Spectrum Management: The Key Lever for Achieving Universality

Spectrum Management The Key Lever for Achieving Universality Authors: Antonio García Zaballos and Nathalia Foditsch Spectrum Management The Key Lever for Achieving Universality Authors: Antonio García Zaballos and Nathalia Foditsch Cataloging-in-Publication data provided by the Inter-American Development Bank Felipe Herrera Library García Zaballos, Antonio. Spectrum management: the key lever for achieving universality / Antonio García Zaballos, Nathalia Foditsch. p. cm. — (IDB Monograph ; 322) Includes bibliographic references. 1. Wireless communication systems—Government policy—Latin America. 2. Broadband communication systems—Government policy—Latin America. 3. Spectrum analysis—Government policy—Latin America. I. Foditsch, Nathalia. II. Inter-American Development Bank. Capital Markets and Financial Institutions Division. III. Title. IV. Series. IDB-MG-322 Publication Code: IDB-MG-323 JEL Codes: D47, L1, L5, L88, L96, R5 Keywords: spectrum, telecommunications, public policy, regulatory policy, competition Copyright © 2015 Inter-American Development Bank. This work is licensed under a Creative Commons IGO 3.0 Attribution-NonCommercial-NoDerivatives (CC-IGO BY-NC-ND 3.0 IGO) license (http://creativecommons.org/licenses/by-nc-nd/3.0/igo/legalcode) and may be reproduced with attribution to the IDB and for any non-commercial purpose. No derivative work is allowed. Any dispute related to the use of the works of the IDB that cannot be settled amicably shall be submitted to arbitration pursuant to the UNCITRAL rules. The use of the IDB’s name for any purpose other than for attribution, and the use of IDB’s logo shall be subject to a separate written license agreement between the IDB and the user and is not authorized as part of this CC-IGO license. 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Proofreaders: Audrey Esquivel and Steven Nelson (TriLexica Editorial) Index About the Authors ....................................................................................................................................... vii Preface and Acknowledgments ............................................................................................................ ix Executive Summary ................................................................................................................................... xi 1. Introduction .......................................................................................................................................... 1 2. Market Evolution and Demands................................................................................................... 2.1. Trafic and Speed Demands ............................................................................................... 2.2. Wireless Market Evolution in the Future ...................................................................... 3 3 5 3. Spectrum Management ................................................................................................................... 9 3.1. The Role of Government ....................................................................................................... 9 3.2. Management Frameworks ................................................................................................... 10 4. Crucial Issues Affecting Spectrum Management ............................................................... 4.1. Spectrum Harmonization and Band Plans .................................................................. 4.2. Creation of Secondary Markets ....................................................................................... 4.3. Spectrum Caps ........................................................................................................................ 4.4. Neutrality ..................................................................................................................................... 4.5. Infrastructure and Spectrum Sharing .......................................................................... 5. Spectrum Sharing ............................................................................................................................... 21 5.1. Unlicensed Spectrum Sharing ........................................................................................... 21 5.2. Licensed Spectrum Sharing .............................................................................................. 27 6. Analogue Switchoff/Digital Switchover................................................................................... 29 7. Competition and the Future of Spectrum .............................................................................. 33 8. Analysis of Reference Countries.................................................................................................. 8.1. United States ............................................................................................................................... 8.2. United Kingdom ...................................................................................................................... 8.3. Australia ....................................................................................................................................... 8.4. Germany ...................................................................................................................................... 15 15 16 17 18 19 35 36 42 47 50 iii 9. Spectrum Management in LAC Countries: Current Status and Key Challenges .......................................................................................................................... 9.1. Mobile Data Trafic and Connection Broadband in LAC....................................... 9.2. Spectrum Management in LAC ........................................................................................ 9.3. Analogue Switchoff/Digital Switchover ...................................................................... 9.4. Band Plan Options for Latin America and the Caribbean .................................. 9.5. Spectrum Caps.......................................................................................................................... 9.6. Neutrality .................................................................................................................................... 9.7. Secondary Markets ................................................................................................................. 9.8. Unlicensed Spectrum and TV White Spaces ............................................................. 55 56 58 61 61 62 63 64 65 10. Lessons Learned ................................................................................................................................ 10.1. Challenges: Institutional, Policy, and Regulatory Frameworks ...................... 10.2. Challenges: Eficiency and Flexibility ......................................................................... 10.3. Challenge: Need for More Innovative Frameworks............................................... 10.4. Challenge: Competition ..................................................................................................... 67 67 68 69 69 11. Policy Recommendations ............................................................................................................... 71 11.1. Promote Sound Institutional, Policy, and Regulatory Frameworks .............. 71 11.2. Ensure Eficiency and Flexibility ..................................................................................... 72 11.3. Enable Innovative Solutions ............................................................................................... 72 11.4. Promote Competition and Infrastructure Deployment/Sharing .................... 73 12. Roadmap for the Digital Switchover ....................................................................................... 75 13. Spectrum Management Index...................................................................................................... 79 13.1. Brief Discussion of the Results ........................................................................................ 80 Bibliography .................................................................................................................................................... 83 Annexes ............................................................................................................................................................. Annex 1: Economic Beneits of Allocating Bands and Using Unlicensed Spectrum ............................................................................................. Annex 2: Spectrum Management Index: Indicators and Variables .......................... Annex 3: Spectrum Management Index Calculation ....................................................... 95 96 101 103 List of Boxes Box 1. Box 2. Box 3. Box 4. Box 5. Box 6. Box 7. Box 8. iv Difference in Spectral Eficiency among Bands ....................................................... 5 Supplemental Downlink.......................................................................................................... 6 Allocations, Allotments, and Assignments ................................................................... 10 Main Spectrum Management Frameworks ................................................................. 11 Spectrum Underutilization .................................................................................................... 12 Convergence and Service Neutrality ............................................................................. 18 Nomadic Wireless and Data Ofloading ....................................................................... 21 HetNets and Vertical Handovers ....................................................................................... 22 SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY Box 9. Box 10. Box 11. Box 12. Why the 700 MHz Band is an Ideal Band for Broadband Use ........................... 30 Spectrum Refarming .............................................................................................................. 31 The Digital Switchover in Spain .......................................................................................... 32 Spectrum Liberalization: Guatemala .............................................................................. 65 List of Figures Figure 1. Figure 2. Figure 3. Figure 4. Figure 5. Figure 6. Figure 7. Figure 8. Figure 9. Figure 10. Figure 11. Figure 12. Figure 13. Figure 14. Figure 15. Figure 16. Figure 17. Figure 18. Figure 19. Figure 20. Global Mobile Data Trafic, 2012–17 ............................................................................ Projected Average Mobile Network Connection Speeds by Region (in Kbps) ........................................................................................................................... Active Mobile Broadband Subscriptions per 100 Inhabitants ...................... Carrier Aggregation: Intra-Band and Inter-Band Aggregation Alternatives ................................................................................................ Examples of Spectrum Allocation .............................................................................. Total CAPEX and OPEX Ratios for MNOs............................................................... Digital Dividend Spectrum.............................................................................................. Historical Wireless Broadband Penetration Rates in Selected Countries, 2009–13 ......................................................................................... Wireless Broadband Penetration Rates in the United States, 2010–13 ...................................................................................................... Wireless Broadband Penetration Rates: UK, 2009–13 .................................... Wireless Broadband Penetration Rates in Australia, 2009–13 ..................... Wireless Broadband Penetration Rates in Germany: 2010–2013 ................ Mobile Data Trafic in LAC, 2012–2017 ...................................................................... Band Plans for the Digital Dividend .......................................................................... Spectrum Management Index for Selected Countries ..................................... SMI Pillars ................................................................................................................................. Governmental Institutions ............................................................................................... Policy and Regulation........................................................................................................ Infrastructure ......................................................................................................................... Competitiveness and Innovation ................................................................................. 3 4 4 6 9 19 29 36 37 42 48 51 58 62 81 81 81 82 82 82 List of Tables Table 1. Table 2. Table 3. Table 4. Table 5. Table 6. Table 7. Table 8. Worldwide Smartphone Usage and Penetration, 2012–17 ............................... Management Frameworks ................................................................................................ Potential Applications, Descriptions, and Examples of TVWS ...................... Summary of Main Characteristics of ASA/LSA..................................................... Different Indicators of the Mobile Sector in the Selected Countries .......... Mobile Broadband Indicators: United States, 2013 .............................................. Licensed Spectrum Available for Mobile Broadband: United States, 2013 ............................................................................................................... Mobile Broadband Indicators: the UK, 2013 ............................................................ 4 14 25 28 35 36 38 42 INDEX v Table 9. Table 10. Table 11. Table 12. Table 13. Table 14. Table 15. Table 16. Table 17. Table 18. Table 19. Table 20. Table 21. Table 22. Table 23. Table 24. Table 25. Table 26. Table 27. Table 28. Table 29. vi Available Licensed Spectrum Available for Mobile Broadband: UK, 2013 ..................................................................................................................................... 43 Mobile Broadband Indicators: Australia, 2013 ........................................................ 47 Available Licensed Spectrum Available for Mobile Broadband: Australia, 2013 ......................................................................................................................... 48 Broadband Mobile Indicators: Germany, 2013........................................................ 51 Licensed Spectrum Available for Mobile Broadband: Germany, 2013 ....... 52 Projected Smartphone Usage Growth in Latin America, 2012–17 ............... 56 Broadband Access Initiatives.......................................................................................... 57 Estimate of Regional 4G Connections ....................................................................... 59 Telecommunications Regulatory Governance Index: Ranking of the Americas versus Australia, Canada, Germany, and UK .... 59 Current Spectrum Usage in Latin America and the Caribbean .................... 60 Amounts Related to the Award of the 700 MHz in Selected Countries in Latin America and the Caribbean ................................. 61 Latin America’s Mobile Spectrum Cap....................................................................... 63 Service Neutrality of Licensing Arrangements in Latin America and the Caribbean ................................................................................ 64 Uniied Licensing Regimes in Selected Countries ................................................ 64 Creating Sound Regulatory and Policy Frameworks: Challenges, Risks, and Actions ..................................................................................... 76 Engage Key Stakeholders: Challenges, Risks, and Actions ............................ 76 Ensure Harmonization: Challenges, Risks, and Actions ................................... 77 Auction the Digital Dividend: Challenges, Risks, and Actions ...................... 77 Spectrum Management Index Pillars .......................................................................... 80 Variable Type of Normalization...................................................................................... 103 SMI: Indicators and Weights ............................................................................................ 104 SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY About the Authors Antonio García Zaballos, Lead Telecommunica- author of several publications on the economic tions Specialist in the Institutions for Develop- and regulatory aspects of the telecommunica- ment Sector at the Inter-American Development tions sector. Bank (IDB), has more than 15 years of experience in the telecom sector. Previously, at Deloitte Nathalia Foditsch, Licensed Attorney, specializes Spain, Antonio led the practice of regulation and in public policy and regulatory practice. Before strategy. He was also the head of the Cabinet for working for the Broadband Special Program at the Economic Studies of Regulation for Telefónica in IDB, Nathalia worked at the Brookings Institution, Spain and a deputy director of economic analysis the World Bank, the Brazilian Antitrust Authority, and markets at the Spanish Telecom Regulator. and various law irms. She holds master’s degrees He holds a PhD in economics from the University in law and public policy. Nathalia is currently a Carlos III of Madrid and is an associate profes- co-lecturer for the Brazil-U.S. Legal and Judicial sor of applied inance in telecommunications at Studies Program at American University Washing- the IE Business School in Madrid. Antonio is the ton College of Law. vii Preface and Acknowledgments ireless broadband has been a key le- W undertaken to achieve an eficient management ver for digital inclusion in developed of spectrum? How have they have shifted toward and developing countries. Penetration more modern management approaches? These of wireless Internet and the economic and so- answers can be used as a benchmark for good cial beneits deriving from it have been increas- regulatory governance. ing. Ensuring that citizens in Latin American and Governance is a key issue in decisions related Caribbean (LAC) countries have access to univer- to spectrum management in the LAC region. Sound sal and affordable broadband will lead to acceler- policy and regulatory frameworks should be able ated development throughout the region. to address issues such as the allocation of the digi- Examples of the beneits of wireless broad- tal dividend bands, the refarming of frequencies, band include access to educational content, health the availability of unlicensed spectrum, and the services, and e-governance solutions. Broadband adoption of new technologies. These decisions will also affects how people connect to each other, ultimately have an impact on the quality and cost how they engage to democratic processes, and of future broadband services. The occasion for how they read their daily news. These factors have this publication is opportune, and the knowledge generated an increase in data trafic and demand gained from it will ultimately contribute to a proac- at an unprecedented rate. Eficient spectrum tive agenda by the decision makers in the region. management is mandatory to meet these challenges and bridge the digital divide. This study examines the experiences of spectrum management in four countries with a In closing, we would like to extend our gratitude to Darrin Mylet, Sidney Nakao Nakahodo, Konstantinos Stylianou, and Anne-Lise Thieblemont for their invaluable contributions to this publication. high percentage of wireless broadband penetration (Australia, Germany, the United Kingdom, Antonio Zaballos and the United States). What actions have they Nathalia Foditsch ix Executive Summary he Inter-American Development Bank (IDB) T The timing of this study is pivotal to the many is committed to the development of coun- policy and regulatory decisions that are currently tries in the Latin America and the Caribbean under way in various regions. Countries are con- (LAC) region. The IDB currently supports the ef- sidering the following: (i) to auction their digi- forts of countries to close the digital divide and tal dividend bands, (ii) which band plans to use, achieve universal access to broadband by pro- (iii) whether or not to refarm their frequencies, moting more affordable services. For a country’s and (iv) how much unlicensed spectrum should development, it is crucial that the electromagnet- be made available and under what circumstances. ic spectrum be the inite resource behind the rev- Their decisions, ultimately, will have an impact on olutionary increase in Internet access. This study the quality and price of future broadband services. aims to inform policymakers, practitioners, and The irst part of this study provides the ratio- civil society about the current status and future nale for the constant increase in demand for spec- trends of spectrum management. trum. How the wireless market has been evolving While spectrum is a scarce resource, the rate is then discussed, including the new technologies of increase in data trafic and demand is expo- responsible for its evolution, namely Long-Term nential. “Will we have suficient spectrum to meet Evolution (LTE) and LTE-Advanced; small cells; future demand?” This is a question posed by the Dynamic Spectrum Access (DSA); and Wi-Fi. industry. “Will we be able to pay a lower price for The second part of the analysis addresses more data?” This is a concern to the consumer. the main issues involved in managing spectrum, While the answers are yet unknown, it is clear that from frameworks to how these have been evolv- network capacity and the eficient management ing throughout the years. In terms of the spectrum of spectrum are major challenges that are the debate, the harmonization of band plans, spec- responsibility of governments. Opportunities are trum caps, and the neutrality of service and tech- now available to ensure eficient management of nology are discussed. spectrum. These opportunities will enable coun- The third section explains the new spectrum tries to provide more affordable Internet access trends relating to (i) infrastructure sharing, which and allow them to progress towards the goal of may take different forms, ranging from the shar- universal access. These two objectives are the ing of site, tower, and radio access networks to key pillars of national public policy relating to the network roaming and core network sharing; and development of broadband. (ii) spectrum sharing, which can be licensed or xi unlicensed. The latter relects licensed spectrum (iii) availability of spectrum; (iv) innovative policies that can be shared, given that the rights can be that have been implemented or are being consid- traded on the market. In the case of unlicensed ered; and (v) main aspects of the analogue swi- spectrum, there are new technologies to enable tchoff process. From this analysis, the key indings sharing. The main advantages of each is discussed, and lessons learned will be determined. as well as their potential to democratize access to broadband services. The sixth segment of the document will include a systematic analysis of the LAC region An analysis of analogue switchoff and digital by applying these ive criteria. The comparison switchover is included in the fourth section of this between the experience of the reference coun- study. This relates to the transition from analogue tries and that of the LAC region will determine the to digital broadcasting, resulting in the freeing up main gaps that exist relating to spectrum manage- a large amount of frequencies. Many countries ment. In addition, issues such as spectrum band are now selecting what frequencies should be plan alternatives for switchover, the approach to assigned and which of those should be used. spectrum caps, and the unlicensed use of spec- A comparative analysis of current issues in trum are addressed. spectrum management in four reference coun- Finally, the Spectrum Management Index tries is made in the ifth section of the study. These (SMI) is discussed. This is an innovative index that include Australia, Germany, the UK, and the United demonstrates the ability of selected LAC countries States, which have undertaken different policy to create opportunities to improve the manage- and regulatory spectrum measures, and whose ment of spectrum, thus expanding Internet access experience can be useful to other countries. The through four pillars: (i) Government Institutions, following criteria relate to each of these four coun- (ii) Policy and Regulation, (iii) Infrastructure, and tries: (i) regulatory and institutional framework; (iv) Competitiveness and Innovation. Each of these (ii) institutional, policy, and regulatory frameworks; pillars comprises a different set of indicators. xii SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY 1 Introduction T he Digital Divide, which is the disparate ac- creates space for social interaction. Its beneits cess to and the use and/or knowledge of are nonlinear and are growing exponentially as the information and communication technolo- level of penetration increases (Galperin, 2012). The gies (ICT) between groups, is one of the main fac- Internet of Things, a concept that is still evolving, tors underlying social inequality in the twenty-irst whereby “the virtual world of information tech- century. As the development of technology expo- nology integrates seamlessly with the real world nentially grows, the same may occur in terms of of things” (Uckelmann, Harrison, and Michahelles, access to ICT knowledge, especially in those re- 2011) is an example of the potential to maximize gions that suffer from poor infrastructure. the Internet’s positive impact on society. For this The beneits from accessing ICTs can help to occur, a critical mass of broadband penetration transform people’s lives in numerous ways, such and its adoption in households and businesses is as improving access to health and education. essential. Fostering access to broadband, therefore, is a Broadband Internet penetration can be mea- key to achieving the Millennium Development sured as the sum of ixed and mobile broadband Goals (MDGs) of the United Nations (UN). The subscriptions within a country. Mobile broadband UN has stated “by end of 2013, an estimated 2.7 penetration, however, is still low in most develop- billion people will be using the Internet, which ing countries—at an average of 8 percent versus corresponds to 39 percent of the world’s popu- 51.3 percent in developed countries (ITU, 2011). lation. Growing infrastructure in information and Fixed line broadband has been the Inter- communications technology, including mobile net enabler in developed markets, but is quite wireless broadband networks, along with social costly, especially in the context of developing media, innovative applications and falling prices markets. Mobile infrastructure is less expensive for services continue to drive Internet uptake in as it requires lower capital expenditure. Mobile all regions of the world” (UN, 2013a). MDG 8 com- access is not only the fastest growing modality of mits, among its objectives and in cooperation with high speed Internet; it may also produce a higher the private sector, to make available the beneits impact on development. While mobile broadband of new technologies to all (UN, 2013b). was once viewed as a complement to an exist- Fast and reliable Internet access promotes ing broadband service, some studies indicate business opportunities, empowers citizens, and that the number of households that use mobile 1 broadband as their only connection is on the mobile broadband plan compared to 30.1 percent increase (Ofcom, 2010). Additionally, the rate for of GNI a month per capita for a postpaid ixed mobile phone penetration is above 100 percent broadband plan with 1G of data (ITU, 2013). Since in most LAC countries and it is the fastest grow- the mobile broadband resource is inite, good ing modality of high speed Internet. These factors spectrum management is essential for prices to are thus driving the need to accelerate the rate of be affordable to all people. penetration and usage of mobile broadband services in the region. Latin American and Caribbean countries have varying views of broadband access, usage, and The electromagnetic spectrum is the inite adoption. Despite the disparities between and resource for revolutionary Internet access increase within countries, the region faces a signiicant and it will stimulate the Internet of Things. As pre- increase in wireless penetration. National broad- viously mentioned, data trafic and demand are band plans are now being developed and many of increasing at an unprecedented rate and Internet them include guidelines on how the electromag- usage has become so popular that the industry netic spectrum should be managed in the future, fears a spectrum crunch in the upcoming years. as well as goals in terms of access, speed, and In order to meet the growing need for network coverage. capacity, countries should ensure that electro- The debate on spectrum management is magnetic spectrum meets the high demand and timely, since relative policy and regulatory deci- that it is used in the most eficient way. Because sions are currently under way in the region. The of its importance, effective management of the goals of each country may differ in terms of the spectrum is critical to the efforts of government eficient usage of spectrum, rapid introduction of to expand Internet access to its population. The new wireless technologies, protection of public development of new technologies and the tran- services and social welfare, minimization of inter- sition from analogue to digital broadcasting— ference, solutions for technical coexistence issues, which affect the spectrum—will change the way revenue generation and, as previously mentioned, countries will view their roles expanding Internet universal access. access through eficient management. The analysis in this publication has sought Two objectives of national public policy in similarities between the four referenced countries terms of broadband development are the oppor- on some of the key questions of spectrum man- tunities for more affordable Internet access and agement. They include how these countries have the progress towards universal access. Universal managed to achieve more eficient management access and spectrum management are closely of spectrum and how they have shifted towards related, since mobile broadband services cost more modern and market-based approaches in considerably less than ixed broadband services in contrast to that of a command-and-control basis. developing countries: 8.8 percent of gross national The knowledge gained from this study can contrib- income (GNI) a month per capita for 1 gigabyte ute to a proactive agenda by LAC governments, as (G) of data relating to a postpaid, computer-based well as to the decision makers in the region. 2 SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY 2 Market Evolution and Demands 2.1. Traic and Speed Demands Mobile connection speeds were twice as high in 2012 compared to 2011, with an average rate of The need for spectrum has grown at a fast pace 526 Kilobits (Kbps) a second (Cisco, 2013) (see around the world. In 2012, mobile data trafic was Figure 2). While ixed Internet is anticipated to nearly 12 times the volume of the entire global grow at a compound annual growth rate of 21 per- Internet in 2000 (Cisco, 2013). Last year, it reached cent by 2017, mobile data is estimated to increase 885 petabytes a month, equivalent to more than 29 by 62 percent by the same year (Cisco, 2013). 1 times the content found in all academic research libraries per diem in the United States—an increase 1 The concepts of wireless and mobile technology are linked; wireless is the enabler for mobile connectivity, but does not only encompass mobile connectivity, as described further on this document. of 70 percent compared to 2011 (Caltech, 2013). Figure 1 illustrates this fast increase in trafic, as well as an estimate for the next few years. FIGURE 1. Global Mobile Data Trafic, 2012–17 90% 12,000,000 80% 10,000,000 70% 60% 8,000,000 50% 6,000,000 40% 30% 4,000,000 20% 2,000,000 10% 0% 0 Asia-Pacific Central and Eastern Europe 2012 Latin America 2013 Middle East and Africa 2014 North America 2015 2016 Western Europe Total Mobile Data Traffic 2017 Source: Authors; data from Cisco (2013). 