Introduction to Spectrum Management Reform
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1 ITU/BDT Regulatory Reform Unit G-REX Virtual Conference Introduction to Spectrum Management Reform Dale N. Hatfield Adjunct Professor, University of Colorado at Boulder February 28, 2005 Introduction Agenda Institutions for Spectrum Management Definitions Traditional Administrative Approaches to Spectrum Management Techniques for Awarding Licenses 1
2 Agenda (Continued) Finding Spectrum for New Services and for Growth in Established Services Constraints and Criticisms of the Traditional Approach Approaches to Spectrum Management Reform Summary and Conclusions Purpose: Introduction To provide an introduction to the topic of spectrum management from a policy perspective 2
3 What Is Spectrum? Introduction Spectrum is a conceptual tool used to organize and map a set of physical phenomena Electric and magnetic fields produce (electromagnetic) waves that move through space at different frequencies The set of all possible frequencies is called the electromagnetic spectrum What Is Spectrum? Introduction The subset of frequencies between 3,000 Hz and 300 GHz is known as the radio spectrum Note that radio waves do not require a medium per se, that is, radio waves can travel through a vacuum (e.g., outer space) Electromagnetic Spectrum 3
4 Introduction Basic Radio Communication System Transmission Line Antenna Antenna Transmission Line Transmitter Receiver Radio Waves Introduction Basic Radio Communications System Relationship Between Frequency, Wavelength and Velocity 4
5 Introduction Nature of the Spectrum Resource A Unique Natural Resource A National and International Resource Infinitely Renewable Like Air or Water It Can Be Polluted Scarcity of the Resource Economic Value Interference Management Key Element of Spectrum Management Introduction Spectrum Diagram FM Broadcast ( MHz) Satellite Common Carrier Microwave Cellular Phones UHF-TV Land Mobile Coast Guard/Harbor VHF-TV ch 7-13 Police VHF Marine Civil Air Patrol Aviation VHF-TV ch 2-6 CB Amateur (Ham) Search & Rescue (SAR) AM Broadcast Marine 15 GHz - 1 GHz MHz MHz MHz MHz - 54 MHz - 27 MHz KHz - 70 KHz - 5
6 Introduction Definition of Spectrum Management All activities associated with regulating the use of the radio spectrum; it includes the structure and processes for allocating, allotting, assigning, and licensing the scarce resource as well as establishing and enforcing the associated rules and regulations Importance of Spectrum Management in the Face of Increasing Demand Introduction Goals of Spectrum Management: Efficiency v. Equity Economic efficiency considerations Allocative efficiency (i.e., assuring prices paid for spectrum reflect the costs to society of spectrum use) Distributive efficiency (i.e., assuring that the spectrum is allocated/assigned to the entities that can put it to the highest value use) 6
7 Introduction Goals of Spectrum Management: Efficiency v. Equity Economic efficiency considerations (Continued) Technical efficiency (i.e., assuring that total costs are minimized for a given level of production or output) Administrative efficiency (i.e., assuring efficiency in the process of allocating/assigning spectrum -- including both speed and cost) Introduction Goals of Spectrum Management: Efficiency v. Equity Equity considerations (e.g., participation by woman, small businesses, and minority groups; impact on existing licenses) Other Goals (e.g., Ensuring Adequate Spectrum for National Defense) 7
8 Introduction Major Functions in Spectrum Management Allocation Service Rules/Band Plans Assignments/Licensing Compliance/Enforcement International Coordination Introduction Interference Concerns Improper design (e.g., spurious signals) Proximity (in frequency, place or time) Improper operation 8
9 Introduction Historically, Above Concerns Led to Licensing of: Technical characteristics of radio equipment itself Licensing of individual stations (frequency, place, characteristics) Licensing of individuals who operated/maintained the equipment Institutions for Spectrum Management The International Dimension of Spectrum Management International Telecommunications Union Member states Sectors: ITU-T, ITU-R, ITU-D World Radio Conferences ITU Table of Allocations ITU Radio Regulations Treaty status Other agreements (e.g., bilateral) 9
10 Institutions for Spectrum Management The International Dimension of Spectrum Management Note that national allocation decisions must take into account these international agreements and that they guide and sometimes constrain domestic policies Regional organizations (e.g., CEPT, CITEL, APT) Institutions for Spectrum Management Domestic Spectrum Management Organization (Generic) 10
