Policy Review and Strategic Framework of Radio Spectrum Management Consultation Paper

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1 Plicy Review and Strategic Framewrk f Radi Spectrum Management Cnsultatin Paper 30 th Octber 2006 Malta Cmmunicatins Authrity Valletta Waterfrnt, Pint Wharf, Valletta VLT01, Malta, Eurpe Tel: (356) Fax: (356) website: inf@mca.rg.mt

2 Plicy Review and Strategic Framewrk f Radi Spectrum Management Cnsultatin Paper Cntents Page Executive Summary Plicy Envirnment Plicy Objectives Gvernment s Strategic Visin The Internatinal Perspective Spectrum Management Overseas Cnclusin Natinal Framewrk Legislative Framewrk fr Spectrum Management Spectrum Management Objectives The Radi Spectrum Licensing Regime Existing and Emerging Plicy Issues Key Drivers Affecting Future Spectrum Demand Use f Market-based Mechanisms Transitinal Arrangements and Implementatin Strategy fr Managing the Radi Spectrum Key Strategic Gals fr Spectrum Management Strategies at the Internatinal Level Strategies fr Specific Radi Services Summary f Issues and Pririties...47 Appendix A - The Internatinal Perspective...53 Appendix B - Radi Spectrum Mnitring and Enfrcement...61 Appendix C - The Radicmmunicatins Sectr in Malta...65 Page 1 f 78

3 Plicy Review and Strategic Framewrk f Radi Spectrum Management Cnsultatin Paper Executive Summary The radi frequency spectrum is a vital and finite natinal resurce f immense ptential value fr Malta. The radi spectrum prvides the means t cnvey audi, vide r ther infrmatin cntent ver distances frm a few metres t thusands f kilmetres. It is essential fr the prvisin f radicmmunicatin services, such as mbile cmmunicatins and wireless receptin f bradcast services. It is als fundamental t the safe peratin f air and maritime transprt, is used widely by the defence frces and emergency services and supprts imprtant scientific applicatins such as meterlgy and radi astrnmy. In July 2004, the Malta Cmmunicatins Authrity (MCA) was assigned the respnsibility fr the regulatin f radicmmunicatins, including the management and mnitring f the radi frequency spectrum. The migratin f these functins was carried ut fllwing an extensive review f the functins perfrmed by the previus Wireless and Telegraphy Department (WTD) within the Ministry fr Cmpetitiveness and Cmmunicatins (MCMP). This dcument depicts the radi spectrum management envirnment in Malta and its effectiveness, the factrs that influence that envirnment and the existing and emerging plicy issues warranting cnsideratin ver the cming years. Mrever, this dcument sets ut the MCA s prpsed strategy fr managing the use f the radi spectrum resurce in Malta ver the next three t five years. It als serves t ensure that Malta can leverage the maximum benefits ecnmically, strategically and in a wider scial cntext, frm the use f the radi spectrum. This dcument is a respnse t fur key drivers, namely: the need t infrm the Minister respnsible fr Cmmunicatins n the existing and emerging plicy issues warranting cnsideratin in the cming years as a result f technlgy develpment and cnvergence that are creating a dynamic envirnment, where spectrum is becming an even mre imprtant resurce; the need fr a clear, well-balanced strategy t maximise the impact that the use f the radi spectrum has n ecnmic and scial develpment; the need t ensure that spectrum is managed in a flexible, transparent way, with prmpt decisin-making t meet the challenges f cnvergence, increased mbility and ubiquity f services; and the need t prvide stakehlders with a publicly available well-infrmed strategy which takes accunt f future develpments and the requirements f Maltese users, and natinal bjectives, and infrmatin n which t base investment decisins. Radi spectrum plicies and their administratin fall within the brader gvernment initiatives t imprve Malta s ecnmic, scial and cultural envirnment. The key plicy issues identified in this dcument that need t be cnsidered further by Gvernment in cllabratin Page 2 f 78

4 Plicy Review and Strategic Framewrk f Radi Spectrum Management Cnsultatin Paper with the MCA in the shrt-t-medium term relate mainly t radi spectrum allcatin and assignment issues, cmpetitin issues and technlgy issues. The rapid technlgical develpments and the cnvergence f electrnic cmmunicatins, media cntent and electrnic devices are creating a dynamic envirnment where spectrum is becming an even mre imprtant resurce. T a certain extent, mdels fr managing and regulating radi spectrum usage have failed t keep apace with these develpments, giving rise t an increasing risk that, withut change, the traditinal apprach will prevent the Maltese sciety frm reaping the benefits f this new dynamic envirnment. Fr this reasn, a review f spectrum plicy and management f this precius resurce is needed. One respnse is t use a market-based mdel fr the allcatin and assignment f spectrum, allwing mre freedm t market players t decide hw spectrum shuld be used, and lwering the barriers fr access t spectrum rights by making pssible the trading f the rights f use. Nevertheless, the assumptin that market mechanisms will ensure spectrum is assigned t its highest value user, has nt necessarily been realised in practice. Varius appraches that might be used t ptimise the spectrum market, such as administrative pricing, auctins, secndary trading, liberalisatin, wnership limitatins and implementatin requirements, are cnsidered in this dcument. Scial and cultural bjectives that depend n the utilisatin f spectrum are, in general, met thrugh administrative assignments, including the reservatin f frequencies fr pssible public interest use. Fr example, in the bradcasting sectr, there are allcatin and funding issues, as demand ften exceeds supply. With respect t spectrum fr public safety and security purpses there appears t be an adequate supply but it is recgnised that there culd be better c-rdinatin in its use. New technlgies impact n the spectrum use and management. There is a general shift away frm hardwired vice and data services t varius types f wireless delivery, sme f which perate in the spectrum cmmns. Cnvergence in technlgy is ntable in cellular telephny (text, pictures, Internet, radi) and televisin bradcasting (interactive digital televisin, Internet and prgramming n demand). There are pprtunities and issues with these develpments. New technlgies perating in the spectrum cmmns are designed t use spectrum efficiently, are self-managing as regards interference and attract little in the way f cmpliance csts, t the benefit f manufactures and cnsumers. On the ther hand, they are difficult t categrise and regulate particularly with respect t interference prblems fr the ther uses f the spectrum. Gvernment, tgether with the MCA, has started t address and reslve the abvementined issues. Cntinuing t address these issues will further cntribute t the creatin f a cmmunicatin technlgy infrastructure that enhances Malta s cmpetitiveness, ecnmic perfrmance and scial achievements. This wuld als enhance Malta s psitin as an ideal lcatin fr rganisatins wishing t use Malta as a manufacturing base and/r test bed fr trial deplyments f new wireless technlgies and services. Furthermre, the efficient and effective use f radi spectrum ffers significant pprtunities t reduce csts, raise prductivity and enhance quality f life. Page 3 f 78