3 FIGURE 2. Projected Average Mobile Network Connection Speeds by Region (in Kbps) 16,000 FIGURE 3. Active Mobile Broadband Subscriptions per 100 Inhabitants 80 70 67.5 36% 14,000 60 12,000 50.5 50 10,000 40 8,000 54% 6,000 57% 4,000 68% 2,000 62% 0 2012 2013 2014 2015 2016 30 20 10 0 Central & Eastern Europe North America Asia-Pacific Latin America Middle East and Africa 10.9 7.1 2011 Africa CIS 22.4 18.9 15.8 14.3 11.2 10.8 4.7 7.4 5.1 1.8 2010 2017 39.8 36.0 36.6 33.6 31.3 28.7 22.9 22.3 48.0 46.0 2012 Arab States Europe 2013 Asia-Pacific The Americas Source: Authors; data from the ITU’s ICT Indicators database. Source: Authors; data from Cisco (2013). The escalating rise in the use of smartphone and other wireless technologies has inluenced between regions, a consistent positive trend can be determined for each. the demand for wireless broadband Internet. As In developing countries, where ixed-line previously mentioned, the Internet of Things will broadband infrastructure is scarce or nonexistent, drive the critical mass of broadband penetration wireless broadband may be a more cost-effec- and adoption (Uckelmann, Harrison, and Micha- tive substitute, since the need for iber-optic lines helles, 2011). It is estimated that by 2017, there for ixed-line broadband infrastructure requires will be 2.5 networked devices per capita, globally, higher levels of capital expenditure (CAPEX) and 54 percent of these will be mobile-connected (McDonough, 2012) compared to wireless infra- (Cisco, 2012). Table 1 shows the global actual and structure. This is especially so when low frequencies anticipated increase in mobile broadband sub- are used, as they have a higher spectral eficiency, scriptions in the period 2012–17. thus allowing for more capacity to deploy fewer Figure 3 illustrates the rise in active mobile base stations. This would incentivize businesses to broadband subscriptions per 100 inhabitants in place infrastructure in underserved areas. Wireless different regions of the world. Despite differences access would then become not only the fastest TABLE 1. Worldwide Smartphone Usage and Penetration, 2012–17 Smartphone users (billions) 2012 2013 2014 2015 2016 2017 1.13 1.43 1.75 2.03 2.28 2.50 12.3% 9.7% % change 68.4% 27.1% 22.5% 15.9% Mobile phone users (%) 27.6% 33.0% 38.5% 42.6% 46.1% 48.8% % of population 16.0% 20.2% 24.4% 28.0% 31.2% 33.8% Source: eMarketer (2014). 4 SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY • Box 1. Diference in Spectral Eiciency among Bands Different bands have varying propagation char- Mobile wireless access: Wireless access application in which the location of the end-user termination is mobile. • Nomadic wireless access: Wireless access acteristics that make the spectrum more or less application in which the location of the end- appropriate for mobile broadband use. Low fre- user termination may be in different places, quency spectrum allows a high level of cover- but it must be stationary while in use. age with a small fraction of the number of sites deployed and, therefore, requiring much less The Radio Access Network (RAN) is an impor- CAPEX. These technical differences among the tant piece of the network infrastructure as it pro- bands create substantial variations in terms of vides wireless connectivity to mobile devices in a deployment needs and costs. With 800 MHz, for wide area. It also resolves the issue of calculating example, only 2,000 sites are necessary to pro- how best to use and manage limited spectrum to vide certain coverage, whereas with 1,800 MHz, this number will increase to 10,000 sites. With 2.6 GHz, the number rises to as high as 20,000 sites (Cramton, 2012). There is debate on whether ixed broadband and mobile services are complementary or sub- achieve connectivity. Traditionally, RAN architecture has a base station that connects to a ixed set of antennae that cover a given area and can only handle uplink and downlink signals on the surface it covers. stitute each other. Studies already indicate, how- To expand RAN capacity, it is necessary to build ever, that the number of households that use more base stations, while upgrading the system mobile broadband as their only connection is can require changing the stations, both of which increasing (Ofcom, 2010). are costly, thus increasing CAPEX and operational expenditures (OPEX). To optimize the performance of existing infrastructure, various technical solutions are now available. These are described below. growing method for high speed Internet; it may also have a higher impact on development. 2.2.1. Long-Term Evolution/LTE-Advanced 2.2. Wireless Market Evolution in the Future LTE is one of the technologies that enable the optimization of network performance. It is a standard 4G wireless broadband that is part of the Global Wireless access systems are deined as broad- System for Mobile Communications, originally band radio systems. According to the Interna- the Groupe Spécial Mobile upgrade. The technol- tional Telecommunications Union (ITU) (ITU, ogy offers higher data rates and shorter latency 2001), wireless access refers to “end-user radio times when compared to previous methods. It connections to core public and private net- also provides operators with the capacity and works.” The types of wireless access can be clas- speed to handle a rapid increase in data trafic. siied as: The irst commercial LTE networks were launched in December 2009 and more than 60 percent of • Fixed wireless access: Wireless access appli- operators in the LAC region were expected to cation in which the location of the end-user launch LTE by 2014 (Rojas, 2012). termination and the network access point to be connected to the end-user are ixed. Frequency Division Duplexing (FDD) and Time Division Duplexing (TDD) are two versions of LTE MARKET EVOLUTION AND DEMANDS 5 FIGURE 4. Carrier Aggregation: Intra-Band and Inter-Band Aggregation Alternatives nX300kHz f Intra-band, contagious Band 1 f Intra-band, non-contagious Band 1 f Inter-band, non-contagious Band 1 Band 2 eNodeB Source: 3GPP (2013). technology. FDD uses symmetric paired blocks for uplink and downlink frequencies and it is the Box 2. Supplemental Downlink most common band plan in the United States. TDD uplink and downlink frequencies occur in blocks Carrier aggregation has made new uses of spec- that are segmented by time, and TDD is more suit- trum possible, such as the Supplemental Down- able for asymmetrical broadband (Musey, 2013). link (SDL), currently under study by the 3rd LTE-A is the next step in the LTE evolution, which allow for downlink and uplink rates of 3G and 1.5 gigabits, respectively—up to 10 to 20 times faster than the original LTE. The main new functionalities are (i) carrier aggregation, through Generation Partnership Project (3GPP). It will allow operators to make the most of fragmented spectrum holdings and unused parts of the spectrum, as described in the box below. The European Union’s standards entity, the European Conference for Postal and Telecommu- which bandwidth is increased by aggregating nications Administrations (CEPT), has approved spectrum; (ii) spatial multiplexing, where multiple the use of this mobile satellite band for two-way antennae are used; and (iii) Relay Nodes which are mobile use, reserving the L-band and maintain- low-power base stations that can improve the efi- ing it speciically for SDL. It is also under analysis ciency of macro and small cells (3GPP, 2013). In before the Federal Communication Commission short, carrier aggregation is used in LTE-A in order (FCC) in the United States, which describes to increase the bandwidth and eficiency. it as a “voluntary industry solution that would The best way to arrange aggregation would be resolve the lack of interoperability in this band to use contiguous component carriers within the while allowing lexibility in responding to evolv- same operating frequency band, known as intraband contiguous. Allocations are not always contiguous, however. For noncontiguous allocation, it can be either intra-band or inter-band. Intra-band takes place when component carriers belong to ing consumer needs and dynamic and fast-paced technological developments” (FCC, 2013a). The technology is expected to enable consumers to enjoy the beneits of greater competition and promote widespread deployment of mobile broadband services, especially in rural areas. The the same operating frequency band, but have a standards for this technology are now under gap, or gaps, in between. Inter-band takes place study by 3GPP. when the component carriers belong to different 6 SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY operating frequency bands (3GPP, 2013). Figure 4 These technologies have the potential to illustrates the intra-band and inter-band aggrega- support various uses and are currently being tion alternatives. researched in depth. They are viewed as disruptive, however, since they enable the prompt 2.2.2. Small Cells launch of new wireless technologies and services without setting aside any new spectrum to assist Between 50 and 60 percent of mobile data traf- the industry to meet trafic demand. ic is concentrated in 10–15 percent of the global By unitizing the spectrum in time and/or geographic area. In addition, between 2 percent geography, Cognitive Radio Technologies allows and 3 percent of users generate almost half of for a more dynamic use of spectrum, detecting the total volume (Dhawan, Mukhopadhyay, and frequencies that are not being used, as well as Urrutia-Valdés, 2013). This is the basis for recent adjusting to those frequency bands that are avail- developments regarding small cells, which relate able. The main concern with regard to DSA, how- to trafic within smaller geographic areas, reduc- ever, is the potential for interference, which could ing the CAPEX of operators. hamper the quality of service (QoS). Moreover, According to the Small Cells Forum, it is “an there are concerns about the reliability of ser- umbrella term for operator-controlled, low-pow- vice due to competition for the same frequencies ered radio access nodes, including those that (Altamimi, Weiss, and McHenry, 2013). Nonethe- operate in licensed spectrum and unlicensed car- less, such challenges may be tackled as the tech- rier-grade Wi-Fi. Small cells typically have a range nology evolves. from 10 metres to several hundred metres”. They The advances described above will allow for are classiied as femtocells, picocells, metrocells, more eficient use of spectrum and, the faster and microcells (Small Cells Forum, 2013). Small cell these are adopted, the sooner operators and units tend to be less powerful, but have the size and wireless broadband users will beneit. At the same 2 weight advantage compared to macro cell equip- time, it is crucial to channel efforts for good spec- ment. They can be used as a standalone application trum management and, for this, it is important or with macro-coverage, used indoors and out- to establish a regulatory framework in anticipa- doors, and support ideal and nonideal backhauls, tion of the launching of such technologies by the ensuring greater lexibility (Nakamura et al., 2013). industry. 2.2.3. Dynamic Spectrum Access DSA is a basic concept underlying the current spectrum sharing trends—possibly due to the development of new technologies, such as Software Deined Radios (SDR) and Cognitive Radio Technologies, 3 which allow for “opportunistic spectrum access” when frequencies are used without causing harm to the incumbent operating services in the occupied television (TV) channels. One example of DSA technology is the TV White Spaces (TVWS)—parts of the spectrum purposely left unused in order to avoid interference. See Small Cell Forum: http://www.smallcellforum.org/ aboutsmallcells-small-cells-what-is-a-small-cell. 3 CRs and SDRs are terms that are often used interchangeably. In this study, we will follow that practice, but the main differences are that “CRs distribute decision making functionality into the radio access network, and ultimately to the handsets allowing them to make operational decisions, including such functionality as sensing the RF environment for spectrum white spaces, controlling frequency selection, power, or other operating parameters/modes. In contrast, SDRs are an implementation technology, implementing in software what previously would have been implemented in radio hardware. As such, SDRs are a key enabling technology for CRs” (Weiss et al., 2012). 2 MARKET EVOLUTION AND DEMANDS 7 3 Spectrum Management 3.1. The Role of Government important to maximize the net social beneit of spectrum use. As explained previously, spectrum management Spectrum is a resource used for several of is crucial for the development of wireless broad- the technologies surrounding us, such as broad- band. The following relates to the role of govern- cast TV, radio, cellular telephone, satellite com- ment and how the approach to management has munications and, most recently, wireless Internet. been changing over time. Figure 5 illustrates an example of how spectrum Spectrum is a inite resource and must be has been utilized to date. administered accordingly. As Stine and Portigal These various uses are possible due to spec- (2004) describe, the ultimate goal of spectrum trum management, which involves frequency management is “to prevent users from harm- allocation, allotment, and assignment, as well as ful interference while allowing the optimum use planning, authorizing, engineering, and monitor- of the spectrum.” Economic factors are also ing their use as established in the National Tables FIGURE 5. Examples of Spectrum Allocation Source: GAO (2011). 9 region. Despite the role these organizations have Box 3. Allocations, Allotments, and Assignments in terms of general management, each country maintains authority over its own spectrum and is Spectrum management is viewed as a system of frequency allocations, allotments, and assignments. The entire spectrum is divided into frequency bands, known as allocations. These allocations specify the permitted use of frequen- responsible for establishing the legal, policy, and regulatory frameworks that relate to it. Governments play a pivotal role in reconciling short-term priorities with long-term goals. cies within the band. The uses are referred to as National goals for spectrum management include radio services (e.g., ixed, mobile, broadcasting, the following: radiolocation, amateur, satellite, radio astronomy, • etc.). spectrum hoarding). The allocations may then be further subdivided into allotments. Frequency channels are Eficient use of spectrum (e.g., avoidance of • Rapid introduction of new technologies (e.g., allotted within the band, according to an agreed introduction of more eficient wireless tech- plan, for use by one or more administrations in nologies that utilize a smaller amount of spec- one or more identiied countries or geographic trum and provide improved service). areas and under speciic conditions. Allotments attempt to prevent interference among users • (e.g., use of spectrum for public purposes, that are managed by different administrations. such as communications for forest service One example is the allotment of channels in plans communication). to avoid interference along borders of countries that are members of the plan. Protection of public service and social welfare • Minimization of interference and the solution Finally, an assignment is a grant of authority for coexistence issues (e.g., authorization of or license to a speciic user for a band of frequen- devices that employ digital signal processing cies or a radio frequency channel under speciic that coexist without interference). conditions. Assignments are the inal subdivision • • Source: Stine and Portigal (2014). Generation of revenue (e.g., revenue from auctions used to balance national accounts). of spectrum. Promotion of universal access (e.g., ensuring that the underserved areas have access to broadband). of Frequency Allocations for each country. Box 3 3.2. Management Frameworks explains the system of frequency allocations, allotments, and assignments. Spectrum management frameworks have been The ITU is the specialized agency of the United traditionally classiied according to three models: Nations that is responsible for issues relating to command-and-control, licensed, and unlicensed. information and communication technology. Its The command-and-control model establishes framework voluntarily guides national regulators a top-down approach, where the government on the enforcement of norms relating to spectrum has power to designate the use, technology, and management. The Inter-American Telecommuni- users of the spectrum in the interest of the public. cation Commission (CITEL), Caribbean Telecom- The licensed model is a market-based approach, munications Union (CTU), and Association of whereby licensees follow the rules established by National Telecommunication Organizations also regulators. Under the unlicensed model, spectrum play an important coordinating role in the LAC is available to all with no limitation. 10 SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY A range of products and technologies has command-and-control, licensed, and unlicensed changed in ways that could not possibly have been models is outlined in Box 4. foreseen. For this reason, there is no one-size-itsall solution and governments should avoid the 3.2.1. Command-and-Control Model powerful vested interest of substituting rules that will make necessary changes in the future dificult The command-and-control model is justiied on to implement. A brief description of each of the the grounds that spectrum is a public resource that requires government to act in the public interest. Despite being more transparent, however, command-and-control is associated with higher Box 4. Main Spectrum Management Frameworks Command-and-control (authoritative): With this model, government is able to designate the use of spectrum, the technology, and its users. The government becomes the central authority for spec- costs and more delays because of the regulatory processes and rules to protect public authorities from regulatory capture and which are designed to enhance the quality of shared information (Lehr and Crowcroft, 2005). trum allocation, assignment, and usage decisions, This model is arguably considered to be inad- and determines the use of speciic portions of the equate, as governments may lack the expertise spectrum, which players will have access to them, to make informed decisions (Lehr and Crowcroft, for how long, and which physical layer technolo- 2005). The ineficiency could slow down inno- gies can be used. It neither ensures whether the vation due to the maintenance of old technolo- spectrum is eficient nor—as is often the case— gies (OECD, 2007). This approach also leads to whether the allotments are used at all. Underuti- the underutilization of spectrum by the spectrum lization of spectrum is, therefore, one of the main holder, since the dominant market players may be challenges under this model. inclined not to make use of it. Licensed (property rights): This approach pro- Example: vides users the exclusive right to use spectrum, in addition to the right via administrative (comparative selection), market mechanisms (auction), or the right to trade spectrum in secondary markets. It may be suitable when scarcity is high and transaction costs, associated with access • This is the default method of government to utilize spectrum to accomplish its tasks, such as using radar systems, voice communication systems, and aeronautical radio navigation. rights, are low (OECD, 2007), but it can also lead to spectrum underutilization. 3.2.2. Licensed Model Unlicensed (commons approach/open spectrum): Unlicensed spectrum is a regime under which the As already described, the key purpose for man- use of spectrum is open to anyone and interfer- aging spectrum is to increase the social gains ence is avoided through the use of technologies from its use while avoiding interference between that allow for this sharing model. This model is par- different users. The way in which this optimal ticularly useful for applications in which the trans- management has been viewed, however, has action costs of licensing users would far exceed the changed in the past years as countries transition value of the small quantity of spectrum that they consume (Matheson and Morris, 2012). This regime encourages innovation without permission—reducing barriers to entry and enabling experimentation. from more constrained to more market-based models. Since the time that Coase (1959) advocated that spectrum rights should be sold to ensure eficient use through market allocation, SPECTRUM MANAGEMENT 11 licenses have been used in order to prevent radio model makes possible the creation of second- interference. ary spectrum markets, in which license holders Under a Coasian bargaining process, users can trade their property rights, thus helping to may have exclusive rights to use spectrum, plus advance economic welfare. Nevertheless, such rights through administrative (comparative selec- secondary markets are not yet a reality in many tion) or market mechanisms (auctions). The key to countries. this model is that it can result in spectrum scarcity Licensing schemes vary depending on the and low transaction costs associated with access country. Most times, however, the right to a license rights (OECD, 2007). Spectrum holes are also comes with obligations such as coverage require- a potential problem in this model. These relate ments. This relects an important step towards to a band of frequencies assigned to a primary achieving universal service. (licensed) user, although the band may not be uti- Example: lized by that user at a particular time and speciic geographic location (Haykin, 2012). This underuti- • The Authorized Shared Access/Licensed lization of spectrum is an issue in various coun- Shared Access (ASA/LSA) is an example of a tries, as explained in Box 5. framework that is currently being actively dis- Flexible-use spectrum rights could accom- cussed in international forums. It proposes a modate competitive new services and allow for sharing scheme in which dedicated spectrum more eficient market allocations of rights across should be assigned by either the incumbent exclusive rights holders. The property rights user or by the licensee in any given place at Box 5. Spectrum Underutilization Spectrum is, by deinition, a scarce resource. Such scarcity is frequently aggravated by the abuse of the market power of spectrum holders, such as the intentional underutilization of the spectrum. Spectrum hoarding makes the markets signiicantly less accessible to new entrants; spectrum holders thwart competition among providers. The traditional command-and-control model, whereby the government decides the purpose, the technologies, and which frequencies can be used, generally does not ensure that the spectrum is eficiently employed, if at all. Under the license model, spectrum holders may not be motivated to make use of spectrum, especially when they are in a dominant market position. Spectrum measurement studies, undertaken some years ago in Manhattan, New York, and Washington D.C., showed that less than 20 percent of the frequency bands below 3 gigahertz (GHz) were employed over the course of a business day, and the highest occupancy rate below 3 GHz was only 13 percent in New York City and an average 6 percent across various locations included in the studies. The underutilization of spectrum has not always been easily measured, but new technologies have made it possible to create an inventory of underused frequencies (Calabrese, 2006). Inventories provide “an opportunity for identifying spectrum supply, assessing its demand and consulting with all stakeholders on the different proposals. This could assist, together with technical studies, in identifying candidate bands for sharing and assessing the feasibility of deployment scenarios for new entrants” (OECD, 2014). Another mechanism that has been discussed in various countries is the use-it-or-lose-it provision, whereby those license holders who do not make use of the spectrum licenses lose their rights. In Jamaica, the ICT Policy expressly includes such provision within its strategies. 12 SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY any given time. More information on ASA/LSA created a regulatory framework for the use is provided below. of TVWS, and other countries are considering doing the same. 3.2.3. Unlicensed Model • Wi-Fi is one of the most prominent examples of innovation and actual market practice. “Car- Advocates of the open spectrum approach argue riers and consumers, however, have relied on that such a model would create a more innovative the lexibility and rapidly growing capacity of and cost-effective ecosystem due to the lower Wi-Fi, rather than on secondary spectrum costs associated with executing asset manage- markets, to add capacity and sustain service ment solutions. It would entitle users, who comply in the teeth of sharply growing demand.” with established technical limits and equipment certiication, to access the spectrum and become 3.2.4. Hybrid Model more competitive as the barriers to access are removed. Instead of a one-size-its all solution, countries are Proponents of unlicensed spectrum will argue currently implementing a mix of policies that will that innovation can be harnessed—as the experi- ensure a more eficient use of spectrum. Modern- ence of the past two decades suggests, in that izing spectrum assignment arrangements is nec- “however scrappy and uncertain Internet inno- essary, since spectrum sharing has moved from vations may seem at irst by comparison to the being a radical notion to a principle policy focus in highly-engineered models of the telcos, these the past decade (Altamimi, Weiss, and McHenry, innovations quickly catch up and surpass their 2013). This traditional characterization of the reg- competitors” (Benkler, 2012). This model, how- ulatory models presented above does not encom- ever, is subject to what is referred to as tragedy pass the complexity of the different regimes in of commons, whereby individuals in a group will place (Lehr and Crowcroft, 2005). Nowadays, the act in their self-interest while sharing a common use of mixed or hybrid assignment frameworks resource. This results in the over-exploitation and convey a new trend in which different frameworks degradation of inite resources—contrary to the are merged. long-term best interests of the group. Interfer- An example of how models have been chang- ence is part of this commons problem, although ing and adapting to the new technological reali- technologies are evolving towards devices that ties is the license-light scheme, implemented by will employ digital signal processing and coex- the FCC. Under this light type of licensing scheme, ist without interference. Moreover, despite the users must comply with speciic service rules, advantages, the coverage obligations that focus but they do not have to obtain individual station on universality do not apply to this model. licenses. Examples: Balancing the trade-offs in policy design is also a crucial role governments must take on. • TV White Spaces: Due to new Cognitive Radio Whenever a decision is taken, there are advan- Technologies, it is possible to access parts of tages and challenges as a result. Table 2 summa- the spectrum purposively left unused to pro- rizes the main management approaches with the vide Internet. The United States has already key characteristics and trade-offs. SPECTRUM MANAGEMENT 13 14 SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY TABLE 2. Management Frameworks Regulatory approach Concept Main characteristics Positive features Trade-ofs Commandand-control Authoritative • Governments designate use, technology, and users • Dedicated spectrum • More effective when (international) harmonization of technical standards is needed • Ineficient allocation • Presence of old technologies might slow down innovation • Potential underutilization Licensed Market-based property rights • Market-based mechanism • Exclusive rights • Suitable when scarcity is high and transaction costs associated with access rights are low • Enables the creation of secondary markets, which are not possible in the command-and-control model • Coverage obligations help achieve the goal of universality • Unsuitable when there are high transaction costs and competing claims to scarce resources • Potential spectrum underutilization Unlicensed Commons approach • Market-based mechanism • Spectrum sharing • Lowers barriers to access to spectrum and stimulates technological innovation • Flexible and available to users who comply with established technical limits and equipment certiication • Most adequate in situations of low scarcity and high transaction costs • Potential overuse • Potential tragedy of commons • Not possible to establish coverage obligations Mixed approach • Combines characteristics from the other approaches • Flexibility combining different market mechanisms • Uncertainty about regulatory framework Source: Authors, with inputs from OECD (2007) and Lehr and Crowcroft (2005). 4 Crucial Issues Affecting Spectrum Management s already described, the task of manag- A Compatibility—the uniform allocation of radio fre- ing the spectrum is a complex one, since quency bands, channels, out-of band emissions, it involves a wide range of policy and reg- among others—between countries or across ulatory decisions made by government. One con- entire regions can create enormous beneits in cept that permeates all others is that of legal and terms of social impact and increased productivity. regulatory guarantee. Unless this is present, mar- Speciically, an eficient and compatible spectrum ket players will be unable to invest due to the un- management is essential to a digital economy to certainty of returns. This uncertainty could delay reduce service charges and roaming fees. not only the development of new technologies, Increasing mobile services, thus lowering but also the entire development of the ecosystem. the cost of equipment, can create economies of Ultimately, the lack of guarantee can imply scale. Moreover, a more attractive market would higher prices and a setback of services to con- encourage competition to motivate companies to sumers. The disparities relating to access among produce less expensive products in more quantity countries will potentially be increased, based on and to enable the mobile wireless market to grow at the varying levels of guarantee offered. In addi- a faster pace. Compatibility provides additional and tion, there are several issues in the debate of spec- broader beneits, such as the adoption of common trum management, given the complexity of the frequencies and international protocols for disaster topic and its increasing importance. Some of the management and emergency communications. crosscutting issues that make it so important and urgent a topic are mentioned below. It is important to highlight, moreover, that spectrum harmonization does not include technology. Coordination of the latter relates to the 4.1. Spectrum Harmonization and Band Plans use of compatible services within different countries or across regions. Eficient spectrum management will depend, Since radio waves do not stop at geographic to a large extent, on following international stan- borders, countries should harmonize their band dards due to the nature of cross border conformity. plans to avoid interference along frontiers. Initiatives have been taken globally and regionally 15 to reduce the digital divide and ensure compat- Paciic region, by 2020, is estimated to produce ibility, which is resulting in social and economic a cost reduction of 50 percent in infrastructure, beneits. The Ofice of Communications (Ofcom) a 6–10 percent decrease in subscription fees, and in the UK recently demonstrated the importance an increase in rural penetration of between 10 per- of harmonizing bands and the beneits it brings to cent and 20 percent (GSMA, 2012a). consumers: 4.2. Creation of Secondary Markets Only bands that are internationally harmonized are likely to be economically viable for Secondary spectrum markets are those in which the delivery of mobile data services. Interna- spectrum rights licensees are permitted to make tional harmonization is essential to operators all or parts of their assigned frequencies and/ and handset and device component manu- or service areas available to other entities and facturers as it delivers the economies of scale for other uses (FCC, 2000). This would allow for required for the development and production various types of trading arrangements, such as of network and consumer equipment. Harmo- lease agreements, franchises, and joint operating nization also offers consumers a widening of agreements. Australia, Guatemala, the UK, and choice of mobile devices developed and sold the United States have already created such a sec- in global markets that are compatible with the ondary market in order to provide greater lexibil- use of frequency bands used internationally ity in services and in the use of technology. (Ofcom, 2013g). The concept of a secondary market is that licensees would improve the eficiency of spec- The international framework for the utiliza- trum. As stated by the FCC (FCC, 2000): tion of the radio frequency spectrum is set out in the ITU’s Radio Regulations. It coordinates the While secondary markets are not a substitute information of individual and nationally based fre- for inding additional spectrum when needed quency assignments with other countries, which and should not supplant our spectrum alloca- is then registered in a Master International Fre- tion process, a robust and effective second- quency Register. Each of the three ITU regions ary market for spectrum usage rights could has engaged in meetings to agree on common help alleviate spectrum shortages by mak- regional band plans. With regard to the LAC ing unused or underutilized spectrum held region, the options available are those of the by existing licensees more readily available United States and Asia Paciic (Asia-Paciic Tele- to other users and uses and help to promote community (APT)) band plans. the development of new, spectrum eficient An analogue switchoff