ITU/BDT Regulatory Reform Unit G-REX Virtual Conference

1. ITU/BDT Regulatory Reform UnitG-REX Virtual Conference Introduction to Spectrum Management Reform Dale N. Hatfield Adjunct Professor, University of Colorado at Boulder February 28, 2005

2. Definitions/Terminology • Allocations • The entire range of usable spectrum is divided (in the frequency dimension) into blocks or bands of frequencies called allocations; these frequency allocations determine the type of use allowed in the block or band of frequencies -- examples

3. Definitions/Terminology Allocations: U.S. Frequency Allocations Available at: http://www.ntia.doc.gov/osmhome/allochrt.html

4. FCC’s Table of Frequency Allocations47 C.F.R. §2.106 (Sample) Definitions/Terminology Complete Table Available at: http://www.fcc.gov/oet/spectrum/

5. Definitions/Terminology • Allotment (International) • Entry of a designated frequency channel in an agreed upon plan for a particular service for use in certain identified countries or geographical areas and under specified conditions • Allotment (National – US) • In general, refers to a subdivision of particular service band (allocation) for a specific user and/or provider group within the service • In broadcasting , an allotment is the association of a specific frequency or channel with a particular geographic area -- examples

6. Definitions/Terminology • Assignments • An assignment is a grant of authority -- a license -- for a specific party/individual to operate a transmitter on a specific channel at a specific location under specified conditions • In recent years and in certain services (e.g., cellular), the grant of authority has been expanded to include multiple channels covering a large geographic area employing multiple transmitter sites (area licensing)

7. Definitions/Terminology • Services • National (US examples) • PLMRS = Private Land Mobile Radio Service • CMRS = Commercial Mobile Radio Service • LMDS = Local Multipoint Distribution Service • MMDS = Multipoint Multichannel Distribution Service • ABS = Auxiliary Broadcast Service • Fixed Microwave Service • Cable TV Relay Service

8. Definitions/Terminology • Status of an Allocation • Primary and Co-Primary Allocation • Secondary Allocation • Terminology Associated with Assignments • Exclusive • Non-exclusive • Mutually exclusive • A Brief Note on Unlicensed Spectrum

9. Traditional Administrative Approachto Spectrum Allocations • Considerations in Allocations • Public need and benefits for the service • Amount of spectrum required considering: • Technical limitations on spectrum efficiency • Impact on economic viability of service • Controlling interference with other services

10. Traditional Administrative Approach to Spectrum Allocations • Considerations in Allocations (Continued) • Other technical considerations: • Ability to control interference • Propagation characteristics • Apparatus limitations • International allocation considerations • WRC Results • Use in neighboring countries • Need for international harmonization of the service Source: FCC/Hatfield/Knapp

11. Techniques for Awarding Mutually Exclusive Licenses • Definition of mutually exclusive • If, because of interference limitations, a specific channel can only be granted to one party, the channel is deemed to be exclusive • If more than one party applies for a license to operate on that channel, then the applications are said to be mutually exclusive

12. Techniques for Awarding Licenses • “First-Come, First Served” • Description -- agency accepts applications for a limited number of assignments for a short time (filing window) • If applications exceed number of licenses to be awarded, use a lottery, comparative evaluation or auction; • If fewer, award the licenses • Later applications go onto a waiting list for any licenses returned

13. Techniques for Awarding Licenses • “First-Come, First Served” (Continued) • Advantages • Speed -- licenses issued quickly • Inexpensive (to the agency and the applicant) • Disadvantages • License may not end up in the hands of the entity that values it most highly • In the modern world, with licenses valued highly, it does not really solve the problem

14. Techniques for Awarding Licenses • Comparative Evaluation or “Beauty Contest” • Description -- agency selects the winning applicant in a competitive process using comparative criteria established by precedent or by rule in a rulemaking proceeding -- examples

15. Techniques for Awarding Licenses • Comparative Evaluation (Continued) • Advantages • In theory, awards the license to the contending entity that would make best use of it from society’s point of view -- i.e., the contender who would best serve the “public interest;” can include equity considerations • Keeps the cost of spectrum to providers low thus promoting lower prices to consumers

16. Techniques for Awarding Licenses • Comparative Evaluation (Continued) • Disadvantages • Time consuming • Expensive -- because of economic value of resulting license, applicants often expend huge sums in attempting to succeed in the competitive hearing • Because of the above, the license often end up in the hands of the entity that value it most highly in economic terms in any event • Subjective nature of the process can lead to arbitrariness, unfairness, and corruption

17. Techniques for Awarding Licenses • Comparative Evaluation (Continued) • Disadvantages (Continued) • Ultimately provides no way of choosing among two or more licenses that are substantially equal -- examples, including perverse results; invites litigation and adds further delay • Promises made during the application process may be hard to enforce

18. Techniques for Awarding Licenses • Lotteries • Description -- agency selects from among qualified applicants by random selection • Advantages • Speed -- licenses issued quickly • Inexpensive (to the agency but not necessarily to the society as a whole) • Provides a mechanism for selecting from among substantially equal applications -- “tie breaker”

19. Techniques for Awarding Licenses • Lotteries (Continued) • Disadvantages • License may end up in the hands of an entity that is not qualified to build and operate the system and remedies (pre-lottery qualifications) may produce other problems • In the U.S., once the value of spectrum/licenses became apparent, speculators, “license mills,” and scam artists were drawn in • In some instances, lottery winners reaped huge windfall profits of 10s of millions of dollars in “secondary auction” -- make a killing on the public’s airwaves