5 Plicy Review and Strategic Framewrk f Radi Spectrum Management Cnsultatin Paper It is nted that nne f the plicy issues identified in this dcument have been argued t a cnclusin. Each ne needs t be priritised, incrprated in the MCA wrk prgramme and prgressed thrugh research, analysis and cnsultatin, dwn t a set f recmmendatins t Gvernment, with thse carrying the highest urgency and impact being given pririty. These plicy issues and the prpsed strategies fr dealing with these issues are identified thrughut the text and summarised in the final sectin. T ensure the efficient management and effective use f the radi spectrum with particular regard t the availability f spectrum and the current and future demand fr spectrum the fllwing brad strategic bjectives have been identified: i. facilitating access t radi spectrum thrugh an bjective, transparent and nndiscriminatry prcess that meets statutry requirements; ii. iii. iv. prmting the develpment and deplyment f new technlgies and services; maximising the ecnmic and scial benefits arising frm the use f radi spectrum; ensuring the efficient and effective use f scarce radi spectrum resurces; and v. ensuring cmpliance with natinal, internatinal and Eurpean bligatins and the avidance f harmful interference. Structure f this Dcument The remainder f this dcument cmprises the fllwing: Sectin 1 prvides an verview f the ecnmic, scial and cultural plicy bjectives that underpin Malta s management f the radi spectrum. Sectin 2 prvides an verview f the current spectrum management structures and prcesses. Sectin 3 identifies the main drivers f future spectrum demand, including market, technlgy, scial and cultural, ecnmic and legal develpments and addresses the key plicy issues that have been cnsidered in the develpment f the prpsed strategic framewrk. Sectin 4 presents an verview f the key strategic gals fr radi spectrum ver the next three t five years and utlines the prpsed strategy fr managing the radi spectrum in general and fr specific services in detail. Sectin 5 lists and priritises the key plicy issues identified in the reprt and the prpsed strategies fr dealing with these issues. Page 4 f 78

6 Plicy Review and Strategic Framewrk f Radi Spectrum Management Cnsultatin Paper Appendix A describes the rle f the varius internatinal bdies. Appendix B utlines the strategy with regard t mnitring spectrum use and ensuring cmpliance with spectrum regulatins. Appendix C prvides an verview f the different services authrised fr use in Malta and infrmatin n the key drivers f spectrum demand n a service by service basis. It is nted that parts f the analysis and cmmentary cntained in this dcument are drawn frm varius current natinal and internatinal surces including the review cmmissined by the MCMP n the migratin f the WTD functins t the MCA, the Internatinal Telecmmunicatin Unin (ITU) 2004 publicatin entitled Radi Spectrum Management fr a Cnverging Wrld and the recent spectrum management plicies and strategies develped by freign jurisdictins including the Eurpean Cmmissin (EC), the United Kingdm, Ireland, the Netherlands, the United States and New Zealand. Cnsultatin Perid The MCA welcmes cmments frm the public, users, gvernment, industry and interest grups t the issues and prpsals cntained in this dcument. This wide crss-sectin f views will assist the MCA in identifying and priritising the plicy issues tgether with the strategies fr dealing with such issues. The cnsultatin perid will run frm 30 th Octber 2006 t 15 th December 2006 during which perid the MCA welcmes written cmments n any f the issues and prpsals raised in this dcument. Having analysed and cnsidered the cmments received, the MCA will publish a reprt n the cnsultatin which will, inter alia, summarise the respnses t the cnsultatin. This reprt will be fllwed by the publicatin f a finalised strategy and detailed wrk prgramme fr management f the radi spectrum fr the next three t five years. Hw t Respnd All respnses must arrive at the MCA by n later than the 15 th December In rder t prmte further penness and transparency, the MCA will publish the names f all respndents. Mrever, in the interests f transparency, all representatins will be published, except where respndents indicate that a respnse, r part f it, is cnfidential. 1 The MCA will take steps t prtect the cnfidentiality f all such material frm the mment that it is received at the MCA s ffices. In the interests f transparency, respndents shuld avid applying cnfidential markings wherever pssible. All cmments shuld be made in writing and, where pssible, sent by t inf@mca.rg.mt. Hwever, cpies may als be psted r faxed t the address belw: 1 In accrdance with the MCA s cnfidentiality guidelines and prcedures (refer t Page 5 f 78

7 Plicy Review and Strategic Framewrk f Radi Spectrum Management Cnsultatin Paper Plicy Review and Strategic Framewrk f Radi Spectrum Management Chief f Plicy and Planning Malta Cmmunicatins Authrity Valletta Waterfrnt, Pint Wharf, Valletta VLT 01, Malta, Eurpe Tel: Fax: Parts f the analysis and cmmentary cntained in this dcument are drawn frm current natinal and internatinal surces. It is included fr the sake f balance and fr discussin purpses nly. Nne f the material in this dcument shuld be taken t reflect the views f the MCMP r t represent fficial Gvernment plicy, unless it is explicitly stated therwise. Page 6 f 78