will provide countries technologies. the opportunity to harmonize the frequencies of the dividend and, by doing so, delivering broad- The objective is to promote a more eficient band service to the segment of the population allocation, assignment, and use of technologies. that has no Internet accessibility. As previously Spectrum trading may remove the inlexibility mentioned, the spectral eficiency of 700/800 of a primary assignment; facilitate entry into the MHz bands is higher and, for this reason, net- market; reduce the transaction costs of acquir- works can be deployed at lower cost. The impact ing spectrum; reduce administrative workload; of technical harmonization and the allocation of a permit faster deployment; and meet short-term 700 MHz band for mobile broadband in the Asia increases in demand. It would promote more 16 SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY market innovation—as new entrants would be Spectrum caps have the ability to prevent able to access the spectrum—and would allow for the abuse of market power; they may, however, the introduction of new technologies and services cause adverse consequences, depending on how (Xavier and Ypsilanti, 2006). they are applied. Operators under tight spectrum Making the use of spectrum lexible, relaxing caps may ind it more expensive to offer a full- the constraints on usage and technologies, and service portfolio. By capping the amount of spec- allowing for license-exempt frequencies are not trum, congestion may occur, which would require simple in terms of policy and regulation. It is nec- operators to apply methods, such as cell splitting essary to provide some level of technical restric- (Roetter, 2009) in an attempt to improve the efi- tion to adequately protect against interference, ciency of spectrum usage. This would require, although advances in technology have some- however, the addition of more equipment to exist- what lessened interference issues. As new regula- ing sites to increase the number of connections in tory models and the sharing of these possibilities a network, resulting in an increase in CAPEX and become more popular, the more the optimal usage OPEX costs. of spectrum will become, as the constraints will be The application of heterogeneous spectrum minimized to increase user lexibility and freedom caps across countries could prevent operators to respond to changing conditions. from offering comparable service portfolios to clients travelling internationally. This lack of har- 4.3. Spectrum Caps monization of policies and spectrum frequencies would thus counteract the social and economic Spectrum caps are a mechanism that was intro- beneits that can be derived from a homogenous duced in the 1990s to ensure effective competi- approach across countries. tion in the mobile market. The electromagnetic Spectrum caps have changed considerably spectrum is a scarce resource, and, as a result, over the years to the extent that they have been many countries apply ex ante measures to prevent removed in some countries as a result of prog- a single or small number of operators from con- ress in wireless technology, a growing demand straining most of the spectrum available for com- for mobile services, and the application of new mercial use. This avoids anti-competitive behavior, spectrum bands for commercial mobile commu- which would cause market failures to the detri- nications (Roetter, 2009). In the United States, for ment of customers and overall social and eco- example, spectrum caps have not been applied nomic welfare. for more than ten years, although the United The theory behind spectrum caps is that these States (U.S.) Department of Justice (DoJ) and market failures should be avoided. Each license some groups within civil society have recently has an economic value—based on the return on advocated the reintroduction of caps as the investment in spectrum licenses and network infra- FCC prepares to auction 600 MHz spectrum. As structure—as well as a foreclosure value, which is already mentioned, LAC countries have differing the value of a wireless company that already has approaches with regard to spectrum caps. substantial market share and intends to main- The FCC ceased the application of spectrum tain its dominant position by preventing compe- caps as of 2001, but with the ongoing debate on tition (Moore, 2013). Companies that hold a large whether to adopt it or not, the FCC has reviewed amount of spectrum have the ability to prevent its mobile spectrum holding policies (FCC, 2012b). smaller national and regional carriers from obtain- The DoJ is advocating for “rules that ensure the ing the necessary licenses to provide services. smaller nationwide networks, which currently CRUCIAL ISSUES AFFECTING SPECTRUM MANAGEMENT 17 lack substantial low-frequency spectrum, have an opportunity to acquire such spectrum,” as Box 6. Convergence and Service Neutrality the FCC prepares to auction 600 MHz spectrum (FCC, 2013a). Civil society groups recently published a letter in which they state that they support the position of the DoJ and afirm that limits to spectrum For decades, electronic communications have been divided into varying wired types of communication, such as those provided by telephone companies and the broadcasting that is transmitted through the electromagnetic spectrum. caps contribute to “increasing auction revenue This has led policymakers, worldwide, to develop by attracting a wider base of potential bidders— “elaborate regulatory regimes based both on the bidders that might otherwise be deterred from technological and economic characteristics of participating. Just as important, pro-competitive the transmission medium on the one hand, and spectrum holdings limits will increase downstream the nature of communications being transmitted competition, investment, and innovation in the on the other” (Yoo, 2006). wireless marketplace”(FCC, 2014a). Broadband platforms now allow the convergence of voice, video, and data services onto a 4.4. Neutrality single network, and regimes need to adapt to this convergence. Voice over Internet Protocol (VoIP), The neutrality debate is one of the most prominent when deciding the future of networks, since it affects a large number of stakeholders and since there are different associated dimensions, both of as an example, is a technology that uses Internet Protocol (IP) instead of traditional analogue systems. It converts the voice signal from telephones into a signal over the Internet, which is becoming increasingly popular. The over-the-top VoIP market which are fully supported by the ITU. The irst is is expected to represent 20 percent of total mobile the concept of service neutrality. This refers to voice revenues by 2016 (Thunström et al, 2011). the right to change the type of use to a spectrum A consequence of this convergence is the (e.g., transitioning from broadcasting to mobile introduction of a greater degree of service neu- services). The second is the concept of technol- trality. Nonetheless, network operators often ogy neutrality (e.g., transitioning from a Global resist these technologies, since they compete System for Mobile Communications to a Univer- with existing traditional services. Policymakers sal Mobile Telecommunications System)—having need to be aware of this and recognize the ben- the right to select which technology will access eits that convergence can provide. By imposing the spectrum. As technologies converge, the issue of service neutrality becomes even more obvious (see Box 6). Technology and service neutrality are fundamental to licensees, enabling them to adopt the least expensive options. Furthermore, they con- fewer restrictions on licensees, regulators/administrators can encourage companies to innovate and expand the number of services, leading to lower prices and further competition. Katz and Avila (2010) have demonstrated that broadband prices were drastically reduced when cable TV operators were able to enter the market. tribute towards the realization of economies of scale and scope, thus decreasing costs. While technology convergence and innovation continue at a signiicant pace, regulators are less aware that A related concept is transferability, which it will take time to adapt to change and regula- addresses the different means by which idle spec- tion, which will prevent markets from becoming trum can be used without exchanging legal usage competitive. rights. This means that the licensee undertakes 18 SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY the rights, obligations, and protection associated with the license. Traditionally, spectrum has been assigned to particular users for speciic purposes. FIGURE 6. Total CAPEX and OPEX Ratios for MNOs United States of America Secondary trading, on the other hand, enables U.K. new technologies to lourish. Neutrality in a sec- Germany ondary market results in licenses being more fun- Peru gible and spectrum more lexible. Brazil Despite its clear beneits, neutrality is not a Argentina solution in all cases. There are risks, such as spec- 0% trum fragmentation and interference across long- 40% OPEX ranging frontiers. Furthermore, technical issues can be resolved before service neutrality is imple- 20% 60% 80% 100% CAPEX Source: Authors, with data from GSMA (2013a). mented, such as those relating to network architectures and duplexing approaches (Frullone, 2007). As stated below, most countries in the LAC region still rely on service-speciic licensing regimes for telecommunication services. They are, however, gradually adopting technology and service-neutral licensing frameworks, and are starting to reap the beneits. 4.5. Infrastructure and Spectrum Sharing The mobile industry is one of the most capital intensive ones. Applying new technologies is especially expensive, the high costs of which relate to equipment and spectrum. Nevertheless, there are ways in which to share resources to not only minimize cost but also to improve eficiency. Thus, the possibility of sharing spectrum and infrastructure is further described. The global mobile market CAPEX investment is estimated to grow by 3.7 percent from 2012 to 2017. This growth will come mainly from mobile operators, representing US$164 billion (80 percent) of the nearly US$200 billion invested in 2012. Three types of mobile operator CAPEX justify this increase: maintenance, capacity extension, and new services (Page, Molina, and Jones, 2013). Maintenance relates to expansion in cover- 4G technologies being rolled out. Figure 6 illustrates how high these costs are, while illustrating the OPEX and CAPEX ratios4 for mobile network operator (MNOs) in different countries. The capacity of networks is directly proportional to the amount of spectrum available and to the number of sites employed. As the demand for data connectivity continues to grow, many operators predict a scarcity in spectrum, referred to as the spectrum crunch, which relates to the amount of spectrum available. In addition, an infrastructure crunch in connection to the number of sites is also occurring as operators “attempt to serve a growing volume of trafic using networks originally designed to provide outdoor voice services and not ubiquitous, largely indoor, data” (Thanki, 2012). To survive in the market, operators should take the following steps: (i) share infrastructure in order to mitigate the costs of sites and (ii) share spectrum so as to mitigate the lack of availability of spectrum. Network access costs usually represent between one sixth and one third of an operator’s total costs. A study from Analysys Mason (Analysys Mason, 2010) reviewed the costs and beneits over ive years in relation to various types of radio network access sharing. It was found that operators age and data, as explained above; capacity extension relates to growing network infrastructure increases; and new services correspond to the CAPEX and OPEX ratios are a measure of the total CAPEX and OPEX, compared to the total revenue of the operators. 4 CRUCIAL ISSUES AFFECTING SPECTRUM MANAGEMENT 19 in a development economy gained 30 percent space for sites and towers is limited; and sharing CAPEX in savings, accumulated over ive years, as in developing markets may expand coverage into well as a 15 percent reduction in OPEX each year previously unserved areas (GSMA, 2012b). over a ive-year period, when the building of 2,500 Infrastructure sharing can stimulate beneits sites was shared. Other studies refer to 40 percent that go beyond the operators. Consumers can also in total savings through sharing arrangements in beneit from lower prices for services. Further- mobile markets (Friedrich et al., 2012). more, the digital divide will be bridged as coverage Network sharing is taking place in a number expands through agreement sharing, and energy of forms in developing and mature markets. These consumption will decrease by sharing power sup- range from site-, tower-, and radio-network access plies, contributing to environmental objectives. sharing to roaming and core network sharing. The The following chapter further explains the rationale for sharing in developed markets is to beneits of spectrum sharing. Ways in which reduce operating costs and provide additional licensed and unlicensed spectrum can be shared capacity in areas that are congested and where will be described. 20 SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY 5 Spectrum Sharing S pectrum sharing is a concept that has ex- Wi-Fi-associated ixed networks, which are the isted for a long time, the development of default backhauls for mobile devices. which is being stimulated by new regu- These interoperable networks ofload data latory approaches and technologies. Licensed from cellular networks in order to cope with grow- spectrum can be allocated through liberalization ing demand. As consumers ofload mobile device methods that allow spectrum rights to be traded. trafic over Wi-Fi, it reduces CAPEX and licensed Unlicensed spectrum can now also be shared with spectrum capacity, the latter of which can be new DSA technologies. Below are the most de- diverted to other connections. In addition, as bated examples of licensed and unlicensed shared Wi-Fi is integrated into LTE, the required number use of spectrum. of small cells is considerably reduced. 5.1. Unlicensed Spectrum Sharing The ability of the industry to meet the trafic Box 7. Nomadic Wireless and Data Oloading demand and move data at affordable prices by Ofloading data is important because most using only licensed spectrum is of concern. On the mobile devices are Wi-Fi-enabled and the use other hand, unlicensed spectrum technology con- of mobile communication is mostly nomadic, as tributes to market expansion, increases competition devices can usually connect to a Wi-Fi network. among providers, and is a beneit to the population. As described below, Wi-Fi is becoming increasingly popular. On average, mobile devices are 5.1.1. Wi-Fi, WiMAX, and Data Oloading used 2.5 hours a day in the home and 1.0 hour a day at work compared to less than 0.5 hour Wi-Fi is a key networking technology that uses while on the go (Cisco, 2012). When consum- unlicensed spectrum to ofload data by providing ers ofload mobile device trafic over nomadic wireless high connections. for speed According Economic Internet to the Co-operation and network Organisation Development (OECD) (OECD, 2013), most of the trafic that is wireless networks, it reduces the CAPEX of networks; enables licensed spectrum capacity to be directed to other connections; and contributes to a lower number of small cells being required when Wi-Fi is integrated into LTE. generated from handsets and tablets is linked to 21 Recent studies also suggest that social wel- infrastructure that provides multiple paths for fare is improved after an optimal level of unli- communication to the network and does not censed spectrum is made available. Beyond this, require centrally-located towers. They can bypass however, the price would continue to rise at the obstacles like buildings, hills, and trees by using risk of losing clients, who could possibly migrate to different signal paths, have no single point of fail- the services provided through unlicensed bands, ure, and are easily expandable. With existing open as these can reach a quality threshold (Nguyen et source tools, a mesh network can be built with a al., 2011). Opening a substantial amount of spec- diverse set of hardware from high end carrier class trum for unlicensed use, therefore, is critical to its equipment, familiar off the shelf in home rout- success. ers, existing computers and laptops, to common Despite the many beneits, Wi-Fi has its limi- mobile devices” (New America Foundation, 2011). tations, such as adjacent channel interference, This model is a pragmatic high bandwidth device standards, range of connection, and num- network that avoids path dependencies and ven- ber of concurrent users. Nevertheless, with the dor lock-in from the large network providers. It is exponential increase in demand for data services, typically less expensive, given that the CAPEX is the integration between ixed and mobile net- much less due to lower infrastructure costs. The works will be further developed. OPEX is also lower as a result of the distribution Wi-Fi technology allows connectivity from across lightweight nodes. Furthermore, a key fea- peer to peer or operates in an ad hoc network ture of mesh networks is their potential to achieve mode, enabling devices to connect directly with high levels of coverage by routing around prob- each other. Mesh wireless networks are an exam- lem areas. The quality of service, however, could ple of peer-to-peer communication technology, be an issue because of the existing dependence offering “the ability of users to connect directly on node numbers and movements. Mesh applica- to each other and facilitate a distributed network tion examples include (i) disaster scene or military Box 8. HetNets and Vertical Handovers In order to reduce trafic, a combination of licensed and unlicensed technologies is now in place. The industry is shifting towards heterogeneous networks (HetNets), which are those that connect computers and other devices to different operating systems and/or protocols, which comprise traditional large macrocells and small cells. Most devices are neither solely mobile nor solely nomadic; they are a combination of both, and most networks already allow for this interoperability. Wi-Fi is largely used to ofload data and when it is integrated into mobile networks, a reduced amount of infrastructure is required. Another example of a hybrid network is the Worldwide Interoperability for Microwave Access (WiMAX) which is a wireless communication standard that has been created for last-mile broadband access. WiMAX and Wi-Fi are the principle technologies that transmit high-speed communication over the network, “but when a mobile node moves outside the coverage area of its base station, it is required to switch to some other base station. This process is called handover. When working with dissimilar networks, it is called Vertical Handover” (Saini et al., 2013). Vertical Handover is a process that contributes to democratizing lastmile wireless broadband services, and its integration includes a cost-effective backhaul, freedom from interference, and a combination of licensed and unlicensed spectrum use, which are of beneit. 22 SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY team communications; (ii) hotspot extension of such as digital TV, cannot be detected, resulting urban public wireless access; and (iii) rural com- in false positives (or false negatives) and may, by munity networks, among others. These have been themselves, only beneit the sensing device or implemented in various countries (Plextek, 2006). homogeneous network (Stanforth, 2013). They represent an affordable solution for Internet One of the main differences between the geo- access and can contribute to the achievement of location and spectrum sensing technologies is that universality. “cognitive radio technology is split between the TVWS device (geo-location) and an external entity 5.1.2. TV White Spaces (TVWS database). In the second case, the cognitive radio technology (spectrum sensing) is embed- TV White Space is one of the most promising inno- ded entirely within the white space device” (Saeed vations to resolve the issue of spectrum scarcity. and Shellhammer, 2012). The TVWS database is TVWS represents parts of electromagnetic spec- that which stores information on all the licensed trum used by analogue broadcasting TV chan- services in the TV, and which can calculate a geo- nels, although they are not assigned as protection graphic region where TV receivers can receive the bands. The main purpose of these spaces is to broadcast signal without harmful interference. eliminate interference between channels in very The technologies using TVWS can penetrate high frequency (VHF) bands and in ultra-high fre- walls and provide faster speeds than Wi-Fi can quency (UHF) bands. TVWS cannot be consid- provide, which is why it has been coined, Super ered as part of the digital dividend, as they do not Wi-Fi. 5 In most countries, however, TVWS cannot result from digital conversion and already exist in be used due to a lack of, or nonexistent, regula- the bands occupied by analogue TV broadcasting. tion. Some countries, such as Canada, European The geographic nature of these bands helps to Union, the UK, and the United States, are begin- explain why they are left unassigned. As Freyens ning to develop regulations for TVWS usage. and Loney (2011) point out, TVWS has emerged In June 2014, the Infocomm Development as a means to protect the spaces between ana- Authority of Singapore announced its Regulatory logue TV services in the same licensed area and Framework for TVWS Operations in the VHF/ to ensure geographic separation between TV ser- UHF Band.6 The framework will take effect as vices in different license areas that transmit in the of November 2014 and is part of the Intelligent same channel. Nation Masterplan, a strategy to place the coun- The unlicensed TV band devices that operate try as the world’s foremost in the harnessing of in these white spaces apply two types of cognitive infocommunications, adding value to its economy radio technologies: (i) a combination of geoloca- and society.7 The framework was subject to pub- tion positioning and a database of incumbent ser- lic consultation in 2013 for feedback from industry vices and (ii) spectrum sensing. Spectrum sensing stakeholders. is a bottom-up approach to make use of cognitive radiotechnology. It is embedded in TVWS devices to identify unoccupied radiofrequencies of TV channels (Saeed and Shellhammer, 2012). Geolocation databases, which comprise the list of available TV channels at a given location, can be classiied as top down, utilizing cognitive networks. The downside of these is that a receiver, As TVWS cognitive radio technologies are not equal to WiFi technologies, the term, Super Wi-Fi, has been criticized. Moreover, Wi-Fi is a trademark, which cannot be used by TVWS providers. 6 See http://www.ida.gov.sg/~/media/Files/PCDG/Consultations/20130617_whitespace/ExplanatoryMemo.pdf. 7 See http://www.ida.gov.sg/Infocomm-Landscape/iN2015Masterplan. 5 SPECTRUM SHARING 23 TVWS can be beneicial in a number of ways. leading to spectrum underutilization As technol- It is a prime spectrum, given its signiicant prop- ogy evolves at such a fast pace, new opportunities agation, coverage, and availability, 8 as well as and challenges for regulators continue to surface. its potential to synergize with commercial wire- The use of cognitive radio with geoloca- less services because of its spectrum closeness. tion positioning and databases has been a key The irst standard for TVWS operation, identiied approach to constrain the potential of TVWS. The as IEEE 802.22, has been approved. This allows idea is to protect the operations of incumbents broadband wireless access up to 100 kilometers that are listed in the databases and to identify and up to 29 megabytes per second (Mbps) for spectrum channels that are available for use in a each TV channel, thus increasing the data rate particular area. In the United States, broadcast- through the use of multiple channels (IEEE, 2011). ers initially were concerned about the reliability of The potential to control TVWS for wireless broadband use in the United States is progress- the database, the accuracy of responses, and their ability to deal with multiple database operators. ing rapidly. As of July 2013, the FCC has processed As expected, implementation of TVWS can applications for equipment certiication, approved be questionable. As Stanforth (2013) states, database administrators, established a process “white space is not really ‘white’, as spectrum for wireless microphone registration, and granted availability varies according to time, location, and waivers to register certain TV database receiver device type.” Nevertheless, most regulators have sites. In October 2009, Microsoft implemented the endorsed its use because it is an easier solution to world’s irst operational White Space network at implement when compared to the sensing alter- its Redmond Campus (Chandra, 2013). The irst native (Stanforth, 2013). Databases are lexible TVWS device developed was approved in 2011 and, and easily upgradable without impacting installed in January 2012, it was commercially employed in technology. Furthermore, rules can be adapted to Wilmington, North Carolina (Knapp, 2012). suit location, frequency, and time speciicities. The Wilmington experience has shown that TVWS facilitates the innovation of applica- TVWS can help address spectrum congestion and tions that are not fully supported by existing tech- enable the expansion of applications relating to nologies. They also can expand the resources of video surveillance, facilities control (lighting), and existing applications for improved performance public Wi-Fi access, among other urban services. (Sum et al., 2012). Table 3 shows a list with poten- Recent developments go beyond last-mile access tial applications relating to TVWS. 9 to broadband; they include automated agricultural and remote sensors), Supervisory Control and Data 5.1.2.2. European Union and TV White Spaces Acquisition (advanced broadband), and telemetry Since 2010, the European Commission has dem- systems (Stanforth, 2013). Since 2013, Google and onstrated its commitment to reviving Europe’s applications (autonomous equipment management Microsoft have been testing TVWS technologies to provide broadband access to connect schools in South Africa,10 and in rural areas in Kenya. Micro- Availability depends on the country. Wireless Innovation Alliance includes Dell, Microsoft, Google, Carlson, Spectrum Bridge, Viacomm, New America Foundation, and Public Knowledge. See http://www.wirelessinnovationalliance.org. 10 See The Cape Town TVWS trial, concluded on September 25, 2013. More information available at http://www.tenet. ac.za/tvws/. 8 9 soft is also considering countries in the LAC region. 5.1.2.1. Regulatory Implications of TVWS There is a growing recognition that assigning ixed frequencies to one purpose in large areas is ineficient, 24 SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY TABLE 3. Potential Applications, Descriptions, and Examples of TVWS Application Description Examples Large Area Connectivity • High-data-rate backbone for ixed stations • Hubs are connected to nodes forming a subnetwork • • • • • Utility Grid Networks • Connectivity for complexity-constraint ixed stations • Utility consumers with smart metering devices connected to the utility transceiver station • Smart electricity, gas, and water meters Transportation and Logistics • Logistics control for mobile stations • Connectivity from nodes to hubs, and from hubs to the main concentrator • • • • • Mobile Connectivity • Seamless connectivity for mobile stations • Network consists of a main concentrator (base station) and surrounding mobile nodes (laptops, smartphones, transceivers in ships, etc.) • Land and maritime mobile connectivity High-speed Vehicle Broadband Access • High-data-rate backbone for high-speed mobile stations • Base station is connected to hubs along a railway track or roadside • High-speed trains • Long-distance buses • Subways and underground transportation Ofice and Home Networks • High-data-rate short-range indoor connectivity • Personal workspace connectivity • Ofice area connectivity • Home area networks Emergency and Public Safety • Mission-critical and highly reliable connectivity • Safety surveillance systems • Emergency surveillance Municipal and rural areas Buildings in a campus area network Business enterprise Industrial site Military premises Public transportation information systems Transportation virtual payment systems Baggage management Freight distribution logistics Shipping container management Source: Elaborated by authors with inputs from Sum et al. (2012). economy through the development of a Digi- environment. Having effective spectrum policies tal Agenda and corresponding initiatives. Neelie in place will help to achieve this. Kroes, the previous Vice-President of the Euro- In their objectives to contribute to the inter- pean Commission responsible for Digital Agenda nal market’s wireless technologies and services, and Society, revealed the large-scale ambitions the European Parliament and the Council of the of the program, describing them as pragmatic. European Union approved the irst Radio Spec- According to Ms. Kroes, while networks and regu- trum Policy Programme (RSPP) in March 2012 (EC, lations tend to be on a national basis, Europe as 2012a). Through the RSPP, the Commission will a whole needs to focus on a practical approach ensure that the spectrum that is currently allocated to relieve bottlenecks and remove barriers, in be exploited to the fullest extent possible. This will order to boost the market, improve services, depend on a broad political endorsement of the increase networks speed, and offer better prices. proposed steps in order to foster the develop- The review of the Agenda, published in Decem- ment of wireless innovation in the European Union. ber 2012, established that the irst priority is to The three key goals of the RSPP are to (i) harmo- create a new and stable broadband regulatory nize spectrum access conditions to enable the SPECTRUM SHARING 25 interoperability of economies of scale with regard spectrum access for wireless broadband has in to wireless equipment; (ii) work towards a more terms of net economic beneit to the European eficient use of spectrum; and (iii) increase the Union. The net increase in GDP is estimated at availability of information regarding current use, between EUR 200 billion to over EUR 700 billion future plans, and the availability of spectrum. until 2020, with an allocation increase of 200 MHz The RSPP will identify at least 1,200 MHz by and 400 MHz, respectively. 2015 and will facilitate access to spectrum through An analysis of 23 OECD countries was recently general authorizations. Radio Local Area Net- undertaken to forecast TVWS in the context of works, small cell-based stations, and mesh net- a diffusion of innovation (Saeed and Shellham- works are explicitly referred to in the document in mer, 2012). It is estimated that the four top-rank- terms of spectrum-sharing approaches. The doc- ing countries with the highest market potential in ument also addresses the issue of TVWS, request- Europe are France, Germany, Italy, and the UK. ing the Commission—in cooperation with Member The study concluded, moreover, that there was States—to assess the possibility of extending the little impact during the early years of adoption, allocation of unlicensed spectrum to wireless given that larger economies rapidly shadow the access systems. irst innovation adopter within the diffusion curve. Research has shown that TVWS are, indeed, In September 2012, the European Commission less abundant in Europe than in the United States issued a communication on “promoting the shared (van de Beek et al., 2011). On average, approxi- use of radio spectrum resources in the internal mately 56 percent of spectrum is unused by the market” (EC, 2012b), in which the use of TVWS TV networks in Europe, compared to the 79 per- devices—based on harmonized standards for cent in the United States. Furthermore, Europe is geolocation databases—was advocated. Among administratively very diverse, which could delay the conclusions in the document is that the lower the adoption of TVWS over a longer period part of the UHF band (in particular, 470–698 MHz) (Saeed and Shellhammer, 2012). should provide a pioneer-sharing opportunity to A study on the value of shared spectrum pave the way for this approach in terms of other access was conducted by the European Com- bands. Harmonization at the level of the European mission in early September 2012 (Forge, Horvitz, Union is also highlighted as one of the main steps and Blackman, 2012). It included an assessment to foster wireless innovation. of the socioeconomic value of shared spectrum The European Commission is undertaking a access and its impact on competition, innovation, study relating to cognitive radio systems for efi- and investment. The main recommendation of the cient sharing of TVWS in Europe (COGEU, 2013). study is to develop light licensing and delicens- It is coordinated by the Telecommunications Insti- ing schemes of spectrum management, so as to tute of Portugal with a budget of more than EUR offer a novel mix of old and new ideas (e.g., nonex- 5 million. Under this project, several technical, clusive frequency rights, opening of government business, and regulatory/policy studies are being allocations to new sharing arrangements with conducted. Begun in 2010, the project will take commercial secondaries). Much of the research advantage of the digital switchover by developing undertaken for this study reveals the need to cognitive radio systems. These systems will lever- change shared access allocations for technologies age the favorable propagation characteristics of to enter the marketplace. TVWS through the introduction and promotion The quantitative of real-time secondary spectrum trading and the assessment of the impact that increased shared creation of a new spectrum management regime. 