Spectrum Reform Has Seen Successes, Failures

U.K. reform has led much spectrum to move from traditional command & control to market oversight, said Martin Cave, economist and former member of the U.K. Competition Commission. In 2000, 96% of U.K. spectrum saw tight controls. By 2010, 71% will be managed through market mechanisms. U.K. regulators at Ofcom increasingly are relying on deregulation to address competitive concerns, Cave said: “With liberalization you should see these spectrum markets widen… The opportunity for anybody actually to horde spectrum in the market… that should go out the window.”

But uncertainties remain. For example, after 14 months the secondary market for spectrum has seen virtually no trades. “Last week, to everybody’s great relief, some… trades took place,” Cave said: “Everybody is sort of keeping a stiff upper lip and we are saying we didn’t expect anything to happen yet.” One gray area is the annual renewability of existing licenses. Cave said spectrum holders assume they will hold the spectrum for a given number of years, though how long hasn’t been resolved. The expectation is “that they have ‘N’ years of tenure,” he said: “No one knows what N is.”

Cave told us one regret was that the govt. wasn’t “more rigorous” in pressuring public sector users to hand back underused spectrum. “It’s a very difficult issue, and it’s not only getting spectrum back -- it’s also imposing some kind of discipline on public sector demands for additional spectrum, for example for homeland security,” he said: “Homeland security has to be secured, but it should be done in a framework in which consideration is given to alternative uses of the spectrum.”

Bruce Emirali, head of frequency management for the New Zealand Defence Force, said his nation’s spectrum reform experience has been mixed. He questioned the wisdom of forcing govt. entities to pay for spectrum they use, a conference topic (CD March 1 p2). “I regard charging the Crown entities as really an academic exercise at the end of the day,” he said. “The government is charging the government for something that it already owns… The first year would be a shock because I wouldn’t have budgeted for it. The 2nd year I would have budgeted and I would have gone to our government and said, ‘Be prepared… You've got to pump up my budget.'”

New Zealand’s property rights regime doesn’t necessarily promote more efficient spectrum use, Emirali said. “Our management right regime does not promote sharing,” he said. “The owner can buy the spectrum and he can keep people out. I find that it’s extremely difficult when we're trying to coordinate wideband systems in the areas where the management right is held.” In the past, Emirali said he only had to negotiate with the govt.: “We now have to go to all the cellular operators, all the management right holders, pitch the same thing and if one of them says ‘no’ the system doesn’t work.”

Guatemala got considerable attention at the summit after regulators there embraced a strong property rights approach on spectrum licenses. FCC senior economist Wayne Leighton said “propertization” of spectrum has led to competitive prices for wireless service and huge subscribership growth. Interference fights are resolved by regulators working on tight deadlines. But in at least one case of pirate radio stations interfering with broadcast bands, the govt. has had difficulty getting interference under control, he said.

Former NTIA Dir. Janice Obuchowski said U.S. regulators need to study international counterparts’ experiences, past and future. “We very much need the insights that are being developed around the world,” she said. “We need to know what works, what doesn’t work. We need shared experiences.”