8 Plicy Review and Strategic Framewrk f Radi Spectrum Management Cnsultatin Paper 1. Plicy Envirnment Radi waves are defined by the Internatinal Telecmmunicatin Unin (ITU) as electrnic waves f frequencies arbitrarily lwer than 3000 GHz prpagated in space withut artificial guides. In practice, the range f frequencies accessible with current technlgy is 9 khz t 100 GHz (the upper limit has risen ver the years as technlgical prgress has allwed higher frequencies t be explited). This is regarded as the radi spectrum fr all practical purpses. Within this very wide range, different frequency bands have very different characteristics. At the lwest frequencies, radi signals are capable f travelling very lng distances but can carry relatively little data. At the highest frequencies, they are capable f carrying large amunts f infrmatin but can nly travel shrt distances and can be impeded by trees and buildings, r even rain at the very highest frequencies. Intermediate frequencies ffer different mixes f distance and infrmatin-carrying capacity. The prime spectrum fr cmmunicatins services is smetimes cnsidered t be between 100MHz and 3GHz as this ffers the ptimum cmbinatin f distance and infrmatincarrying capacity. Mst f the spectrum belw 3 GHz is used fr mbile and aernautical applicatins, reflecting the lng transmissin range and nn line-f-sight receptin capability at these frequencies, whereas the higher frequencies are predminantly used by fixed terrestrial and satellite services. The ecnmic value f spectrum access is determined by a cmbinatin f factrs including the suitability f a particular frequency band fr specific technlgies, equipment availability and the phenmenn f interference. Because f high existing usage and cmpeting demand, btaining access t sme f the mre versatile parts f the radi spectrum can be difficult due t its utility and scarcity. Fr example, frequencies in the 300 MHz t 3 GHz range are currently generally regarded as the mst valuable because they supprt wide area mbile applicatins which are highly valued by users because f the functinality they ffer and because there are few if any realistic alternatives. Spectrum allcatins 2 and standards, agreed within the ITU, the Eurpean Cnference fr Pstal and Telecmmunicatins Administratins (CEPT) and the Eurpean Unin, 3 and 2 Allcatin is the prcess f deciding which use the spectrum shuld be put t. In additin t allcating spectrum fr cmmercial use, Gvernment has the respnsibility fr the allcatin f spectrum t uses that are in the public interest and that wuld nt nrmally by prvided by cmmercial services (e.g. public bradcasting, armed frces, plice and emergency services). The Natinal Frequency Plan (NFP) published n the MCA s website ( lists the allcatins made by Gvernment fr radi frequency spectrum in Malta taking int accunt internatinal and reginal regulatins. The tables cntained in the NFP utline the types f radicmmunicatins allcated t each frequency band, the standards that apply, tgether with sme ntes n future develpments where applicable. The NFP reflects the principle f allcating frequencies accrding t a prcedure that is, as far as pssible, technlgy and service-neutral. 3 In particular the Eurpean directives, which are applicable, inter alia, t allcatin prcedures fr licences t be issued and the accmpanying requirements, that are significant. Page 7 f 78

9 Plicy Review and Strategic Framewrk f Radi Spectrum Management Cnsultatin Paper bserved by Malta, play a large part in ensuring cmpatibility f radi systems and minimising harmful interference. As a small cuntry surrunded by neighburing cuntries, Malta must take accunt f ther cuntries and has a great interest in harmnisatin and standardisatin in rder t restrict interference and t be able t use equipment that can be marketed in several cuntries. 4 This means that Malta is in a psitin t pursue its wn radi spectrum plicy within its wn brders and the framewrks referred t abve, as lng as interference affecting users in these neighburing cuntries remains at the acceptable level that has been agreed n. 1.1 Plicy Objectives The radi spectrum is a scarce finite resurce that supprts a range f wireless cmmunicatins services critical t the Maltese ecnmy and t a variety f gvernment functins. The utility f the resurce depends crucially n the management f interference frm cmpeting users. Thus, if managed effectively and efficiently, spectrum can cntribute t innvatin, jb creatin, ecnmic grwth and public welfare. Management f the radi spectrum is the cmbinatin f administrative, regulatry and technical prcedures necessary t ensure the efficient peratin f radicmmunicatin equipment and services. Simply stated, spectrum management is the verall prcess f regulating and administering the use f the radi frequency spectrum. A primary gal f spectrum management is t maximize the value f spectrum t the Maltese sciety. Value can be derived frm the radi spectrum in a number f ways. As a tradable gd, it has an ecnmic value, but it culd als facilitate the achievement f scial and cultural bjectives that are independent f the radi spectrum s cmmercial wrth. In managing the radi spectrum (i.e. in making decisins abut the allcatin and the assignment 5 f spectrum), it is imprtant t strike a balance between the cmpeting factrs related t the ecnmic, scial and cultural bjectives f the relevant radicmmunicatin services. These factrs include: ensuring that the requirements f all radicmmunicatin services are met and that there is a balance between the varius public plicy requirements; 4 Harmnisatin encurages the glbal cnvergence f prducts and helps establish an effective single market fr applicatins, with cnsequent ecnmies f scale and benefits t the cnsumer (cheaper and mre readily available equipment). Standardizatin f services and the equipment used fr these may be highly imprtant t users but als t service prviders and manufacturers, and fr sme applicatins, like radi cmmunicatin and aviatin, it is even indispensable. 5 Assignment is the prcess f deciding which users shuld gain a licence (i.e. rights f use) r authrisatin t use the spectrum within the agreed allcatin. Hwever, there are varying degrees f allcatin depending n the level f internatinal agreement and the degree f specificatin. An assignment fr the rights f use des nt cnfer any right f wnership f the frequency spectrum. It allws the assigned frequency channel t be used during the term f the licence in accrdance with the cnditins f the licence. It is nted that the assignment f the right f use f spectrum is nt fully exclusive, because there can be sharing r third-party use, such as by defining levels belw which a licensee may experience harmful interference. Page 8 f 78