26 study also contains a SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY 5.2. Licensed Spectrum Sharing be assigned to one or more incumbent users. Under the LSA framework, the additional users Licensed spectrum methods are being proposed are allowed to use the spectrum (or part of in addition to unlicensed spectrum sharing. A the spectrum) in accordance with sharing description of the ASA/LSA is included below, rules included in their rights of use of spec- including a proposal to increase capacity to com- trum, thereby allowing all the authorized users, plement dedicated licensed spectrum. including incumbents, to provide a certain QoS. ASA/LSA has been proposed for different 5.2.1. Shared Access/Licensed Shared Access bands, depending on the region. The 2.3 GHz signiicantly band is being considered for Europe, while in the increases, there are new ideas to resolve poten- United States the 3.5 GHz band is viewed as a pos- tial crunches. ASA/LSA is one method being sible option. In the latter, the band is operated for proposed. According to the Electronic Commu- naval radar as opposed to Europe and the LAC nications Committee (ECC), it “allows ine man- region, where it exists primarily for satellite use. agement of network deployment and effective These are bands that are generally assigned for control of the sharing arrangement, as opposed government and military purposes. As the demand for spectrum to licence-exempt regulatory approach” (ECC, The concept behind ASA/LSA complements 2013). It is a different approach to secondary the capacity of the dedicated licensed spec- use or opportunistic spectrum access, where the trum. It varies from the licensed and unlicensed applicant has no protection from the primary user approaches, given that it assigns dedicated spec- and where one of its key features is that it “allows trum in a binary way; that is, the spectrum is used offering a predictable quality of service for the either by the incumbent or by the licensee in any incumbent as well as for the LSA licensee when given place at any given time. This characteristic each has exclusive access to that spectrum at a provides predictability and security for licensees given location at a given time” (ECC, 2013). and protection to the incumbent, since geoloca- To repurpose and vacate spectrum are simultaneous processes that take time. Differing from tion databases can technically enable such a sharing scheme. LSA, ASA is a solution that limits the number of Unlicensed spectrum lowers the barriers MNO licensees that have exclusive access to unde- for market entry; however, it can be subject to a rutilized higher spectrum bands. These bands are tragedy of commons, challenging the number of licensed for international mobile telecommunica- operators and level of interference. Proponents tions (IMT) wherever and whenever incumbents of the ASA/LSA framework argue that ensuring are not using them (GSMA, 2013a; FCC, 2013e). QoS and the predictability of access and service The European Union’s Radio Spectrum Policy remain issues in terms of unlicensed frameworks. 11 Current proposals for ASA/LSA include the Group, on the other hand, refers to the concept of LSA as the following: concept that the national regulatory authority should “set the authorization process with a A regulatory approach aiming to facilitate the view to delivering, in a fair, transparent and non- introduction of radiocommunication systems discriminatory manner, individual rights of use of operated by a limited number of licensees under an individual licensing regime in a frequency band already assigned or expected to The deinitions of LSA and ASA have been discussed in various forums. No deinitions have been made oficial to date. 11 SPECTRUM SHARING 27 TABLE 4. Summary of Main Characteristics of ASA/LSA Scope Framework and allocation Authorization process Individual licensing regime to facilitate the introduction in a frequency band of new users. Requires access, while maintaining incumbent services in the band of a certain level of guarantee in terms of spectrum. The sharing framework includes the set of sharing rules and/or conditions that materialize the change, if any, in the spectrum rights of the incumbent(s) and deine the spectrum, with corresponding technical and operational conditions. The Administration/NRA would set the authorization process with a view to delivering, in a fair, transparent, and non-discriminatory manner, individual rights of use of spectrum to LSA licensees, in accordance with the sharing framework deined beforehand. Licensees and incumbents operate different applications and are subject to different regulatory constraints. Sharing framework should be determined by each regulator/administration in national governments. LSA does not prejudge the modalities of the authorization process to be set by administration/national regulators that take into account national circumstances and market demand. Each licensee has exclusive individual access to a portion of spectrum at a given location and time. The decision on the services to be protected within the sharing framework is to be made by national administrations in the light of national policy objectives. LSA is not a tool to regulate the electronic communications service market; it is based on different principles from spectrum trading. Source: Authors, based on ECC Report 205 (ECC, 2013). spectrum to LSA users, in accordance with the of global harmonization, as “uncoordinated shar- sharing framework deined beforehand. The LSA ing activities could be counterproductive to global does not prejudge the modalities of the autho- harmonization and could potentially reduce the rization process to be set by national regulatory economies of scale necessary for the development authorities taking into account national circum- of a sustainable technology sector” (GSMA, 2013a). stances and market demand” (update proposals This approach is considered to be optimal for to the draft ECC, 2013). The framework provides small cells, since the additional capacity available for a vertical sharing scheme, relecting the possi- to the macrocell and small cell can be committed bility and the hierarchy of the access to spectrum. to improving service quality or to accommodating The use of ASA/LSA would be advantageous additional users in order to share capacity. Fur- to licensees, offering predictability, quality of ser- thermore, it would decrease the transaction costs vice, and prompt market availability. Timely avail- between commercial and government users—key ability is impossible in traditional methods (e.g., to ASA/LSA. All these advantages can potentially refarming) due to the amount of time it takes for reduce costs for the operator and, ultimately, the the undertaking. Additional advantages to this consumer. innovative sharing approach are the potential The FCC is considering this model in its efforts opportunities for economies of scale and assur- to advance small cells and spectrum sharing. It has ance of effective spectrum harmonization. LSA been proposed in a Notice of Proposed Rulemak- addresses bands with the signiicant probability ing (NPRM) with regard to the 3.5 GHz band. 28 SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY 6 Analogue Switchoff/Digital Switchover B roadcast TV has occupied, for many years, improvement in spectrum eficiency and it corre- signiicant parts of the spectrum in the sponds to the amount of spectrum made available Ultra High Frequency (UHF) and Very High as a result of the transition of TV broadcasting Frequency (VHF) bands to deliver analogue TV from analogue to digital. signals. This framework dates back to the 1960s The increase in data demand and the immi- and, since then, new technologies have emerged nent spectrum crunch has motivated many and the use of spectrum has signiicantly increased. countries to agree to the switchoff of analogue By transitioning from analogue to digital TV, TV signals and to shift to digital transmission, a a portion of the UHF band will be freed up and process referred to as analogue switchoff. Sub- used for mobile broadband services—deined sequently, a number of the channels may be allo- as the digital dividend. This is derived from the cated to new services, such as mobile broadband. FIGURE 7. Digital Dividend Spectrum VHF/UHF spectrum Existing analog programs Consider changing spelling to analog and programs Digital dividend Existing analog programs Time Analogue transmission Switchover Digital transmission Source: ITU (2013). 29 Box 9. Why the 700 MHz Band is an Ideal Band for Broadband Use Bands have differing propagation characteristics that make spectrum more or less appropriate for mobile broadband use. The 700 MHz band is a signiicant band for broadband deployment, as it is more spectrally eficient and has broad coverage with a lower CAPEX relative to ixed broadband. The use of the 700 MHz band is less costly for companies and it offers more broadband services that would otherwise be available from higher spectrum bands that would require a larger number of radio base stations. Its impact on rural connectivity is higher, since it will encourage operators to enter these traditionally under-served areas. As a result of the lower CAPEX, a company that establishes its cellular infrastructure in the 700 MHz band will spend three times less than it would in the 1.9 GHz band for the same area of coverage (García-Zaballos and López-Rivas, 2012). Accordingly, in areas where the capacity and peak data loads are not an issue—as occurs in most rural areas—operators will be able to provide broadband at a much lower cost by using the 700 MHz band than by using higher frequencies (García-Zaballos and López-Rivas, 2012). Lastly, these frequencies will provide improved indoor coverage, passing through walls more easily than with higher frequency signals. Ofcom has shown that the 900 MHz network will deliver a minimum of 8 Mbps to 70 percent of locations, whereas the 2,100 MHz will deliver the same data rate to only 45 percent of locations. The allocation of digital dividend bands for mobile and Digital Terrestrial Audio Broadcasting tech- broadband would result in the following: nologies in VHF frequency Band III (174–230 MHz) 12 and the DVB-T technology in the UHF frequency • • • Asia/Paciic region: 6–10 percent less in Band IV/V (470–862 MHz) (OECD, 2006). In many subscription fees for consumers as a result cases, however, the actual use of freed channels of reduced service costs; a 10–20 percent will be lexible, in which instance some channels increase of subscription for rural households; may be allocated to new services (e.g., mobile TV, and 2.7 million new jobs by 2020. high-deinition TV, datacasting, or other as yet Brazil: The availability of mobile broadband to unspeciied services). increase to 95 percent—a reduction in CAPEX In the case of the Americas,13 band 698–806 of US$1.6 billion when compared to infrastruc- MHz (700 MHz) was identiied at the ITU’s World ture in higher frequency bands; an additional Radiocommunications Conference 2007 as being US$1.3 billion in taxes; and the creation of underutilized in most of the region. It is to be freed 4,300 new jobs. up for IMT as requirements issued by the Radio- Europe: EUR 55 billion of tax revenue, 80,000 communications Sector of the ITU (ITU-R). Box 9 new businesses, and 156,000 new jobs. explains why the 700 MHz band is ideal for broadband use. Some countries have selected various technol- Despite the role played by the ITU, its ITU-R ogies to implement the digital switchover. At the framework leaves considerable lexibility for ITU Regional Radiocommunications Conference, held in Geneva in 2006 (Geneva-06 Plan), coun- See Annex 1 for a complete table of estimated beneits and the studies that have been undertaken. 13 For a list of ITU BDT Regions and Region 2, see ITU (2013). 12 tries in Africa, Europe, and the Middle East agreed to apply the Digital Video Broadcasting-Terrestrial 30 SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY national policy. Europe’s CEPT, for example, has mobile broadband. European countries have auc- already allocated the 800 MHz band for mobile tioned digital dividend spectrum since Germany broadband services. Discussions in Europe began commenced the process in May 2010, followed in 2006 and a nonbinding decision was approved by France, Italy, and Spain, continuing throughout in May 2010 with the “harmonized technical condi- 2011. Nevertheless, in many instances, bands will tions of use in the 790–862 MHz frequency bands not be available until their current licensees have for terrestrial systems capable of providing elec- migrated to other bands or refarmed the frequen- tronic communications services in the European cies currently assigned to them (OECD, 2013). This Union” (EC, 2010). may take some time. Box 10 describes spectrum Nearly all OECD countries have begun ten- refarming. dering processes for the 800 MHz (from 790–862 Europe is in the initial stages of considering a MHz) band for digital dividend frequencies for second digital dividend that would create another large band of low frequency spectrum. This came about subsequent to the ITU World Radio Confer- Box 10. Spectrum Refarming ence 2012, during which it was decided to allocate additional UHF spectrum to mobile services in ITU As technology evolves, spectrum change will Region 114 in 2015—from 694 MHz to 790 MHz. yield greater economic or social beneits. The This new digital dividend is contiguous to the irst process, referred to as refarming, occurs when one that took place at 800MHz. Furthermore, the a government reassigns spectrum frequencies 700 MHz band will provide further bandwidth for different purposes than those currently in to accommodate mobile broadband services in place. Existing users of spectrum on a certain Europe to meet future demand. The 700 MHz allo- band are obliged to transition to other frequen- cation in Europe raises the prospect of harmoniza- cies. Cave (2010) describes this as a process tion with other ITU world regions, such as Region “achieved by giving substantial notice that a 2, in which LAC is included. spectrum license will be terminated, and sometimes—where demand for the end user service will continue—by providing a new frequency and funding the licensee’s move to that frequency”. Countries differ with regard to the way in which Box 11 includes the case of Spain with regard to its switchover. It illustrates the importance of the legal and regulatory limitations, as well as the applicable international rules and standards. licenses are revoked and the ability of regulators to do so; however, in many cases, this process takes time. ITU Region 1 consists of Europe, Africa, and parts of the Middle East. 14 ANALOGUE SWITCHOFF/DIGITAL SWITCHOVER 31 Box 11. The Digital Switchover in Spain The case of Spain with regard to its digital switchover result of their obligation to broadcast simultaneously is unusual. To enable it to execute the switchover, a during the transition; and (ii) dwellers of collective new entity was created in 2005 under the presidency residential buildings by offering subsidies as a means of the Spanish State Secretary of Telecommunications: for them to continue to have reception of free-to-air the Commission for Monitoring the Process of Transi- channels. The total budget was estimated at EUR tion to Digital Television (Comisión para el Seguimiento 600–800 million. del Proceso de Transición a la Televisión Digital). The transition was planned to be completed in 2010. European Commission has examined whether this compensation plan was proportionate In May 2010, however, CEPT proposed to harmo- and necessary, in accordance to Article 107 (3) (c) of nize the technical conditions of use in the 790–862 the Treaty of the Functioning of the European Union MHz frequency bands for terrestrial systems, capa- (EC, 2012c). The ruling relates to the “aid to facili- ble of providing electronic communications services tate the development of certain economic activities in the European Union. This action happened sub- of certain economic areas”. For compatibility with sequent to Spain having completed the digital swi- the internal market, such aid shall not “adversely tchover process one month prior to most digital TV affect trading conditions to an extent contrary to services being offered on the digital dividend band. the common interest”. The European Commission The 800 MHz band was not used in Spain and, as a result, this part of the spectrum was available to also inquired whether the measure favored terrestrial broadcasting over other available technologies. DTT stations. This move proved to be incompatible The European Commission asserted that it was with the decision by CEPT in 2010 to implement its irrelevant that the Spanish compensation scheme proposal by January 2013. Consideration was given was a way in which to assist companies to meet their to the unusual case of Spain and the deadline was legal obligations; it was deemed as a grant. The con- extended to January 2015. Spain now has to create clusion of the European Commission was that the an action plan (Government of Spain, 2012) to har- burden of regulatory obligations should be borne by monize its frequency plan with that established by broadcasters and operators to avoid potential distor- CEPT so as to free this portion of spectrum and real- tions to competition (Government of Spain, 2012). locate these services to other frequencies. According to the ruling, the country should have car- Broadcasters were then required to broadcast simultaneously, using two channels, over a transi- 32 The ried out the digital switchover in a technology-neutral manner. tional period of 6 to 24 months. The ensuing costs The experience of Spain exempliies that when were borne by the consumer because of the need to implementing policies that relate to the digital swi- adapt to multifamily buildings for adequate reception. tchover, countries should be familiar with legal To meet the costs, Spain offered compensation to the ramiications and regulatory limitations, as well as (i) broadcasters for the additional costs incurred as a applicable international rules and standards. SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY 7 Competition and the Future of Spectrum o preserve and to encourage competition T transactions. For this reason, sharing licensed spec- are essential to spectrum management. trum may not be necessarily to the beneit of new Exercising market power leads to higher entrants. In addition, it will lead to spectrum accu- prices for the consumer and diminishes the qual- mulation and consolidation, since the amount of ity of service and innovation. The new opportuni- spectrum held by each operator determines the ties that arise from spectrum access (e.g., digital capacity. A competitive environment thus can dividend bands), the ability to create innovative be created when new market players are able to business models, and the use of unlicensed parts deploy networks in terms of unlicensed spectrum of the spectrum will promote change and shift the use. power dynamics of the wireless industry. These, As markets become increasingly integrated among other changes, should be relected in reg- on a vertical basis, operators will be able to ulatory frameworks to prevent the convergence of apply their market power against anticompetitive products and services (García-Zaballos, 2013). behavior (e.g., margin squeeze, predatory pricing, The continuous transformation in the access and collusive behavior). The latter example has to networks and spectral resources encourages taken place in cases where license fees are too the entry of operators into the market place. This high (Gruber, 2001). The potential for collusion is will result in more competition within the telecom considered as anticompetitive behavior and it can sector. As previously mentioned, infrastructure arise in relation to the agreement of infrastructure and spectrum licensing is costly. Competition, sharing, where the stakeholders do not maintain therefore, would encourage licensed spectrum independent control over certain key network ele- sharing, either by the unlicensed application of ments (Cave, Avgousti, and Foster, 2012). frequencies or by sharing licensed spectrum. The convergence of the wireless broadband Lowering the barriers to market entry could environment can give rise to several competitive be advantageous to spectrum and infrastructure issues. One is the extent to which regulators should sharing. Thanki (2012) argues, however, that it will interfere, ex ante, and what should be assessed, ex- be the large operators that will win the bids and post, in terms of competition. Competition policy which will take advantage of the secondary market should take the middle ground in situations where 33 the architectural approach becomes ambiguous access to customers with far more success than (Yoo, 2006); it should allow for various alternatives could have been achieved under the imposition to take place, unless it can be demonstrated that of regulatory arrangements.” Governments are the competition can be detrimental. thus responsible for leveling the playing ield by A strong private sector market presence can stimulating competition, which is a key to ensur- accelerate innovation and the deployment of ing mobile broadband access. The wide variety new technologies if it is adequately supported. of players to have “ever increasing weight within In countries where companies have to compete, the sector of wireless technologies” (Cave, mobile access rates tend to be lower compared to Avgousti, and Foster, 2012) conirms that further those in countries where the case is monopolistic attention should be paid to the legal interven- or quasi-monopolistic. tions related to competition. A careful review of As the OECD (2013) reports, competition has led “operators to open and share their 34 ex ante and ex post-regulatory approaches is required. SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY 8 Analysis of Reference Countries ustralia, Germany, the UK, and the United A The four countries count on a high percent- States were selected as reference coun- age of wireless broadband penetration, as well as tries, since they are at the institution- advanced mobile technologies in comparison to al forefront in terms of policy and regulation of most. Figure 8 shows this progress relating to the spectrum. The Telecommunications Regulatory penetration between 2009 and 2013. Governance Index (TRGI), created by Waverman These countries are ahead in terms of innova- and Koutroumpis (2011), is an attempt to establish tive approaches in the use of spectrum. Germany a benchmark for the quality of telecommunica- and the UK now allow pilots of TVWS, and both tions regulatory governance. Australia, Germany, are expected to have the highest market potential and the United States are ranked at the top in their for TVWS in Europe. In terms of spectrum allo- respective regions: Asia-Paciic, Europe, and the cation to mobile broadband, Germany and the Americas. The UK ranks ifth in Europe and sev- United States are the leaders. The aspects described above will be assessed, enth globally. These four countries can be used as a refer- among others, in this section. The analysis for each ence point in terms of spectrum management. country includes a description of the (i) institu- Table 5 illustrates various indicators relating to the tional, policy, and regulatory framework; (ii) avail- mobile sector in these nations. ability of spectrum; (iii) innovative policies that TABLE 5. Different Indicators of the Mobile Sector in the Selected Countries Indicator Australia Germany 108.92% 63.06% 74.79% 83.88% Market penetration – 3G 92.24% 66.44% 80.22% 62.30% Market penetration – 4G 16.69% 3.49% 1.09% 21.59% Market penetration – LTE 16.69% 3.49% 1.09% 18.93% OPEX/revenue, annual 75.43% 85.12% 80.95% 73.93% 11.69% 18.16% 14.30% 15.45% 3,795 2,649 2,757 2,487 Market penetration – Mobile Broadband CAPEX/revenue, annual Herindahl-Hirschman Index U.K. U.S. Source: Authors with data from GSMA (2013a). 35 FIGURE 8. Historical Wireless Broadband Penetration Rates in Selected Countries, 2009–13 TABLE 6. Mobile Broadband Indicators: United States, 2013 Indicator 120 Percent 100 Population 318.8M GNI/capita $48,450 80 Connections 347.2M 60 Market penetration – Mobile Broadband 83.88% Market penetration – 3G 62.30% Market penetration – 4G 21.59% Market penetration – LTE 18.93% OPEX/revenue, annual 73.93% CAPEX/revenue, annual 15.45% 40 2013–Q2 2012–Q4 2012–Q2 2011–Q4 2011–Q2 2010–Q4 2009–04 0 2010–Q2 20 Herindahl-Hirschman Index Australia Germany United States United Kingdom OECD 2,487 Source: Authors with data from GSMA (2013a). Source: OECD (2014). investment of US$35 billion. Table 6 conirms the have been implemented or are being considered; and (iv) main aspects of the analogue switchoff process. robust penetration of mobile broadband. Broadband basic speed is currently deined at 3 Mbps downstream and 768 Kbps upstream (3 megabytes/768 kilobytes), with regulatory 8.1. United States decisions deining basic service as 4 Mbps downstream and 1 Mbps upstream (President’s Coun- 8.1.1. Overview cil of Advisors on Science and Technology, 2012). This is, however, a progressive baseline that The United States is a very large country in terms relects a growing need for increased bandwidth, of population and land. Nonetheless, despite its given the reliance U.S. citizens placed on broad- challenges, more than 80 percent of the popu- band for personal and work communications and lation uses the Internet. Since early 2009, nearly a wide variety of services. The penetration rate of US$250 billion in private capital has been invested mobile is considerably high and it has increased in in U.S. wired and wireless broadband networks. the past few years, relected in Figure 9. Between 2012 and 2013, more high-speed iber cables have been laid than in any other period since 2000 (President’s Council of Advisors on 8.1.2. Institutional, Policy, and Regulatory Frameworks Science and Technology, 2012). According to the President’s Council of Advi- The responsibility for the institutional framework sors on Science and Technology (2012), annual for frequency management in the United States investment in U.S. wireless networks grew more is divided between the FCC and National Tele- than 40 percent between 2009 and 2012, from communications and Information Administration US$21 billion to US$30 billion, while wireless (NTIA). The FCC, which is an independent regula- investment in Asia rose only 4 percent. Projec- tory agency, administers spectrum for nonfederal tions for 2013 indicate an annual wireless network use and the NTIA, which is an operating unit of the 36 SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY in the United States by the Communications Act of 1934. The Telecommunications Act of 1996 to vation and advancement of universal service on 40 the principles of (i) quality and rates; (ii) access to 20 advanced services; (iii) access in rural and high- 0 cost areas; (iv) equitable and nondiscriminatory 2013–Q2 60 2012–Q4 the Act, the FCC bases its policies for the preser- 2012–Q2 80 2011–Q4 including the Internet, expanded it. According to 2011–Q2 100 2010–Q4 include spectrum allotment and broadcasting, 2010–Q2 120 2009–04 Percent FIGURE 9. Wireless Broadband Penetration Rates in the United States, 2010–13 Source: OECD (2014). contributions; (v) speciic and predictable support mechanisms; and (vi) access to advanced telecommunications services for schools, health care, and libraries (FCC, 1996). Aufderheide (1999) indicates out that the new U.S. Department of Commerce, administers spec- version of universal policies, released in 1996, cor- trum for federal use. responds not only to a shift in technology since the The FCC also undertakes the management 1934 Act, but also to the transition from a regu- and licensing of spectrum for commercial and lated monopoly to deregulated competition. While noncommercial users, including state, county, and this adaptation made the United States the envy local governments. Within the FCC, the Ofice of the world for some (Aufderheide, 1999), it rep- of Engineering and Technology provides advice resented a legal atavism for others (Mueller, 1997). on the technical and policy issues that pertain The universal service section of the Telecommu- to spectrum allocation and usage, as well as fre- nications Act provided the FCC the ability to cre- quency allocation and assignment. ate a durable system whereby the price for a basic Under the Freedom of Information Act pro- phone would remain low. It would also ensure moting transparency, relevant information can be that existing companies and new entrants to the found online. This includes frequency allocation market share the burden of providing an afford- and assignment, as well as the policies and activi- able service (Aufderheide, 1999). Universal service ties of the authorities. thus, for the irst time, included advanced services A sound regulatory framework for spectrum management needs to be in place in order to such as broadband Internet for all consumers at fair, reasonable, and affordable rates. democratize access to the beneits that spectrum Subsequent to the Act of 1996, the Univer- can offer. Such a framework is also essential to sal Service Fund (USF) was created and the FCC support the vast investments in wireless networks designated The Universal Service Administra- that are being made. The United States completed tive Company (USAC) as its administrator. USAC its digital switchover in February 2009 nation- is an independent, not-for-proit corporation that wide, with US$19 billion being raised through the receives, since 2013, 15.5 percent of end-user rev- 700 Mhz band auction. enue received by companies from USF fees (FCC, Spectrum management is essential to achieve 2013). The fee applies to telecommunications carri- universality of access and services, given the ers, including wireline and wireless companies, VoIP need for mobile broadband to reach underserved providers, and cable companies that provide voice areas and the use of mobile technologies. Uni- service, and is based on an assessment of interstate versal service is a concept that was introduced and international end-user revenues (USAC, 2013). ANALYSIS OF REFERENCE COUNTRIES 37 Spectrum caps ceased to be applicable in These recommendations are interlinked and 2013. Instead, the FCC instituted a policy, referred relate to a decade of high-level debates on spec- to as spectrum screening, to evaluate spectrum trum policy held within the Federal Government. holdings on a market-by-market, case-by-case Since 2002, the Spectrum Policy Task Force has basis. This allegedly caused a “steady consoli- advised the FCC on how to evolve from the com- dation and a dramatic decline in competition to mand-and-control model of spectrum manage- the detriment of consumers” (Feld, 2013). In any ment to a model with less regulatory intervention, event, the debate on whether to adopt caps or as well as on prevalent spectrum issues. The report not continues. The FCC has reviewed its mobile that was issued by the Spectrum Policy Task Force spectrum holding policies and the DoJ advo- in November 2002 indicates that in some bands, cates that “rules that ensure the smaller nation- the spectrum was not fully used. It stated that one wide networks, which currently lack substantial of the reasons for this was due to how spectrum low-frequency spectrum, have an opportunity is regulated and that “increased lexibility will be a to acquire such spectrum” as the FCC prepares key component of any policy that successfully pro- to auction the 600 MHz spectrum. Civil society motes the eficient use of spectrum” (FCC, 2002). groups issued a petition to support the DoJ position and to support the capping of spectrum caps 8.1.3. Spectrum Availability as a means towards “increasing auction revenue by attracting a wider base of potential bidders— Among the countries assessed in this study, the bidders that might otherwise be deterred from United States ranks as second from the top, fol- participating. Just as important, pro-competitive lowed by Germany, in terms of the amount of spectrum holdings limits will increase downstream spectrum dedicated to mobile broadband with an competition, investment and innovation in the allocation of 608 MHz. Table 7 shows the bands wireless marketplace” (FCC, 2014b). that are allocated. A more recent step towards universality is the National Broadband Plan released in March of 2010. It highlights ways in which the U.S. Government can stimulate the broadband ecosystem and reform universal service, for which a total of US$4.5 billion a year was allocated from the USF. The plan sets the following recommen- TABLE 7. Licensed Spectrum Available for Mobile Broadband: United States, 2013 Band Below 700 Mhz Allocation (in blocks) N/A dations: (i) to ensure greater transparency con- 700 MHz 70 cerning spectrum allocation and utilization; (ii) to 800 MHz 64 expand incentives and mechanisms to reallocate 900 MHz N/A or repurpose spectrum; (iii) to make more spec- 1,500 MHz N/A trum available for broadband within the next 1,700/1,800 MHz N/A ten years; (iv) to increase the lexibility, capacity, 1,900 MHz 130 and cost-effectiveness of spectrum for point-to- 2.1 GHz 130 point wireless backhaul services; (v) to expand 2.3 GHz 20 opportunities for innovative spectrum access 2.6 GHz 194 TOTAL 608 models; and (vi) to take additional steps to make U.S. spectrum policy more comprehensive (FCC, 2010). 