Towards a Fluid Spectrum Market for ExclusiveUsage Rights

Linda Doyle & Tim FordeCentre for Telecommunications Value-chain Research (CTVR),

Trinity College, University of Dublin, Ireland.ledoyle@tcd.ie, timforde@mee.tcd.ie

Abstract— This paper focuses on highly fluid markets fortrading exclusive spectrum usage-rights. The purpose ofthe paper is to underline the need for flexible usage-rightspolicies, as a core facilitator of such markets as well as tostress the need for a greater technical input to the debate.The paper builds on current work in the field of spectrumproperty rights and exclusive usage-rights. The first half ofthe paper captures the current state-of-play and presents aframework for visualizing the concepts involved. The papergoes on to make a clear distinction between the definingof a set of exclusive usage-rights and the exercising ofthose rights. This leads to a discussion of policies that arenot alone about defining metrics and setting their desiredvalues but are also about behaviors that involve negotiationand interaction. Through-out the paper the evolution oftechnology and its affect on the progress towards the goalof fluid spectrum markets is emphasized, as is the need fora very multifaceted approach to the challenges involved.

I. I NTRODUCTION

In current spectrum management regimes, marketforces have limited impact. There is however an emerg-ing international consensus that market regimes will playmuch larger roles in the future of spectrum managementand that a significant move away from the currentCom-mand & Controlapproach is inevitable. The argumentsfor this move are well established and therefore notrepeated in this paper and regulators such as the F.C.C.1,Ofcom 2, and the E.U.3, have already indicated a movetowards the use of more flexible trading regimes. Henceour starting point is that market-based approaches to

1Notice of proposed rule-making (FCC 00-402):promoting efficientuse of spectrum through elimination of barriers to the development tosecondary markets,” Federal Communications Commission, Novem-ber 2000.

2Spectrum framework review statement, The U.K. Office for Com-munications, June 2005.

3The rspg opinion on secondary trading of rights to use radio spec-trum (rspg04-54 final version),” E.U. Commission Radio SpectrumPolicy Group, November 2004.

spectrum management will play a significant role in thefuture.

The potential market approaches that exist are varied.On the one side of the spectrum of options is the propertyrights/exclusive flexible use/licensed approach and onthe other side is the open access/unlicensed/spectrumcommons model. As Bill Lehr notes ”Both of thesecases are stylized as market-based because decision-making is decentralized to the market”[1]. There hasbeen much debate as to the merit of these two extremeswith economists such as Hazlett [2] favoring the anexclusive usage rights approach and Lehr [1] favoring acommons approach. In this paper we focus on exclusiveusage rights. The paper is not about whether this isthe sole and only reasonable approach, nor is it aboutthe relative merits of this approach over the commonsmodel. It is an attempt to tease out the issues involvedin realizing a highly flexible and fluid exclusive usagerights market in which spectrum becomes a commoditythat be can be traded and used as desired, within theboundaries of the rights associated with the commodity.The focus is on the very flexible types of policies thatwill be needed to underpin such a system.

The remainder of the paper is organized as follows.Section II captures the current state of understandingof the issues associated with the trading of exclusiverights and attempts to visualize the rights as applied to avery fluid market for trading spectrum. The basic time,frequency and space characteristics of the traded blocksof usage-rights are discussed. Section III builds on thisand discusses the difficulties associated with exercisingthe actual usage rights that result from having to dealwith electromagnetic radiation. Co-channel and adjacentchannel interference are defined and visualized withinour model framework and what we termthe relativityof interferenceis discussed. Section IV then deals withthe implications of section III through delineating theinterference management options for two neighboring

spectrum consumers, neighboring in terms of space orfrequency. This section finishes by highlighting the needfor interference management policies that permit a levelof open negotiation between neighboring entities. In theconclusion the impact of technology on the evolution ofexclusive usage-rights markets is discussed.

II. T HE STARTING POINT; V ISUALIZING AND

DEFINING THE USAGE RIGHTS

Clearly, defining the rights associated with exclusiveusage of spectrum is a challenging problem. There hasbeen a range of interesting papers that have discussedthis issue in the past number of years. Hatfield [3]does an excellent job of summarizing many of themain contributions to this debate and traces the de-velopment of the definition of spectrum usage rightsthrough from Coase [4],[5], to De Vany [6],[7],[8], toKwerel [9],[10],[11],[12],[13] and to Matheson [14],before going on to further the discussion himself. Inthe main, in all these papers, the approach has been toattempt to define the parameters associated with somekind of packet/bundle/blockof spectrum with the endaim of making the definition tight enough

1) so that the user of thepacket/bundle/blockhas aclear set of entitlements

2) and it becomes possible to trade apacket/bundle/block or multiples thereof insome kind of market system.