10 Plicy Review and Strategic Framewrk f Radi Spectrum Management Cnsultatin Paper maximising scial and cultural benefits arising frm radicmmunicatins use, fr example in relatin t bradcasting, public safety, natinal security and health care; and enhancing Malta s cmpetitiveness by ensuring that adequate spectrum is allcated and assigned t uses that derive the highest ecnmic value frm it. In additin, there is a need t ensure the efficient and prductive use f the spectrum within the bunds f spectrum cnstraints and technlgy develpments. The regulatry prcess f ensuring the ptimal use f the spectrum needs t be flexible and respnsive in rder t adapt t changes in technlgies, demand, markets and public plicy. Fr prviders f cmmercial services 6 such as mbile telephny, the value f spectrum resurce is the prfit that can be btained frm supplying services that use spectrum as an input, which in turn depends n the demand fr thse services, their cst f supply, and the nature f the cmpetitin in actual r ptential markets. In a perfect market that is, a market with a cmfrtably large number f well-infrmed and willing buyers and sellers the spectrum wuld be valued at its market price. It is generally apprpriate fr such services t be assigned spectrum by market-based mechanisms, 7 as their prviders are cnsidered t be in the best psitin t assess its current value. Nn-cmmercial services culd be defined as radicmmunicatins that tend t be funded by gvernment and vluntary rganisatins due t their nn-prfit nature and their use invlves a public interest. This culd cncern a scial as well as a cultural interest. It encmpasses services and applicatins cncerning the cuntry s safety and security, such as defence, emergency services, the plice and, air traffic management and vessel traffic cntrl. In additin, it includes all ther services and applicatins cnsidered essential frm a scial r cultural perspective, such as public service bradcasting r the use f the frequency spectrum fr scientific purpses, including meterlgy and radi astrnmy. Public interest tasks are s beneficial t sciety that undisturbed (i.e. withut any harmful interference) access t sufficient spectrum is guaranteed. When spectrum is assigned t these services by market-based mechanisms that is, in cmpetitin with prviders f cmmercial radicmmunicatin services the prbability is that affrdable spectrum wuld nt be readily available t such services. Therefre, it is generally seen apprpriate that spectrum is assigned t such services by administrative mechanisms 8 r by a statutry preferential psitin rather than by market-based mechanisms. 6 i.e. the use f frequencies fr ecnmic activities invlving a cmmercial interest. 7 This is knwn as the private prperty methd, als referred t as the market-based mdel. This is bradly the use f auctins and trading with liberalisatin, t allw the market t mdify histrical allcatins twards thse mre likely t maximise ecnmic efficiency. Spectrum pricing (such as administrative pricing) can als inject sme market disciplines int the allcatin and assignment prcess. 8 This is knwn as the administrative methd, als referred t as the cmmand-and-cntrl mdel. This is the histrical apprach where the regulatr decides hw much spectrum each applicatin shuld have and allcates and assigns the spectrum accrdingly. It is still the predminant methd f managing spectrum. Page 9 f 78

11 Plicy Review and Strategic Framewrk f Radi Spectrum Management Cnsultatin Paper Public plicy gals play a significant rle in determining spectrum management plicies such as whether spectrum is assigned administratively r via market-based mechanisms. Efficiencies may have t be cmprmised in rder t safeguard the prvisin f certain public services such as safety, defence and public bradcasting services. 9 Technical and ecnmic efficiencies may smetimes be cnstrained by internatinal bligatins related t spectrum use. T ensure the ptimal use f radi spectrum, fees are charged n spectrum use. Optimal use f spectrum depends n a number f factrs, including: demand fr spectrum in particular bands and/r gegraphic areas; public plicy cnsideratins; ecnmic and market cnsideratins; scial cnsideratins; technlgy; and legal factrs (e.g. Eurpean r internatinal bligatins). In general, spectrum fees shuld be set at a level that ensures the technical and ecnmic efficient use f scarce radi spectrum resurces, encurages the develpment and deplyment f new technlgies and services and reflects its value t sciety. 10 Imprtantly, fees must be bjectively justified, transparent, nn-discriminatry and prprtinate in relatin t their intended purpse. 1.2 Gvernment s Strategic Visin As depicted in the Pre-Budget 2006 Dcument - A Better Quality f Life, Gvernment s visin fr Malta is that f a dynamic, high-value-added ecnmy funded n cmpetence, skills and excellence and capable f sustaining a high standard f living fr its entire peple. 11 It is recgnised that the single underlying pririty t achieving this visin remains cmpetitiveness. Gvernment s key bjective is t imprve natinal cmpetitiveness, thus cnslidating Malta s prgress twards renewed ecnmic grwth and prsperity. Spectrum plicy has the ptential t cntribute t Malta s cmpetitiveness in the fllwing key areas: 9 Fr example, the reservatin f frequencies fr the transmissin f lcal bradcast cntent in digital frmat. 10 Fees encurage users t release spectrum t thers when its retentin is n lnger justified. Fees als make it easier t avid spectrum harding and reduce inefficient use f spectrum. 11 Refer t website f the Department f Infrmatin Page 10 f 78