38 Source: Authors, with data from FCC (2013h). Note: N/A = not available. SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY Despite the United States having allocated a incumbents in the 600 MHz band; and (iv) post- larger amount of spectrum than in most countries, transition regulatory issues, including channel there is yet more need for capacity to satisfy the sharing. The auction is planned for mid-2015. steep increase in consumer and business broadband demand. The country, therefore, is now 8.1.4.2. TV White Spaces seeking additional spectrum and is repurposing Unlicensed spectrum that is already allocated. between US$16 billion and US$37 billion each year spectrum currently generates Accordingly, the National Broadband Plan has to the U.S. economy (Clyburn, 2012), since exclu- established various spectrum recommendations. sively licensed spectrum occupies ive times the Among them are the expansion of (i) incentives spectrum in the 500 MHz to 1 GHz frequencies and mechanisms to reallocate or repurpose spec- as unlicensed usage does (Cooper, 2012). This is trum; and (ii) opportunities for innovative spec- not suficient to meet the fast rising demand for trum access models. These objectives have been wireless data. By using Wi-Fi, providers ofload at the center of the spectrum policy debate. High- over one third of their trafic into the unlicensed lighted below are the main innovations that corre- spectrum, saving over US$25 billion in OPEX and spond to each of the recommendations. CAPEX (Cooper, 2012). 8.1.4. Innovative Policies trum use, and recent studies suggest that “the Wi-Fi is a success in terms of unlicensed specshare of mobile device trafic ofloaded over unli- 8.1.4.1. Incentive Auctions censed spectrum onto residential and business Incentive auctions are essential to expand incen- wireline networks is likely to surpass two-thirds tives and mechanisms to reallocate or repurpose over the next several years” (Calabrese, 2013). The spectrum, as described in the National Broadband United States is aware of this and has been under- Plan. These auctions are a market-based means taking steps to advance unlicensed spectrum reg- through which licensees are encouraged to volun- ulation, in particular the use of TVWS. tarily renounce their usage rights in exchange for The idea of having ixed and portable unli- a share of the values paid for new licenses to use censed devices to operate in one or more TV con- the repurposed spectrum. The proceeds would tiguous channels has been under discussion since contribute to the funding of a new US$7 billion 2004, when an NPRM was issued. Subsequently, public safety network, in addition to paying the the FCC ran two series of tests on TVWS proto- broadcasters that renounce their licenses. types, the results of which were found to be varied The U.S. Congress, in February 2012, autho- when the prototypes were found to work well in rized the FCC to use spectrum for incentive auc- sensing TV signals but not so well in sensing wire- tions. An NPRM was adopted in September 2012 less microphones (Saeed and Shellhammer, 2012). to develop a broadcast TV spectrum incentive The FCC “Report and Order” (FCC, 2014a) and a auction in the 600MHz band, the irst of its kind, memorandum for opinion, issued in 2010, set the worldwide (FCC, 2012d). rules under which an unlicensed device can be In May 2014, the FCC adopted rules to imple- certiied and allowed to operate in the TVWS. ment the First Ever Broadcast Television Incentive Fixed devices operate with high power and Auction, four parts of which include the (i) reorga- antennae that are mounted on buildings or masts, nization of the 600 MHz Band, including repack- and they are likely to be used for commercial Wi-Fi ing and unlicensed operations; (ii) auction process Hot-Spots. On the other hand, portable devices and design; (iii) post-auction transition for all are for short distances through rural broadband ANALYSIS OF REFERENCE COUNTRIES 39 distribution or cellular-type installations. These interference through technical license terms, are suitable for Wi-Fi access points, tablets, and instead relying on resolving any interference smartphones (Google, 2013). White space devices after it has occurred.” are considered still in their infancy (Benkler, 2012), Under this light type of licensing scheme, since the FCC approved the irst device only in users must comply with speciic service rules but 2011 and its initial deployment occurred in 2012 in do not have to obtain individual station licenses. Wilmington, North Carolina. The rules for sharing Operators are expected to only pay a small reg- ixed and portable white space devices have been istration fee to operate in the 50 MHz between established (FCC, 2013g) and are set forth in the the 3,650 MHz and 3,700 MHz spectrum. Further- Code for Federal Regulations. more, various operators are allowed to register on The FCC has also recently advanced the a nonexclusive basis. By the FCC having removed pilot tests for database systems. In March 2013, the barriers for entry, more players are able a 45-day test of Google Inc.’s TV band database to enter the market, thus progressing towards system began with the granting of public access universality. and, as speciied in the rules, to ensure that it cor- ASA/LSA. In 2010, U.S. President Obama rectly identiied the channels available for unli- unveiled an initiative to reform spectrum pol- censed radio transmission devices to (i) operate icy and improve America’s wireless infrastruc- in unlicensed TV band devices; (ii) register radio ture. In collaboration with the FCC, he signed a transmitting facilities that are entitled to protec- Memorandum calling for the NTIA to make avail- tion; and (iii) provide protection to authorized able 500 MHz of spectrum—used for other fed- services and registered facilities. In June 2013, eral and nonfederal services—within the next Google, Inc. was granted approval by the FCC’s 10 years. Based on this, the NTIA assigned the Ofice of Engineering and Technology to operate 3.5 GHz band, which applied to military and sat- the database system, providing the public with a ellite operations, as a band that can potentially service to support unlicensed radio devices that modernize spectrum access models (NTIA, 2010). transmit on TVWS (FCC, 2013h). The ASA/LSA model is currently being proposed for this band. It builds upon the efforts 8.1.4.3. Innovative Types of Licensing Spectrum of the NTIA; the report of the President’s Coun- The light-licensing model is a nonexclusive cil of Advisors on Science and Technology (2012) scheme used for licenses in the 3,650 MHz band and the U.S. experience with spectrum sharing and can well be applied for existing federal ser- in TVWS. The ASA/LSA approach is viewed as a vices (FCC, 2013i). As explained by Webb (2008): new way in which to share spectrum, combining elements of traditional spectrum management 40 “Light licensing is an approach where users with the new and enabling it to be shared at cer- do require a license (unlike license-exemption) tain times and in particular places. The FCC con- but this license is typically very low cost and sidered has this technique since December 2012 available on request to anyone. Users then as part of its NPRM for a new Citizens Broadband have to register their use of the spectrum in Service in the 3,550–3,650 MHz frequency band some way, such as through a database con- (3.5 GHz band). The small cells and spectrum taining parameters of each of their transmit- sharing, together, will improve the eficient use of ters such as their location and power levels. radio spectrum (FCC, 2012c). Varying degrees of control are then possible. The NPRM proposes that “the Citizens Broad- (…) Light licensing does not attempt to control band Service be managed by a spectrum access SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY system incorporating a dynamic database and, MHz band. This would total 150 MHz available for potentially, other interference mitigation tech- shared wireless broadband access. On Novem- niques. The spectrum access system would ensure ber 2013, the FCC determined that it would be that Citizens Broadband Service users operate in the public interest to solicit further comment only in areas where they would not cause harm- on speciic alternative licensing proposals (FCC, ful interference to incumbent users and could also 2013c). help manage interference protection among dif- ASA/LSA is a framework that increases spec- ferent tiers of Citizens Broadband Service users” trum sharing and the use of small cell networks, (FCC, 2012c). thus raising data capacity within available spec- There are three tiers of service proposed: trum resources. It is considered vital to pursue (i) Incumbent Access; (ii) Priority Access; and small cell spectrum-sharing strategies in parallel (iii) General Authorized Access (GAA). What dif- with other efforts to increase the amount of exclu- ferentiates each of these tiers is the level of inter- sively licensed spectrum for more widespread ference protection each have: connectivity at affordable prices. The global small cell market is expected to grow to US$2.7 billion Incumbent Access users would include autho- by 2017 (Infonetics, 2013). rized federal and grandfathered FSS users currently operating in the 3.5 GHz Band. 8.1.5. Analogue Switchof/Digital Switchover These users would have protection from harmful interference from all other users in Overview: The digital switchover was completed the 3.5 GHz Band. In the Priority Access tier, in February 2009 across the United States. As a the NPRM proposes that the Commission result, 108 MHz in the 700 MHz band were vacated. authorize certain users with critical quality-of- From the 108 MHz, 24 MHz were allocated to pub- service needs (such as hospitals, utilities, and lic safety. The rest has been auctioned. public safety entities) to operate with some interference protection in portions of the 3.5 Subsidies: The U.S. Government has subsi- GHz Band at speciic locations. Finally, in the dized the cost of transitioning by offering cou- GAA tier, users would be authorized to use the pons to those affected, totaling US$1.5 billion. 3.5 GHz Band opportunistically within desig- The program was administered by the NTIA and nated geographic areas. GAA users would be coupons in the amount of $40 were mailed to required to accept interference from Incum- household addresses through the U.S. Postal bent and Priority Access tier users (FCC, Service. One aspect of this scheme is that the 2013b). NTIA included all U.S. households due to the uncertain demand. The FCC is now analyzing how rights should be assigned among users. Some stakeholders Public Safety/Private Partnership: A framework have proposed a two-tiered sharing structure between licensees in commercial spectrum blocks that essentially removes the GAA tier and oth- and those in public safety blocks was created, ers have defended a more traditional framework, under which the public safety licensee has priority whereby exclusive access to spectrum would be access to a commercial licensee in the case of an assigned geographically (FCC, 2013b). The FCC emergency. This interoperability provides a sec- is also considering expanding ASA/LSA into an ondary use of spectrum and the maximization of adjacent 50 MHz of spectrum in the 3,650–3,700 public safety. ANALYSIS OF REFERENCE COUNTRIES 41 Auction: In 2008, US$19 billion was raised through the 700 Mhz band auction. The main aspects of the auctions were: • • Indicator Population 63.0 million GNI/capita US$37,780 Connections 77.6 million Market penetration – Mobile Broadband 74.79% Market penetration – 3G 80.22% will make the unserved portions of the license Market penetration – 4G 1.09% available to other potential users. Due to Market penetration – LTE 1.09% interoperability issues, however, the four-year OPEX/revenue, annual 80.95% deadline was extended (FCC, 2013k). CAPEX/revenue, annual 14.30% Herindahl-Hirschman Index 2,757 Technology and service neutrality. Coverage obligations: Thirty-ive percent of the geographic area of the license within four years and 70 percent within ten years. Failing to meet these requirements automatically • TABLE 8. Mobile Broadband Indicators: the UK, 2013 Split in two major ranges: lower and upper 700 MHz. Source: Authors with data from GSMA (2013a). Delay: The initial date that had been established for the switchover was February 2009. Analogue Figure 10 below indicates the wireless broadband penetration rates between 2009 and 2013. broadcasting, however, did not cease entirely by this deadline. 8.2.2. Institutional, Policy, and Regulatory Frameworks 8.2. United Kingdom Under the Communications Act 2003, Ofcom 8.2.1. Overview became the UK’s independent uniied regulator and competition authority for the UK elec- Following global trends, the UK also faces the tronic communications sector. It took over the rising demand for mobile data as a result of the responsibilities of the previous separate regula- proliferation of connected devices and chang- tors and it manages civilian use of the spectrum. ing consumer behavior. According to informa- The Communications Act 2003 and the Wireless tion from Ofcom, the volume of data more than The market penetration of mobile broadband is considerably high, at almost 75 percent, primarily relating to 3G. Table 8 summarizes some of the indicators relating to the UK: 42 Source: OECD (2014). SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY 2013–Q2 access to 4G mobile services (Ofcom, 2013c). 2012–Q4 2017, almost the entire UK population will have 2012–Q2 19 percent. Ofcom estimates that by the end of 2011–Q4 of UK adults and tablet ownership now stands at Percent 2013c). Smartphone ownership rose to 39 percent 90 80 70 60 50 40 30 20 10 0 2011–Q2 (24.7 percent) a month more than in 2010 (Ofcom, 2010–Q4 vices was 2.1 hours a month in 2011—25 minutes FIGURE 10. Wireless Broadband Penetration Rates: UK, 2009–13 2010–Q2 and the average time spent on mobile data ser- 2009–04 doubled in the 18 months preceding January 2012, Telegraphy Act 2006 give Ofcom the authority Final Report (Government of the UK, 2009), which over spectrum management. came into legislation through the Digital Economy Within Ofcom, the Spectrum Policy Group Act 2010 (Government of the UK, 2010).16 Among clears, awards, and licenses the UK’s radio spec- the provisions of the Act are the digital switchover, trum, ensuring that wireless communications regulation of TV and radio services, and access to operate eficiently and without interference. In electromagnetic spectrum. The Wireless Telegra- turn, the Spectrum Clearance and Awards Man- phy Act 2006 was also amended. agement Board manages Ofcom’s Spectrum Clearance and Awards Programme for the 800 8.2.4. Innovative Policies MHz and 2.6 GHz frequency bands. Ofcom has articulated a market-led approach to 8.2.3. Spectrum Availability spectrum management since 2005, when its last strategic review took place. A series of objectives The table below shows that the UK has already around the introduction and extension of market allocated a high amount of spectrum to mobile mechanisms were set, including (i) auctions as a broadband. means to assign new spectrum access rights for The National Broadband Policy, released in large blocks of spectrum; (ii) spectrum pricing to December 2010, will provide access to broadband create incentives for users to make eficient use speeds of at least 2 Mbps and superfast broad- of spectrum; (iii) spectrum trading and leasing for band to at least 90 percent of the population by spectrum access rights that are already assigned 2015. In terms of spectrum management, the princi- to change hands; and (iv) greater license lexibil- pal legal instruments are the Communications Act ity (liberalization) as a principle to enable change 2003 and the Wireless Telegraphy Act 2006. The of use, wherever possible, without recourse to legal framework includes the 2009 Digital Britain: Ofcom to vary the technical license conditions 15 (Ofcom, 2013g). As a result of this strategy, the fol- TABLE 9. Available Licensed Spectrum Available for Mobile Broadband: UK, 2013 Band Allocation (in blocks) lowing has taken place: • The 4G auction at 800 MHz and 2.6 GHz has been undertaken. • Spectrum pricing has been extended to most Below 700 Mhz N/A 700 MHz N/A 800 MHz 60 900 MHz 70 1500 MHz N/A lexible, including the liberalization of mobile 1,700/1,800 MHz 143 licensees, deploying 3G and 4G technologies 1,900 MHz 20 in all mobile bands and changes to business 2.1 GHz 120 2.3 GHz N/A 2.6 GHz 185 TOTAL 598 major license classes. • A total of 84 percent of relevant spectrum is now tradable. • A total of 21 percent of spectrum is highly radio licensing. Deined as 24 Mbps. Broadband is not included in the Universal Service Obligations; it is part of a broader national broadband plan launched in 2010. 15 Source: Authors, with data from Ofcom (2013f). Note: N/A = not available. 16 ANALYSIS OF REFERENCE COUNTRIES 43 In October 2013, the authority released a con- barriers to deploying the latest available mobile sultation document relating to a proposed strat- technology. This decision, according to Ofcom, is egy to fulill the country’s spectrum management aligned with the public interest, since operators will over the next ten years (Ofcom, 2013g). Ofcom also be able to plan the deployment of 4G services with- released its long-term and annual plans. Among out engaging in a further regulatory process. Oper- the priorities set for 2013/2014 is to secure optimal ators, therefore, will not be required to deploy 4G use of spectrum. Activities under this priority are services in the immediate future (Ofcom, 2013b). the following: The auction generated £2.3 billion, £1.2 billion less than the Treasury had predicted and £3 bil- • • • Timely spectrum clearance in 800 MHz and lion less than the assumed maximum. In 2000, 3G 2.6 GHz to enable new awards, while mitigat- licenses were sold for £22.5 billion, ten times more ing co-existence issues. than that for 4G spectrum. Ofcom neither set a Implementation of the UHF strategy to enable maximum igure for the proceeds nor did it fore- a potential release of 700 MHz for harmonized cast the proceeds ahead of the auction. Instead, mobile use. the authority wishes to maintain competition in Support of the release of 2.3 GHz and 3.4 GHz the mobile telecommunications market and to bands to meet spectrum demand. maximize consumer beneits, estimated at £20 billion. The difference between the estimate and In addition to the above, the use of TVWS was the actual amount has raised the suspicion of the identiied for potential broadband use. Ofcom is National Audit Ofice, which is currently preparing shifting towards a more lexible management of a report of an assessment of auction outcomes, the spectrum and it has opted for neutrality in while taking into account the experience of other terms of services and technologies in its future countries (UK, 2014). spectrum assignments. alternative bands that can be used for mobile data 8.2.4.2. Implementation of UHF Strategy to Release 700 MHz in the future, such as the 2.7 GHz band currently As a result of the ITU World Radio Conference 2012, used for radar and the 3.6 GHz satellite band. The the ITU has allocated additional UHF spectrum to total amount of spectrum would boost mobile mobile services in the 694 MHz to 700 MHz fre- data capacity by more than 25-fold between quency band in ITU Region 1.17 This is expected to today and 2030 (Ofcom, 2013c). The main steps take place in 2015 and, in the meantime, the UK is for each of the activities are summarized below. releasing its mobile broadband to the 700 MHz Furthermore, the regulator has identiied band. Ofcom, in parallel, is ensuring that current 8.2.4.1. Timely Spectrum Clearance in the 800 MHz and 2.6 GHz Bands users of the 700 MHz band—primarily digital terres- In February 2013, Ofcom auctioned 245 MHz in two and special events (PMSE)—will be able to continue separate bands: (i) that which was freed as a result to provide services in the event of this change. A of the analogue switchoff and the 800 MHz that call for public comment was made in April 2013 to was part of the digital dividend; and (ii) the 2.6 GHz assess the beneits of mobile broadband in the 700 band. This is equivalent to two thirds of the radio MHz frequency band (Ofcom, 2013d). trial TV (DTT), as well as those of program-making frequencies currently in use by wireless devices. This refarming process was an effort to liberalize mobile licenses so as to remove the regulatory 44 ITU Region 1 includes Europe, Africa, and parts of the Middle East. 17 SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY No inal decision has been taken to date at the • Requirement to provide general information international, European or UK levels with regard regarding equipment and use of frequencies to the release of this frequency band. In fact, for the rollout of networks. coordination at the international level will signii- • No coverage obligations. cantly inluence this undertaking in terms of timing, usage, and the DTT band plan to be adopted. Ofcom considers that “spectrum is most use- The procedure should be completed by 2018 at ful if it can be as unencumbered as possible.” Its the earliest (Ofcom, 2013c). initial view was that such bands will be used to develop 4G networks, although other possibilities 8.2.4.3. Support the Release of 2.3 GHz and 3.4 GHz Bands are under consideration. The regulatory authority is expecting to award this spectrum in FY2015–16. Since March 2011, the UK Government, through Harmonization of the 2.3 GHz band is taking its Department for Culture, Media and Sport, place in Europe, based on the ITU’s World Radio announced its intention to release 500 MHz of Conference 2007, which established the 2,300 public spectrum by 2020 (Government of the MHz to 2,400 MHz band for use by IMT. In addi- UK, 2011a)—below 5 GHz. As part of its plan, the tion, the 3.4 GHz band has been allocated by the Ministry of Defence (MoD), under its Defence ITU for ixed, mobile, ixed satellite, and radiolo- Spectrum Reform, will open up some military cation services. Both bands are undergoing har- spectrum bands to share with public and pri- monization in Europe. With regard to the 2.3 GHz vate users. The UK Government will release band, CEPT—through the ECC—is expected to further spectrum in the 2,310–2,400 MHz and issue a nonbinding agreement to make the band 3,410–3,600 MHz frequencies in 2013/14 and available for mobile and ixed communication. 2015/16, respectively (Government of the UK, With regard to the 3.4 GHz band, the European 2011b). Commission’s Radio Spectrum Committee con- In addition to the call for public comment, sidered the CEPT Report in December 2013 and Ofcom requested a consultation concerning the the decision in March 2014, which is binding on award of licenses to use frequencies in the 2.3 Member States (Ofcom, 2013a). GHz and 3.4 GHz frequency bands at the time the MoD released 190 MHz of radio spectrum in these 8.2.4.4. Mobile Infrastructure Project bands to Ofcom for an award process. The spec- In October 2011, the UK announced the Mobile Infra- trum being made available comprises: structure Project (MIP) with a £150 million capital expenditure to improve mobile coverage and qual- • • 2.3 GHz band: 40 MHz of spectrum between ity. The project is managed by Broadband Delivery 2,350 MHz and 2,390 MHz. UK, a unit within the Department for Culture, Media 3.4 GHz band: 150 MHz of spectrum above and Sport. The objectives of MIP are to (i) improve 3,410 MHz and below 3,600 MHz. the coverage and quality of mobile network services for the 5–10 per cent of consumers and busi- The principal license conditions proposed are the following: nesses that live and work in areas of the UK where existing mobile network coverage is poor or nonexistent; and (ii) extend coverage to 99 per cent of • • Initial license period of 20 years. the UK population. The project will be implemented Fully tradable, subject to Ofcom giving con- in 2015 (Government of the UK, 2012) and already sent to trade prior to it being implemented. has the clearance of the European Commission. ANALYSIS OF REFERENCE COUNTRIES 45 The MIP is part of a larger plan of the UK Ofcom’s TV White Spaces Pilot, launched in Government to improve broadband in the coun- October 2013, tested the interactions between try—evidence that, despite the high penetration devices, databases, and Ofcom. This provided an of Internet, the UK Government is including the opportunity for the industry to (i) conduct further underserved. It is expected that the £150 million trials using the proposed framework; and (ii) gain investment will deliver approximately £340 million further information on the extent of interference in economic beneits by extending coverage to to DTT and PMSE 19 users. remote and rural areas across the country (Gov- The Ofcom pilot ended in March 2014. The ernment of the UK, 2013b). Under the MIP, the purpose was to test (i) device operations; (ii) data- Government will cover the OPEX—over a period base contract qualiication; (iii) database opera- of 20 years—of four mobile operators that provide tion and calculations; (iv) the provision of Ofcom’s coverage for certain areas. The program will also qualifying database listing; (v) Ofcom’s DTT cal- consider ways in which it can support the sharing culation results and provision of PMSE data; and of infrastructure among operators in lieu of install- (vi) interference management. Under the cur- ing four sets of equipment. rent pilot scheme, there is no charge for services; however, a different license for charging may be 8.2.4.5. Unlicensed Spectrum Sharing granted by Ofcom on request. Another example of the shift towards a more lex- More than 40 expressions of interest to receive ible use of spectrum promoted by Ofcom is the a nonoperational pilot license (Ofcom, 2013e) were diversiication of bands of radio spectrum allowed received. Ofcom will undertake tests to ensure that in the UK for unlicensed use. These bands contain the proposed co-existence parameters will result in a variety of applications (e.g., telemetry, broad- low interference to DTT and PMSE. To participate in band wireless communications, and short-range the test, a master white space device must discover radar and relays). The license-exempt frequency active qualifying white space database broadband bands are 2.4 GHz; 5.1 GHz; 5.5 GHz; and 60 GHz by consulting a device-readable list provided by (Government of the UK, 2011b). Ofcom (Caines, 2013). To ensure that there is no BT Fon is an initiative between BT and FON undue interference with existing spectrum users, to provide its clients with an innovative way to the database will provide updated information on access wireless broadband globally in terms of where the TVWS are and the level of power limits TVWS. It has a network of 7 million Wi-Fi hotspot that the devices would be required for use. locations around the world (Deloitte, 2013) and the UK is one of the countries undertaking this 8.2.5. Analogue Switchof/Digital Switchover process. The launch of the industry pilot project in Cambridge in June 2011 by a consortium of Overview: Digital UK’s Programme Ofice in part- companies was completed in April 2012. It was nership coordinated the switchoff process with designed to evaluate the technical capabilities of various stakeholders, including government and 18 the technology and the potential user application scenarios. The trial took ten months and included urban and rural areas in and around Cambridge. Based on the results, the consortium requested that Ofcom complete the development of its regulatory framework to enable the commercialization of the technology. 46 The consortium includes Adaptrum Inc., Alcatel-Lucent, Arqiva, BBC, BSkyB, BT, Cambridge Consultants, CRFS, CSR Plc., Digital TV Group, Microsoft Corp., Neul, Nokia, Samsung, Spectrum Bridge Inc., The Technology Partnership Plc., and Virgin Media. 19 Wireless cameras and wireless microphones are examples of PMSE. 18 SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY broadcasters. Most of the spectrum used for ana- companies that received the awards were Every- logue TV was set aside for DTT: 256 MHz from a thing Everywhere Ltd., Hutchison 3G UK Ltd., total of 368 MHz. Niche Spectrum Ventures Ltd., Telefónica UK Ltd., and Vodafone Ltd. The auction included the fol- Stakeholders: In addition to the UK Government, lowing aspects: various stakeholders played a vital role during the transition process (e.g., UK broadcasters, operators of six digital multiplexes) with the establish- • • while not considered an easy process, it ultimately Rollout or coverage obligations in the new licenses. ment of a forum. A cross-industry agreement on the challenges of the switchoff was reached and, Technology and service neutrality. • • Coverage obligations. Spectrum caps: overall spectrum cap of 2 x led to a smooth and successful transition. Digital 105 MHz and sub-1GHz spectrum cap of 2 x UK coordinated the undertaking. 27.5 MHz. Subsidies: It is a challenge in any switchover pro- 8.3. Australia cess to include the most vulnerable and isolated populations. The UK Government, under an agree- 8.3.1. Overview ment with the BBC, initiated the Switchover Help Scheme from 2007 to 2012, which reached 1.3 mil- Australia has been shown to be signiicantly ahead lion eligible people older than 75 years of age, as in mobile broadband penetration. Table 10 shows well as the disabled, during the transition. that Australia also has a high penetration rate of advanced technologies. Communications: A major communications strat- Australia’s mobile broadband penetration egy was put in place by way of a website (http:// rates stands at 108.92 percent. This is relected in www.digitaluk.co.uk) for the public to inform them Table 10 below. of the transition taking place in their respective There are three mobile network carriers in areas. More than 60 million visits were made to Australia: Telstra, Optus, and Vodafone Hutchin- the website. Viewers of TV were also informed via son Australia, with 46 percent, 31 percent, and 23 broadcast messages. percent, respectively. The share of the telecommunications industry revenue has recently increased, Regional approach: The transition was designed reaching more than 50 percent (Deloitte, 2013). around the 15 regions and more than 1,150 transmitting stations were upgraded. The irst switchover to digital TV took place in Whitehaven over a period of a month, including 25,000 households. The community outreach resulted in 23 million emails, 6 million phone calls, the engagement of TABLE 10. Mobile Broadband Indicators: Australia, 2013 Indicator Market penetration – Mobile Broadband 108.92% Market penetration – 3G 92.24% ment of 100,000 community supporters (Govern- Market penetration – 4G 16.69% ment of, 2013a). Market penetration – LTE 16.69% OPEX/revenue, annual 75.43% 6,000 statutory organizations, and the recruit- Auction: The transition to the 800 MHz and 2.6 GHz bands was completed in 2013. The ive CAPEX/revenue, annual 11.69% Source: Authors with data from GSMA (2013a). ANALYSIS OF REFERENCE COUNTRIES 47 FIGURE 11. Wireless Broadband Penetration Rates in Australia, 2009–13 120 TABLE 11. Available Licensed Spectrum Available for Mobile Broadband: Australia, 2013 Band 100 Allocation (in blocks) 80 Below 700 MHz N/A N/A 1,700/1,800 MHz 150 2013–Q2 1,500 MHz 2012–Q4 50 2012–Q2 900 MHz 0 2011–Q4 40 2011–Q2 800 MHz 20 2010–Q4 N/A 2010–Q2 700 MHz 2009–Q4 60 40 Source: OECD Broadband statistics 2014 (OECD, 2014). 8.3.2. Institutional, Policy, and Regulatory Frameworks 1,900 MHz 20 2.1 GHz 120 2.3 GHz 98 2.6 GHz N/A TOTAL 478 Source: Authors, with data from FCC (2013h). In Australia, the authority responsible for managing the spectrum is the Australian Communications and Media Authority (ACMA), governed by the fact that 478 MHz are allocated (Government the ACMA’s Act of 2005 (Government of Austra- of Australia, 2011): lia, 2005), its Radiocommunications Act 1992, and Despite the allocated 478 MHz, it is estimated its Broadcasting Services Act 1992. The key prin- that Australia has located an additional 130 MHz– ciples for its spectrum management are the fol- 150 MHz of spectrum to support mobile access lowing (Government of Australia, 2009): services by 2015, supplemented by 150 MHz by 2020. The ACMA has determined several possible • • Allocate spectrum to the highest value usage. Enable and encourage spectrum to move to its highest value of usage. • To the extent possible, promote both certainty and lexibility. • bands, as follows: Balance the cost of interference and the beneits of greater spectrum utilization. • • • • • 850 MHz expansion band. 1.5 GHz mobile band. 3.3 GHz band (3,300–3,400 MHz). 