A Guide to the Spectrum Framework Review · 2016. 8. 25. · radio spectrum to go around. It is a finite resource, with many potential applications vying for the most valuable frequency

Issued: September 2005

A Guide to theSpectrum Framework Review

A Guide to the Spectrum Framework Review 1

The role of this guide

Ofcom’s strategy for managing theUK’s radio spectrum was set outin some detail in our SpectrumFramework Review (SFR) Statement.Published in June 2005, it was necessarilyquite technical; the primary targetaudience of the Statement was thosewho are already familiar with theregulation of radio spectrum.

The aim of this guide is to explainour thinking to a wider audience,including people making investmentdecisions in companies that use, ormight use, radio spectrum. So whilethe Statement remains the definitivepolicy document1, we hope this guide will prove useful in introducingsome of the issues.

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1 The Statement is considered by Ofcom as the definitive publication of our strategy.This document is intended for guidance only.

2 A Guide to the Spectrum Framework Review

An introduction to radio spectrum

Every day, we take it for granted thatwireless communications will be thereto serve us. From mobile phone callsand broadband connections, to theradio and television programmes weflick on without a thought, to radiotaxis and Wi-Fi enabled laptops – our need for wireless communicationnever stops and, indeed, is growing asnew technology creates new demands.Wireless communications are also thebackbone of safety-critical operationssuch air traffic control and the railways, and the rapid response of the emergency services.

Wireless services work by sendingsignals to each other through the air. The radio waves that carry thesesignals form part of what is known as spectrum (or, more properly,‘electromagnetic spectrum’).

A key property of wirelesstransmissions is the frequency ofthe signal being transmitted. In thesame way that sound can be at a lowfrequency (for example, a drum beat)or a higher frequency (such as awhistle), so wireless transmissions have different frequencies. These vary according to the electrical signal used to generate them.

Usefully, different frequencies do not interfere with each other, even ifthey’re transmitted in the same place.That’s also why you can hear manydifferent FM radio stations, simply bychanging the frequency on your dial.So by licensing different broadcastersand users on different frequencies wecan avoid one interfering with another.

However, not all frequencies are thesame. At lower frequencies, signalstravel a long way, but they have limitedroom for information or differentservices. At high frequencies, signalsmay only travel tens of metres from the transmitter – but can carry massiveamounts of information.

Figure 1 sets out the spectrum or rangeof frequencies, and where some of thekey services reside. Its most useful areais UHF; this mid-region ‘sweet-spot’offers the best of both worlds, wheresignals travel a reasonable distance but also have a good capacity forcarrying information.

Given radio spectrum’s importanceto enterprise, safety and society as awhole, Ofcom has been consideringcarefully how to manage this vitalresource. In November 2004, wepublished a consultation document

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on the Spectrum Framework Review.The responses this generated weretaken into account before publishingour Spectrum Framework ReviewStatement in June 2005. Thispublication is a concise guide tothat Statement, summarising itsmain conclusions.

The value of spectrum to society

It is hard to put a price on somethingthat sits at the very heart of how welive, work, travel and relax. Withoutradio spectrum, journeys by trains,boats and planes would be chaotic,and considerably more risky. 999

assistance would be slower and lesseffective. TV would be the preserve of city dwellers who could plug intocable, and there would be no radio atall. You could forget about your mobilephone, and a host of devices such ascentral locking car key-fobs, garagedoor openers and cordless phones.

Studies in the past have conservativelyestimated that the use of radiospectrum adds around £24bn eachyear to the UK economy and that thisvalue grows significantly year-on-year.Figure 2 shows how this value isdivided across the main users ofthe radio spectrum.

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Figure 1:

ElectricWaves

RadioWaves

Visible Light

UltraViolet

Gamma Rays

Cosmic Raysx-rayInfra-red

Radio Spectrum

“Sweetspot”

Long WaveRadio

Medium WaveRadio

FMRadio

MicrowaveRadio Links

TETRA

DECT

GSM

TV

3G

WiFiBluetooth

VLF LF MF HF VLF UHF SHF EHF

3

kHZ MHz GHz

300 3 30 300 3 30 30030

Increasing RangeDecreasing Bandwidth

Decreasing RangeIncreasing Bandwidth* See glossary for acronyms


Why spectrum is regulated, and Ofcom’s duties

Clearly, radio spectrum is a vitalresource for the nation, demandingcareful management. In practicalterms, this raises two regulatorypriorities: to make sure that its currentuse is protected from disruption, andto extract the maximum value fromspectrum for the benefit of our society.