11 Institutions for Spectrum Management Domestic Spectrum Management Organization (U.S.) Figure 1. National Spectrum Management COMMUNICATIONS ACT OF 1934 THE PRESIDENT THE CONGRESS NTIA Federal Users National Defense Law Enforce. & Security Transportation Resource Mgmt. & Control Emergencies Other Services ADVISORY COORDINATION LIAISON FCC Non-Federal Users Business State & Local Government Entertainment Commercial Private INTERDEPARTMENT RADIO ADVISORY COMMITTEE Chaired by NTIA 20 Federal Agencies Represented Source: President s Spectrum Policy Initiative Report 2 Institutions for Spectrum Management National Spectrum Management Organization (U.S.) Federal Communications Commission Independent regulatory agency Among other responsibilities, manages all nonfederal government use of the radio spectrum Allocations and allotments are made in formal rule-making proceedings and the results are incorporated into the agency s rules and regulations 11
12 Institutions for Spectrum Management National Spectrum Management Organization Canada UK Australia Other Definitions/Terminology Allocations The entire range of usable spectrum is divided (in the frequency dimension) into blocks or bands of frequencies called allocations; these frequency allocations determine the type of use allowed in the block or band of frequencies -- examples 12
13 Definitions/Terminology Allocations: U.S. Frequency Allocations Available at: Definitions/Terminology FCC s Table of Frequency Allocations 47 C.F.R (Sample) MHz (UHF) Page 41 International Table United States Table FCC Rule Part(s) Region 1 Region 2 Region 3 Federal Government Non-Federal Government See previous page for MHz FIXED FIXED MOBILE except aeronautical MOBILE mobile BROADCASTING S5.322 See previous page for MHz S5.323 S AERONAUTICAL RADIONAVIGATION See previous page for MHz FIXED MOBILE BROADCASTING FIXED US268 US301 US302 G FIXED FIXED NG AERONAUTICAL RADIONAVIGATION US268 US301 US302 NG120 Public Mobile (22) Fixed Microwave (101) Public Mobile (22) International Fixed (23) Auxiliary Broadcast. (74) Fixed Microwave (101) Aviation (87) S5.328 S5.328 US224 Complete Table Available at: 13
14 Definitions/Terminology Allotment (International) Entry of a designated frequency channel in an agreed upon plan for a particular service for use in certain identified countries or geographical areas and under specified conditions Allotment (National US) In general, refers to a subdivision of particular service band (allocation) for a specific user and/or provider group within the service In broadcasting, an allotment is the association of a specific frequency or channel with a particular geographic area -- examples Definitions/Terminology Assignments An assignment is a grant of authority -- a license -- for a specific party/individual to operate a transmitter on a specific channel at a specific location under specified conditions In recent years and in certain services (e.g., cellular), the grant of authority has been expanded to include multiple channels covering a large geographic area employing multiple transmitter sites (area licensing) 14
15 Definitions/Terminology Miscellaneous Other Identification Designation Grey spectrum Source: Manner Services Definitions/Terminology International (examples) AMS = Aeronautical Mobile Service AMSS = Aeronautical Mobile Satellite Service ARNS = Aeronautical Radio Navigation Service BS = Broadcast Service BSS = Broadcast Satellite Service EES = Earth Exploration Satellite Service RAS = Radio Astronomy Service RDS = Radio Determination Service RLS = Radio Location Service 15
16 Services Definitions/Terminology National (US examples) PLMRS = Private Land Mobile Radio Service CMRS = Commercial Mobile Radio Service LMDS = Local Multipoint Distribution Service MMDS = Multipoint Multichannel Distribution Service ABS = Auxiliary Broadcast Service Fixed Microwave Service Cable TV Relay Service Definitions/Terminology Status of an Allocation Primary and Co-Primary Allocation Secondary Allocation Terminology Associated with Assignments Exclusive Non-exclusive Mutually exclusive A Brief Note on Unlicensed Spectrum 16
17 Traditional Administrative Approach to Spectrum Allocations Considerations in Allocations Public need and benefits for the service Amount of spectrum required considering: Technical limitations on spectrum efficiency Impact on economic viability of service Controlling interference with other services Traditional Administrative Approach to Spectrum Allocations Considerations in Allocations (Continued) Other technical considerations: Ability to control interference Propagation characteristics Apparatus limitations International allocation considerations WRC Results Use in neighboring countries Need for international harmonization of the service Source: FCC/Hatfield/Knapp 17
18 Techniques for Awarding Mutually Exclusive Licenses Definition of mutually exclusive If, because of interference limitations, a specific channel can only be granted to one party, the channel is deemed to be exclusive If more than one party applies for a license to operate on that channel, then the applications are said to be mutually exclusive Techniques for Awarding Licenses First-Come, First Served Description -- agency accepts applications for a limited number of assignments for a short time (filing window) If applications exceed number of licenses to be awarded, use a lottery, comparative evaluation or auction; If fewer, award the licenses Later applications go onto a waiting list for any licenses returned 18
