Tackling spectrum crunch: is more sharing the answer?

Free, but worth billions

Today’s post is by Agustin Diaz-Pines of the OECD’s Science, Technology and Industry Directorate

The spectrum used for mobile communications in the United Kingdom alone was worth USD 48 billion in 2011 according to this study. In turn, the mobile industry also supports a supply chain of infrastructure, equipment, applications and content providers, generating revenue of around USD 32 billion a year in the UK. But if the Internet economy is to continue to develop, more spectrum will be needed to accommodate the growth in smartphones and other wireless devices.

A new OECD report looks at new approaches to enhance spectrum management to make more spectrum resources available for wireless communication services to meet current and future demand and, at the same time, increase the efficiency in its use.

The traditional approach has been to make spectrum (i.e. rights of use) available to communication providers on an exclusive, dedicated basis. The Federal Communications Commission (FCC) in the United States is encouraging broadcasters to release some of their cherished airwaves: incentive auctions. If wireless providers are ready to pay for more spectrum and broadcasters ready to be compensated for transitioning to other frequencies, or going off the air, the economic logic tells us that their incentives should be aligned. “Repacking” the released frequencies in order to clear contiguous blocks of spectrum remains the most complex task, as these blocks need to be suitable for flexible use and harmful interference minimised.

Undoubtedly, exclusive licensing will continue to play a prominent role in future communications, but evidence suggests, however, that one of the most successful technologies relies on unlicensed spectrum, such as the now pervasive Wi-Fi networks. Wi-Fi is embedded in most tablets and smartphones, and mobile traffic off-loading to fixed networks through Wi-Fi helps alleviate mobile network congestion. One report has estimated that the unlicensed Wi-Fi use provided a consumer surplus of between USD 52 billion to USD 99 billion a year globally, by enhancing the value of fixed broadband connections. As a result, making available sufficient spectrum for unlicensed use should be among policy makers’ priorities in the coming years.

In the Netherlands, unlicensed GSM spectrum (1 800 MHz band) is being used by 3 000 organisations (hospitals, stadiums and exhibition centres) to deploy their private indoor mobile networks, independent from existing mobile networks. This increases indoor coverage and avoids network congestion. But another approach is attracting interest: “licensed shared access” (LSA), whereby a limited number of users are allowed to utilise spectrum held by an “incumbent” user (a spectrum holder, which can be a government user or an operator). While incumbent users remain protected from harmful interference, the licensees are allowed to use the spectrum in a given timeframe or geographical area while respecting some rules, provided that the “incumbent” is not using the spectrum.

The European Union Radio Spectrum Policy Group has recently published an opinion on Licensed Shared Access, which seeks a more efficient use of spectrum. Candidate bands for sharing are the 2.3 GHz band in Europe and the 3.5 GHz band in the United States. The CEPT (a European technical spectrum body) is currently considering the 2.3 GHz for LSA access. Likewise, on 23 April 2014 the FCC in the United States issued a proposal to transition to a sharing regime in the 3.5 GHz band, following the recommendation of the PCAST report. Some of the PCAST report recommendations were included in the latest Economic Report of the President of the United States.

Other arrangements aimed at promoting sharing and efficiency, the report quotes, are femtocells in Japan or the nascent TV White Spaces technology (frequencies not being used at all times or at all locations) with trials in various countries, including Korea, the UK and US.

The success of incentive auctions, spectrum sharing and other related initiatives clearly relies on the ability of policy makers and regulators to set up the right rules to align the incentives of the main stakeholders. Market-based incentives, while preserving critical government services, are crucial to avoid spectrum remaining underutilised because there is no incentive to sell it or share it. In their overall assessment, policy makers should take into account that spectrum is an essential input to the global Internet economy: virtually all sectors of the economy could benefit from more widely available and efficient wireless broadband services.

Useful links

OECD “The Spectrum Dividend: Spectrum Management Issues”,

OECD “Secondary Markets for Spectrum: Policy Issues

OECD “Spectrum Allocation: Auctions and Comparative Selection Procedures

Ofcom (United Kingdom): “The future role of spectrum sharing for mobile and wireless data services – Licensed sharing, Wi-Fi, and dynamic spectrum access

United States, President’s Council of Advisors on Science and Technology, “Report to the President. Realizing the full potential of government-held spectrum to spur economic growth.”

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4 comments to “Tackling spectrum crunch: is more sharing the answer?”

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  1. Michael Elling (@Infostack) - 19/05/2014 Reply

    The issue isn’t sharing per se, rather how carriers view their business models. As long as they hold to the following biases:
    1) core vs edge (they are the edge access providers)
    2) vertical vs horizontal (they insist on the former stranding significant opex/capex)
    3) supply vs demand (they can’t control end-to-end demand)
    We will continue to see growth and scale at the core dramatically outpace the edge. Soon it will be very easy for the core to build out shared infrastructures in the mid, first and last mile for B2B, B2C and C2C segments.

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