Preventing disruption

The orderly use of spectrum canbe disrupted by interference. Thisis caused if two users in close proximitytransmit on the same frequency at the same time. The result can so degrade a radio signal that itbecomes indecipherable. To preventinterference, Ofcom usually grants the right to transmit on a particularfrequency over a particular

geographical area. By making surethat anyone else using the samefrequency is sufficiently far away, mostforms of interference can be avoided.

The right to transmit is sometimesreferred to as ‘access to the spectrum’,and users will sometimes refer tohaving bought ‘spectrum at auction’.Of course, radio signals do not stop at borders, so the issue of interference has an international dimension as well.

Maximising value

Rather like land, there is only so muchradio spectrum to go around. It is afinite resource, with many potentialapplications vying for the most valuablefrequency bands. It’s in everyone’sinterests that spectrum is allocated in a way that realises the very best valuefrom the resource available. However,with many thousands of possible uses,and spectrum spanning a wide rangeof frequencies, this is a hugely complextask. Much of what follows in thisguide focuses on our strategy formaximising the value of spectrum.

Ofcom’s duties

Ofcom is responsible for managingspectrum in the UK for civil use. TheCommunications Act 2003 requiresthat Ofcom encourages the optimum

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Public Mobile, 12.6

Broadcasting, 5.2

Fixed Links, 3.3

Satellite Links, 2.5

Private Mobile Radio, 1.0

Other, 0.1

Figure 2:Value of radio spectrum to the UK economy in £bn, estimated in 2002


use of spectrum and maximises theeconomic benefits. As well as fulfillingthese duties Ofcom has a wider ambitionto make the UK a leader for wirelessinvestment and innovation.

How spectrum has been managed and why this should be changed

Almost as soon as spectrum started to be used, it needed to be managed.So, around 100 years ago, spectrummanagement was introduced in theUK, with the initial focus on preventinginterference. It is only in recent timesthat the thinking has been widened to include maximising the value ofspectrum as well.

Worldwide, there has been a generalpattern of spectrum managersdeciding, often in line with an agreedinternational framework, how aparticular band should be used,and who should be able to use it.

This approach was appropriate whilethere were relatively few uses and users.The spectrum manager could have asgood an understanding of the best useof spectrum as the market itself, andsensibly control all aspects of spectrumusage. The distribution of spectrumthat has emerged in the UK under this approach is shown in Figure 3.

Generally speaking, this style ofspectrum management has worked well in terms of avoiding interference.Less clear, however, is whether it hasmaximised the value of spectrum.

Broadly, it seems unlikely that it would– pinpointing a set of uses that wouldproduce the maximum value is analmost insurmountable task. The vastquantity of data needed to assess thebusiness case of every possible mixwould require enormous resources, wellbeyond the capability of any regulator.

But in any case, is a regulator a betterarbiter than the market itself ? Manyeconomists argue that companies areinherently experts in their own businesscases and that natural competition willlead to scarce spectrum resources beingdistributed in the optimum manner.This is nothing new: market forces are

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Aeronautical and Maritime 14%

Science 1%

Broadcasting 13%

Fixed/Satellite 24%

Defence 30%

Emergency Services 2%

Business Radio 5%

Cellular 4%

Other 7%

Figure 3:


used in many aspects of our lives

and are now addressing issues such

as pollution rights and fishing quotas.

In the same way, the argument goes,

the market – not the regulator – is

better placed to maximise the value

of spectrum.

It is virtually impossible to prove this

either way. If the market approach

were better, it would allow new and

changed uses of the spectrum to

emerge more rapidly. There is some

evidence of this in market-led countries

such as the US, where a wider range

of technologies is deployed, although

it is hard to decouple this from other

influencing factors such as the ready

availability of venture capital there.

Weighing these arguments, it seems

reasonable to suggest that the wider

market is more attuned to the values

of different applications than the

regulator. It follows that a well

functioning market would probably

generate a greater value from

the spectrum than a centrally

managed system.

How spectrum might be managed

With the dual goals of minimising

interference and maximising value,

Ofcom sees three possible approaches

to spectrum management.

1. More of the same. Ofcom manages

the radio spectrum in a similar fashion

to the way it has been managed for

the last 100 years. This is often known

as ‘command & control’ and, until

recently, has been used for around

95 per cent of the spectrum.

2. Market mechanisms. The market

manages the radio spectrum within

the terms of the licences set by Ofcom.

This route was strongly recommended

in the Review of Radio Spectrum

Management (the Cave Report).

