Comparison of the Three Approaches

The three approaches to spectrum management differ considerably, particularly in terms of the balance of rights and responsibilities between government and spectrum users, the extent to which user incentives are aligned with broader public policy, and the constraints and risks of implementation. Table 5.1 summarizes the main features, advantages, and limitations of each approach. Table 5.2 summarizes the scope of application of each approach and under what conditions they are likely to be most effective. A detailed discussion was presented in chapters 2–4 of this paper.

Five categories of building blocks are required to implement any of the three approaches to spectrum management. These blocks deal with allocation, rules, authorization, and enforce-ment regarding interference and fair competition. Table 5.3 summarizes the scope of each class of building block and its main functions under each approach to spectrum management. Build-ing blocks were discussed in chapters 2–4.

Table 5.1Summary of Spectrum Management Approaches:Main Features,Advantages,and Limitations Improved AdministrationTradable RightsCommons Features•government allocates spectrum •government grants exclusive and •spectrum is made available to all among types of uses and establishes transferable rights to individual users users conditions of useto use specific frequencies•users are subject to minimal •within each band,government •rights holders may sell,lease,divide,technical standards to limit assigns frequencies to individual or aggregate spectruminterference users for exclusive or shared use•rules and rights of use prevent •flexible usage rights with little or •detailed technical and operating rules harmful interferenceno restriction on use or technology and standards prevent harmful •no guarantee of interference-free interferenceoperation Advantages•mature practice,ample experience on •can correct for inefficient initial •encourages use of spectrum-efficient which to drawassignment and allocationtechnologies •proven effective in preventing •creates incentives for efficient use•lowers entry barriers,enhances harmful interference•accelerates response to changing competition,facilitates innovation •scope for some improvement over technology and demand•reduces some forms of traditional practices•enhances transparency and reduces anticompetitive behavior opportunities for corruption•reduces regulatory burden •reduces regulatory burden Limitations•increasingly unable to respond to •few spectrum buyers and sellers can •risk that commons will be overused, demand growth,changing uses,and impede effective market developmentresulting in reduced data rates new technology•high transaction costs can discourage •irreversibility of deregulation •inflexibility and shortages slow down spectrum trades•loss of government control over services competition,innovation,•international agreements limit scopespectrum and related revenues and growthfor liberalizing spectrum use•commons possibly not as attractive •can result in major economic and •risk of market failures,mainly for large investments as exclusive technical inefficienciesinterference and anticompetitive rights •limited scope for improvementtrading •excessive regulatory burden•potential conflict with public policies,mainly fiscal,windfalls, service obligations,industrial

Table 5.2Scope of Application of Different Spectrum Management Regimes Improved administrationTradable rightsCommons Useful•Traditionally used throughout •Potentially applicable throughout •Arguably applicable for significant the radio spectrumthe radio spectrumsegments of the radio spectrum Most effective or •Manage spectrum used by •Best where there is acute spectrum •Best for bands used for short range uniquely suitedgovernmentscarcity and low transaction costs communication,in relatively •Manage spectrum necessary to of moving spectrum from low to closed spaces,or where spectrum accomplish compelling public high value usesutilization is low interest objectives•Good in greenfield situations •Good to try out new services •Perform certain government where there are few existing and business models functions that cannot be delegated licensees to markets or users Least effective or •Least effective in bands where •Not suitable to manage •Not suitable where the users’ not suitabletechnology or demand change aeronautical and maritime,business models require legal rapidly,or where spectrum navigation,ISM and short range,protection from interference enables downstream competitionscientific,and amateur and CB bands

Table 5.3Critical Building Blocks of Spectrum Management Main functions Building blocksOutlineImproved administrationTradable rightsCommons AllocationDetermines what each •Detailed allocation of •Establish any limits for •Make bands available frequency band may be bands to classes of uses,changing use of assigned for commons use as used for,and under what with conditions of use spectrum rightsneeded conditionsunder each allocation RulesRegulations and procedures •Establish detailed •Define spectrum rights •Set minimal technical that provide the primarytechnical standards and and obligations,mainly standards (e.g.,power tools for day-to-day operating rules to prevent regarding interferencelimits) to contain spectrum managementharmful interference interference among spectrum users AuthorizationProcess by which users and •Assign frequencies to •Assign spectrum rights •Issue general equipment gain access to individual users for initially to individual authorization for use of the radio spectrumindividual or shared useuserscommons •Test and certify radio •Authorize equipment if equipmentneeded to embed technical standards Enforcement: •interferenceDeals with interference •Monitor and enforce •Resolve disputes on problemscompliance with interference among allocations,rules,and spectrum rights holders authorizations •fair competitionDeals with anticompetitive •Ocasionally revise •Apply general behaviorfrequency assignments if competition law and needed to contain market merger control rules to poweruse and trade of spectrum rights

The design of the building blocks depends on the initial focus and balance among approaches chosen, and adjustments may be required along the way to reflect the changing balance. Con-sider, for example, the different ways in which the risk of interference is managed. Under the administration approach, harmful interference is largely handled ex ante as part of the authori-zation process followed by monitoring and enforcing compliance with detailed technical and operating rules. In a spectrum rights regime, the risk of interference is higher, especially when changes of use are allowed. Addressing interference problems, when they happen, may require assessing whether interference levels (at the geographical and frequency boundaries of the spectrum rights) have been violated, corrective action by the parties themselves, and perhaps formal dispute resolution. In the commons approach, minimal technical rules (e.g., maximum power transmitted) provide some protection against interference levels building up among commoners as a group. But interference-free operation is not assured, and users rely primarily on technologies, protocols, and codes of conduct that themselves reduce the risk of interfer-ence among users and handle problems when they arise.

Five support functions are required for the critical building blocks to work well. These support functions provide data, analytical, administrative, monitoring, and international capabilities.¹²⁸ The scope and importance of each of these support functions also vary considerably among approaches to spectrum management. Table 5.4 outlines these support functions and gives an impression of their relative intensity of use under each approach to spectrum management. To some extent the choices among approaches are influenced by their support requirements and the extent to which these can be met under given country conditions. Rights and commons

128Support functions are discussed in considerable detail in module 5 of infoDev’s online toolkit for ICT regulation (infoDev 2006).

Table 5.4 Support Functions for Spectrum Management

Intensity of use

Support function Outline ADM RGT COM

Data Detailed information on current spectrum use +++ ++ +

Analysis Analytical skills, methods, and tools—engineering,

economics, legal +++ ++ +

Administration Administrative processes and methods to handle

routine tasks +++ + +

Monitoring & Ensuring compliance with allocations, rules, and

enforcement authorizations +++ ++ +

International Participating in ITU and other organizations on

affairs spectrum matters ++ ++ ++

ADM Improved administration RGT Tradable rights

COM Commons

solutions tend to demand less support than administration. For example, government adminis-tration requires a comprehensive national database of all frequencies in use, identifying indi-vidual users and their locations as well as functions and technical characteristics of the equip-ment used. Under the spectrum rights approach the main data requireequip-ment is limited to a register of all rights owners, kept up to date as these rights are traded. And under the spectrum commons approach, users are anonymous.