So for example De Vany talks about TAS packets(Time, Area, Spectrum). In this case the owner of theTAS-based rights would have the exclusive right to pro-duce (information bearing) electromagnetic waves for aspecified period of time (T), over a specified geographicarea (A) and in a specified range of frequencies (S).Another example is the work of Matheson. He furthersthe definition of the packet with his seven dimensions ofelectrospace that include frequency, the three dimensionsof locationlatitude, longitude, and elevationtime, and thetwo possible directions of arrival (azimuth and elevationangles) and time. In one sense Matheson’s definition issimply an expanding of the Area term by De Vany intoa more rounded and complete definition that takes threedimensions into account.

In this paper we build on the work that currentlyexists and conceptualize what we call theradio spectrumrights continuumas a three-dimensional model: Space,Time and Frequency. Space, a broader term than Areacaptures the three dimensional notion of electromagneticradiation. We propose that such a continuum shouldbe quantized into discrete packets/bundles/blocks. Each

packet/bundle/block represents a unique assignment ofspectrum rights at a particular place, for a particularfrequency and at a fixed time. The purpose of quantizingthe spectrum continuum on the time-axis is to allow eachblock assignment to be recycled and re-assigned at eachtime interval. For the purposes of consistency we willuse the termblockthroughout the remainder of this paperrather than packet, bundle or any other such means ofdefining the discrete entity that has an associated set ofusage rights.

A. Usage Rights: A Visualization of the Present

Though not used as a reference point for existingspectrum management regimes the RF spectrum rightscontinuum model can provide a helpful visualizationtool, especially in terms of setting the context for futureregimes. Hence Figure 1 attempts to visualize the ac-cess rights afforded to contemporary GSM and UMTSlicensees in terms of Frequency/Space/Time blocks. AGSM/UMTS licence, under the model is constituted bya collection of unique Frequency/Space/Time blocks4.The allocations consist of spatially and temporally con-tiguous blocks of spectrum for a single frequency rangewhich aggregate to form conventional licences, whichreflects the underlying technologies and business modelsin play at the moment. In Figure 1 the red allocationrepresents the GSM license and the blue allocation theUMTS license, the latter license obtained by the licenseesometime after obtaining its initial GSM license. Asshown in Figure 1, the allocations for the Republic ofIreland extend to the entire jurisdiction of the state - outto the southern, eastern and western coastal extremitiesof the island and to the border with Northern Ireland.The temporal element of spectrum rights rarely featuresin descriptions or charts of spectrum allocations andassignments, despite the fact that many licenses arefor what de facto amounts toin perpetuity. The RFspectrum rights continuum model therefore emphasizesthis long-lived-nessand the allocations extend to thefuture indefinitely.

Figure 1 also attempts to capture the static nature ofthe current system. The UMTS license in Figure 1 isobtained at a time in advance of a 3G market emergingas has been the case for most operators. It should also benoted that Figure 1 embraces no notion of liberalization

4Note however in the diagrams used in this paper, forsimplicity,space - whether two-dimensional (x & y) or three-dimensional (x, y& h - height above ground) - is collapsed to one-dimension in thismodel.

Fig. 1. Representations of an Assignment for a Single GSM/UMTSNetwork Operator

5.It is important at this stage to also point out that

the use of Ireland as a reference point and the size ofthe individual cubes in the diagrams are for illustrativepurposes only and are not meant to actually suggest sizein terms of frequency, space or time. The actual size ofthe blocks is an open question.

B. Usage Rights: An Ideal Visualization of the Future

Moving on from the visualization of current regimeswe can now use the RF spectrum rights continuummodel to visualize the future. At its most extreme, ourproposal for a flexible market would facilitate a radicalform of disaggregation of the RF spectrum, which couldhave a similar effect on the wireless telecommunicationsindustry. This is illustrated in Figure 2. The Rubik’scube-like illustrations represent an area of the spectrumrights continuum in which there has been completedisaggregation of assignments over frequency, space andtime.

