most important of all a review of current service definitions, to allow for a broader (and more inclusive) variety of convergent services.
David Bowie sang some 30 years ago ‘Ground control to Major Tom, your circuit’s dead’ in Space Oddity. Radio is no longer an Oddity, there is spectrum Space, and why should ‘Circuits’ or services or even consumer choice be constrained by lack of spectrum?
Let the innovation flow, with a more open spectrum market.
Mapping the Future of Convergence and Spectrum Management. RA report, May 2000 (see www.radio.gov.uk)
Communications White Paper (see http://www.culture.gov.uk/creative/dti-dcms_commsreform_white_paper.html)
EU Internet Telephony (see http://europa.eu.int/eurlex/en/oj/2000/c_17720000627en.html)
Wireless Telegraphy Act 1998