19 Techniques for Awarding Licenses First-Come, First Served (Continued) Advantages Speed -- licenses issued quickly Inexpensive (to the agency and the applicant) Disadvantages License may not end up in the hands of the entity that values it most highly In the modern world, with licenses valued highly, it does not really solve the problem Techniques for Awarding Licenses Comparative Evaluation or Beauty Contest Description -- agency selects the winning applicant in a competitive process using comparative criteria established by precedent or by rule in a rulemaking proceeding -- examples 19
20 Techniques for Awarding Licenses Comparative Evaluation (Continued) Advantages In theory, awards the license to the contending entity that would make best use of it from society s point of view -- i.e., the contender who would best serve the public interest; can include equity considerations Keeps the cost of spectrum to providers low thus promoting lower prices to consumers Techniques for Awarding Licenses Comparative Evaluation (Continued) Disadvantages Time consuming Expensive -- because of economic value of resulting license, applicants often expend huge sums in attempting to succeed in the competitive hearing Because of the above, the license often end up in the hands of the entity that value it most highly in economic terms in any event Subjective nature of the process can lead to arbitrariness, unfairness, and corruption 20
21 Techniques for Awarding Licenses Comparative Evaluation (Continued) Disadvantages (Continued) Ultimately provides no way of choosing among two or more licenses that are substantially equal -- examples, including perverse results; invites litigation and adds further delay Promises made during the application process may be hard to enforce Techniques for Awarding Licenses Lotteries Description -- agency selects from among qualified applicants by random selection Advantages Speed -- licenses issued quickly Inexpensive (to the agency but not necessarily to the society as a whole) Provides a mechanism for selecting from among substantially equal applications -- tie breaker 21
22 Techniques for Awarding Licenses Lotteries (Continued) Disadvantages License may end up in the hands of an entity that is not qualified to build and operate the system and remedies (pre-lottery qualifications) may produce other problems In the U.S., once the value of spectrum/licenses became apparent, speculators, license mills, and scam artists were drawn in In some instances, lottery winners reaped huge windfall profits of 10s of millions of dollars in secondary auction -- make a killing on the public s airwaves Techniques for Awarding Licenses Auctions Description -- agency awards license on the basis of willingness to pay Advantages Speed -- licenses issued quickly Probably less expensive to both the government and the private sector (compared to comparative hearings and perhaps lotteries) Licenses go to the entity that values them most highly -- promotes economic efficiency 22
23 Techniques for Awarding Licenses Auctions (Continued) Advantages (Continued) Windfall profits are, in effect, taxed away and go to the government Process is more objective and transparent lessening opportunities for favoritism and corruption Provides information on value of the spectrum which is useful in allocation proceedings Techniques for Awarding Licenses Auctions (Continued) Disadvantages May lead to increased concentration in the telecommunications industry ( the rich get richer); but antitrust laws and other rules and regulations can combat May ignore non-financial objectives in terms of equity and the public interest; but certain of these can be designed in -- e.g., set-asides and installment payment plans 23
24 Techniques for Awarding Licenses Auctions (Continued) Disadvantages (Continued) Some argue that auctions lead to less infrastructure development and higher prices to consumers May lead to government managing spectrum in such a way as to maximize revenue to the national treasury rather than in assuring its efficient use; i.e., the monopolist s propensity to create scarcity and raise prices Techniques for Awarding Licenses Hybrid Approaches Combination of comparative hearing and lottery (to break ties) Combination of auctions and comparative hearings Advantages and disadvantages of hybrid approaches 24
25 Techniques for Awarding Licenses Comments Note that all of the above techniques are designed to solve the assignment problem; they do not: Solve the problem of finding spectrum for new services or growth in existing services Address ways of improving the allocation process (e.g., by reducing rigidities in the traditional methods of allocating the resource) Finding Spectrum for New Services Increased Sharing Increased Technical Efficiency Band Clearing /Reallocation Extend the Upper Limit of the Useful Range 25
26 Finding Spectrum for New Services Increased Sharing Different services can use or share the same spectrum Risk of interference is minimal Uses are compatible or can be coordinated Increased sharing usually comes at the expense of increased complexity and cost Finding Spectrum for New Services Example of Sharing Ships and Railroads Share Marine VHF Frequencies 26
