Practical aspects of liberalisation andre-farming of spectrum

International Telecommunication UnionTelecommunications Development Bureau

ITU Regional Workshop on Efficiency of theFrequency Spectrum Use in the Arab Region

Amman-Jordan, 5-7 Dec. 2011

Dr. Arturas MedeisisITU-BDT Spectrum Management Expert

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Scope of presentation • What is flexibility and liberalisation in SM

• The balancing act of liberal SM

• Spectrum trading as part of liberalisation

• What is re-farming

• Means and ways of re-farming

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The terms• Flexibility means possibility of changing the

purpose for which the assigned spectrum is used by licence owner

• Liberalisation of SM means providing possibility of liberal exchange of spectrum holdings– unrestricted spectrum trading of flexibly defined

spectrum assignments is the best example

• Hence, flexibility can be realised without liberalisation, whereas liberalisation is seldom meaningful without flexible spectrum usage right

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Flexible vs. harmonised

Degree of

harmonisation

HighLow

High

Low

Medium

Medium

Full harmonisation (e.g. 2G/IMT bands)

Partial flexibility (e.g. PMR, SRD bands)

Full flexibility (e.g. 2.4 GHz band, other commons)

Degree of

flexibilitySource: ECC Report 80

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Market scenarios

Lowflexibility

Highflexibility

High flexibility

Low flexibility

Market dimension

Technology

dimension

Prescriptive conditions

Technical flexibility

Marketapproach

Liberalisedmarket

High flexibility

Low flexibility

High flexibility

Low flexibilitySource: ECC Report 80

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Spectrum trading

1st owner 3rd owner

2nd owner

Regulator

Traditional spectrummanagement

1st owner 3rd owner

2nd owner

RegulatorNote Note

Note

Spectrum trading

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Making the market work

• Well-defined tradeable spectrum units

• Change of use allowed

• Liberal and simple conditions for trade

• Long-term confidence in acquired assets

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Long term economic impact?• Results of scenario modelling of

introducing spectrum liberalisation compared with harmonised base-case

*) UMTS Forum study: Thriving in Harmony. Frequency harmonisation: the better choice for Europe, November 2006, available at: www.umts-forum.org

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Liberalisation conclusions• The liberal flexibility in itself is a two-sided sword

and therefore should not be seen as universal one-fit-all solution

• The optimum is likely to be achieved through balancing act:– Combination of liberalisation and flexibility with certain

degree of harmonisation– E.g. liberalisation and flexibility at a technical level

(license conditions) but harmonisation (regional, global) in general spectrum use trajectory, which would lead to positive mass-market effects

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What is re-farming• A tool, a process:

– used by the NRA’s spectrum management policy and frequency planning functions,

– whenever it becomes necessary to change the current use of spectrum, including recovering spectrum from existing users for the purpose of re-assignment

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Types of re-farming

Service level:

- refarming process

Fixed Mobile

Applications level:

P-P links PMP links PMR Cellular

Technical level:

2G 3G

12.5 kHz25 kHzDigitalAnalogue

See ECC Report 16

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Implementing re-farming• Two steps:

– deciding on necessity of re-farming– organising the process, choice of instrument

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Implementing re-farming (II)Administratively managed re-farming Re-farming through spectrum trading (*)

Tri

gger

ing

con

sid

erat

ion

s

Legal criteria

Financial criteria

Political criteria

Socio-economic criteria

Technical and efficiency criteria

Overall analysis performed and decision taken by NRA

Choosing instrument of re-farming

Business criteria

Financial criteria

Analysis performed and decision taken by spectrum owner (**)

Revoking licence with compensation

Incentive pricing of spectrum use

Licence termination upon its expiry

Voluntary withdrawal

Equipment re-tuning

Combination / other tools

Contract between private entities (**)

* - presuming existence of flexible spectrum use clause** - may be subject to approval by the administration (NRA) See ECC Report 16

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Compensation options• New user pays: compensation arrangement is

made between the incumbent and new user, usually with mediating role of administration

• Government pays: compensation to be paid directly from state budget or from NRA income derived from spectrum licensing fees

• National re-farming fund established: NRA administers a fund created either from the payments by new operators, from licence fees or from the state budget. This fund could be then used for paying compensations for network re-deployment, financial incentives to accelerate re-farming processes, etc.

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Fund: French case study• Managed by ANFR• Strictly separated from agency budget• Ministry of Finance provided initial

instalment• ANFR first pays the re-location costs to

incumbent• New users pay to the fund upon receiving

authorisations, i.e. already after completion of re-location of incumbent

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Fund: French case study (II)• ANFR functions:

– proposes schedule– evaluates cost components– supervises carrying out of the process– controls the funds, administers payments

• Fund active since 1998, initial seed from the state budget: 3 M€

• Fund’s net capital ultimo 2010: 27.3 M€• Practical details in ITU-R Rec. SM.1603

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Re-farming results in France

Source: ANFR

New system Spectrum amount Former incumbent

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Conclusions• Spectrum use liberalisation is normally

intrinsically linked with allowing flexible spectrum use and secondary trading – the practical implementation of these principles and mechanisms would help the more efficient, market-driven use of spectrum

• Re-farming is additional tool that may assist to resolve collision with obsolete uses, make way for innovative services

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Thank youand farewell!

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