3.4 GHz band (3,400–3,600 MHz). Bands above 4.2 GHz have not yet been identiied but might be an option in the near future. The allocation of frequency bands occurs every few years. A new version was launched in 8.3.4. Innovative Policies 2013 in response to the ITU’s World Radio Conference 2012 recommendations. The Australian Government bases its policy decisions and regulatory interventions on a total wel- 8.3.3. Spectrum Availability fare standard. Whenever regulatory options are evaluated, “the beneits to the community of the Table 11, below, indicates the amount of spectrum recommended option exceed its costs and have allocated to mobile broadband. This is in spite of the greatest net beneits (beneits minus costs) to 48 SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY the community of all alternative approaches con- to engage with industry players as further techni- sidered” (Australia, 2007). A total welfare standard cal and regulatory developments are explored. requires that, to the extent possible, (i) all signii- The ACMA views the development and cant beneits and costs arising from the regulatory deployment of Dynamic Spectrum Access “as proposal will be given the same weight, regardless evolutionary rather than revolutionary” and that of the identity of the recipient; and (ii) the approach “arrangements to address spectrum management expected to generate the greatest net beneits is issues associated with these technologies will be the preferred approach (Government of Australia, the subject of further work by the authority”. It also 2008). Despite possible antitrust issues, the ACMA considers that TVWS cannot yet be regulated. Nev- has taken this approach with the result that wireless ertheless, the Australian Parliament has agreed to penetration has proved to be signiicantly successful. amend the legislation to allow class licenses within The licensing regime adopted in Australia the spectrum’s licensed spaces to enable usage of relates to three categories: (i) apparatus licens- TVWS (Saeed and Shellhammer, 2012). ing; (ii) spectrum licensing; and (iii) class licensing, In any event, some wireless devices licensed the last of which corresponds to the unlicensed under the class license use TVWS. These devices approach used in other countries. Spectrum include radio microphones, biomedical telemetry licensing has a market-based approach and is nor- transmitters, and transmitters used for under- mally issued following a price-based distribution. ground communications. The technologies are cat- Spectrum licenses are issued as a property right egorized as potentially low-interference devices. and a means to manage interference. There is evidence that these have been successful to “provide 8.3.4.2. Infrastructure Sharing a workable compromise between maximizing lex- Further developments have recently taken place ibility and certainty in usage, channeling spectrum with regard to infrastructure sharing, since vari- supply toward market demand and minimizing the ous stakeholders are interested in deploying wire- need for ex post regulatory intervention” (Saeed less networks within a large geographic area. As and Shellhammer, 2012). The licenses are technol- a result, the ACMA is considering an area-wide ogy neutral, but the degree of service neutrality license for the mining and transport sectors and varies depending on the band. other entities, with a trial private park arrangement in a designated location. The trial is to see 8.3.4.1. Spectrum Trading and Sharing whether participants can be given the opportunity Spectrum licenses can be traded. Some of the to test the equipment and technologies, as well as bands, however, are underutilized (e.g., 500 MHz, 2.3 to determine whether spectrum sharing and coor- GHz, 27 GHz), and a portion of the valuable spaces dination agreements can be negotiated between (e.g., 800 MHz and 3.4 GHz) is being traded at a industry players in close geographic proximity suboptimal level (Saeed and Shellhammer, 2012). within the framework of the private park. The issuance of a class license is a distinct way in which to minimalize the operational conditions of the spectrum, which are not tailored to 8.3.5. Analogue Switchof/Digital Switchover speciic users. Aeronautical mobile stations, citizen band radio stations, and cordless communica- Overview: The switchoff process on the 694–820 tions systems, among others, instead, use these. MHz band was challenging because of the preva- The ACMA is looking at ways in which to facilitate lence of DTT channels on that band. It took time increased access to shared spectrum and it plans to move them to below channel 52, following the ANALYSIS OF REFERENCE COUNTRIES 49 analogue switchoff. The process was completed Auction: Auctions of the digital dividend in the in December 2013, but the task of restacking the 700 MHz band and the 2.5 GHz band were con- channels was completed in 2014. The project ducted in April and May 2013. This has resulted amounted to US$37.9 million in addition to the in total revenues of US$2 billion for the Federal subsidies indicated below. Government from three winners. Companies are expected to begin to be able to use LTE 4G net- Communications: A communications strat- egy was formulated. A website was also created works in 2015. The main aspects of the auctions were: (http://www.digitalready.gov.au/). • A spectrum cap was established and a sin- Regional approach: A region-by-region timetable gle bidder could not acquire more than 2×25 was put in place. This was considered, rather than MHz (50 MHz in total) in the 700 MHz band one based on license areas. and more than 2×40 MHz (80 MHz in total) in the 2.5 GHz band. This cap was informed by advice from the Australian Competition and Coordination: The Australian Government estab- Consumer Commission. lished the Digital Switchover Taskforce within the Department of Broadband, Communications • Applications for licenses for the 700 MHz band and the Digital Economy with an allocation of began on January 1, 2015. In most cases, appli- US$16.9 million. In addition, a Digital Switchover cations for the 2.5 GHz band commenced on October 1, 2014. Liaison Oficer Program was created to fund nonproit organizations or government entities within • Bidders are allowed to bid for any combina- each of the switchover regions to develop and tion (or package) of the spectrum on offer that implement a community engagement strategy, is best suited to their business requirements. designed to help viewers in those regions transfer to digital TV. • The auction raised AU$929 million less than expected, and 30 MHz in the 700 MHz frequency band remains unsold. Subsidies: The Household Assistance Scheme was designed to provide practical assistance to 8.4. Germany older Australians, veterans, and people with disabilities. The Satellite Subsidy Scheme provides a 8.4.1. Overview subsidy for the installation of the equipment for populations in areas that are reliant on analogue As shown in Table 12, Germany has a very high per- retransmission services from a self-help TV tower centage of mobile connection. Its mobile broad- not converted to digital. Moreover, funding for band penetration, however, is lower than those of the private sector was provided in FY2012–13 up the UK and the United States. The table also indi- to the amount of US$143.2 million over ive years cates a high CAPEX and OPEX. and up to US$26.578 million in FY2013–14. These Germany is a sound market with ive opera- subsidies are for commercial and national broad- tors: E-Plus, Netcologne, O2 (Telefonica), Telekom, casters to restack the digital TV service channels. and Vodafone. In terms of investment and despite Restacking involves changing the frequencies of the low levels of CAPEX over the past decade in approximately 1,500 national and commercial dig- Europe, Deutsche Telekom AG will increase capi- ital TV channels across Australia at approximately tal expenditure by approximately 10 billion Euros 440 transmission sites. over the next three years (Musey, 2013). Such an 50 SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY post, and railway sectors. It falls under the scope of TABLE 12. Broadband Mobile Indicators: Germany, 2013 the Federal Ministry of Economics and Technology. The mandate of the BNetzA is to (i) promote Indicator effective competition and eficient infrastruc- Population 82.8M GNI/capita $43,980 Connections 113.2M Market penetration – Mobile Broadband 63.06% Market penetration – 3G 66.44% Market penetration – 4G 3.49% tion and the collection of spectrum fees, as well as Market penetration – LTE 3.49% standardization and numbering. The Telecommu- OPEX/revenue, annual 85.12% nications Act, Radio Equipment and Telecommu- CAPEX/revenue, annual 18.16% nications Terminal Equipment Act, Amateur Radio Herindahl-Hirschman Index 2,649 Act, and Electromagnetic Compatibility of Equip- ture to secure nondiscriminatory network access; (ii) guarantee compliance with statutory requirements for universal service throughout the Federal Republic of Germany; and (iii) manage the spectrum, including frequency planning and distribu- ment Act established these responsibilities. Source: Authors with data from GSMA (2013a). The Telecommunications Act created a frame- FIGURE 12. Wireless Broadband Penetration Rates in Germany: 2010–2013 50 work in which to structure a more lexible system of spectrum regulation. Sections 1 and 2 of this Act include the principles of technology neutrality, pro- 45 40 motion of competition, and eficient infrastructure in 35 telecommunications and the guarantee of appropri- 30 ate and adequate services throughout the country. 25 20 The German Federal Council (Bundesrat)–a 15 part of the advisory council of the BNetzA–repre- 10 sents Germany’s sixteen federal states and stands 2013–Q2 2012–Q4 2012–Q2 2011–Q4 2011–Q2 2010–Q4 2010–Q2 5 0 Source: OECD (2014). in for them in national legislative and administrative processes. In some cases, however, the decisions of Bundesrat are not aligned with those of the BNetzA (Standeford, 2013). With regard to TV broadcasting, each federal increase in CAPEX offers the potential for spectral eficiency gains and increase in penetration. The target for broadband speed will be a minimum of 50 Mpbs by 2014. This will be available for 75 percent of households nationwide by 2018 (Government of Germany, 2012). state has its own authority, which could be a challenge in terms of policy and regulatory discussions on the use of frequencies. As an example, while the digital switchover process was successful, it was dificult to coordinate the various state administrations. This should be taken into account with respect to TVWS, which use the same bands. 8.4.2. Institutional and Regulatory Frameworks 8.4.3. Spectrum Availability In Germany, the Federal Network Agency (Bundes- Germany is a leader of spectrum dedicated to netzagentur (BNetzA)) is responsible for the regu- mobile broadband. Table 13 shows the bands that lation of the electricity, gas, telecommunications, have been allocated for this. ANALYSIS OF REFERENCE COUNTRIES 51 TABLE 13. Licensed Spectrum Available for Mobile Broadband: Germany, 2013 Band Allocation (in blocks) Below 700 Mhz N/A 700 MHz N/A 1,800 MHz bands, which will expire in 2016, in addition to the allocation of the bands for mobile broadband. In 2009, the BNetzA decided to make lexible the frequency usage rights for wireless access 800 MHz 60 900 MHz 70 1,500 MHz N/A 1,700/1,800 MHz 140 bands. A study was commissioned in 2005 and 35 based on this, the BNetzA has harmonized the 1,900 MHz in terms of application and technology for telecommunications services in the 450 MHz, 900 MHz, 1,800 MHz, 2 GHz, and 3.5 GHz frequency 2.1 GHz 120 2.3 GHz N/A TVWSs are under way in Germany, similar to 2.6 GHz 190 the trials being undertaken in the UK, the United TOTAL 615 States (Consortium, 2012), and other countries. A Source: Authors, with data from FCC (2013h). Note: N/A = not available. approach for lexible frequency regulation. recent study estimates that Germany has the highest market potential for TVWS in Europe, followed by France, Italy, and the UK (Saeed and Shellham- Despite having allocated the amount of spec- mer, 2012). As previously indicated, Germany does trum relected in Table 13 to mobile broadband, not have a sole authority to deal with broadcast- the country is still seeking ways in which to satisfy ing—highlighted in the study as a reason for the the rapid increase in the demand for broadband. delay in the deployment of TVWS. The Federal Government’s Broadband Strategy, Unlicensed use of spectrum is a well-known launched in 2009, included the allocation of new resource for broadband access, and Germany has spectrum among its priorities. one of the highest penetrations of Wi-Fi in households in the world (Marcus and Burns, 2013), using 8.4.4. Innovative Policies the following frequencies: 2,400.0 MHz–2,483.5 MHz; 5,150 MHz–5,350 MHz; and 5,470 MHz– Germany is in its initial stages of consider- 5,725 MHz. The use of Wi-Fi as a way to ofload ing a second digital dividend that would create mobile data is becoming increasingly relevant in another large band of low frequency spectrum. Germany. 20 This decision follows the decision at the ITU’s World Radio Conference 2012 to allocate addi- 8.4.5. Analogue Switchof/Digital Switchover tional UHF spectrum to mobile services in ITU Region 1. Germany thus will allocate frequencies Overview: Cable and satellite reception are exten- to the 700MHz spectrum used by broadcasters sive in Germany, so analogue terrestrial TV has as follows: played a limited role, facilitating the simulcast at the time the digital transition took place on a • It is expected to award spectrum in the 900 MHz, 1,800 MHz, 700 MHz, and 1,452 MHz1,492 MHz (1.5 GHz) bands for wireless access. • The BNetzA is deciding on the future allocation of spectrum licenses of the 900 MHz and 52 20 Deutsche Telekom is building up its Wi-Fi offering, while continuing with its LTE rollout for 85 percent coverage across Germany by the end of 2016. In partnership with FON, it is expected that more than 2.5 million additional hotspots will be available. SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY regional basis. The transition, begun in 2002, was switchover and by the end of 2003, all commer- completed in April 2012. cial channels, including public service channels, had been switched off. Market dominated by cable: The German TV market has been dominated by cable. From 36.2 Communications Strategy: A neutral communica- million households, only 2.6 million rely on terres- tions strategy to raise the awareness of the popu- trial TV, with cable penetration higher at 20.6 mil- lation regarding the transition was implemented. lion households, followed by satellite at 13 million Consumers of satellite and cable were unsure homes (Government of the UK, 2006). As such, whether to make the change or whether it applied the transition to digital in Germany has affected to them (MABB, 2009). The principal outlets for fewer people in comparison to most countries. the communication campaign were the TV channels and a letter that was sent to households, while Regional approach: The switchover process was MABB partnered with tenant associations and con- undertaken on a regional basis, aggregated in sumer interest groups. The cost for the communi- large conurbations. The process was launched in cation initiative was 1.1 million Euros, borne jointly Berlin in October 2002 with a legislative frame- by the broadcasters and MABB (MABB, 2003). work in place and was completed in 2003. Other large urban areas with high population densities Auction: The German auction of May 2010, assign- followed suit. Commercial TV ceased analogue ing 60 MHz in the 800 MHz band, raised proceeds transmission in 2005 and, in 2008, the last pub- of EUR 3.57 billion, or EUR 60 million per MHz. lic service broadcasts were transmitted over ana- It resulted in four winners: Telekom with 95 MHz; logue capacities. Vodafone with 95 MHz; E-Plus with 70 MHz; and Telefonica O2 with 99 MHz. One player was left Coordination: Government entities were respon- out without a share of the 800MHz spectrum. The sible for coordinating the terrestrial broadcasters objectives of the auction were as follows: in each region, bringing together key stakeholders for communication campaigns. In Berlin, for example, the Media Institute Berlin-Brandenburg (Medienanstalt Berlin-Brandenburg • • (MABB)) Coverage obligations: 800MHz licensees obliged to roll out to rural areas before rolling undertook this role. In 2002, MABB signed an agreement with broadcasters to complete the Technology and service neutrality. out to urban areas. • Spectrum caps. ANALYSIS OF REFERENCE COUNTRIES 53 9 Spectrum Management in LAC Countries: Current Status and Key Challenges C ountries in the LAC region differ from other developing national broadband plans to improve countries in relation to broadband access, access to Internet high-speed connection. They use, and adoption. Despite the disparities have set targets, encouraged private investment, between and within countries, the region faces a and promoted broadband Internet access to con- widespread increase in mobile-cellular penetra- sumers and businesses (OECD, 2011). Many of tion. In 2011 alone, more than 30 million mobile these plans include guidelines on how the elec- broadband subscriptions were issued in the LAC tromagnetic spectrum should be managed in region (ITU, 2012). By the end of the same year, upcoming years and they set the goals to promote penetration surpassed 100 percent and 20 of the access, including in terms of speed and coverage. 33 countries in the region had more subscriptions Table 14 below illustrates some of these plans in than inhabitants (ITU, 2012). selected LAC countries. Accelerating broadband deployment and ser- Regardless of recent improvements, broad- vices in LAC is essential to achieve the beneits band penetration in the LAC region remains one associated with the development of the Inter- of the lowest in the world. On the demand side, net. Economic growth is one of the most impor- access is limited by economic constraints (e.g., tant impacts, and has been closely correlated low income and high access fees). The limitation to broadband penetration. A recent study, con- relates to usage disparities. Those subscribers (1.0 ducted by the IDB, found that an average of 10 percent) who use network resources the most percent increase in penetration was associated account for 28.1 percent of upstream, 28.0 per- with a 3.19 percent increase in GDP in the region, cent of downstream, and 28.8 percent of aggre- 2.61% increase in productivity, and 67,016 new jobs gate bytes each month (Sandvine, 2013). On the (García-Zaballos and López-Rivas, 2012). supply side, the lack of an adequate regulatory Following the trend observed in developed economies, LAC countries have commenced framework constrains the participation of potential service providers. 55 TABLE 14. Projected Smartphone Usage Growth in Latin America, 2012–17 2012 2013 2014 2015 2016 2017 103.0% 48.2% 22.4% 21.4% 17.0% 15.1% Brazil 70.8% 40.2% 36.0% 27.0% 16.0% 16.1% Argentina 46.3% 29.4% 22.7% 16.4% 12.1% 10.8% Other 64.4% 51.5% 27.9% 25.4% 18.6% 14.8% 71.1% 45.3% 28.3% 24.1% 17.0% 14.9% Mexico Latin America Source: eMarketer (2014). A study undertaken by Galperin (2013) found López-Rivas, 2012). Broadband operators require that, on average, the relative effort that LAC mobile additional spectrum for mobile technologies, set- broadband users have to make so as to afford the ting the stage for effective spectrum manage- same service package is six times greater than in ment, and strategic regulation if countries are to OECD countries, ranging from US$30 in Brazil to succeed in lowering service costs and progress US$4 in Costa Rica. Despite these limitations, the towards universality of broadband services. affordability of broadband has improved over the past years. Galperin (2013) also discovered the following: • • • 9.1. Mobile Data Traic and Connection Broadband in LAC To access a broadband connection in LAC, The LAC region has experienced a steep rise in the minimum expenditure by household mobile connections throughout the past few years, has dropped to an annual rate of 4 percent with 164 million subscribers as of June 2013. This between 2010 and 2013. number is expected to grow by 30 percent annu- Half of the countries in the region are spend- ally over the next ive years (GSMA, 2013a). Smart- ing less than 2 percent per capita income on phone penetration will be close to 20 percent of broadband access. the population at the end of 2013, and is expected Mobile access is helping the region achieve to rise to 44 percent by 2017 (GSMA, 2013a). universality, despite low-income populations having access to plans with low data caps. Moreover, by 2015, approximately 44 percent of Latin American subscribers may use smartphones (GSMA, 2013a). On the other hand, data Internet penetration has tended to favor trafic will grow at a slower pace than in other mobile access, mainly due to real-time entertain- regions, excluding mature economies. This sug- ment, accounting for 29.0 percent of peak down- gests that LAC countries are not taking full advan- stream (Sandvine, 2013). A trend that is taking tage of improved Internet infrastructure. place in various markets is the differentiation of Mobile usage is a key to economic growth in applications, where access is limited to a certain LAC and, according to GSMA, will contribute to variety, such as social networks and content por- the following: tals (Galperin, 2013). Under current growth rates, the number • of mobile broadband subscriptions is expected in 2012, with an expected increase of 4.5 per- to reach twice the number of ixed subscriptions in the next few years (García-Zaballos and 56 Generate over 3.7 percent of the region’s GDP cent by 2020. • Support over 350,000 direct jobs. SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY TABLE 15. Broadband Access Initiativesa, b, c Program (launch) Estimated investment Argentina Plan Nacional de Telecomunicaciones Argentina Conectada (2010) Brazild Country Main goals Other characteristics • ARS$8 billion, of which ARS$3.7 billion will be allocated for iberoptics backbone • Cover 97 percent of the total population by 2015 • Expand coverage and improve broadband access services, especially in areas underserved by the private sector • National Fiberoptics network of 50,000 km • Digital Inclusion through public access points and capacity building (Núcleos de Acceso al Conocimiento y Puntos de Acceso Digital) Plano Nacional de Banda (2010) R$12.8 billione • 40 million households by 2014 • Minimum speed of 1 Mbps • South-American iber optical ring (part of UNASUR initiative) • Backbone of 23 km administered by Telebras • 2.5 GHz for 4G • 250 MHz for mobile phone and broadband • Regulation and infrastructure standards • Tax incentives • Productivity and technology policies • National backbone network Chile Todo Chile Comunicado (2010) US$110 million • By 2011, to provide Internet access to 3 million rural households • By 2014, 100 percent of school and 70 percent of households to have broadband • By 2018, 100 percent of households to have broadband • Fund of Telecommunications Development, created to promote access to undeserved rural areas • US$30 a month, 1 Mbps • Law No. 20.453 enshrines the principle of net neutrality for consumers and Internet users Colombia Plan Vive Digital (2010) COP$415 million (approx. US$237 million) • In ive years, triple number of municipalities connected, connect 50 percent of SMEs and households, and quadruple Internet connection (reaching 8.8 million in 2014) • Expand iber optics coverage to 62 percent of all municipalities (90 percent of population) • Creation of a legal regulatory framework for convergence (continued on next page) SPECTRUM MANAGEMENT IN LAC COUNTRIES: CURRENT STATUS AND KEY CHALLENGES 57 TABLE 15. Broadband Access Initiativesa, b, c (continued) Program (launch) Estimated investment Mexico Acciones para el Fortalecimiento de la Banda Ancha (2012) Peru Plan Nacional para el Desarrollo de la Banda Ancha en el Perú (2011) Country Main goals Other characteristics N/A • Incentivize telecom services through public and private investment in infrastructure • By 2012, 22 percent broadband penetration. • Broadband access set as a national priority in Digital Agenda • Design of a National Broadband Plan under development with IDB N/A • In 6 years, 100 percent of municipalities and main rural areas with broadband connection of 2 Mbps • 4 million connections, of which 5 million at 4 Mbps Source: Authors’ elaboration. a See Galperin, Mariscal, and Viecens (2012). b See Katz (2012). c See OECD (2011). d See Brazil. (2013). e See G1. (2011). FIGURE 13. Mobile Data Trafic in LAC, 2012–2017 a growing rate of connection, although it is still 800,000 below the global average. limited in comparison to other regions and it is 700,000 It is estimated that by 2017, 4G penetration 600,000 in Latin America will be one third and one ifth 500,000 of those achieved in Western Europe and North 400,000 America, respectively (Cisco, 2013). 300,000 9.2. Spectrum Management in LAC 200,000 100,000 0 2012 2013 2014 2015 2016 2017 9.2.1. Institutional, Policy, and Regulatory Frameworks Source: Authors, with data from Cisco (2013). The TRGI, developed by Waverman and Koutroumpis (2011), is a global index that includes • Contribute to over US$39 billion to public countries in the LAC region. It assesses (i) regula- funding in Latin America (GSMA, 2013a) tory transparency, (ii) independence, (iii) resource availability, (iv) license enforcement, and (v) per In 2012, 4G connection (including WiMAX and LTE technologies) generated almost 20 capita income. The global and regional rankings for the Americas are shown in Table 17. times more trafic than non-4G connection, even As shown in the table above, countries in LAC though the former represents less than 1 percent vary widely with regard to global ranking. While of total connections (Cisco, 2013). Table 16 shows Chile, Costa Rica, Panama, and various other 58 SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY TABLE 16. Estimate of Regional 4G Connections Number of 4G connections 2012 Percent of total connections Middle East and Africa 168,536 0.00% 28,437,977 2% Central and Eastern Europe 903,123 0.20% 50,913,035 6% Latin America 326,212 0.00% 51,772,961 6% Asia Paciic 24,143,897 0.70% 425,094,836 8% North America 31,329,522 6.80% 264,618,277 31% Western Europe 3,544,454 0.60% 171,013,933 18% Global 60,415,743 0.90% 991,851,020 10% Region Number of 4G connections 2017 Percent of total connections Source: Cisco (2013). TABLE 17. Telecommunications Regulatory Governance Index: Ranking of the Americas versus Australia, Canada, Germany, and UK Country Score Americas Regional Rank Global Rank (out of 140) Germany 0.71 — 2 United States 0.7 1 3 U.K. 0.65 — 7 Canada 0.65 2 7 Australia 0.63 — 10 Costa Rica 0.53 3 27 Panama 0.52 4 28 Chile 0.51 5 29 St. Vincent and the Grenadines 0.5 6 31 Peru 0.49 7 34 Jamaica 0.49 7 34 Dominican Republic 0.47 9 43 Brazil 0.46 10 45 Bahamas 0.46 10 45 Argentina 0.45 12 54 Nicaragua 0.45 12 54 Barbados 0.44 14 59 Colombia 0.42 15 68 Ecuador 0.4 16 78 Trinidad and Tobago 0.4 16 78 Uruguay 0.39 18 85 Venezuela 0.37 19 93 Paraguay 0.36 20 96 El Salvador 0.35 21 98 Mexico 0.34 22 101 Haiti 0.33 23 104 Bolivia 0.29 24 112 Source: Waverman and Koutroumpis (2011). SPECTRUM MANAGEMENT IN LAC COUNTRIES: CURRENT STATUS AND KEY CHALLENGES 59 countries are classiied as relatively good, over- by the ITU. The ITU report (ITU, 2006) on spec- all, others such as Bolivia, Haiti and Mexico score trum bandwidth requirements estimates that the poorly. minimum spectrum bandwidth requirement for Another study, undertaken by Montoya and the Radio Access Techniques Groups (RATG1 and Francesc (2007), includes an analysis of the reg- RATG2) for 2015 and 2020 are 1,300 MHz and 1,280 ulatory independence of countries in LAC over MHz, respectively, with regard to International time. The conclusion is that countries in the region Mobile Telecommunications-2000 and Interna- are beneiting from growing regulatory indepen- tional dence with a positive impact on ixed line penetra- (ITU, 2006). To date, LAC countries are far from tion rates. reaching this goal. Brazil, Chile, and Colombia Mobile Telecommunications-Advanced Despite this overall progress, the region faces have achieved 30 percent; Costa Rica, Nicaragua, many institutional challenges. Afonso and Valente Puerto Rico, Peru, and Uruguay, 20 percent; and (2010) indicate that spectrum awards in Brazil the other countries, between 10 percent and 20 often lack transparency—a reality that exists in percent (4G Americas, 2013). Table 18 provides a other countries in the region in addition to the summary of how countries in the region have allo- challenges of independence and coordination cated their bands. with other agencies. Opportunities for additional sources of spec- In terms of spectrum policies, LAC coun- trum exist, as indicated above. The 1.7/2.1 GHz tries are considered to be fairly conservative. The band, used for advanced wireless services (AWS) Hazlett and Muñoz (2009) study shows that in to provide mobile voice and data services, video, 2006, the regulatory authorities in most countries and messaging, is assigned in several countries, constrained access to spectrum, not only due to although many are still outstanding. Further- rigid regulatory schemes in place but also due to more, the 2.5 GHz (2,500–2,690 MHz) frequency signiicant restriction on bandwidth. This restriction could relect a lack of demand, although such was not the case, since demand will increase seven-fold by 2017, as indicated above. The eficiency of networks and services can only be TABLE 18. Current Spectrum Usage in Latin America and the Caribbean 450 MHz • Multiple uses: Rural, ixed, mobile telephony, public and private safety, point-to-point and pointto-multipoint distribution services 700 MHz • Broadcasting services – TV • Planned for TV broadcasting, ixed and mobile services 850/900/1,800/ 1,900/2,100 MHz • Mobile services 1700/2100 MHz • Advanced wireless services (AWS) 2,500/2,690 MHz • TV and MMDS services • Assigned to mobile services since 2010 3,400/3,600 MHz • Fixed services • Point-to-point and point-tomultipoint distribution services achieved by the sensible deployment, allocation, and assignment of spectrum. In the LAC region, the 850 MHz and 1.9 GHz spectrum bands have been assigned to most markets. Eight of them have been assigned the 900 MHz band; nine have tenders for AWS 1.7/2.1 GHz spectrum bands (1,710–1,755 MHz matched with 2,110–2,155 MHz); and three have completed the allocation of 2.5 GHz (2,500 MHz to 2,690 MHz) spectrum for the provision of mobile wireless services (4G Americas, 2013). Hazlett and Muñoz (2009) discovered that higher spectrum allocations are directly linked to lower average prices for services. LAC countries, however, are far from the spectrum recommended 60 Source: Authors, with data from Rojas (2012). SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY band is only used by Brazil, Chile, and Colombia. Refarming frequency bands (e.g., 2.5 GHz band) is expected to occur in various LAC countries for mobile wireless services. TABLE 19. Amounts Related to the Award of the 700 MHz in Selected Countries in Latin America and the Caribbean Country Price (US$) Band Argentina 2.23 billion 700 MHz and AWS (1.7–2.1 GHz) bands spectrum hoarding—the underutilization of spec- Brazil 2.39 billion 700 MHz trum by operators holding licenses. This creates Bolivia 23 million 700 MHz an artiicial shortage of spectrum and this needs Chile 250 million 700 MHz to be addressed. Honduras 31.5 million 700 MHz The fact that all bands have not been allocated is not the only factor constraining wireless broadband in the LAC region. A further issue is Source: Authors. 9.3. Analogue Switchof/Digital Switchover • A consumer surplus of US$645 million, measured in terms of the difference between will- In the case of the Americas (ITU Region 2), 22 ingness to pay and the price paid for a good World Radio Conference 2007 determined the or service (GSMA, 2011). 698 MHz–806 MHz (700 MHz) frequency band, It is expected that prices will differ during the which are typically under-utilized in most coun- auctioning process of the digital dividend bands in tries in the region. It proposed the freeing up of the region (see Table 19). this band for IMT. In 2011, GSMA commissioned a report to evaluate the impact of this transition in Latin Amer- 9.4. Band Plan Options for Latin America and the Caribbean ica. The scope was limited to the 700 MHz band (upper segment of UHF), currently allocated for While the ITU has set the guidelines for transition, TV broadcast. The report contends that the eco- countries nevertheless have considerable lexibility nomic and social impacts are in favor of the 700 to establish national policy to include the recom- MHz band for mobile broadband, which would mendations of the ITU-R framework. The band plan contribute to the following: alternatives for the LAC region are described below. • • • • Increase coverage by 31.5 percent. 