12 Plicy Review and Strategic Framewrk f Radi Spectrum Management Cnsultatin Paper assisting ecnmic grwth and jbs 12 by creating and maintaining a spectrum management envirnment in which existing and new radicmmunicatin technlgies can develp easily and cst-effectively; creating the apprpriate envirnment fr new radicmmunicatins-based industries that in turn ffer emplyment pprtunities; imprving the skills f the Maltese wrkfrce; and enhancing cmmunicatins and lwering assciated csts fr gvernment, rganisatins, educatin institutins and research establishments. 1.3 The Internatinal Perspective Radi frequencies extend beynd natinal brders s radi spectrum management requires an in-depth knwledge f, and invlvement in, Eurpean and glbal spectrum management develpments. Much f the radi spectrum is planned internatinally and in sme cases this cnstrains hw specific frequencies r frequency bands may be used. This is particularly s in the aernautical and maritime sectrs where, because f the glbal nature f these services, ships and aircraft must use specific frequencies fr navigatin and cmmunicatin purpses. In additin, there are a number f internatinally harmnised frequencies fr cmmercial radi systems such as cellular telephny. The TV and radi bradcast bands have been harmnised fr many decades, t facilitate crdinatin between neighburing cuntries and the develpment f cnsumer markets. Other parts f the spectrum may be used t meet specific natinal requirements, as lng as these cmply with the requirements f the ITU Radi Regulatins and any relevant reginal agreement. Tday, spectrum at the internatinal level is managed within the framewrk f the ITU. This specialised agency f the United Natins has, amng its majr purpses, the avidance f radi interference and the equitable and efficient use f spectrum and rbital resurces. The management f spectrum n an internatinal level, hwever, is nt restricted t the ITU. As a critical resurce, reginal rganisatins als play a greater rle in spectrum management plicies. Thus, within EU Member States, there is a three level regulatry structure gverning radi spectrum usage, cmprising glbal, reginal and natinal layers. Glbal regulatin is primarily the remit f the ITU, while reginal regulatry remits lie with the EU and the CEPT. 12 Refer t Cmmunicatin COM(2005) 229 frm the Cmmissin t the Cuncil, the Eurpean Parliament, the Eurpean Ecnmic and Scial Cmmittee and the Cmmittee f the Regins entitled i2010 A Eurpean Infrmatin Sciety fr Grwth and Emplyment. Page 11 f 78

13 Plicy Review and Strategic Framewrk f Radi Spectrum Management Cnsultatin Paper These bdies define the brad framewrk within which all spectrum users must perate, and in sme cases have develped harmnised appraches t spectrum use in rder t facilitate internatinal services, pen markets and minimise the risk f interference between users. The rle f these internatinal bdies is described in mre detail in Appendix A. 1.4 Spectrum Management Overseas In a number f verseas jurisdictins, radi spectrum is treated entirely as a cmmunity asset and distributed accrdingly t perceived need at the lwest pssible cst. In thers, it is partly r whlly categrised as a natural resurce frm which the greatest pssible financial return shuld be generated. Mixed ecnmies, cmbining free market and state regulated distributin mechanisms, tend t embdy bth principles but are nt always clear, in principle r practice, as t the bundary between them. Mst natins f the wrld, with such rare exceptins as Guatemala, 13 have tended t retain administrative licensing f spectrum in a gverned market. Hwever, there is a grwing trend twards the free market assignment f cmmercial spectrum. In the United Kingdm, fr example, Ofcm 14 has recmmended liberalisatin f the management regime. Varius internatinal initiatives have been launched t adjust the spectrum plicy fr the purpse f respnding t rapid market and technlgy develpments. Fr example, the ITU is investigating whether the internatinal allcatins shuld be adjusted t develpments such as cnvergence. Recently, the Eurpean Cmmissin (EC) issued a cmmunicatin in which it presented prpsals fr greater free market peratin and mre flexibility f the spectrum plicy. 15 In additin, varius individual cuntries, bth in and utside f Eurpe, are in the prcess f adjusting their natinal radi spectrum plicy. 1.5 Cnclusin Radi spectrum is required fr the use f a wide variety f radicmmunicatin services, which in turn are subject t a diverse range f legislative cntrls and plicy intentins. Sme services are predicted t functin ptimally in an pen market envirnment, thers in a gverned envirnment, and a further grup in an envirnment that has elements f bth. A need t balance the plicies and purpses f Gvernment and f service prviders, is characteristic f such a mixed spectrum management regime. These issues are examined in further detail in the subsequent sectins. 13 Refer t ITU s reprt Spectrum fr a cnverging wrld case study f Guatemala, Als refer t the dcument published by Sunrise Cnsultants Selling the airwaves spectrum trading in practice 14 Refer t 15 Cmmunicatin COM(2005) 400 frm the Cmmissin t the Cuncil, the Eurpean Parliament and the Eurpean Ecnmic and Scial Cmmittee and the Cmmittee f the Regins entitled A market-based apprach t spectrum management in the Eurpean Unin dated 14 th September 2005 (refer t Als refer t the Wireless Access Plicy fr Electrnic Cmmunicatins Services (WAPECS) develped by the Radi Spectrum Plicy Grup dated 23 rd Nvember 2005 (refer t Page 12 f 78