It is currently being introduced in the

UK thorough the implementation of

spectrum trading and liberalisation.

3. Licence-exempt usage. In this

approach, no one has control over who

uses the spectrum, but power constraints

or other mechanisms restrict usage to

reduce the probability of interference.

This is known as licence-exempt use (or

sometimes ‘spectrum commons’). Around

five per cent of the spectrum in the UK is

currently set aside for licence-exempt use.

Let’s look at the latter two approaches

in a little more detail.

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Market mechanisms: trading andliberalisation

If spectrum is to realise its full value,the market must make sure thatspectrum can be bought by users who are able to maximise theirinvestment, and who can use it in the way they want. This will requiretwo key market mechanisms:

1. Trading of spectrum between users so that they can buy, sell, aggregate or unbundle spectrum holdings; and

2. Liberalisation of spectrum use, so thatusers can change technologies, or thetype of use, applied to their spectrum.

Our proposals for trading are now well advanced. We implementedtrading in some licence classes at theend of 2004, and plan to extend itprogressively to almost all suitablelicence classes by the end of 2007.

Rather more complex is the issue of spectrum liberalisation. Spectrumusers have been packed in tightly byspectrum managers over the years,with many users sharing spectrum.Handled wrongly, liberalisation couldtherefore lead to intolerable interference.Ofcom has published a statement onliberalisation, making it clear that some

restrictions will be essential. There are two ways in which we willimplement liberalisation:

• Licence holders can ask Ofcom to alterthe terms of their licence, allowingthem to use the spectrum for a differentapplication. Ofcom will considerwhether the request can be grantedwithout it resulting in unacceptableinterference to other users; and

• Ofcom will alter existing licences,making them less specific regardingusage and technology. This will freelicence holders to make certain types of change to their use of spectrumwithout needing the prior consent ofOfcom. We are currently investigatingwhether this can be achieved using a concept we have termed ‘spectrumusage rights’.

This new era of liberalisation willmean no, or only limited, constraintson technology and usage. Historically,licence holders have been restricted to particular uses, such as mobile, andoften to particular technologies, suchas GSM. In time, liberalisation shouldlargely sweep these restrictions away.

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Licence-exempt usage

Every day, most of us use radio devicesthat do not need a licence. These‘licence–exempt’ devices range fromwireless headsets, cordless phones andcar key-fobs to baby monitors, garagedoor openers and WiFi systems.

Licence-exempt devices are also widelyused in industry, including anti-theftsystems in shops, identity cards thatactivate doors, and in some cases fordata links to remote base stations.

Although these are uses that do notgenerally result in large financialactivity, consumers often find themhighly valuable and hence they helpOfcom achieve its objective ofmaximising the value of the spectrum.

To make a device exempt fromlicensing, Ofcom normally identifies the technology or standard that can be used in a “licence-exemptionregulation” (although it would bepossible to include generic classes of devices). A key issue is to limit a

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Using spectrum to achieve policy objectives

In the past, certain obligations have been attached to spectrum in order to achievepolicy goals, or outcomes judged to be socially desirable. A good example was thecoverage obligation that accompanied 3G licences. But the upside of, for example,a more inclusive service may come with the downside of a less attractive licence.

Going forward, Ofcom does not believe that obligations should be attached tospectrum for policy ends. We believe that a subsidy (usually through taxation) is a more efficient, and less distorting, way of meeting costs raised by policy goals.In the case of cellular, for example, if the Government wished to achieve a certaincoverage in the future there could be a subsidy for operators to provide coverage inspecific areas.

There will be cases when our statutory duties or other circumstances require us tomanage the radio spectrum to further certain policy objectives. We believe these willbe rare, but when they occur we will justify why we have departed from our generalpreference for market mechanisms.


device’s transmitting power: radiosignals from high-powered devicestravel further, increasing the chancesof interference with others using thesame frequencies. If this occurs, thefrequencies will become of limiteduse – the so-called ‘tragedy ofthe commons’.

Users need to be aware that there areno guarantees that the spectrum will be free of interference. Some may eveninvest in licence-exempt equipment,only to discover there is too muchinterference for it to work in theirvicinity. However, by managing thepower level rules, the regulator cankeep the probability of interferencelow. Ofcom is also now investigatingwhether requiring other approaches,such as ‘politeness protocols’, wouldincrease the value gained from licence-exempt usage.