27 Finding Spectrum for New Services Example of Sharing Earth Stations (Uplinks) and Fixed Microwave Links Can Use the Same Frequencies Through Antenna Discrimination Finding Spectrum for New Services Techniques for Increasing Efficiency Increasing the amount of information that can be transmitted in a given amount of spectrum (e.g., through improved modulation techniques) Reducing the amount of information that has to be transmitted (e.g., through compression techniques) Exploiting frequency reuse (e.g., by utilizing smaller cells in a cellular mobile radio system and/or by taking advantage of antenna directivity) 27
28 Finding Spectrum for New Services Example of Improved Spectral Efficiency 50 khz 25 khz 25 khz 12.5 khz 12.5 khz 12.5 khz 12.5 khz 6.25 khz 6.25 khz 6.25 khz 6.25 khz 6.25 khz 6.25 khz 6.25 khz Reduction in Voice Channel Bandwidths in the Mobile Services 6.25 khz Finding Spectrum for New Services Band Clearing /Reallocation Lightly used spectrum can be reallocated for other purposes Existing operations required to move to other bands (or other modes of communications) Various techniques can be and have been adopted to facilitate band clearing (e.g., voluntary negotiations between incumbents and new entrants) Growing demand/congestion makes band clearing increasingly difficult and contentious 28
29 Finding Spectrum for New Services Extend the Upper Limit of the Useful Frequency Range The usefulness of extremely high frequencies is constrained by The state-of-the-art in microwave component technology Propagation limitations The highest frequency with service rules has steadily increased -- today the upper limit approaches 100 GHz Constraints and Criticisms of the Traditional Approach Nature of the Traditional Approach Still primarily an engineering oriented, centralized, command and control system exercised through network licensing requirements focused on eliminating or minimizing interference Facing tremendous pressures on the resource due to growth in number of users, number of uses and amount of capacity required per user 29
30 Constraints and Criticisms of the Traditional Approach Criticisms of the Command And Control System of Spectrum Management Excessive rigidity administrative scarcity Stifles technical and service innovation Lacks incentives for efficient use of the resource Creates barriers to voluntary and involuntary sharing Erects barriers to other beneficial transactions Proposals for Reforming the Traditional System Move More Toward the Use Market-place Forces in the Management and Licensing of the Resource Property-like, exclusive rights Flexibility of use/unified licensing Spectrum trading/secondary markets Examples Australia, Guatemala, and New Zealand and, partially, the U.S. 30
31 Proposals for Reforming the Traditional Systems Move Towards an Unlicensed, Spectrum Commons Approach No exclusive rights anyone can use certain blocks of spectrum subject only to certain basic rules (e.g., maximum power) and for any lawful purpose using any technology Examples of commons approach Definition (e.g., communal grazing of cattle or use of a national park) Early examples from radio (e.g., amateur radio service) Proposals for Reforming the Traditional System Move towards an unlicensed, spectrum commons approach (Continued) Immense success of unlicensed equipment/service market (e.g., Wi-Fi) Internal WLANs Hot-spots Wireless Internet Service Providers (WISPs) including development of carrier class equipment Improve the Command and Control System 31
32 Reform Proposals Licensed Spectrum Option Advantages Promotes investment by providing more certainty for investors Provides more certainty regarding interference environment for design engineer May provide greater revenue collection opportunities to government (e.g., through auctions Disadvantages Licensing step creates entry barrier Stifles innovation in products and services unless accompanied by greater regulatory flexibility (including spectrum trading) Creates opportunities for spectrum hoarding Diminishes opportunities for local initiatives and microfinance Reform Proposals Unlicensed Spectrum Option Advantages Promotes rapid innovation in services/devices because of minimal regulatory restrictions Reduces barriers to entry and opportunities for corruption by eliminating the licensing step Eliminates opportunities for spectrum hoarding Creates opportunities for local initiatives and microfinancing Disadvantages Creates conditions than may lead to the tragedy of the commons May reduce investment incentives due to lack of exclusivity Reduces opportunities for government to collect revenues Creates issues of fairness related to spectrum users who have paid for spectrum 32
33 Summary and Conclusions Contact Information Dale N. Hatfield Adjunct Professor Interdisciplinary Telecommunications Program University of Colorado at Boulder Engineering Center - ECOT-317 Campus Box 530 Boulder, CO Main Tel: Direct Dial: Fax: Cell Phone: dale.hatfield@ieee.org or hatfield@spot.colorado.edu 33
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