Mandated Spectrum Trading Isn’t Needed, EC is Told

Sweden’s Post & Telecom Agency (PTS) said while issues such as secondary trading and flexibility are “valuable steps” toward a more liberalized approach to spectrum management, the recommendation that trading be mandated through “appropriate binding measures” at the EU level wouldn’t achieve the goals set out in the report. Rather, PTS said, binding measures could delay developments in countries already introducing secondary trading and “have negative impact” on more hesitant govts. The future of secondary trading in Europe “will be led by example and developed through exchanges of best practice” rather than rules, PTS said.

The Finnish Ministry of Transport & Communications (MTC) disputed the report’s assumption that trading always leads to the most efficient use of spectrum, calling the finding “theoretical.” In addition, said MTC, the report didn’t look at possible negative effects of spectrum trading, and it should have considered the idea of frequency liberalization without spectrum trading. Finally, it said, “whenever spectrum trading is introduced in the member states, it must be on a voluntary basis.”

Nokia complained the report made no effort to quantify the costs of trading and liberalization or the benefits of harmonized use of spectrum. It also faulted the section on public policy objectives, saying some -- such as the furtherance of universal broadband via fixed wireless access -- could be hindered by too much liberalization. The argument that liberalization with trading is necessary to ensure competition is “misleading,” Nokia said. “It is not liberalisation of the band being traded that will reduce entry barriers, but liberalisation of some other similar band where competitive equipment is available.”

There’s no need to regulate leasing or transfers of spectrum rights for services that already “enjoy a high degree of liberalization and commercial maturity,” such as international satellite services, said the European Satellite Operators Assn. (ESOA). The concept of inefficient spectrum use doesn’t apply to existing satellite operators, the group said, because: (1) Through commercial agreements they're already de facto trading spectrum rights at the international level among themselves or with providers of earth station services. (2) Satellite operators’ business model has created a “market with vivid competition” that ensures they make the most efficient use of the scarce resource of spectrum and users get the best prices and conditions. (3) The EU’s radio regulatory framework continues to ensure innovation and avoidance of harmful interference. Using spectrum for services not foreseen by the framework will “inevitably lead to interference levels which will render satellite services unavailable,” ESOA said.

Responding to the report’s 2 options for interference management -- spectrum management authorities (SMAs) vs. spectrum users working out disputes themselves -- Paris- based Eutelsat warned that satellite can’t “operate over a fragmented market and can not adjust their coverage to a portion of the territories to cope with the requirements of a specific terrestrial operator deployed over only limited areas.” SMAs should continue to handle interference case by case, band by band, with a view to protecting “the requirements of existing services against harmful interference” while considering any forms of spectrum trading and flexibility in band use, the company said.

Two commenters enthusiastically endorsed the report’s call for spectrum trading and liberalization. Norway’s Post & Telecom Authority (NPT) already permits spectrum trading, with no restriction on the form of trade or the kinds of rights traded. NPT backed the report’s overall approach to spectrum trading and the need for EU regulation.

Electrical engineering consultant Roberto Ercole said spectrum liberalization requires the abilities to trade and to use spectrum flexibly. The success of both is dependent on keeping low the transaction costs associated with changing spectrum uses, he said, and, ultimately, on how spectrum property rights are defined. The EC “has a role in co-ordinating the introduction of technology neutral and flexible use spectrum licenses,” he said. It should also monitor the impacts on competition of the introduction of flexible use and trading. But spectrum users should be allowed to decide what services and technologies to use, or innovation will be stifled, he said.

Europe’s current inflexible spectrum regime makes it tough for new technologies to get access to spectrum, hurting their ability to compete in the telecom market, he said. A more flexible spectrum market will spark more innovation, allowing emerging technologies and business plans to develop “by trial and error, that is without the need for a central planner, who may well be risk averse.” The bottom line, Ercole said, is that consumers aren’t getting the services they want -- or may be paying more than necessary for them -- because spectrum licenses are artificially scarce. Countries that maintain that inflexibility could pay the price in loss of competitive position, he warned.