20. Techniques for Awarding Licenses • Auctions • Description -- agency awards license on the basis of willingness to pay • Advantages • Speed -- licenses issued quickly • Probably less expensive to both the government and the private sector (compared to comparative hearings and perhaps lotteries) • Licenses go to the entity that values them most highly -- promotes economic efficiency

21. Techniques for Awarding Licenses • Auctions (Continued) • Advantages (Continued) • Windfall profits are, in effect, taxed away and go to the government • Process is more objective and transparent lessening opportunities for favoritism and corruption • Provides information on value of the spectrum which is useful in allocation proceedings

22. Techniques for Awarding Licenses • Auctions (Continued) • Disadvantages • May lead to increased concentration in the telecommunications industry (“the rich get richer); but antitrust laws and other rules and regulations can combat • May ignore non-financial objectives in terms of equity and the public interest; but certain of these can be designed in -- e.g., set-asides and “installment payment” plans

23. Techniques for Awarding Licenses • Auctions (Continued) • Disadvantages (Continued) • Some argue that auctions lead to less infrastructure development and higher prices to consumers • May lead to government managing spectrum in such a way as to maximize revenue to the national treasury rather than in assuring its efficient use; i.e., the monopolist’s propensity to create scarcity and raise prices

24. Techniques for Awarding Licenses • Hybrid Approaches • Combination of comparative hearing and lottery (to break ties) • Combination of auctions and comparative hearings • Advantages and disadvantages of hybrid approaches

25. Techniques for Awarding Licenses • Comments • Note that all of the above techniques are designed to solve the assignment problem; they do not: • Solve the problem of finding spectrum for new services or growth in existing services • Address ways of improving the allocation process (e.g., by reducing rigidities in the traditional methods of allocating the resource)

26. Finding Spectrum for New Services • Increased Sharing • Increased Technical Efficiency • “Band Clearing”/Reallocation • Extend the Upper Limit of the Useful Range

27. Finding Spectrum for New Services • Increased Sharing • Different services can use or “share” the same spectrum • Risk of interference is minimal • Uses are compatible or can be coordinated • Increased sharing usually comes at the expense of increased complexity and cost

28. Finding Spectrum for New Services • Example of Sharing Ships and Railroads Share Marine VHF Frequencies

29. Finding Spectrum for New Services • Example of Sharing Earth Stations (Uplinks) and Fixed Microwave Links Can Use the Same Frequencies Through Antenna Discrimination

30. Finding Spectrum for New Services • Techniques for Increasing Efficiency • Increasing the amount of information that can be transmitted in a given amount of spectrum (e.g., through improved modulation techniques) • Reducing the amount of information that has to be transmitted (e.g., through compression techniques) • Exploiting frequency reuse (e.g., by utilizing smaller cells in a cellular mobile radio system and/or by taking advantage of antenna directivity)

31. Finding Spectrum for New Services • Example of Improved Spectral Efficiency 50 kHz 25 kHz 25 kHz 12.5 kHz 12.5 kHz 12.5 kHz 12.5 kHz 6.25 kHz 6.25 kHz 6.25 kHz 6.25 kHz 6.25 kHz 6.25 kHz 6.25 kHz 6.25 kHz Reduction in Voice Channel Bandwidths in the Mobile Services

32. Finding Spectrum for New Services • “Band Clearing”/Reallocation • Lightly used spectrum can be reallocated for other purposes • Existing operations required to move to other bands (or other modes of communications) • Various techniques can be and have been adopted to facilitate band clearing (e.g., voluntary negotiations between incumbents and new entrants) • Growing demand/congestion makes band clearing increasingly difficult and contentious

33. Finding Spectrum for New Services • Extend the Upper Limit of the Useful Frequency Range • The usefulness of extremely high frequencies is constrained by • The state-of-the-art in microwave component technology • Propagation limitations • The highest frequency with service rules has steadily increased -- today the upper limit approaches 100 GHz

34. Constraints and Criticisms of the Traditional Approach • Nature of the Traditional Approach • Still primarily an engineering oriented, centralized, “command and control” system exercised through network licensing requirements focused on eliminating or minimizing interference • Facing tremendous pressures on the resource due to growth in number of users, number of uses and amount of capacity required per user

35. Constraints and Criticisms of the Traditional Approach • Criticisms of the Command And Control System of Spectrum Management • Excessive rigidity – administrative scarcity • Stifles technical and service innovation • Lacks incentives for efficient use of the resource • Creates barriers to voluntary and involuntary sharing • Erects barriers to other beneficial transactions

36. Proposals for Reforming the Traditional System • Move More Toward the Use Market-place Forces in the Management and Licensing of the Resource • Property-like, exclusive rights • Flexibility of use/unified licensing • Spectrum trading/secondary markets • Examples – Australia, Guatemala, and New Zealand and, partially, the U.S.

37. Summary and Conclusions

38. Contact Information Dale N. Hatfield Adjunct Professor Interdisciplinary Telecommunications Program University of Colorado at Boulder Engineering Center - ECOT-317 Campus Box 530 Boulder, CO 80309-0530 Main Tel: +1-303-492-8916 Direct Dial: +1-303-492-6648 Fax: +1-303-492-1112 Cell Phone: +1-303-589-4546 Email: dale.hatfield@ieee.org or hatfield@spot.colorado.edu