How we select between the different options

It is the task of the regulator, and notthe market, to strike the best balancebetween these different types ofspectrum management. The marketalone cannot decide, for example,how much spectrum should be licence-

exempt, because its users are typicallyindividuals. It would be difficult to co-ordinate their actions to acquirespectrum through a market mechanism.

We have selected the balance betweenthe different options by:

• assessing how much spectrum webelieve should be licence-exempt;

• using market mechanisms to manage as much of the remaining spectrum as possible; and lastly

• managing any remaining spectrumusing command & control.

What follows is how we carried outeach of these steps.

Assessing the need forlicence-exempt spectrum

There is no rule of thumb or industrystandard for determining the optimumamount of licence-exempt spectrum.For the reasons expressed above, it isthe regulator, and not the market, whomust decide and we have developed a new methodology to help us.

The economics of spectrummanagement show that wherecongestion is expected, a licensedapproach should be followed. Ingeneral, longer-range communications

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10

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A Guide to the Spectrum Framework Review

rapidly increase the probability forinterference and, therefore, congestion.The exceptions to this are rural areasand relatively under-utilised bands.

While we can determine the relativeprobability for interference given amaximum range and likely user-density,we cannot be certain that congestionwill never occur. We therefore needto work on a balance of probabilityand with an action plan to easecongestion should it arise. In the2.4GHz band we are now seeing earlyreports of interference, mainly betweenWiFi nodes.

Typically, these have a maximum rangeof around 200m and, therefore, thisshould be the general upper limit forlicence-exempt devices in urban areas.With such a range, the applications forlicence-exempt spectrum are restrictedto short-range uses such as home andoffice networks.

By restricting the applications in thisway we can estimate the total data rateslikely to be needed by users. Althoughopinions may differ, the consensus isthat 100Mbits/s per person should besufficient for the applications that can

be foreseen over the next five to tenyears. By understanding the re-usefactors needed in urban environments,a ceiling of 800MHz on the amount of spectrum needed for licence-exemptuse can be reached.

Ofcom has already made 535MHzavailable in the 2.4GHz and 5GHzbands (excluding band C which is subject to light-touch licensing).As a maximum, then, an additional250MHz or so of spectrum mightbe needed for licence-exempt use.While this may seem like a smallincrement, a very large amount ofspectrum has been recently reservedfor licence-exempt use in the lightlyused 5GHz band.

While this puts a ceiling on the likelyneed for licence-exempt spectrum, itdoesn’t tell us whether this allocationwould maximise the value of thespectrum. To do this, Ofcom wouldneed to compare the relative economicbenefits of licensed, and licence-exempt, usage. This is difficult as itrequires forward-looking assessmentsof the best use of the spectrum.


However, since there have been fewtakers for the existing part of the5GHz band set aside for licence-exempt use, it seems unlikely thatproviding additional spectrum nowwould be economically sensible.Therefore, Ofcom will instead monitorthe usage of the 5GHz band in orderto predict when demand in the bandmight exceed capacity. As and whenthis looks likely, we will conduct aneconomic study to assess whether morespectrum should be made available forlicence-exempt use, and act accordingly.

Determining which spectrum cannotbe managed by market mechanisms

While we prefer to use marketmechanisms to manage spectrum,there are some areas of allocationdecision-making where they cannotbe fully applied. These are:

• spectrum where there are unavoidable,important or valuable internationalissues. For example, spectrum assignedto satellite operation may be coveredby international obligations and theremay be valid economic reasons why the UK would like to see these continue;

• spectrum which relates to a broadersocial objective. As a rule, Ofcom is not in favour of policy goals beingattached to the allocation of spectrum.However, there are some currentlicences where policy conditions areattached and it will not be possible to remove them. This applies tobroadcasting spectrum and to some of the emergency services; and

• spectrum where it is important tomaintain international harmonisationfor operational reasons. This includesaeronautical and maritime uses,where common frequencies worldwideare essential.

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2 These figures exclude defence spectrum and are percentages of amounts of spectrum relativeto the band centre frequency, rather than absolute amounts. Assumptions and approximationsare needed in compiling these figures which should therefore be taken as illustrative.

Summary

By using the mechanisms set out above we are able, firstly, to set aside somespectrum for licence-exempt use and, secondly, to apply market mechanisms in allbut those areas where command & control management is required. The relativeamounts of spectrum managed under these three different approaches, and howthey will change as a result of these strategies, is shown in the tables below.2

Command & Control The Market Licence-exempt

2000 95.8% 0.0% 4.2%

2005 68.8% 27.1% 4.2%

2010 22.1% 73.7% 4.2%

Command & Control The Market Licence-exempt

2000 95.3% 0.0% 4.7%

2005 30.6% 61.3% 8.2%

2010 21.1% 69.3% 9.6%

Change in values for spectrum below 3GHz

Change in values for spectrum between 3GHz and 60GHz

The figures show a major shift away from command & control in favourof market forces between 2000 and 2010, with a smaller increase in licence-exempt spectrum in the bands above 3GHz.


