Setting up Rules for Secondary Markets in Spectrum Trading Workshop on Economic Aspects of Spectrum Management November 2016 Tehran, Iran

Transcription

1 Setting up Rules for Secondary Markets in Spectrum Trading Workshop on Economic Aspects of Spectrum Management November 2016 Tehran, Iran Dr. Azim Frad DG of Radio Licensing and Planning Communications Regulatory Authority (CRA), MICT

2 Spectrum Utilization Profile Not all operators, licensees or technologies use spectrum with similar occupation every place Not all operators feeling lack of spectrum similarly Congestion of licenses in a frequency band does not show heavy occupation necessarily In fact, spectrum trading is License rights sharing that promote usefulness of spectrum in win-win process, under the secondary spectrum trade regulation Example 2

3 Objectives of Spectrum Trading Making Making licensed licensed spectrum quickly be available to to whom whom are more are more capable to to use it it efficiently Preventing spectrum hoarding Streaming Preventing idle/non-efficient spectrum hoarding employed and banking spectrum toward the licensees who face lack of spectrum or have excessive spectrum demand Streaming idle/non-efficient employed spectrum toward the licensees who face lack of spectrum or have excessive spectrum demand 3

4 Example Population: 5 million Area: 107,029 km² 2 12 MHz in 1800 MHz Frequency band Cell phone penetration: 103% Broadband penetration: 15% Questions: How much spectrum regulator allow operator to sale? What will happen to operator s obligation in the Isfahan province? 4

5 Market Force to Introduce into Spectrum Management Auction Spectrum Pricing Secondary Trade Liberalization whereby spectrum block licenses are sold to the highest bidder where owners of apparatus licenses are charged to use the radio spectrum whereby owners of spectrum usage rights whether block or site license can sell or lease all or part of the rights associated with their licenses whereby the owners of licenses can have their spectrum usage rights changed if they meet conditions defined by the regulator 5

6 Concept of Spectrum Trading Permission Permission granted by granted licensing by licensing authority authority to licensee, to in the context licensee, of in the license, context to of sale license, or lease to sale to or others lease to in others in accordance with secondary trade regulation accordance with secondary trade regulation The tradable The rights tradable as rights well as well the as amount the amount of right of that can be traded shall be clearly and carefully identified inside the granted license identified inside the granted license right that could be traded shall be clearly and carefully Spectrum rights normally cover details stating the precise technical, or operational characteristics, of the radio system that will be used from a specified location, or within a specified area. 6

7 Spectrum User Traditional Licensing Within the validity period of a radio license, the frequency must be used by licensees or returned to the licensing authority Rejection of request, reasonably Frequency is not available License & invoice sending License Request Registration Administrative study EMC Analysis Coordination Notification in ITU DB License & invoice generation Frequency assignment Official request Folder Creation Processing, administrative and technical analysis Coordination study & submission to ITU Fee calculation and licensing, collection of some fees 7

8 Disadvantage of Traditional Radio Licensing Method Returning Back of Spectrum is Very Difficult Issuing license is more easier than returning back spectrum to authority, even if supported by regulations Unknown Market Value of Spectrum The value of spectrum deemed to be the price that licensee pay to the authority, despite the possibly higher value of spectrum in market, Late Awareness of Spectrum Inoccupation In many cases, spectrum managers are too slow to get informed that licensed spectrum are under-utilized while market could sense more faster, Spectrum Hoarding by Licensees Licensees having no/less need to spectrum in some geographical areas, cannot transfer usage right to the others for better use 8

9 Spectrum Trading Spectrum Space LICENSE RIGHTS Geographical Area Duration Spectrum Full Trade SUBJECT TO REGULATION, OBLIGATIONS AND LICENCE CONDITIONS Partial Trade 9

10 Methods of Spectrum Secondary Trade Full Sale Lease Secondary Trade Frequency Sale Lease Parts Geography Sale Lease Time Sale Lease 10

11 License having Tradable Rights Market Study Transparent Right Reserve Reallocation Flexibility The real need of applicant shall be discovered from the expected usage information. The definition of the spectrum rights should be as clear as possible but also as nonrestrictive (flexible) as possible. Should include the right to reclaim the spectrum before the license has expired, if it should be necessary to meet, for example, the requirements of an international agreement to reallocate the spectrum. The definition of the spectrum rights should be as clear as possible but also as nonrestrictive (flexible) as possible. 11