9.4.1. APT/CITEL Generate between US$11.7 billion and US$14.8 billion from the acquisition of goods and In September 2010, the Asia Paciic region, through services. APT, adopted a band plan where the 700 MHz A seven-fold rise in the direct (additional rev- frequency for Region 3 was allocated to expand enues of the industry) and indirect (positive mobile services as a result of the digital dividend. externalities) contributions to GDP, amount- In terms of harmonization, the plan was designed ing to US$3.1 billion, and the addition of 5,540 with the three following principles: eficient usage jobs compared to TV broadcasting. of the spectrum, maximum spectrum block size, An increase in annual tax collection over a and appropriate protective measures for services period of eight years to US$325 million—more than four times that which is expected in the absence of mobile broadband. 21 For a list of ITU BDT Regions and Region 2, see ITU (2013). SPECTRUM MANAGEMENT IN LAC COUNTRIES: CURRENT STATUS AND KEY CHALLENGES 61 FIGURE 14. Band Plans for the Digital Dividend CEPT Band Plan – 2 x 30MHz 30MHz 11 790MHz 30MHz 862MHz APT/CITEL Band Plan – 2 x 45MHz 5 45MHz 10 45MHz 3 698MHz US Band Plan – 2 x 22MHz 12MHz 806MHz 12MHz 6 698MHz 10MHz 10MHz Public safety 746MHz Public safety 806MHz Source: GSMA (2013b). in adjacent bands (APT, 2010). The FDD mode, The LAC region appears to lean towards har- which is the focus of the APT band plan, estab- monization around the APT band plan, with the lishes two bands of 45 MHz and includes a 10 MHz exclusion of Ecuador and Bolivia. Those that are center-band gap. CITEL approved a plan with sim- committed to APT include Brazil, Chile, Colombia, ilar FDD segmentation for Region 2, speciically Costa Rica, Mexico, Panama, and Venezuela, while for the 700 MHz band for broadband mobile ser- Argentina, Peru, and Uruguay are likely to follow vices (OAS, 2011). 23 suit (GSMA, 2013b). As mentioned, the use of the same band plan 9.4.2. U.S. Band Plan at the regional level is advantageous. Harmonization across the region by adopting the APT band In the United States, the digital dividend has accel- plan will contribute to economies of scale, lower erated since the Digital Television Transition and the cost of mobile devices and network equip- Public Safety Act of 2005 (DTV Act) was passed. ment, reduce interference along borders, and The deadline date established was February 17, allow for international roaming. 2009, for transition (FCC, 2007). The 700 MHz band was freed up as a result of 9.5. Spectrum Caps the analogue switchoff. It is divided into three segments: a broadband (763 MHz-768 MHz/793 MHz- Spectrum caps, as previously indicated, are an 798 MHz), a narrowband (769 MHz-775 MHz/799 ex ante measure to prevent a monopoly of spec- MHz-805 MHz), and a 1-MHz guard band to mini- trum, which could cause market failure. There are mize interference between them (FCC, 2013a). different approaches to spectrum caps in LAC. The FCC has divided the 700 MHz into two parts As indicated in Table 20, some countries impose that are treated independently. In both the upper spectrum caps, while some do not, with the total and lower portions, two paired blocks of 11 MHz cap varying from 50 MHz to 115 MHz (4G Americas, have been made available for mobile broadband commercial use. Figure 14 shows the main band plans adopted in different regions. 62 22 The less commonly used Time Division Duplexing (TDD) segmentation option was also approved by APT and CITEL. SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY 2013). Colombia and Peru have band-speciic and bands, totaling 80 MHz. The decision to imple- cumulative caps and in Brazil, the cap excludes ment caps does not imply that the operator is the 450 MHz and 2.5 GHz. There is a strong pres- denied the opportunity to enhance network ser- ence of state-owned operators in various coun- vices, since 4G services can be deployed in bands tries, with the state having allocated between 30 that are not included in the aggregate cap calcula- MHz and 130 MHz in Argentina, Bolivia, Costa Rica, tion (Government of Jamaica, 2013). Ecuador, Honduras, Paraguay, Uruguay and Venezuela (4G Americas, 2013). In the case of Ecuador, 9.6. Neutrality for example, spectrum caps do not apply for its state-owned operation, the National Telecommu- Regulators and administrators should promote, nications Corporation (Corporación Nacional de to the extent possible, their technology and ser- Telecomunicaciones) (4G Americas, 2013). vice neutrality to ensure an optimal level of service In September 2013, Jamaica created an quality and to foster innovation in a constantly Aggregate Spectrum Cap Policy in the 700 MHz, changing market. LAC countries still have dis- 850 MHz, 900 MHz, 1,800 MHz and 1,900 MHz parate approaches towards neutrality and most TABLE 20. Latin America’s Mobile Spectrum Cap Country Spectrum cap Comments 50 MHz Spectrum currently allocated Bolivia None Spectrum currently allocated Brazil 85 MHz Excludes 450 MHz or 2.5 GHz (MMDS, WiMAX, LTE) Chile 60 MHz Only applies for AWS spectrum in combination with 850 MHz & 1.9 GHz Colombia 115 MHz (85 MHz + 30 MHz) 85 MHz for > 1 GHz & 30 MHz for < 1 GHz Costa Rica None Spectrum currently allocated Dominican Republic None For AWS 40 Mhz 65 MHz Does not apply to state-owned operator AWS or 700 MHz spectrum El Salvador None Spectrum currently allocated Guatemala None Spectrum currently allocated Honduras None Spectrum currently allocated 80 MHz Spectrum currently allocated Nicaragua None Spectrum currently allocated Panama None Spectrum currently allocated Paraguay None Spectrum currently allocated 100 MHz (40 MHz + 60 MHz) 60 MHz for 800 MHz, 900 MHz & 1,900 MHz and 40 MHz for 1.7 GHz/ 2.1 GHz Puerto Rico None Spectrum currently allocated Uruguay None Spectrum currently allocated Venezuela None Spectrum currently allocated Argentina Ecuador Mexico Peru Source: Authors, with inputs from 4G Americas (2013). SPECTRUM MANAGEMENT IN LAC COUNTRIES: CURRENT STATUS AND KEY CHALLENGES 63 maintain service-speciic licensing arrangements. Endeavors in Argentina, Colombia, and Peru The ITU Connect Americas 2012 report (ITU, 2012) are in place to adopt technology and service neu- indicates, nevertheless, that some nations in LAC tral licensing frameworks throughout the region. have, indeed, adopted a uniied licensing system, Details of this are outlined in Table 22. relected in Table 21. National regulations in terms of neutrality are pending in most countries in the region. El Salvador and Guatemala are the only ones to have fully liberalized their spectrum, resulting in higher pen- TABLE 21. Service Neutrality of Licensing Arrangements in Latin America and the Caribbean etration and lower prices. Box 12 below relects the experience of Guatemala. 9.7. Secondary Markets Service-Speciic Licensing Uniied Licensing Barbados Argentina Brazil Bahamas Countries in LAC still lag behind in terms of second- Chile Colombia ary markets. Most lack licenses for trading, leasing, Cuba Costa Rica Dominican Republic Honduras Ecuador Peru El Salvador Trinindad & Tobago Grenada or selling, and the management model adopted in the region is based somewhat on that of command and control. Argentina and Chile are designing more modern approaches to develop secondary markets. Chile is undertaking legislative and regulatory measures to create secondary markets through Guyana its SubSecretariat of Telecommunications (Sub- Jamaica secretaría de Telecomunicaciones (Subtel)). A Mexico study conducted by Subtel in 2013 found out that Panama the lack of mechanisms, such as spectrum pric- Paraguay ing and trading, are one of the main laws in Chil- Venezuela ean spectrum management (Subtel, 2013). It also gives the experience of the UK as a base to create Source: ITU (2012). TABLE 22. Uniied Licensing Regimes in Selected Countries Country Instrument Type Details Argentina Decree No. 764/00 Service and Technology, with exception of broadcasting services Licenses do not expire, and there is no limit to licenses that can be issued Colombia Law No. 1341/2009 Technology, but spectrum and numbering resources must be applied for separately Law states that technology neutrality should follow international guidelines Peru Law No. 28737 Service and technology, including paid television services Law states that it is intended to promote the convergence of networks and services, as well as to facilitate the interoperability of different network platforms and provide various services and applications over a common technology platform. Source: Elaboration of authors, with information from ITU (2012). 64 SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY Box 12. Spectrum Liberalization: Guatemala Guatemala is an example of spectrum liberalization ated a market-driven structure whereby titles can in the LAC region. The country underwent a major be totally or partially leased or sold for a period of reform in 1996 by granting private parties exclu- 15 years, with extensions for equal periods. Appli- sive control of the use of wireless bandwidth. It cations are submitted to the Telecommunications also obliged regulators to deine, issue, and protect Superintendency requested spectrum rights. municaciones), an entity established as a result of (Superintendencia de Teleco- Prior to the enactment of the General Telecom- the General Telecommunications Law, responsible munications Law, the electromagnetic spectrum for administering and supervising spectrum usage, was a public good, licensed by the Federal Govern- managing the registry, resolving disputes related ment to private parties, as occurs in most of Latin to access and use of spectrum, and other spec- America. The Law now requires the allocation of the trum issues (Government of Guatemala, 2013). In spectrum to have a bottom-up approach so that all addition, the law allows for private negotiation and users, including foreign companies, can request any agreement of price and access conditions in the spectrum band that is not assigned to others. lease and sale of titles within 40 days of application There are three types of allocation: (i) one reserved for government use; (ii) one reserved for to the superintendency, subject to extension if both parties agree. amateurs; and (iii) the regulated bands. A total of The outcome of the reform has been considered 1,331 MHz was assigned to the Government, mainly positive, given that spectrum usage has become in the bands from 3 KHz to 3,000 MHz. For amateur more eficient. Urizar (2007) states that there is evi- use, a total of 4,761 MHz was assigned, distributed dence that these changes have developed the tele- between 1.8 MHz and 250 GHz (Velásquez, 2006). communications market in Guatemala, and that the The authorization granted under these three types Title to Frequency Usufruct has provided economic of assignments cannot be sold or transferred. incentives and conditions for innovation. Further- For regulated bands, the reform generated the more, the reform has lowered the price of telephone right of usufruct which, according to the country’s services considerably—by two thirds—from what was Civil Code, permits the title holder to enjoy the a monopolistic market to one of competition (Urizar, property of another to the extent that such use and 2007). Finally, mobile penetration has taken place at enjoyment does not destroy or diminish its essen- a fast pace. In 2009, for ixed telephony, there were tial substance. The title, Title to Frequency Usufruct only 10 lines for every 100 inhabitants; it is now 12 (Título de Usufructo de Frecuencias), has gener- times more (Elbitar, 2010). secondary markets, where leasing is made pos- created, together with other parts of the spec- sible; that is, the secondary user has the option trum, managed as a commons (Fiuza Lima and de to be the main licensee when the primary license Matos Ramos, 2006). expires or is revoked. Brazil has been evaluating the issue for some years. The Secretariat for Economic Monitor- 9.8. Unlicensed Spectrum and TV White Spaces ing (Secretaria de Acompanhamente Econômico (SEAE)) has defended a hybrid model, whereby Wi-Fi has been widely adopted in the region. A traditional mechanisms recent study by the Brazilian National Telecom- are combined with secondary markets that are munications Agency shows that there are more command-and-control SPECTRUM MANAGEMENT IN LAC COUNTRIES: CURRENT STATUS AND KEY CHALLENGES 65 than 158,000 Wi-Fi hotspots in Brazil (ANATEL, a small pilot project was launched in Uruguay in 2014). A signiicant number of other countries 2014 in collaboration with the Regulatory Agency allow Wi-Fi on an unlicensed basis (openspec- of Communications Services (Unidad Reguladora trum.info, 2014). Identifying and making unli- de Servicios de Telecomunicaciones (URSEC))— censed spectrum available for Wi-Fi will assist the regulating authority that provided the license LAC to ofload data and reduce the CAPEX and for the demonstration. The Government of Uru- licensed spectrum capacity of operators, increas- guay and Microsoft are also discussing the use of ing connectivity and decreasing the cost for con- TVWS for connectivity in schools located in rural sumers. The freeing up of unlicensed spectrum in parts of the country. This will be a part of Plan the 700 MHz band, however, is still outstanding in Ceibal, 28 an initiative that intends to introduce ICT most of the area. in public primary and secondary schools. 29 Chile On the basis of a survey made of each LAC is also in the process of normalizing the use of country, it was evident that none has deployed TVWS. This should be complete by 2015, if not TVWS. Nonetheless, Microsoft has provided before (Basaure, Casey, and Hämmäine, 2012). TVWS demonstrations during an IDB Annual Meet- Finally, the use of TVWS is currently under ing, held in 2012 in Montevideo, and at the Rio+20 discussion under the auspices of the Permanent Conference in Rio de Janeiro, held during the same Consultative Committee II: Radiocommunications year. 23 In 2010, Microsoft Research, together with including Broadcasting (PCC.II) of the Organiza- Brazil’s Telecommunications Research and Devel- tion of the American States at the Inter-American opment Center (Centro de Pesquisa e Desenvolvi- Telecommunication Commission (Comisión Inter- mento em Telecomunicações (CPqD)), signed an Americana de Telecomunicaciones (CITEL)). agreement for the research and testing of TVWS, for which the IDB will provide technical support. 24 Since the initiation of this partnership, CPqD has attended discussions in Europe but, to date, there has been no further progress. 25 An ANATEL ordinance in November 201326 failed to include the option of shared unlicensed spectrum. While this could change, telecommunication experts in Brazil argue that broadcasting in the 700 MHz frequency band will be very unlikely. A new ordinance in September 2013, 27 however—enacted by Brazil’s Ministry of Communications (Ministério das Comunicações)—will seek to allocate spectrum bandwidths for unlicensed use. As a result of the 2012 Microsoft TVWS demonstration at the IDB Annual Meeting in Uruguay, 66 See TVWS’ pilot projects and demonstrations at http://research.microsoft.com/en-us/projects/spectrum/pilots.aspx. 24 See http://www.cpqd.com.br/midia-eventos/fatos/fatos177/cpqd-microsoft-irmam-acordo-cooperacao-tecnica-area-radios-cognitivos. 25 Information provided by the Innovation Specialist at CPqD. 26 Resolução nº 625, de 11 de novembro de 2013. Available at http://legislacao.anatel.gov.br/resolucoes/2013/644-resolucao-625. 27 Portaria n. 275, de 17 de setembro de 2013. Available at http://www.mc.gov.br/portarias/28256-portaria-n-275-de17-de-setembro-de-2013. 28 See www.ceibal.edu.uy. 29 Information provided by Microsoft in an interview. 23 SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY 10 Lessons Learned I n view of the challenges faced by countries in LAC now and in the future, some key lessons Challenge assessed in LAC: Strengthening can be drawn from the experiences of Australia, of leadership and coordination Germany, the UK, and the United States. The three key strategic challenges in spectrum man- Lessons Learned: In Germany—where each state agement that are incorporated within these les- has a different body to manage broadcasting fre- sons are (i) institutional, policy, and regulatory quencies—it has been a challenge as well as an frameworks; (ii) eficiency and lexibility; and advantage. Coordination efforts were possible (iii) competition. and the digital switchover process was undertaken. The structure now in place encourages the 10.1. Challenges: Institutional, Policy, and Regulatory Frameworks deployment of technologies, state by state. The independence of each state, however, could have been detrimental, even though Germany has a potentially high rate of TVWS availability. Its expe- Challenges assessed in LAC: Transparency and stakeholder engagement for institutional strength rience shows that strong governance and adequate coordination needs to be in place in advance to be able to transition to new technologies. Lessons Learned: Transparency and the engage- Challenge assessed in LAC: Lack of harmo- ment of stakeholders are especially important nized frequencies activities to strengthen institutions. The experiences of the reference countries indicate that Lessons Learned: Harmony is a key to the interoper- changes in policy and regulation should involve a ability and cost effectiveness of frequency bands. In wide range of actors in public consultation. This 2009, countries within the European Union adopted will not only facilitate better outcomes; it will a regionally harmonized band for mobile at 800 MHz, ensure transparency. following the recommendations of CEPT. Spain’s 67 experience underlines the example that by following them. This market-based approach can beneit international harmonization guidelines, countries can operators and consumers alike as more spectrum avoid problems that may arise in the future. In Spain’s becomes available. case, it had to refarm frequency bands twice at a cost as a result of its initial process not being compatible with the CEPT harmonization plan. 10.2. Challenges: Eiciency and Flexibility Challenge assessed in LAC: The ITU’s estimated spectrum bandwidth requirements for 2015 and 2020 are far from being met. The amount of spectrum allocated to wireless broadband is much lower than that recommended by the ITU. Demand may not be met by 2020. Challenge assessed in LAC: Service and technology neutrality are not yet part of the regulatory framework in many countries. Lessons Learned: In the Unites States, “increased lexibility will be a key component of any policy that successfully promotes the eficient use of spectrum”(FCC, 2002). Making lexible the usage rights for wireless access is essential to achieve more eficient usage of spectrum. Germany is taking the harmonization approach towards lexible frequency regulation by prioritizing service and technology neutral licenses. Lessons Learned: The four reference countries The UK has committed likewise with the objec- have taken various measures to guarantee that tive of reaching 21 percent of spectrum that is spectrum demand is met. They have completed lexible. the switchoff process and have auctioned the dividend bands with high spectral eficiency of wireless broadband access. Moreover, they are also freeing new bands and allowing the use of unlicensed spectrum. Countries in LAC should consider pursuing a strategy that involves short- and long-term ways to release spectrum. Challenge assessed in LAC: As technology has evolved, parts of spectrum formerly reserved for government purposes are now available for award or to be shared with the private sector. The mechanisms, however, are not yet in place. Challenge assessed in LAC: Spectrum hoarding is making markets signiicantly less accessible to new entrants and it is thwarting competition among providers. Lessons Learned: Ofcom considers that spectrum is most useful if it can be as unencumbered as possible. Ofcom is expected to release 500 MHz of public spectrum, formerly used by the MoD, by 2020. These bands may be used to Lessons Learned: The United States is promoting develop 4G networks, although there are other incentive auctions to free parts of the spectrum possibilities under consideration. The United not used by current incumbents. This innovation States is also making some federally used fre- will motivate incumbents to release these spec- quencies lexible so as to create a Citizens Broad- trum parts on a voluntary basis by reimbursing band Service. 68 SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY 10.3. Challenge: Need for More Innovative Frameworks Australia, the European Union, Germany, and the UK are in the throes of similar reforms, with pilots now in place. As TVWS is based on the use of unlicensed spectrum, there will be more players enter- Challenge assessed in LAC: The command-and-control inheritance of regulatory frameworks in the region may be a barrier for modernizing spectrum assignment arrangements. Lessons Learned: The United States has implemented a licensed-light spectrum to be shared with ing the market, which will lower CAPEX costs, in addition to more widespread coverage. In sum, TVWS technologies can include rural areas, provide services to a more diverse market at less cost, improve eficiency, and provide faster connection. Challenge assessed in LAC: In most cases, there are no secondary markets. existing federal services. Operators will pay a small registration fee to operate in the 50 MHz band that exists between 3,650 MHz and 3,700 MHz. Under Lessons Learned: While secondary markets are this light type of licensing scheme, users must com- not a substitute for additional spectrum, they can ply with speciic service regulations, although they alleviate the shortage of spectrum by making the will be exempt from having to obtain individual sta- unused or underutilized spectrum held by existing tion licenses. Another approach being considered licensees more readily available to other opera- in the United States and in Europe is the ASA/LSA tors. The four reference countries have estab- approach, although approval is still pending. It lished various forms of secondary markets under combines the elements of traditional spectrum the authority of the regulators. management with the new, so that spectrum can be shared at certain times and in certain places. 10.4. Challenge: Competition Both approaches indicate that it is possible to encourage more eficient use of spectrum by way of relatively simple regulatory variations. Challenge assessed in LAC: Despite the increasing penetration rate in the LAC region, CAPEX and OPEX costs remain high Challenge assessed in LAC: The application in remote areas. Many people are under- of unlicensed spectrum has been a success served as a result. in the LAC region and Wi-F s now wdely available. The regulatory frameworks, nevertheless, continue to lag behind in terms of alternative technologies. Being unable to install technologies using TVWS is an example of the regulatory limits that hinder the regional advancement towards universality. Lessons Learned: The UK plans to inject £150 million in CAPEX to improve mobile coverage and quality. It will also cover the OPEX of its four mobile operators over 20 years. The operators, in turn, will provide coverage to rural areas, thus extending coverage to 99 percent of the population. The program will support infrastructure- Lessons Learned: The United States has revised sharing agreements among operators. It is clear its regulatory framework to include TVWS. that by establishing coverage obligations and LESSONS LEARNED 69 creating partnerships between the public and pri- maximum net beneits. These instances relect vate sectors, the reference countries are closer to that Australia and the UK are aware that it is neces- their objective of universal access. Their experi- sary to balance their iscal objectives with the lon- ence shows that government intervention will cre- ger term goal of universality and affordability, ate when they each set the bidding price. the necessary incentives to achieve affordability and universality. Challenge assessed in LAC: ConcentraChallenge assessed in LAC: To assess the tion in some markets may be a problem various bidding mechanisms and to balance that is worsened by the lack of mechanisms iscal and social beneits can be challeng- to limit the number of operators that hold ing when awarding frequencies to meet the spectral resources. demand for spectrum. Lessons Learned: Australia, Germany, the UK, and Lessons Learned: In the UK, the 245 MHz auctions the United States have discovered that there are held in 2013 in the 800MHz and 2.6GHz frequency various ways to tackle the concentration in their bands generated £1.2 billion less than anticipated markets while, simultaneously, establishing spec- and £3 billion less than the estimated maximum. trum caps. The United States has not applied caps The regulating authority aims to maintain competi- for some years, although it has similar mechanisms tion within the mobile telecommunications market to avoid market failures and foreclosures. The les- at the same time as maximize consumer beneits. son that can be drawn from this is that it is neces- Australia has experienced a similar case when it sary for countries to be aware of the competitive raised AU$929 million less than anticipated and 30 effects of awarding frequencies. In addition, they MHz in the 700 MHz band remained unsold. Aus- should seek ways to address concentration issues tralia applied the total welfare standard for without distorting competition. 70 SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY 11 Policy Recommendations G overnments have a leading role to encour- • Promote transparency. Engage academia, civil age more affordable broadband services society, and the private sector in decisions and bridge the digital divide. Overcoming that relate to spectrum management. the obstacles relating to connectivity depends on a • Engage stakeholders. Seek approaches to wide range of factors, and it is indispensable to un- enable commercial and government users to derstand the importance of sound policy and reg- engage in discussion and share the knowl- ulatory frameworks with regard to electromagnetic edge of market dynamics, spectrum usage, spectrum. The recommendations outlined below future constraints, and other essential infor- can guide countries in the LAC region in some of mation relating to spectrum management. the key regulatory and policy challenges they may • Promote a sound policy and regulatory frame- face in their efforts to achieve universal access to work. Timing is essential to enable markets the Internet. These recommendations are a result to meet the demand for spectral resources. of the lessons learned from an assessment of the Countries need to recognize the technological experiences of Australia, Germany, the UK, and the changes that are necessary, to have in-depth United States. It is important to highlight the im- knowledge of the industry, and to be able to predict the challenges that may arise. portance of abiding by the guidelines of the ITU and regional telecommunications agencies. • Set clear and appropriate policy goals. In their efforts to protect and promote competition 11.1. Promote Sound Institutional, Policy, and Regulatory Frameworks and welfare, regulators should not impose regulatory limitations unless absolutely necessary. • Follow international standards and guidelines. Strong markets are a result of strong institutions Countries must follow the ITU guidelines and that are able to adequately enforce regulations those set by the regional telecommunications without unnecessary interference. Excluding the organizations for Latin American and Carib- appropriate precautions can be detrimental to bean countries (CTU, CITEL, and CANTO). consumers, investors, and the regulators them- This is essential to promote sustainable poli- selves and lead—ultimately—to higher prices and cies and regulations. a lower penetration of services. To meet universality, each country should include the following: • Harmonize spectrum bands. Effective national and international coordination depends 71 largely on the harmonization of bands at the thwarts competition. Incentives should be regional and global levels. in place to free underutilized frequencies, including those of government which, in many 11.2. Ensure Eiciency and Flexibility cases, can be shared with the private sector or be refarmed. In a world where technology is evolving at an • Motivate incumbents to free the spectrum exponential rate, the societal welfare deriving they are not using. The incentive auctions from its use also is increasing steadfastly. Regula- designed in the United States are exemplary tors and administrators need to ensure that the in how governments can avoid the underuti- decisions made now do not hinder the growth of lization of spectrum. the Internet ecosystem. They should encourage a • Promote a lexible licensing regime. Instead market-based approach towards spectrum man- of a one-size-its-all solution, countries should agement. Regulators and policymakers should, continue to implement a mix of policies for therefore, consider the following: a more eficient use of spectrum and attract new players into the market. • Accelerate spectrum release. Most countries have not yet met the ITU’s spectrum band- 11.3. Enable Innovative Solutions width requirements for 2020. Governments • • should dedicate time and effort to refarm fre- In addition to providing regulatory conidence to quencies, license new spectrum, and make attract investment and create a competitive mar- available unlicensed spectrum. New spec- ket, countries should remove the barriers that tral resources should be sought and supplied are essential to meet the short-term increases in through awards, refarming bands, or assign- demand. An innovative market results from the ing the use of unlicensed spectrum. entry of new providers to the spectrum and when Consider the social beneits when establishing new technologies and services are introduced. As bidding mechanisms, in addition to the iscal indicated, the ability to access unlicensed spec- objectives. Bidding mechanisms should take trum can create innovation without authority, into account short-term iscal policy objec- reduce entry barriers, enable experimentation, tives, when considering the balance between permit the use of open standards, and establish a an eficient allocation of resources and the more competitive market, thus lowering the cost long-term goal of universality and affordability. of service and bridging the digital divide. The main Follow the steps set in the roadmap for digital steps for innovation to occur are the following: switchover. Review the roadmap for speciic guidelines relating to the transition process. • • Create market-based mechanisms to ind Adopt a technology- and service-neutral more spectrum. The incentive auctions held in approach. Neutrality promotes innovation, and the United States are an example of how new the eficient utilization of spectrum depends on spectrum can be made available to meet the industry lexibility to apply appropriate technol- growing demand for licensed spectrum. This ogies. Service neutrality should be promoted method of repurposing spectrum is an exam- to the extent possible without interference. ple of how market-based incentives can lead to its better utilization. Ensure that spectrum is being utilized. Spectrum underutilization makes markets signiicantly less accessible to new entrants and 72 • • Allow access to spectrum for testing purposes. TVWS pilots are now taking place in SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY various countries, as previously mentioned. These tests are essential for the further devel- 11.4. Promote Competition and Infrastructure Deployment/Sharing opment of technologies as well as a way to • encourage local digital ecosystems to be To recognize that spectrum is a public and inite aware of new trends and consider them in resource is a irst step to promote competition. As their objectives. markets become increasingly vertically integrated, Promote the use of unlicensed spectrum. operators become anticompetitive. Affordability The use of unlicensed spectrum is gener- and universality can only be possible if there is ating high economic beneits as a result of competition. new DSA technologies. Wi-Fi is a positive example of how to reduce the CAPEX by • • ofloading trafic and leave licensed spec- should not be underestimated. The conver- trum capacity for other connections. Its gence of products and services creates new success has been conirmed for some years opportunities but additional obstacles. It is and the trend will continue to foster societal essential for relevant regulators, government beneits as unlicensed spectrum is made ministries, and competition authorities to available. engage in sharing information and align their Ensure that the unlicensed spectrum made available is within the bands with high spec- interests and approaches to foster competition. • • Establishing limits on overall spectrum auc- tral eficiency. Technologies using TVWS have tions should be considered. Regulators and multiple applications and attract newcom- administrators should be aware that spectrum ers into the market; they facilitate the use of caps may encourage competition. In paral- advanced applications that are not fully sup- lel, an estimate of the amount of spectrum ported by existing technologies; and they and bands that can be held by each operator expand existing applications for improved should be made so that spectrum usage can performance. • The importance of promoting competition Facilitate the use of TVWS. Many countries be eficiently managed. • Resources should be used to further develop are now undertaking steps towards the use of national digital ecosystems. Countries at the TVWS. These markets will soon be leaders in forefront of wireless