14 Plicy Review and Strategic Framewrk f Radi Spectrum Management Cnsultatin Paper 2. Natinal Framewrk In Malta, the MCA is the Natinal Regulatry Authrity (NRA) respnsible fr the regulatin f the electrnic cmmunicatins sectr, 16 including radicmmunicatins, 17 and bradcasting transmissin. 18 In line with the principal statutry duties, the MCA seeks t further the interests f cnsumers in relatin t electrnic cmmunicatin matters by prmting cmpetitin. Furthermre, the MCA creates regulatry plicies that prmte effective investment and stimulates the delivery f services. 19 In carrying ut its rle in relatin t radi spectrum management the MCA must: take int accunt plicy directins issued by the Ministry respnsible fr Cmmunicatins; in meeting its bjective t ensure the efficient management and use f the radi spectrum, ensure that measures taken are bjective, transparent, nn-discriminatry and prprtinate; and have regard t internatinal develpments with regard t the radi frequency spectrum. 2.1 Legislative Framewrk fr Spectrum Management The Radicmmunicatins Act (Cap 49) prvides the licensing framewrk fr radicmmunicatins apparatus in Malta. 20 Under the Radicmmunicatins Act everybdy requires a licence t have in pssessin apparatus fr radicmmunicatins and this generally takes the frm f a licence r a general authrisatin created under secndary legislatin. The Minister respnsible fr Cmmunicatins has the authrity t develp secndary legislatin t permit the licensing r the general authrisatin f different types f radicmmunicatins apparatus. The Fees Leviable by Gvernment Departments Regulatins issued under the Fees Ordinance (Cap 35) 21 prvides the basis fr the setting f the level f fees fr radicmmunicatins apparatus in Malta. 16 Electrnic cmmunicatins netwrks and services and the management and mnitring f the radi frequency spectrum as defined in the Electrnic Cmmunicatins (Regulatins) Act (Cap 399). 17 Fr the purpse f issuing and managing radicmmunicatins apparatus licences (including general authrisatins) in terms f the Radicmmunicatins Act (Cap 49). 18 In relatin t bradcasting, the MCA s rle is limited t spectrum management and assignment issues related t electrnic cmmunicatins service prviders. Bradcast plicy and assignments t analgue bradcasters are the respnsibility f the Minister respnsible fr bradcasting and the Malta Bradcasting Authrity respectively. Nevertheless, it is recgnised that spectrum plicy is clsely cnnected with bradcasting plicy: hence the need t wrk clsely between all parties. 19 This is exactly what the issue f radi spectrum licences has dne in many f the spectrum bands. The mbile phne industry is transfrming the lives f the Maltese, increasing penetratin rates, cntinuing their investment and driving innvatin. The digital TV licences have brken the mnply hld f cable TV. The fee exempt licence bands are creating a series f wireless lcal area netwrks that are slving the last hundred feet prblem. 20 Refer t 21 Refer t Page 13 f 78

15 Plicy Review and Strategic Framewrk f Radi Spectrum Management Cnsultatin Paper Until July 2004 spectrum was regulated by the then Wireless Telegraphy Ordinance (nw the Radicmmunicatins Act) thrugh spectrum-related cnditins impsed n the licensees via licences f radicmmunicatins apparatus. In July 2004, the new Eurpean Unin (EU) Framewrk fr electrnic cmmunicatins was transpsed int Maltese law. The framewrk is cmpsed f primary and secndary legislatin: Electrnic Cmmunicatins (Regulatins) Act (Cap 399); 22 Electrnic Cmmunicatins Netwrks and Services (General) Regulatins (Legal Ntice 412 f 2004). 23 The new regulatry framewrk des nt replace the Radicmmunicatins Act. The Radicmmunicatins Act nly regulates the pssessin f equipment whilst the Electrnic Cmmunicatins (Regulatins) Act regulates the assignment f frequencies where such use invlves the prvisin f an electrnic cmmunicatins netwrk r service. Licence fees fr the right t use radi spectrum are set ut in a subsidiary legislatin under the Electrnic Cmmunicatins (Regulatin) Act (Cap 399). Since 2004, licensing f wireless electrnic cmmunicatins services and netwrks must be carried ut in accrdance with the requirements f the framewrk regulatins. The new framewrk regulatins d nt include bradcast cntent regulatin. The primary legislatin applicable t the Bradcasting sectr cmprises f the Bradcasting Act (Cap 350). 24 Maltese televisin and radi bradcasters (analgue) are licensed fr the use f spectrum and apparatus under the Bradcasting Act. Bradcasting distributin and transmissin systems are subject t the new regulatry framewrk fr electrnic cmmunicatins netwrks and services. In February 2005, Gvernment utlined its plicy n the successful develpment f digital audi and digital televisin bradcasting including the assignment f spectrum licences fr the transmissin f lcal bradcasting cntent Spectrum Management Objectives In managing spectrum, regulatrs are cncerned with tw frms f efficiency - technical and ecnmic - which are pursued within the verall cntext f public plicy. The bjective f technical efficiency principally relates t achieving the mst intensive use pssible f available spectrum within acceptable interference levels. It als seeks t prmte the develpment and intrductin f spectrum-saving technlgies. Ecnmic efficiency, n the ther hand, invlves ensuring that spectrum is allcated and assigned t uses that derive the highest ecnmic value frm it. Overall, the regulatry prcess f ensuring bth technical and ecnmic efficiency has t be sufficiently flexible and respnsive in rder t adapt t changes in market valuatins and technlgies. 22 Refer t 23 Refer t 24 Refer t 25 Refer t Page 14 f 78