Spectrum usage rights

When buyers acquire licences to usespectrum, perhaps through auction,they expect that they have boughtcertain rights. These rights are oftenexpressed as both a right to transmitwithin certain guidelines, and a rightto expect only low levels ofinterference from others. While theright to transmit is normally clearlydefined, the expected level ofinterference is less so. Often, alicence states that the user can expect the spectrum to be free of ‘harmful interference’.

As part of the liberalisation process we would like to see clearer definitionsof usage rights. This will not onlyallow licence holders to change theirtechnology or usage, but also givegreater clarity on levels of interference.We are currently developing proposalsfor this complex area.

International issuesand harmonisation

Historically, there have been two keyinternational objectives in managingspectrum. These are:

• working with neighbouringadministrations when licensing uses ofspectrum which may cause interferingsignals to extend across nationalborders, or where services areinherently multi-national (such as satellite systems); and

• helping to reach internationalagreement on frequency bands forparticular applications in order topromote economies of scale andinternational roaming (often called‘harmonisation’).

A number of international bodieswork to achieve these aims.

At the global level the InternationalTelecommunications Union (ITU) setsout guidelines for usage, although theseare non-binding. At a regional level,the European Commission (EC) haspowers to deliver binding directives and

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decisions across European countries.It is supported by the EuropeanConfederation of Postal andTelecommunications regulators(CEPT), which provides technicalexpertise and may also deliver non-binding recommendations onfrequency harmonisation acrossEurope. Other bodies, such as NATO,have been delegated internationalcontrol of spectrum in particularfrequency bands such as those used forDefence purposes. Decisions taken bythese bodies restrict national freedomon the use of spectrum.

We are not proposing any change to achieve the first of the twointernational objectives set out above –namely the control of interferingsignals and multi-national usage. Forbands where there are internationalinterference concerns or multi-nationalservices, the command & controlapproach to spectrum managementneeds to continue.

However, we are proposing changes to the way that the second objective –harmonisation – is delivered. Beforeexplaining our policies in this area,we use the following definitions:

• Standardisation: The development ofan open standard for a particular typeof equipment allowing multiplemanufacturers to make equipmentwhich can interoperate. Standards are normally developed by bodies such as ETSI and the IEEE;

• Harmonisation: The identification ofcommon frequency bands throughout a region (e.g. Europe) for a particularapplication and, in some cases,a specific standard; and

• Exclusive access: The exclusiveprovision of frequency bands for a specific application or standard.

Ofcom believes that standardisationand harmonisation can bringsignificant benefits, such as reducedinterference; lower cost equipmentthrough economies of scale; increasedcertainty for manufacturers; andinternational roaming. GSM is oftenheralded as a prime example ofharmonisation at its best.

However, Ofcom does not generallysupport exclusive access. Recently,we commissioned a study that showedcases where exclusive access hasprovided little benefit, or has actuallyreduced the value of the spectrum byreserving it for a technology that did


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not develop commercially. By adoptingharmonisation, but without exclusiveaccess, it would still be possible to reapthe benefits of a GSM, while avoidingthe loss of value from cases such as ERMES.

Ofcom also believes that, in the long-term, the market will be able to bring about standardisation and harmonisation, rather than the regulator. Imagine a group of interested manufacturers andoperators, working within a body such as ETSI, proposing a frequencyband for their new standard. Ofcomand other regulators could then –subject to interference studies – createsufficiently flexible licensing terms for the spectrum to be used for theirnew application, without requiring thatthis is how the spectrum must be used.

Users of spectrum would then befree to acquire the newly harmonisedspectrum through trading, and changeits use. This approach would ensurethat, in the event of an inappropriatestandard being harmonised, spectrumwould not remain unused. This isbecause, in such a case, it is likelythat the spectrum will not be acquired

by new users, but left with theexisting users.

However, this approach is only likely to work when spectrum markets areliberalised in more countries. We will promote this outcome by puttingforward our views to internationalbodies. In the interim, we will continueto be active participants in harmonisationactivities internationally.

