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Practical aspects of liberalisation and re-farming of spectrum

International Telecommunication Union Telecommunications Development Bureau. Practical aspects of liberalisation and re-farming of spectrum. Dr. Arturas Medeisis ITU-BDT Spectrum Management Expert. ITU Regional Workshop on Efficiency of the Frequency Spectrum Use in the Arab Region

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Practical aspects of liberalisation and re-farming of spectrum

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  1. International Telecommunication UnionTelecommunications Development Bureau Practical aspects of liberalisation and re-farming of spectrum Dr. Arturas Medeisis ITU-BDT Spectrum Management Expert ITU Regional Workshop on Efficiency of the Frequency Spectrum Use in the Arab Region Amman-Jordan, 5-7 Dec. 2011

  2. Scope of presentation • What is flexibility and liberalisation in SM • The balancing act of liberal SM • Spectrum trading as part of liberalisation • What is re-farming • Means and ways of re-farming ITU Regional Workshop, Amman, 5-7 Dec 2011

  3. The terms • Flexibility means possibility of changing the purpose for which the assigned spectrum is used by licence owner • Liberalisation of SM means providing possibility of liberal exchange of spectrum holdings • unrestricted spectrum trading of flexibly defined spectrum assignments is the best example • Hence, flexibility can be realised without liberalisation, whereas liberalisation is seldom meaningful without flexible spectrum usage right ITU Regional Workshop, Amman, 5-7 Dec 2011

  4. Flexible vs. harmonised Degree of harmonisation High Full harmonisation (e.g. 2G/IMT bands) Low Medium Medium Partial flexibility (e.g. PMR, SRD bands) Low High Full flexibility (e.g. 2.4 GHz band, other commons) Degree of flexibility Source: ECC Report 80 ITU Regional Workshop, Amman, 5-7 Dec 2011

  5. High flexibility Low flexibility High flexibility Low flexibility Market scenarios Source: ECC Report 80 ITU Regional Workshop, Amman, 5-7 Dec 2011

  6. 1st owner 3rd owner Regulator 2nd owner 2nd owner Note Note Regulator Note 1st owner 3rd owner Spectrum trading Spectrum trading Traditional spectrum management ITU Regional Workshop, Amman, 5-7 Dec 2011

  7. Making the market work • Well-defined tradeable spectrum units • Change of use allowed • Liberal and simple conditions for trade • Long-term confidence in acquired assets ITU Regional Workshop, Amman, 5-7 Dec 2011

  8. Long term economic impact? • Results of scenario modelling of introducing spectrum liberalisation compared with harmonised base-case *) UMTS Forum study: Thriving in Harmony. Frequency harmonisation: the better choice for Europe, November 2006, available at: www.umts-forum.org ITU Regional Workshop, Amman, 5-7 Dec 2011

  9. Liberalisation conclusions • The liberal flexibility in itself is a two-sided sword and therefore should not be seen as universal one-fit-all solution • The optimum is likely to be achieved through balancing act: • Combination of liberalisation and flexibility with certain degree of harmonisation • E.g. liberalisation and flexibility at a technical level (license conditions) but harmonisation (regional, global) in general spectrum use trajectory, which would lead to positive mass-market effects ITU Regional Workshop, Amman, 5-7 Dec 2011

  10. What is re-farming • A tool, a process: • used by the NRA’s spectrum management policy and frequency planning functions, • whenever it becomes necessary to change the current use of spectrum, including recovering spectrum from existing users for the purpose of re-assignment ITU Regional Workshop, Amman, 5-7 Dec 2011

  11. Types of re-farming Mobile Fixed Service level: Applications level: P-P links PMR Cellular PMP links 2G 3G Technical level: Analogue Digital 25 kHz 12.5 kHz - refarming process See ECC Report 16 ITU Regional Workshop, Amman, 5-7 Dec 2011

  12. Implementing re-farming • Two steps: • deciding on necessity of re-farming • organising the process, choice of instrument ITU Regional Workshop, Amman, 5-7 Dec 2011

  13. Implementing re-farming (II) Administratively managed re-farming Re-farming through spectrum trading (*) Legal criteria Financial criteria Business criteria Political criteria Triggering considerations Socio-economic criteria Financial criteria Technical and efficiency criteria Overall analysis performed and decision taken by NRA Analysis performed and decision taken by spectrum owner (**) Incentive pricing of spectrum use Licence termination upon its expiry Voluntary withdrawal Contract between private entities (**) Choosing instrument of re-farming Revoking licence with compensation Equipment re-tuning Combination / other tools * - presuming existence of flexible spectrum use clause ** - may be subject to approval by the administration (NRA) See ECC Report 16 ITU Regional Workshop, Amman, 5-7 Dec 2011

  14. Compensation options • New user pays: compensation arrangement is made between the incumbent and new user, usually with mediating role of administration • Government pays: compensation to be paid directly from state budget or from NRA income derived from spectrum licensing fees • National re-farming fund established: NRA administers a fund created either from the payments by new operators, from licence fees or from the state budget. This fund could be then used for paying compensations for network re-deployment, financial incentives to accelerate re-farming processes, etc. ITU Regional Workshop, Amman, 5-7 Dec 2011

  15. Fund: French case study • Managed by ANFR • Strictly separated from agency budget • Ministry of Finance provided initial instalment • ANFR first pays the re-location costs to incumbent • New users pay to the fund upon receiving authorisations, i.e. already after completion of re-location of incumbent ITU Regional Workshop, Amman, 5-7 Dec 2011

  16. Fund: French case study (II) • ANFR functions: • proposes schedule • evaluates cost components • supervises carrying out of the process • controls the funds, administers payments • Fund active since 1998, initial seed from the state budget: 3 M€ • Fund’s net capital ultimo 2010: 27.3 M€ • Practical details in ITU-R Rec. SM.1603 ITU Regional Workshop, Amman, 5-7 Dec 2011

  17. Re-farming results in France New system Spectrum amount Former incumbent Source: ANFR ITU Regional Workshop, Amman, 5-7 Dec 2011

  18. Conclusions • Spectrum use liberalisation is normally intrinsically linked with allowing flexible spectrum use and secondary trading – the practical implementation of these principles and mechanisms would help the more efficient, market-driven use of spectrum • Re-farming is additional tool that may assist to resolve collision with obsolete uses, make way for innovative services ITU Regional Workshop, Amman, 5-7 Dec 2011

  19. Thank youand farewell! ITU: Committed to connecting the World ITU Regional Workshop, Amman, 5-7 Dec 2011

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