16 Plicy Review and Strategic Framewrk f Radi Spectrum Management Cnsultatin Paper The MCA s rle as a spectrum manager is t ensure as far as pssible the ptimal use f spectrum resurces under its management, 26 within the cnstraints set by natinal and internatinal legislatin and regulatins, technlgy cnsideratins and natinal public plicy bjectives. The MCA reprts n its activities in respect f radi spectrum thrugh public cnsultatins and its annual reprts. The MCA s spectrum management activities embrace fur main areas, namely plicy advice t the Minister respnsible fr Cmmunicatins with respect t frequency allcatin and related matters, 27 the regulatry framewrk, frequency assignment and enfrcement. The prcess f allcating frequencies t radi services and the regulatry framewrk are largely determined by external factrs such as public plicy, legislatin and internatinal agreements r regulatins. 28 Alng with the MCMP as the Ministry respnsible fr Cmmunicatins, the MCA plays an active rle in internatinal fra t ensure that, as far as pssible, the internatinal allcatin and regulatry framewrk accmmdates Malta s specific requirements. The MCA als participates in technical cmpatibility studies and in the develpment f technical standards t supprt mre efficient and flexible use f the radi spectrum. 29 Frequency assignment and enfrcement activities gvern hw individual users may access radi spectrum and ensure that legal and technical cnditins are cmplied with, in rder t avid harmful interference. Frequency assignment includes the prcessing f licence applicatins and the issue and renewal f licence dcuments (refer t Sectin 2.3 belw). Enfrcement includes mnitring the spectrum t ensure that use is in accrdance with licence cnditins, carrying ut inspectins n radicmmunicatins installatins, and taking legal actin where the cnditins are infringed (refer t Appendix B). The MCA requires substantial investment in human capital t maintain its expertise and needs t upgrade and replace technical equipment t apprpriately deal with spectrum issues and enfrce rules regarding interference and ther technical requirements. The resurces available t the MCA t carry ut its spectrum management rle include plicy, technical and administrative staff, technical planning tls and databases cntaining infrmatin n licences and spectrum use As already mentined, the MCA des nt manage the entire spectrum. Frequencies used fr the prvisin f (analgue) bradcasting services are assigned by the Malta Bradcasting Authrity. 27 The MCA is als respnsible fr ensuring that spectrum alltments (i.e. the designatin f specific frequencies fr assignment within a specific allcatin) are planned in accrdance with sund engineering principles. 28 Under Part IV f the Electrnic Cmmunicatins (Regulatins) Act the Minister respnsible fr cmmunicatins is respnsible fr drawing up, adptin and publicatin f the Natinal Frequency Plan (NFP), in cnsultatin with the MCA. The NFP is based n the ITU Radi Regulatins and takes int accunt the Eurpean table f frequency allcatins and utilisatins (ERC Reprt 25) as well as the Eurpean Recmmendatin relating t the use f frequencies fr Shrt Range Devices (SRD) (ERC/REC/70-03). 29 In the recent past, allcatins were very detailed and narrw. Fr example, an allcatin wuld allw fr fixed pint-t-pint micrwave and nthing mre. Nw, allcatins are inclined t be mre brad and flexible, where internatinally permitted t d s. Page 15 f 78

17 Plicy Review and Strategic Framewrk f Radi Spectrum Management Cnsultatin Paper Tgether, these resurces enable the MCA t manage the use f radi spectrum in a way that maximises the benefit t individual users and the cuntry as a whle, keep pace with technlgical develpments and trends and prmte the implementatin f new spectrum management techniques and plicies. 2.3 The Radi Spectrum Licensing Regime The radicmmunicatins licensing regime, in the main, is designed t minimise interference, ensure cmpatibility f adjacent technlgies and ensure technical and ecnmic efficiency. 31 The use f radi frequencies has t be carefully planned and authrised t ensure the prvisin f a sufficiently high standard f service, therwise it can cause interference t ther users. In particular, it is vital that emergency services, aircraft and shipping, be enabled t cmmunicate sufficiently and successfully. Interference can als impair the success f businesses and prevent individuals frm the enjyment f radi and televisin prgrammes. Thus, it is clear that access t the frequency spectrum needs t be cntrlled. In sme cases, sufficient rganisatin f frequency use can be achieved by using licence exempt r general authrisatin arrangements. 32 In such cases it is nt necessary t regulate the characteristics r the individual use f the radi spectrum. Furthermre, it is nt necessary t have any dialgue with the end user f the spectrum r radi equipment. In ther cases, nly a small amunt f infrmatin abut the spectrum use is required and a kind f registratin system might meet these requirements. Hwever this apprach is nt sufficient in many cases. Even thugh the frequency bands are harmnised and the radi systems standardised, mre detailed administrative wrk may still be required. There may be several reasns fr this: Fr the efficient use f the spectrum and avidance f interference it is necessary t plan the technical characteristics f certain statins and t set specific technical cnditins and parameters fr their use. 30 The MCA has implemented an integrated frequency management slutin referred t as a Frequency Management Autmated System (FMAS). This system assists the MCA in the administratin and cntrl f the radi frequency spectrum. 31 Refer t regulatin 64 f the Electrnic Cmmunicatins Netwrks and Services (General) Regulatins n the cnditins which may be attached t rights f use fr radi frequencies. Als refer t the CEPT reprt published in February 2004 cvering the licensing prcedures that are applicable fr the use f radi equipment r the use f frequencies ( 32 This is als knwn as spectrum cmmns and unlicensed access. The regulatr allws free access t the spectrum, althugh users must agree t the rules f the cmmns prir t entering (e.g. generic technical specificatins which prevent harmful interference t licensed usage in the same band and t limit the risk f interference with ther unlicensed usages). Fr using these frequencies n an unlicensed basis, there is neither exclusive usage nr a guarantee f interference-free peratin. It is pssible fr sme classes f radi licences t be exempted frm licensing requirements, but the use f general authrisatins (smetimes referred t as class licences) are preferred where individual licences are impracticable r inapprpriate. Hence, exemptins are seldm cnsidered, ther than temprarily, when a General Authrisatin is pending. A General Authrisatin is issued t perate radicmmunicatins apparatus r fr the use f specified spectrum with n requirement fr individual licensing r fee payments. It is recgnised that even if there is n need fr impsing individual licence requirements, it may be necessary t keep track f users. Fr this reasn, there may be an bligatin t ntify (pssibly at a minimum cst fr the relevant ntificatin) in such cases. Page 16 f 78