In summary, then, our long-termobjective is to see non-bindingharmonisation brought about mainlyby the market, with minimal regulatoryintervention. However, a critical mass of support will be needed.Meanwhile, Ofcom will remain active in international harmonisationactivities, while seeking to avoidexclusive access.

Mixed modes of usage

There is not always a neat dividing line between spectrum that is licensedto a particular user – whether undercommand & control or market forces –and licence-exempt spectrum. Thereare a number of instances where itmight be possible for licence-exemptusers to transmit in licensed spectrum.


The entitlement to transmit inspectrum that is actually licensed toothers has existed for some time. Forexample, everyday electrical equipmentsuch as hairdryers transmit unwantedinterference into a wide range offrequency bands. In practice, this israrely an issue because the power levelsthey transmit are normally so small.

More recently, a number of researchershave started to look at whetherdeliberate emissions such as thesemight be a valid way of getting even more use from the spectrum.Discussions have centred around two possibilities:

• Entitlements in time. Users hop onto a temporarily unused frequency,transmit briefly and then leave it before the licensee needs to use it; and

• Entitlements in power. Low-poweredtechnologies transmit across multiplebands licensed to others, but at suchlow power levels there is no significantdegradation in performance.

These entitlements can act across a wide range of spectrum bands,whether licensed, or set aside forlicence-exempt use. In general, we areless concerned where the spectrum is

set aside for licence-exempt use. In thiscase, if the transmission is low-poweredit would typically be allowed already.However, if it is a higher powertransmission, it would need to remainwithin the overall power limits for the licence-exempt equipment. Thediscussion that follows is focused onentitlements in licensed spectrum.

Entitlements in time(‘cognitive radio’)

There are now radios (known as‘cognitive radios’) that can scanmultiple frequency bands, spot anunused band, transmit on it and thenmove to a different band. Even so,problems with the technology meanthat you can never be totally sure that a band is unused; the only way to becertain is through central managementby the owner of the band. It thereforebecomes the spectrum owner’s choicewhether they wish to allow this kind of access and, if so, under whatconditions. Ofcom will allow licenceholders to enable cognitive access if they wish to do so, as part ofthe general trading regime.

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Entitlements in power

Ultra-wideband (UWB) is a technologythat spreads a data signal across abroad bandwidth. By harnessing thisincreased bandwidth, even very low-powered transmissions levels can beused to reliably transmit information.To achieve this, the signal needs to be spread across broad swathes of spectrum, where there may behundreds of licence holders. UWBmight have a wide range of usesincluding in-home networks, car radarsand board-to-board communicationswithin racks of equipment. Clearly,it isn’t practical for someone wishing to transmit using UWB to seekpermission from hundreds of licenceholders; it is an issue for the regulatorto resolve. We have carried outconsultations on UWB and our policynow is to work with Europe to enableits deployment under carefully crafted conditions.

UWB is an 'underlay' technology:in terms of output power, it liesunderneath the other users of theband. It is possible that other underlaytechnologies will emerge and, inconsidering their impact, Ofcom muststrike a balance. On one hand, we

want to define stable spectrum usagerights and, on the other, to recogniseour duty to enhance the efficient use of spectrum and bring innovativeproducts to the fore. We can't givechapter and verse on regulatingtechnologies that don’t yet exist.However, in general, Ofcom wouldprefer not to mandate an underlaytechnology unless:

• there were overriding directives legallyrequiring Ofcom to do so; or

• the technology or service would bringsignificant net benefits to the UK.

In the latter case, we would prefer usersof underlay technologies to negotiatedirectly with licence holders they mayaffect for access using, for example,trading principles. But as mentionedabove, this poses considerablechallenges in the case of technologiessuch as UWB. In these cases, it maybe appropriate for Ofcom to intervene.

Why this framework will bring benefits

We began this document by noting thatthe primary reasons for managingspectrum were to maximise value andavoid interference. We also set out anumber of aspirations for Ofcom’smanagement of the spectrum.

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We believe that the proposalscontained in the full Statement of theSpectrum Framework Review (andwhich we summarise here) will lead tothe UK realising greater value from itsradio spectrum resource. With usersable to trade spectrum and change itsuse, the market should allow highervalue uses to emerge with the resultingincrease in value to the country.We also expect the proposals to be acatalyst for innovation and investment;people with exciting new ideas willhave simple and rapid access tospectrum, and find there are relativelyfew constraints on how they use it.

Regarding the second priority ofavoiding interference, we believethese proposals will be neutral. Theprevious management approach wasgenerally effective and we see noreason to alter it.