12 Interference Influence on Coverage Area Interference will shrink coverage area Wanted station Signal level Protection Ratio Interfering station Noise + Interference Interference -free Signal level Interference -free Signal level Noise level Edge of of coverage Lost coverage Coverage in without case of interference distance 12

13 Interference Classification In-band interference, whereby there is bandwidth overlap between the unwanted transmitter and victim receiver TX RX Out-of-band interference, whereby there is no bandwidth overlap between the unwanted transmitter and victim receiver. There are two sub-types of this path: In-band emissions received out-of-band (due to imperfections in the filtering of the receiver or due to closely spacing); Out-of-band emissions received in-band (due to imperfections in the filtering of the transmitter or due to closely spacing); TX RX 13

14 Overcoming Interference Issue in Technically Flexible License Due to usage and technology flexibility in spectrum market, determination of exact restriction would be impossible Defining following items in license would likely ensure interference free operation, at least: 1. In-band and out of band Emissions Rights which specify characteristics of the RF signals that license holder can transmit 2. Spectrum Quality Benchmarking, which gives an indication of the impact of other interference from users of the radio spectrum on the level of service which can be achieved at the receiver 14

15 Risky Change Through the Spectrum Trade Change of Service: The ability of the licensee to change the service they provide may raise problems, particularly where there are a number of countries with many borders, the potential technical and interference problems; the impact of changing service on the users of their existing service. There is also the question of protection from cross border interference that would arise from a national allocation that differs from Article 5 of the RR. International obligation of administrations in border area must be ensured 15

16 Preparation for Spectrum Trading Publish Publish Regulation Regulation and provide and relevant provide transparent relevant instrument transparent instrument Establish official official and software and software spectrum trading spectrum system for trading system registration for and registration conduction of administrative and conduction procedureof administrative procedure Provide frequency bands that trade can take place on bands that trade can take place on Review the existing spectrum licenses to clarify whether they Review allowed to the trade existing relevant rights spectrum licenses to clarify whether they allowed to trade relevant rights Provide overall and band-wised band-wised spectrum cap spectrum for FDD and TDD cap for frequency bands FDD and TDD frequency bands 16

17 Spectrum Trading Regulation Definitions Condition of license that its right to be soled or leased Condition of sellers and buyers Condition of frequency band Administrative procedure of trade Framework on how to make decision by authority Conditions and framework of sale/release contract Penalties Payable fees 17

18 Spectrum (Geography/Time) Cap Each operator Band can 1 hold p% of total 100% allocated spectrum to operators and q% of each band q% Operator CAP Band 1 Operator CAP Band 2 p% Band 3 Band n All bands 100% Regulator may impose CAP on only group of frequency bands not all of them, e.g. below 1 GHz Example: p in India and UK are 25% and 30%, respectively q in India is 50% Reason: Preventing market move toward monopoly or duopoly Same concept is applicable to Geography and Time The amount that each operator can bid is restricted to several CAPs 18

19 Spectrum/Geography/Time Floor Minimum Tradable Right The amount of proposed right to trade shall not be too small to be practical, resulting in inefficient use of spectrum and unnecessary administrative costs Minimum Remaining Right The remaining resource for seller shall not be lower than the threshold amount that is likelihood to change the essence of license, e.g. MNO to MVNO / National operator to local operator 19

20 License and Frequency Band Conditions The frequency band band Licensee shall be has allocated not been through The remain a market of license mechanism shall be allocated exempted from validity period shall Licensee through a has market not been payment exempted of spectrum from payment be more of than a mechanism utilization fee certain duration spectrum utilization fee The remain of license validity period shall be more than a certain Trading duration of license The frequency band Buyer shall have right Trading the of concerned license right has in not the been concerned traded rollout frequency plan to band utilize was frequency permitted band was ago within certain spectrum permitted period of time The frequency band has not been traded ago within certain period of time Buyer shall have rollout The plan frequency to utilize lot spectrum The frequency lot shall shall meet meet the the spectrum CAP spectrum 20

21 Spectrum Trade Procedure Submission of Request by Seller Reject Process Accept Public Announcement Receiving Buyers Request Process Agreement Submitting Agreement to Authority Process and Update State of Registration of Request State of Issuing Permission for Negotiation Permitting for Negotiation Negotiation Settlement of Obligations Issue of Radio License State of Failed Signing Agreement and Approval END 21