18 Plicy Review and Strategic Framewrk f Radi Spectrum Management Cnsultatin Paper The frequency used in a given lcatin must be available fr use by anther user in a separate lcatin withut any interference being caused. T ensure that there is n verlading when the same channel needs t be assigned t mre than ne user in a given lcatin. Radi transmitters are ften cncentrated in lcatins which are attractive because f gegraphical cnditins, availability f antenna sites, etc. In such lcatins mutual interference thrugh several different mechanisms may ccur. There may be a need t set pririties t certain user categries. It may be necessary, fr example, t prhibit the use f certain attractive frequency bands fr hbby purpses, r t allw nly security services n certain ther bands. C-rdinatin with neighburing cuntries has t take place. Fr these reasns, use f radi frequencies requires direct cntact with the user. In rder t carry ut these tasks, licences are issued fr the rights f use f radi spectrum r fr the pssessin and peratin f radicmmunicatins apparatus. Prir t the migratin f the WTD functins t the MCA all access t spectrum was granted by assigning frequencies fr use by a service t individual users, n a first cme first served basis and via licence fee exemptins fr thse systems that perate withut unduly affecting ther users (e.g. shrt range devices). 33 At that time, spectrum was regulated by the then Wireless Telegraphy Ordinance thrugh spectrum-related cnditins impsed n the licensees via licences f radicmmunicatins apparatus. The review f the functins f the WTD re-examined the need fr individual licences fr radicmmunicatins apparatus and lked at ways where natinal interest safeguards culd still be met thrugh licence exempt / general authrisatin arrangements. 34 This apprach is planned t be implemented fr licence categries that fail t satisfy ne r mre f the abve-mentined reasns fr requiring a licence (e.g. wireless access netwrks and services perating in the harmnised 2.4 GHz and 5 GHz bands, shrt range devices and specific maritime and aernautical equipment). The WTD review als identified the requirement t streamline and simplify the licensing prcess fr aernautical and maritime-related radicmmunicatins equipment by creating a ne-stp-shp service fr all aernautical and maritime-related matters. The administrative functins assciated with the licensing f radicmmunicatins equipment used by merchant ships r ther seaging vessels have been delegated t the Malta Maritime Authrity (MMA). 33 Refer t the Fees Leviable by Gvernment Departments Regulatins issued under Fees Ordinance (Cap 35) fr a list f radicmmunicatins equipment exempt frm a licence fee. Als refer t Annex 5 f the NFP fr a list f permitted shrt range devices subject t an exemptin frm a licence fee. 34 Refer t Article 5 (1) and (2) f the Authrisatin Directive and the plicy and regulatry principles laid dwn in the Framewrk Directive Article 9 and Article 8. Als refer t the Electrnic Cmmunicatins Netwrks and Services (General) Regulatins, regulatin 61 (1). Page 17 f 78

19 Plicy Review and Strategic Framewrk f Radi Spectrum Management Cnsultatin Paper The Department f Civil Aviatin (DCA) 35 within the MCMP is respnsible fr the administrative functins assciated with the licensing f certain radicmmunicatins equipment used by aernautical users. 36 The MCA is currently reviewing the licence and fee structures fr the pssessin f radicmmunicatins equipment 37 and intends t cnsult n the revised licence and fee structures in the cming mnths. The cnsultatin will review the licence and fee structures fr a brad range f radicmmunicatin services including: fixed radi links, business radi, ships radi, aircraft radi and radi amateur licences, and prpse simple and transparent fees that will reduce bureaucracy and prmte the ptimal use f spectrum. As mentined abve, since July 2004 the Electrnic Cmmunicatins (Regulatins) Act regulates the assignment f frequencies fr cmmercial services. 38 There can be situatins where the number f licences fr the rights f use f these radi frequencies is limited t ensure the efficient use f spectrum as a result f its utility and scarcity. 39 If there is spectrum available t meet the demand, it is generally assigned administratively n a first cme first served basis. Where demand fr the available spectrum exceeds supply, cmparative (i.e. beauty cntest) r cmpetitive (such as auctins) selectin prcesses have started t be used, 40 in rder t determine which entities will be granted spectrum rights f use. 41 T encurage cmpetitive behaviur and discurage anti-cmpetitive behaviur, spectrum caps restricting the amunt f spectrum that ne entity may hld, cupled with implementatin requirements (such as cverage and rllut requirements) t avid spectrum harding, have als been used in the assignment f such spectrum bands. The recent licences awarded fr the rights f use f spectrum fr cmmercial services invlving a limited number f prviders and majr investments have been granted fr perids f between eight (8) and fifteen (15) years retaining the right t cmmence any prcedure necessary fr the re-assignment f the rights f use upn expiry f the licence. 42 Payment 35 Refer t the website f the Department f Civil Aviatin 36 The prcess fr licensing radicmmunicatins equipment use by aernautical users is currently being reviewed by the MCA. 37 Licences fr radicmmunicatins apparatus may r may nt require the assignment f individual frequencies. 38 Electrnic Cmmunicatins Netwrks and Services as defined in the Electrnic Cmmunicatins (Regulatins) Act. It is nted that the Act als cvers electrnic cmmunicatin netwrks which are nt limited t cmmercial use. 39 Refer t the Authrisatin Directive Article 5 (5) and the Electrnic Cmmunicatins Netwrks and Services (General) Regulatins, regulatin 61 (6). This cncerns mainly large-scale use invlving a limited number f prviders and majr investments (e.g. GSM, UMTS, DTTV and BWA licences). In these cases, every licensee is granted the right t use its frequencies fr a lnger perid f time. 40 Refer t the dcument entitled Plicy and Implementatin Strategy regarding DTTV, 3G and BWA jintly published by the MCMP and the MCA in February 2005 and the dcument entitled Plicy and Implementatin Strategy Terrestrial Digital Audi Bradcasting jintly published by the MCMP and the MCA in August 2005 ( 41 The assignment f such licences des nt mean that licensees are granted ecnmically exclusive rights f use. In additin, it is impssible t issue any guarantee that similar applicatins will nt be permitted in ther bands during the term f the licence. As a result f brader allcatins in ther bands and the develpment f radi technlgy, similar applicatins will emerge. 42 These licences have been subject t the smallest pssible number f requirements and restrictins, in line with the Eurpean directives, in particular the Authrisatin Directive (2002/20/EC). The rights f use f spectrum may be viewed at Page 18 f 78

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