The changes proposed by theStatement represent a significantprogression in the way radiospectrum is managed. They willopen up new opportunities for users,particularly in fixed and mobilesystems. Equally, this will be asignificant change for those alreadyusing spectrum and appropriate

transitional arrangements need to be put in place to recogniseexisting investments.

No one can predict with any precisionthe net effect of these changes, but wecan envisage developments such as:

• an operator acquiring some spectrumpreviously used for fixed applicationsand deploying a WiMax mobile dataservice, providing multi Mbits/s mobilelaptop coverage across major parts ofthe country;

• cellular operators gaining morespectrum, enabling a raft of newapplications such as interactive gamingand personal broadcast services at low cost;

• emergency services gaining temporaryaccess to spectrum when they need it,enabling, for example, video from thehelmet of fire-fighters and emergencymedical workers; and

• consolidation in the private mobileradio market, resulting in a low-cost but higher capacity service, reducingoperating costs for taxi companies,despatch riders and many others.

What actually happens may, of course,be very different; the important thing isthat it is real market need, rather than

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the regulator’s assumptions, whichdictate the nature of change.

These are the most wide-rangingchanges to spectrum management since the first act of Parliamentregulating radio spectrum in 1904.We expect them to bring major benefits to investors, manufacturers,operators, spectrum users, citizens and consumers.

How to buy and sell spectrum

We describe as ‘spectrum trading’ anytransaction that involves the transfer ofrights to use radio spectrum, grantedby a Wireless Telegraphy Act licence,from one organisation to another.

These deals could involve the outrightsale, leasing or swapping of rights.They could be for the entirety of therights granted under a licence, or just a part; for example, the rights in onlyone part of the country, or for a subsetof the licensed frequencies. Atransaction could be concerned almostentirely with the transfer of spectrumusage rights, or be part of a muchlarger deal – for example, the transfer

of an entire network – for which thetransfer of usage rights is a peripheral,but none the less necessary, part.

Spectrum trading became legal in theUK, for certain classes of WT Actlicence, in December 2004. Ofcomintends to expand the range of licencesthat can be traded, with the majority oflicences tradable well before the end ofthe decade.

The regulatory process for completinga Spectrum Trade is very straightforward because Ofcom’s main concern is to be clear who holds which spectrum usage rights – not thecommercial details of the transaction.

We have not laid down any rules oncommercial arrangements betweentrading parties, nor set up any sort of‘trading floor’ or system for usage rightstransactions. We anticipate the industrydeveloping a variety of different typesof Spectrum Trade to meet itsdisparate needs, with various types of agent and intermediary helpingparties to identify and completetransactions efficiently.

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The regulatory process for completinga Spectrum Trade is as follows:

• the parties to the trade agree the termsof the deal;

• the parties jointly complete and submita simple form to Ofcom, setting outwho they are; the details of thespectrum usage rights that are to betransferred; and a statement by eachparty consenting to the transfer;

• Ofcom reviews the details of theproposed transfer, confirms that it is permitted under the regulationsand that we are willing to give ourconsent; and

• with everything in place, the transfer ismade by surrendering the old licence,and Ofcom issuing a new licence(or licences).

Basic details of Spectrum Trades,either in progress and completed, arepublished in the Transfer NotificationRegister on Ofcom’s website. Ofcomalso publishes basic details of alltradable licences on its website, in theWireless Telegraphy Act Register. Bothregisters can be accessed throughOfcom’s Spectrum Licensing Portal:

http://www.ofcom.org.uk/radiocomms/isu/ukpfa/intro

Further details and guidance onSpectrum Trading can be found in theTrading Guidance Notes published onOfcom’s website:

http://www.ofcom.org.uk/radiocomms/ifi/trading/tradingguide/tradindguidencenotes.pdf

The Vision

In this guide, we have set out how webelieve that the markets are more likelyto maximise the value of spectrumthan central control from the regulator.We have shown how we will allowmarket mechanisms to be used for themajority of spectrum, after setting asidean appropriate amount for licence-exempt usage and excluding spectrumwhere central managementis still needed. We have shown how this reduces the need for the regulatorto be involved in internationalharmonisation activities.

The Ofcom Spectrum Vision wheremarket forces can be applied can besummarised as follows:

www.ofcom.org.uk


www.ofcom.org.uk

We will achieve this by:

• providing spectrum for licence-exemptuse as needed, although we estimatethat little additional spectrum willbe required in the foreseeable future,growing only to seven per cent of thetotal spectrum;

• allowing market forces to prevailthrough the implementation, wherepossible, of trading and liberalisation.We will fully implement these policiesin around 72 per cent of thespectrum; and

• continuing to manage the remaining 21 per cent of the spectrum usingcurrent approaches.