22 Case Studies A few countries are exploring for allowing market trading in spectrum licenses: Australia, New Zealand, UK, Iran, etc Condition of usefulness of spectrum trading: If the trading value to be determined by standards of competitive market efficiently, the trading expected to improve spectrum efficiency If the trading values are governed by artificial scarcity, speculation, gains from holding rather than using scare resources, or anticompetitive objectives, then trading will not results desired efficiency 22

23 Radiocommunications EP FP GP HP IP JP KP (Trading LP Rules for Spectrum DQ EQ Licences) FQ GQ HQ IQ Determination JQ KQ LQ 2012 AR BR CR DR ER FR GR HR IR JR KR LR MR AS BS CS DS ES FS GS HS IS JS KS LS MS NS This determination Item sets Band out (MHz) the rules for MCB the in trading MHz of AT BT CT DT ET FT GT HT IT JT KT LT MT NT spectrum licenses 1 only AU 2 BU CU DU EU FU GU HU IU JU KU LU 5MU NU A licensee must 3 not trade a part of license if 1the trade results AV BV CV DV EV FV GV HV IV JV KV LV MV NV a bandwidth 4 that is less than the MCB (minimum 1 contiguous AW bandwidth) 5 BW CW DW HW IW JW KW LW 5MW NW JX KX LX 5MX Regulation 7allows trading all or part of license 5 to an existing KY LY MY licensee or 8to another person; LZ 3.5MZ Regulation 10restricts trade to single or multiple 5 STU (standard 11 trading unit which Level 4: consists 3 blocks of a geographic 5 area AU9 BU7 equal to a 12 BU8 BU9 CU7 BV1M Level 1 cell and BV1N BV1O BV1P BV2M BV4C9 BV4D7 a frequency band) 2.5BV4D8 BV4D9 BV5A7 13 BV4A BV4B BV4C BV4D BV5A 2.5 BV1 BV2 BV3 CV1 BV4G3 BV4H1 BV4H2 BV4H3 BV5E1 A licensee 14 must not transfer their licence for 50 the purpose of BV4E BV4F BV4G BV4H BV5E BV4 providing 15 BV5 BV6 CV4 security for a loan BV4G6 BV4H4 50BV4H5 BV4H6 BV5E4 AV9 AW3 BV4I BV4J BV4K BV4L BV5I BV7 BW1 BV8 BW2 BV9 BW3 CV7 CW1 AV9D BV7A BV7B Economic Aspects of Spectrum Management, Workshop, BV7C BV7D BV8A November 2016, Tehran, Iran GO HO IO JO BV4M BV4N BV4O BV4P BV5M KO BV4G9 BV4K3 BV4H7 BV4L1 BV4H8 BV4L2 BV4H9 BV5E7 BV4L3 Level 3: 1 1 blocks Level 2: 15' 15' blocks Level 1: 5' 5' cells BV5I1 23

24 The Wireless Telegraphy (Mobile Spectrum Trading) Regulations 2011 Transfer of all or parts of the rights and obligations arising by virtue of a wireless telegraphy license is permitted Currently trading of frequencies in this list permitted OFCOM may disagree with trade in several cases including: competition is likely to be distorted as a result of the transfer in the interests of national security Frequency bands MHz MHz MHz MHz MHz MHz License holder has unpaid legal fees based on regulation 24

25 Parameters to Influence in Trade Price The The paid amount for the frequency band that the seller paid Market dimension that Period frequency of remaining band that validity, the the spectrum longer the could period be used the for greater the value seller of the paid license Market Existing dimension demands that and spectrum Period could of remaining be used for validity, Flexibility proposals of in license market owner to in technical the longer condition the period and the delivered buy or lease services. the spectrum The fewer greater restrictions the value that of are the imposed license on the use of the spectrum the greater the value of the license and Flexibility conversely of the license more owner restrictions in technical the lower condition its value and delivered services. The fewer restrictions that are imposed on the use of the spectrum the greater the value of the license and conversely the more restrictions the lower its value 25

26 Guidelines to Consent or Reject Trading Requests In designing flexible spectrum management, authorities should always have the interests of the end user in mind In certain cases, it may in fact be necessary to limit flexibility, notably as a means of addressing issues of market power or interference. The goal is to create a framework for assigning spectrum that permits market forces to act for the benefit of the end user Assignment mechanisms should be selected with the aim of boosting competition A more flexible regulatory regime in a country will only realize its full potential if the principle of greater flexibility is also applied in the international level 26

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