penetration have invested terms of the application of advanced technol- in capacity building, research and develop- ogy. It is essential to regulate these changes to ment, and capital and human resources to make TVWS an actuality. understand national, regional, and global Support secondary-market and licensed spec- demands, and to implement modern regula- trum sharing. Create or strengthen the secondary market by seeking new methods, such tory approaches. • Infrastructure sharing should be encouraged. as allowing more freedom to stakeholders to In order to be competitive, companies need decide which license to use/trade. Regulators to reduce costs. Regulators should guarantee should adapt to encourage competition, such that infrastructure can be shared and make as licensed spectrum sharing. the necessary regulatory adaptation. POLICY RECOMMENDATIONS 73 12 Roadmap for the Digital Switchover he roadmap below sets out the general T broadband access. Deining how and when steps for governments to maximize the net spectrum will be freed entails realistic and clear beneits of the digital dividend that results deadlines, milestones, and various stages in the from the analogue switch off. It is based on the in- process. There should be lexibility to accommo- formation provided in the previous chapters. date regional variances; for instance, the transition may occur at a faster pace in more developed Step A. Create sound policy and regulatory frameworks areas compared to poor ones, requiring additional This initial step includes strengthening the regu- Costs should not be underestimated time to comply with new rules. lating authority so that it can act independently and impartially. It is important to create a sound The cost of a digital switchover will vary from legal and regulatory framework to provide coni- country to country. It is essential for governments dence and improve transparency in terms of spec- to calculate suficient resources to support com- trum allocation, thus helping to improve mobile munication and marketing activities and assist Step A: Create sound policy and regulatory frameworks Step B: Engage key stakeholders Step C: Encourage private sector participation Step D: Ensure harmonization Step E: Award the digital dividend 75 TABLE 23. Creating Sound Regulatory and Policy Frameworks: Challenges, Risks, and Actions Challenge Risk Actions Independence and empowerment of regulatory agency Political factors Insuficient resources Shield agency and nominate technical personnel for key positions Deine stable and continuous source of funding Staff possess technical skills Staff unprepared Hire appropriate staff and provide adequate training Offer of certainty Uncertainty relating to dates Establish deadlines Execution within expected timeframe Delays Obtain prioritization in the political agenda the vulnerable segments of the population. Costs speed, evidence is needed that the net beneits can be faced not only by the individual but also from mobile broadband access can be offset. In by the industry. As occurred in Spain, the Spanish addition, the issues that can arise from interest Government had to compensate broadcasters for groups taking over the policy agenda should be the additional costs they incurred when simulta- avoided. For a successful transition, it is manda- neously broadcasting during the transition. It also tory to engage the various relevant organizations had to subsidize those in multifamily buildings to and stakeholders, such as broadcasters and non- ensure continuity of reception of free-to-air chan- governmental organizations. The larger the num- nels. Subsidies have been part of the transition ber of interested parties involved in the process, process in other countries and they need to be the more likely that the process will be smooth. considered when assessing the economic implications on policy and regulatory modiications. Reach out to targeted audiences Step B. Engage key stakeholders Some households require more support than others to prepare for analogue switchoff. In the UK, The digital dividend spectrum can be used in a for example, the Switchover Help Scheme reached number of ways, including digital TV transmission, 1.3 million persons with disabilities and those older voice communication, and mobile broadband than 75 years of age. It is important to have efi- access. Together, government, the private sector, cient methods to reach out to speciic audiences and civil society should decide how best to allo- and be aware of their needs and constraints. Aus- cate usage. To prioritize the increase of Internet tralia, Germany, the UK, and the United States TABLE 24. Engage Key Stakeholders: Challenges, Risks, and Actions Challenge Risk Actions Reconciliation of priorities of various stakeholders Impossibility of reaching common ground Maintain open communication Preserve rights of incumbents (and include compensation if necessary) while freeing up spectrum Utilize bottom-up approach Expectations of stakeholders to be met Frustration due to slow or lack of progress Establish realistic goals and timeframe Agenda not dominated by few stakeholders Collective action Create mechanisms of checks and balances to ensure smooth switchover transition 76 SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY digital switchover. This includes the international TABLE 25. Ensure Harmonization: Challenges, Risks, and Actions rules and standards that may be applicable. Spain experienced a major change when CEPT harmo- Challenge Risk Actions Meeting established deadlines Missed opportunities due to slow progress Promote regional phasing out Resolution of crossborder interference Delays in reaching common ground Prioritize issue in discussions about harmonization in regional fora nized the 790 MHz-862 MHz frequency bands. The country had only just completed its digital switchover process a month before CEPT’s decision. As a result, Spain had to go through the process twice. Step D. Award the digital dividend Using the digital dividend spectrum for mobile created websites and communications campaigns broadband has the advantage of servicing a larger to ensure a smooth transition. area with fewer base stations: with the same number of stations, coverage can increase by a factor Step C. Ensure harmonization of 10 at 800 MHz, when compared to 2.6 GHz. To harness the power of the digital dividend, admin- Countries in the LAC region should have a consis- istrative processes and delays should permit gov- tent and harmonized approach to the band plan ernments to auction licenses sooner rather than they select. Economies of scale that are created later. The experience of the four reference coun- through harmonization result in (i) lower equip- tries demonstrates their commitment to awarding ment production costs, (ii) increased competition the frequencies in a short period of time subse- in an attractive market and the launch of more and quent to the transition. less expensive products; and (iii) the adoption of common frequencies and relevant international Technology and Service Neutrality protocols for disaster management and emergency communications, among other beneits. Australia, Germany, the UK, and the United States auctioned the digital dividend license on a ser- Timing and Harmonization: The Case of Spain vice- and technology-neutral basis. This left the private sector free to evaluate how the frequen- Spain’s experience has shown countries should be cies should be used and encouraged them to aware of the legal and regulatory limitations that are ensure that their cost-effectiveness will ultimately in place when implementing policies related to the result in more affordable services. TABLE 26. Auction the Digital Dividend: Challenges, Risks, and Actions Challenge Risk Actions Meeting spectrum demand Frequencies left unused Expedite the award process Deploying technology High CAPEX Promote infrastructure-sharing and partnerships among operators Promote technology and service neutral licenses Infrastructure deployment in remote areas Perpetuation of underserved areas Consider establishing coverage obligations Competitive markets Suboptimal distribution Deine clear competitive criteria ROADMAP FOR THE DIGITAL SWITCHOVER 77 13 Spectrum Management Index he SMI measures the ability of a country to T are necessary for eficient use of spectrum. The create opportunities for more eficient us- four categories of the index are (i) Government age of its electromagnetic spectrum. The Institutions; (ii) Policy and Regulation; (iii) Infra- index raises awareness of the importance of pol- structure; and (iv) Competitiveness and Innova- icies and regulations to promote broadband ac- tion. Each category comprises a different set of cess through a well-managed electromagnetic indicators (see Table 27). spectrum and create a more competitive market. The methodology of the SMI is based on that Universal access to broadband can contrib- applied in the IDB’s Broadband Development ute to the achievement of the MDGs. Countries Index for Latin America and the Caribbean (IDB, that consider themselves committed to universal 2013). This is a socioeconomic index that mea- access should adhere to how spectrum—a scarce sures the current level of broadband development resource—is managed. Governments can ulti- in the LAC area by country. mately contribute to achieving affordable broad- Variables are either qualitative or progress band access towards universality by promoting from a points range of 1 (minimum) to 8 (maximum). eficient usage. For example, to the variable existence of spectrum Australia, Germany, the UK, and the United caps, the number 1 is attributed to countries where States were selected as the benchmark for this caps are not applied, and the number 8 is attrib- study. At the forefront of eficient spectrum uted to countries that do apply caps. In the case management, lessons can be drawn from their of the variable progress of analogue switchoff, dif- experience in terms of institutional, policy, and ferent numbers are attributed, depending on the regulatory frameworks. For the LAC region, date set by each country as the deadline for the Argentina, Brazil, Chile, Colombia, Guatemala, switchoff. Each of these four pillars receives equal Mexico, Peru, and Uruguay were selected as a ref- weight (25 percent). Likewise, within any compo- erence for the status of spectrum management nent, the indicators are equally weighted. development. These countries appear in the spider charts below. Most of the data below comes from the ITU’s ICT Eye, a one-stop-shop website that compiles The presence of strong regulators, sound pol- data the ITU collects on each country. While the icies, adequate infrastructure, innovative regula- dates of each variable will differ, 2012 is used tory approaches, and a competitive environment whenever possible. Some of the variables derive 79 TABLE 27. Spectrum Management Index Pillars Index Pillars Governmental institutions • Existence of an entity in charge of frequency allocation and assignment • Existence of an entity in charge of universal service/access • Enforcement power of the regulator • Autonomy of regulator in decision making • Transparency of decisions (Decisions reported on the regulatory authority’s website) • Publicity of the information on spectrum Policy and regulation • Technology neutrality of spectrum licenses • Existence of spectrum caps • Adoption of a national broadband plan • Progress of analogue switchoff • Operators under universal access/service obligation • Creation of a universal service fund • Adoption of an universal access/service policy • Monitoring and enforcement of spectrum Infrastructure • Percentage of spectrum allocation recommended by the ITU completed by 2015 • Assignment of spectrum for 3G • Assignment of spectrum for Long-Term Evolution • Assignment of spectrum for WiMAX • Number of active mobile broadband subscriptions • Percentage of the population covered by a mobile-cellular network • Availability of commercial LTE services Competitiveness and Innovation • Level of competition of the Wireless Local Loop • Level of competition on the wireless market • Level of competition on International Mobile Telecommunications (3G, 4G, etc.) • Regulation/legislation on the use of TV white spaces in place or planned • Band migration allowed • Secondary trading allowed • Change of spectrum use permitted on transfer • Mobile broadband competitor index • Infrastructure sharing for mobile operators allowed from the collection of data from cited authors— fare well; in particular, Mexico and Peru stand one speciically from 4G Americas (2013). out because of their strong and autonomous 30 13.1. Brief Discussion of the Results The four indicators of the SMI show that in the Government Institutions category, LAC countries 80 The variable“percentage of spectrum allocation recommended by the ITU completed by 2015” was taken from the 4G Americas publication, “Analysis of ITU Spectrum Recommendations in the Latin American Region: Understanding Spectrum Allocations and Utilization” (4G Americas, 2013). 30 SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY FIGURE 15. Spectrum Management Index for Selected Countries Chile and Guatemala have made the most progress in the region. Argentina 13.1.1. Government Institutions 8 AUS Brazil 6 GER Chile 4 the necessary institutions in place to manage the 2 UK Most of the LAC countries in the sample have Colombia 0 spectrum eficiently. On the positive side, all countries have assigned agencies responsible for radio frequency allocation and assignment, and infor- USA Guatemala mation on spectrum policy is publicly available. On the other hand, three of the eight coun- Uruguay Mexico tries have no reported decisions on their respec- Peru tive regulating authority website. This indicates a lack of transparency that needs tackling. Regulators in Brazil and Chile are reported to have limregulating agencies. In terms of Policy and Regu- ited powers, which can undermine their authority, lation—and in addition to Mexico and Peru—Brazil while Colombia is constrained by its own agency’s has developed a framework in line with the best limited enforcement power. practices that exist in more developed economies. On the other hand, Guatemala and Uruguay need 13.1.2. Policy and Regulation to take bigger strides to reach the levels of their Spectrum management policy and regulation peers. Unsurprisingly, Infrastructure is the weakest in the LAC area is in line with most developed link among the selected LAC countries, where economies, with particular emphasis on spec- Peru has the biggest gap to bridge. With regard trum monitoring and enforcement, including the to the Competitiveness and Innovation category, establishment of universal service funds. Moreover—with the exception of Guatemala—national FIGURE 16. SMI Pillars Argentina FIGURE 17. Governmental Institutions 8 AUS Brazil Argentina 6 8 GER AUS Chile 4 Brazil 6 2 GER UK Chile 4 Colombia 0 2 UK USA Colombia 0 Guatemala Mexico Uruguay USA Guatemala Peru Governmental institutions Policy and regulation Infrastructure Competitiveness and Innovation Uruguay Mexico Peru SPECTRUM MANAGEMENT INDEX 81 broadband plans, technology neutral spectrum FIGURE 19. Infrastructure licenses, and spectrum caps have largely been Argentina adopted across the region. 8 AUS The region is falling behind with regard to the digital switchover compared to the rest of the Brazil 6 4 GER world. The transition from analogue to digital TV Chile 2 has been faster in Mexico and Uruguay and slower UK in Colombia and Peru. 13.1.3. Infrastructure Colombia 0 USA Guatemala Uruguay All countries in the LAC sample have had spec- Mexico Peru trum for 3G assigned to operators. The same has occurred for WiMAX services, with only Peru and Uruguay as exceptions. The population covered by a mobile-cellular network is also high in the region, ranging from 76 percent in Guatemala and 13.1.4. Competitiveness and Innovation 83 percent in Colombia, to almost 100 percent in In the Competitiveness and Innovation category, all other countries. Despite the fast growth rates, mobile broad- LAC countries do well in infrastructure-sharing band subscriptions remain low, reaching less than for mobile operators. They lag behind, however, in 2 percent of the population in Peru, compared to some of the cutting-edge regulatory changes that rates of 79 percent in the United States and more have been promoted in the reference countries, than 100 percent in Australia. Argentina and Bra- such as the use of TVWS and secondary spectrum zil, with 23 and 21 percent of fast mobile Internet markets, which have been extensively discussed in access, respectively, show the best performance this document. in the region. FIGURE 18. Policy and Regulation FIGURE 20. Competitiveness and Innovation Argentina Argentina 8 AUS 8 AUS Brazil 6 GER 4 Chile GER 2 UK Colombia USA Guatemala Mexico UK Chile Colombia 0 USA Guatemala Mexico Uruguay Peru 82 4 2 0 Uruguay Brazil 6 SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY Peru Bibliography 3GPP. 2013. “LTE-Advanced.” Available at Basaure, A. T. R. Casey, and H, Hämmäine. 2012: h t t p : // w w w . 3 g p p . o r g / t e c h n o l o g i e s / “Different Regulation Paths Toward Cognitive keywords-acronyms/97-lte-advanced. 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S. 2006. “Network Neutrality and the Eco- Weiss, M. B. H., W. Lehr, L. Cui and M. Altamimi. nomics of Congestion.” Georgetown Law 2012. “Enforcement in Dynamic Spectrum Journal 94:1847. Available at http://scholar- Access Systems.” Telecommunications Pol- ship.law.upenn.edu/cgi/viewcontent.cgi?artic icy Research Conference, Arlington, Virginia, le=1780&context=faculty_scholarship. USA. September 21–13. BIBLIOGRAPHY 93 Annexes 95 96 Annex 1: Economic Beneits of Allocating Bands and Using Unlicensed Spectrum SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY Country/ Region Technology afected Regulatory highlights Economic beneits Value created Source Year AsiaPaciic Mobile broadband Allocation of harmonized 700 MHz band Subscription price decrease of 6–10% to consumers as a result of service cost reduction. Increase in rural household beneits by 10– 20%. New jobs: 2.7 million by 2020 US$1 trillion (2014–20) The Economic Beneits of Early Harmonisation of the Digital Dividend Spectrum & the Cost of Fragmentation in Asia-Paciic (BCG/GSMA) http://www.gsma. com/spectrum/wp-content/ uploads/2012/07/277967-01-AsiaPaciic-FINAL-vf11.pdf 2011 Australia Mobile broadband Harmonization of the Digital Dividend. Allocation of 80 MHz and 120 MHz frequencies Maximum net economic beneit to society will be realized if 120 MHz of useable UHF spectrum is allocated to mobile services A$7–10 billion (2008–28) Getting the most out of the digital 2009 dividend in Australia: Allocating UHF Spectrum to Maximise the Economic Beneits for Australia (Australian Mobile Telecom Association, Spectrum Value Partners, Venture Consulting) http://www.gsma.com/spectrum/wpcontent/uploads/2012/07/277967-01Asia-Paciic-FINAL-vf11.pdf Brazil Mobile broadband Allocating the 700MHz band to mobile broadband Increased availability of mobile broadband would increase to 95%, reduction of CAPEX of US$1.6 billion compared to deployment of infrastructure in higher frequency bands, an extra US$1.3 billion in tax. Jobs created: 4,300 US$5.3 billion Brazil Mobile Observatory 2012 (Deloitte, GSMA) http://www. gsma.com/spectrum/wp-content/ uploads/2012/10/gsma_brazil_obs_ web_09_12-1.pdf 2012 China Mobile broadband Allocation of additional 1,200 MHz for international mobile technology (spectrum range: 800 MHz, 900 MHz, 1,800 MHz, 2,300–2,400 MHz, 2,500–2,960 MHz; spectrum band: 687) Jobs created: 22.6 million (18.6 million direct jobs) 2.41% of the GDP by 2016 (RMB 4.4 trillion). RMB 7.8 trillion (by 2020) The Socio-Economic Impact of Allocating Spectrum for Mobile Broadband Services in China (China Academy of Telecommunication Research — CATR/GSMA) http://www.gsma.com/spectrum/ wp-content/uploads/2013/01/SOCIOECONOMIC-IMPACT-OF-SPECTRUMIN-CHINA.pdf 2013 (continued on next page) Annex 1: Economic Beneits of Allocating Bands and Using Unlicensed Spectrum (continued) Country/ Region Technology afected Europe United Kingdom ANNEXES Regulatory highlights Economic beneits Value created Source Year Mobile technology Digital Dividend (release of the 800 MHz band to mobile broadband) EUR 55 billion of tax revenues and 80,000 new businesses. Jobs created: 156,000 EUR 119 billion by 2020 Mobile Economy Europe 2013 (BCG / GSMA) http://gsma. com/newsroom/wp-content/ uploads/2013/12/GSMA_ME_Europe_ Report_2013.pdf 2013 Wi-Fi License exempt at 2.4 GHz and possible expansion of 5 GHz band Enhance the value of ixed broadband, avoid mobile costs through ofloads, and enable machine-to-machine applications EUR 95 billion in 2023 2013 Mobile services (including broadband) Spectrum authorities have recently auctioned signiicant quantities of spectrum at 800 and 2600 MHz. Countries typically have access to over 500 MHz of spectrum at frequencies below 3 GHz Transition of users from basic phones to smartphones and from 2G to 4G, Internet of Things EUR 269 billion per annum (2013); EUR 477 billion per annum (2023) Valuing the Use of Spectrum in the EU: An Independent Assessment for the GSMA (Plum/GSMA) http://www.gsma.com/spectrum/wpcontent/uploads/2013/06/EconomicValue-of-Spectrum-Use-in-Europe_ Junev4.1.pdf Mobile wireless and broadband (Public mobile communications) Release 500 MHz of spectrum for commercial use by 2020 Economic welfare due to access to services provided using spectrum (consumer surplus) and surplus that producers earn from offering these services (producer surplus). Roll out of 4G networks will result in an investment of GBP 5.5 billion, supporting 125,000 jobs for one year. GBP 273–341 billion (2012–21) Impact of Radio Spectrum on the UK Economy and Factors Inluencing Future Spectrum Demand (UK Department for Business, Innovation and Skills — BIS/and the Department for Culture, Media and Sport — DCMS) http://www.culture.gov.uk/images/ publications/Impact_of_radio_ spectrum_on_the_UK_economy.doc 2012 (continued on next page) 97 98 Annex 1: Economic Beneits of Allocating Bands and Using Unlicensed Spectrum (continued) SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY Country/ Region Technology afected United States Regulatory highlights Economic beneits Value created Source Year Mobile broadband Not speciied More eficient management and documentation; health care eficiency enhancements; enhancements in ield service automation; improved inventory management and reduction of inventory loss; sales force automation; replacement of landline desk phones with wireless devices, etc. US$127 billion by 2016 The Increasingly Important Impact of Wireless Broadband Technology and Services on the U.S. Economy (CTIAThe Wireless Association / Ovum) http://iles.ctia.org/pdf/ Final_OvumEconomicImpact_ Report_5_21_08.pdf 2008 Mobile broadband Reassignment of 300 MHz of spectrum to mobile broadband and potential release of additional 200 MHz US$75 billion in CAPEX. Jobs created: 300,000 new jobs (with additional 200 MHz: another 200,000 new jobs) US$230 billion within ive years (US$385 billion considering additional 200 MHz) Private Sector Investment and Employment Impacts of Reassigning Spectrum to Mobile Broadband in the United States (Sosa, D. and M. Van Audenrode/Analysis Group) http://www.analysisgroup.com/ uploadedFiles/News_and_Events/ News/Sosa_Audenrode_Spectrum ImpactStudy_Aug2011.pdf 2011 Mobile broadband Voluntary incentive auctions; additional 500 MHz of spectrum available for wireless broadband US$28 billion in tax revenue over ten years Not speciied Winning the Future through Innovation 2012 — The Federal Budget FY2012 (OMB) http://www.whitehouse.gov/omb/ factsheet/winning-the-future-throughinnovation Mobile broadband Ensuring suficient spectrum Investment in 4G networks could fall in the range of US$25–53 billion (2012–16). Jobs created: 371,000–771,000 US$73–151 billion (2012–2016) The Impact of 4G Technology on Commercial Interactions, Economic Growth, and U.S. Competitiveness (Deloitte Development) http:// www.deloitte.com/assets/DcomUnitedStates/Local%20Assets/ Documents/TMT_us_tmt/us_tmt_ impactof4g_081911.pdf 2011 (continued on next page) Annex 1: Economic Beneits of Allocating Bands and Using Unlicensed Spectrum (continued) Country/ Region Technology afected Regulatory highlights Economic beneits Value created Source Year Mobile broadband Reassignment of 300 MHz to mobile broadband US$75 billion in new investment. Jobs created: 300,000 US$230 billion in ive years Private Sector Investment and Employment Impacts of Reassigning Spectrum to Mobile Broadband in the United States (Sosa, D. and M. Van Audenrode/Analysis Group) http://www.analysisgroup. com/uploadedFiles/News_and_ Events/News/Sosa_Audenrode_ SpectrumImpactStudy_Aug2011.pdf 2011 Mobile broadband Not speciied CAPEX of US$84.2 billion; jobs created: 205,000 (2010–15) US$242 billion (2010–15) The Economic Impact of Broadband 2010 Investment (Crandall and Singer/ Broadband for America Coalition) http://internetinnovation.org/iles/ special-reports/Economic_Impact_of_ Broadband_Investment_Broadband_ for_America_.pdf White Spaces (unlicensed) Allocation of unlicensed spectrum Reduce cost of connectivity US$0.8–4.3 billion 2009 Wi-Fi Allocation of unlicensed spectrum Greater potential for innovation than licensed spectrum US$16–36.8 billion (selected WI-Fi applications) The Economic Value Generated by the Current and Future Allocations of Unlicensed Spectrum: Final Report http://apps.fcc.gov/ecfs/document/ view?id=7020039036 Mobile wireless Incentive auctions and spectrum sharing freeing Expand coverage, saving US$18 billion over a decade due to sharing US$150 billion FCC Chairman Julius Genachowski Prepared Remarks to International CTIA Wireless 2012 New Orleans, May 8, 2012 (transcription) http://transition.fcc.gov/Daily_ Releases/Daily_Business/2012/ db0508/DOC-313945A1.pdf 2012 ANNEXES (continued on next page) 99 100 SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY Annex 1: Economic Beneits of Allocating Bands and Using Unlicensed Spectrum (continued) Country/ Region Technology afected Wi-Fi (ofloading) Regulatory highlights Economic beneits Value created Source Year Allocation of unlicensed spectrum Cellular broadband providers were ofloading over one third of their trafic into the unlicensed spectrum. Avoiding the construction of over 100,000 cell sites, they avoided incurring annual capital and operating costs of over US$25 billion. Instead, the initial hop to the Internet was provided by Wi-Fi networks at less than one tenth the cost. US$50 billion Eficiency Gains and Consumer Beneits of Unlicensed Access to the Public Airwaves (Mark Cooper) http://papers.ssrn.com/sol3/papers. cfm?abstract_id=2030907 2012 Annex 2: Spectrum Management Index: Indicators and Variables Pillar Variable ARG BRA CHI COL GUA MEX PER URU USA UK GER AUS Government institutions Are decisions reported on the Regulatory Authority’s website? 1.00 8.00 1.00 8.00 1.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 Entity in charge of radio frequency allocation and assignment 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 Policy and regulation Infrastructure Regulator autonomous in decision making 8.00 1.00 1.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 Entity in charge of universal service/access 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 Information on spectrum is publicly available 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 Regulator has enforcement power 8.00 8.00 8.00 1.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 — 8.00 — — 8.00 8.00 8.00 — 8.00 — 8.00 8.00 Spectrum caps Spectrum licenses technology neutral 8.00 8.00 8.00 8.00 1.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 National broadband plan adopted 8.00 8.00 8.00 8.00 1.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 Progress of switchoff 2.00 2.00 2.00 1.00 — 3.00 1.00 3.00 3.00 5.00 5.00 4.00 Operators under universal access/service obligation 8.00 8.00 8.00 8.00 — 8.00 8.00 — 8.00 8.00 8.00 8.00 Has your country established a Universal Service Fund? 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 1.00 8.00 Universal access/service policy adopted 8.00 8.00 8.00 8.00 — 8.00 8.00 — 8.00 8.00 8.00 8.00 Spectrum Monitoring and Enforcement 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 Percentage of spectrum allocation completed (ITU by 2015) 1.17 3.09 2.43 2.54 1.30 1.50 1.87 1.66 8.00 8.00 8.00 8.00 Operators assigned spectrum for 3G (IMT) 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 — 8.00 1.00 8.00 1.00 8.00 1.00 1.00 8.00 8.00 1.00 8.00 Active mobile broadband subscriptions 2.49 2.35 2.09 1.16 1.19 1.22 1.00 1.53 6.11 5.88 3.74 8.00 Percentage of the population covered by a mobilecellular network 8.00 7.97 8.00 3.25 1.00 7.97 7.25 8.00 7.54 8.00 8.00 8.00 Operators assigned spectrum for WiMAX services 8.00 8.00 8.00 8.00 8.00 8.00 1.00 1.00 8.00 8.00 8.00 8.00 — 1.00 1.00 1.00 1.00 1.00 — 1.00 8.00 — 8.00 8.00 Operators assigned spectrum for LTE services ANNEXES LTE services commercially available (continued on next page) 101 102 SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY Annex 2: Spectrum Management Index: Indicators and Variables (continued) Pillar Variable Competitiveness and Innovation If Yes, is a change of spectrum use permitted on transfer? ARG BRA CHI COL GUA MEX PER URU USA UK GER AUS — — 1.00 1.00 — 1.00 1.00 1.00 — 8.00 1.00 8.00 Wireless Local Loop 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 4.50 8.00 8.00 Mobile (wireless market competition) 4.50 8.00 8.00 8.00 8.00 8.00 8.00 1.00 8.00 4.50 8.00 8.00 Regulation/legislation in place regarding the use of white spaces 1.00 8.00 1.00 1.00 1.00 1.00 1.00 1.00 8.00 8.00 1.00 8.00 Band migration allowed 8.00 8.00 8.00 8.00 1.00 8.00 8.00 — 8.00 8.00 8.00 8.00 Secondary trading allowed 1.00 1.00 8.00 1.00 8.00 8.00 8.00 1.00 8.00 8.00 8.00 8.00 Mobile broadband competitor index 6.25 8.00 8.00 8.00 8.00 8.00 6.25 8.00 8.00 8.00 8.00 8.00 IMT (3G, 4G, etc.) 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 Is infrastructure sharing for mobile operators permitted (e.g., Mobile Virtual Network Operators)? 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 Annex 3: Spectrum Management Index Calculation The SMI is calculated as follows: SMI = PGI * SIPGI + PPR * SIPPR + PIN * SIPIN + PCI * SIPCI Where, Px . Relative weigh of dimension x SIPx . Pillar sub index x x ∈ {GI, PR, IN, AC} Where, GI Governmental Institutions PR Policy and Regulation IN Infrastructure CI Competitiveness and Innovation The dimensions are calculated according to the following formula: Nx SIPx = ∑ i = 1 Variable i Nx Where, Variable i . Variable is the ith of pillar x Nx . Number of variables comprising pillar x Normalizations are performed for aggregation. The SMI range has been set between 1 (worst) and 8 (best). The variables have been grouped here by the type of nature of its unit of measure. The methodology for normalizing each variable will be different, according to those types in Table 29. Where, Ii,j: is the normalized value of variable i for country j xi,j: is the value of vale of variable i for country j minjxi: is the minimum value of variable i of the 12 countries maxjxi: is the maximum value of variable i of the 12 countries The weight of the indicators, variables, and pillars in the SMI are outlined in the table below. ANNEXES 103 TABLE A3.1. Variable Type of Normalization Percentage variables Those that are expressed in any type of percentage Ii,j=7 ∗ x i,j − mi n jXi +1 ma x jx i − mi n jx i Variables associated to a range Those obtained from a survey that had a different range Special case: variables associated to a range Those that have been built by consulting various telecom operator websites and institutions. Their value will be set directly with the same range as the IDB range Fixed variables Those that have a ixed value (e.g., Mbps, km2, number of households) log10(xi,j ) − log10(min jxi ) +1 Ii,j=7 ∗ log10(max jxi ) − log10(min jxi ) TABLE A3.2. SMI: Indicators and Weights Weight Number of variables Indicator weight in SMI Variable weight in SMI Government institutions 20% 6 20% 3% Policy and regulation 25% 8 25% 3% Infrastructure 40% 7 40% 6% Competitiveness and Innovation 15% 9 15% 2% Pillar 104 SPECTRUM MANAGEMENT – THE KEY LEVER FOR ACHIEVING UNIVERSALITY This study examines the experiences of spectrum management in four countries with a high percentage of wireless broadband penetration (Australia, Germany, the United Kingdom, and the United States). What actions have they undertaken to achieve an eicient management of spectrum? How have they have shifted toward more modern management approaches? These answers can be used as a benchmark for good regulatory governance. Governance is a key issue in decisions related to spectrum management in the LAC region. Sound policy and regulatory frameworks should be able to address issues such as the allocation of the digital dividend bands, the refarming of frequencies, the availability of unlicensed spectrum, and the adoption of new technologies. These decisions will ultimately have an impact on the quality and cost of future broadband services. The occasion for this publication is opportune, and the knowledge gained from it will ultimately contribute to a proactive agenda by the decision makers in the region. *** The Inter-American Development Bank (IDB) was created in 1959 to help accelerate economic and social development in Latin America and the Caribbean. Institutions for People