Inevitably, there will be circumstanceswhen we cannot fully achieve thisvision. In these cases, we will explicitlyexplain why we have departed from it.

The Ofcom Spectrum Vision

1. Spectrum should be free oftechnology and usage constraints as far as possible. Policy constraintsshould only be used where they canbe justified.

2. It should be simple and transparentfor licence holders to change theownership and use of spectrum.

3. Rights of spectrum users should beclearly defined, and users shouldfeel comfortable that they will notbe changed without good cause.


3G The third generation cellular phone system, currentlybeing deployed, which offers higher data rates thanprevious systems allowing services such as videophones.

AIP Administrative incentive pricing. A fee charged to usersof the spectrum to encourage them to make economicallyefficient use of their spectrum.

Auction The use of a standard bidding process to award spectrumlicences to those prepared to pay the most for them.

Beauty contest An approach to deciding who should have a spectrumlicence where those who want the licence make a caseas to why they should have it and the regulator decideswhich case is most convincing.

BlueTooth A standard for short range communications betweendevices such as cellphones and headsets.

BWFA Broadband fixed wireless access. A means of connectingto homes and offices using wireless, as opposed tocopper or fibre optics.

CEPT The European Conference of Postal andTelecommunications administrations. A Europe-wideorganisation whose aims include harmonised use ofthe spectrum.

Cognitive radio A radio which can sense when a piece of spectrum is notbeing used, adapt itself to fit the spectrum, transmit brieflyand then move onto the next free piece of spectrum.

Command & control A way of managing the radio spectrum where theregulator takes all the key decisions including whatspectrum is to be used for and who can use it.

www.ofcom.org.uk

Glossary


DAB Digital Audio Broadcasting. A standard for digital radio.

DECT The Digital European Cordless Telephone. A cordlessphone standard widely deployed in homes and offices.

De-regulation Removing the need to have a licence in order to make a transmission in some specific areas.

EMC Electro-magnetic compatibility. Regulations that ensurethat non-radio devices do not generate interference andare reasonably immune to radio frequency interference.

ERMES The European radio messaging system, a standard forpaging. It was not widely deployed.

GSM The Global System for Mobile Communications.The existing cellular technology widely deployed around the world.

Interference Two or more signals on the same frequency resulting inthe receiver not being able to distinguish one clearly.

ITU The International Telecommunication Union. A bodythat seeks to harmonise telecommunication activitiesaround the world, including access to spectrum.

Liberalisation Allowing licence holders to change the use to which they put their spectrum, within constraints to preventinterference.

Licence-exempt Allowing anyone to use the spectrum for any applicationunder certain specified restrictions, but typically withmaximum power levels.

Market mechanisms An approach to managing spectrum where key decisionsare made by the licence holders acting to buy and sellspectrum, rather than by the regulator.

www.ofcom.org.uk


Power The strength of the wireless transmission. The strongerthe signal the further it will travel, but this in turn willincrease the chances of interference.

Regulation The management of the radio spectrum.

SDR Software defined radio. A radio whose characteristicsare set by software, not hardware, which as a result can change itself considerably to adapt to situations.

Spectrum The set of radio frequencies from around 9kHz to300GHz.

TETRA The Terrestrial Trunked Radio system. A standard forthe type of radios used by emergency services and somebusiness users.

TFTS Terrestrial flight telephone system. A standarddeveloped to allow phone calls from planes direct to theground. It was never deployed - current systems usesatellites to relay signals.

Trading The ability of users to buy and sell spectrum licenceswithout prior approval from the regulator.

UWB Ultra-wideband. A technology that transmits at highdata rates over short distances by using low power signalsspread across many different parts of the spectrum.

WiFi Another name for wireless LANs. The technology usedto connect computers wirelessly in homes, offices andincreasingly in “hotspot” areas such as airports. Alsosometimes known as IEEE 802.11.

WiMax A developing standard for delivering broadband mobiledata services within urban areas.

www.ofcom.org.uk

Riverside House2a Southwark Bridge RoadLondon SE1 9HA

Switchboard +44 (0)20 79813000Facsimile +44 (0)20 79813333

www.ofcom.org.uk

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A Guide to the Spectrum Framework Review · 2016. 8. 25. · radio spectrum to go around. It is a finite resource, with many potential applications vying for the most valuable frequency