Fig. 2. Completely Disaggregated Market-based Assignments

5At the outset, it should be clarified that the term spectrumassignmentis taken to mean assigning spectrum to a particular user(e.g. network operator) and spectrum allocation is understood to meanallocating spectrum for a particular use or service, i.e. non liberalusage. Hence we use the term allocation in the context of existingregimes and assignment in the context of future regimes.

Each block in the Rubik’s Cube like figure representsa unique spectrum assignment and each color representsa uniquespectrum consumer. We have chosen the termspectrum consumer to convey the point that we do notwish to pre-empt the nature of future spectrum usersor businesses built around fluid spectrum. Rather, weconsider that some agent will want to acquire spectrumfor some, possibly still unforeseen, use. We currentlywould understand such a market actor in terms of entitiessuch as cellular network operators, TV companies andwireless broadband providers.

In a very fluid and flexible market spectrum consumerscan freely buy and sell the exclusive rights to the cubes ofspectrum that are illustrated in Figure 2. The services thatowners of the usage rights deliver and the technologiesused to deliver those are not proscribed, i.e. there istotal liberalization of the spectrum. There are no limitsor rules as to what blocks can be neighbors and whatservices can be delivered by neighboring blocks.

In such a very fluid system, the individual blocks ofcourse may be aggregated to form larger assignments.This is depicted in Figure 3. Aggregations in thissituation occur because of market drivers and not becauseof limitations due to the system for acquiring access tospectrum. Figures 2 and 3 therefore attempt to capturethe fluidity of reaction to market forces that wouldcharacterize our framework.

Fig. 3. Completely Disaggregated Market-based Assignments

C. The Dimensions of the Frequency/Space/Time Block

The use of uniform cubes in the Figures 1, 2 and 3is a conceptual starting point6. As emphasized in theprevious section, these figures present an idealized view

6In terms of space the rectangular (or square) shape is acceptedas feasible. While the footprint of radio signals is often depictedby hexagonal shapes in the literature, the Australian authoritiesdetermined that such a representation was neither especially accuratenor practical from the point-of-view of assembling larger space-rightspackages.

of the notion of spectrum as a commodity. The realitiesof dealing with spectrum as a tradable commodity willin fact be dealt with in sections III and IV. Howeverfor the purposes of the current discussion, it suffices tocontinue focusing on the frequency/space/time block inorder to pose a number of questions relating to its generaldimensions.

The frequency/space/time dimensions of the blocksmay take a different shape and may be non uniform insize. It may be desirable to have one base block size fromwhich commonly traded units emerge. In this case theidea would be to use the smallest frequency/space/timethat makes sense and to build all trading packages fromthis. Or it may be preferable to have heterogeneousblock sizes, made from a range of discrete acceptablefrequency, space and time dimensions7. For the purposesof this paper we will focus on the spatial dimensionand explore the factors that might influence it’s choicebut a similar analysis could be performed for the otherdimensions.

1) Block Size - Spatial Analysis:In terms of creating abasic block size, consider the following spatial analysis,depicted in Figure 4.

(a) Population DensitySpread for Area UnderConsideration

(b) Space-Right Unit Ag-gregations Based on Pop-ulation Densities

Fig. 4. Factors Affecting the Aggregation of Space-Right Units

We consider the requirements of a spectrum consumer,e.g. a network operator, that decides that it would beeconomically beneficial to build-out a network in incre-ments that serve no less than five to eight populationclusters. In this case the decision of the network operatorcould be driven by the cost of existing radio and networktechnologies, by the nature of the intended service (e.g.digital TV, Broadband Internet, etc.) and by the cost ofspectrum suited to these technologies and services. Fig-ure 4(a) illustrates the spread of population density overthat area; each red dot represents a population cluster of,

7In terms of frequency the Australian model sets basic frequencyrights dimensions as low as 0.0125MHz for some frequency rangeswith dimensions increasing to as big as XMHz.

say, one thousand people. The spectrum consumer canthen decide that it is only worthwhile for it to packagethe basic space-right units according to this populationinformation so that it does not arrive at larger space-right units than it deems economically viable. So inFigure 4(b) the smallest block dimension is evident onthe left hand corner and the largest traded entity, on thetop right hand corner, is a multiple of the basic blocksize.

The main point to take from this example is thatit is necessary to ensure that the basic space-rightsunits are initially defined as small as possible so thata potential spectrum consumer can assemble a packageof rights that just meets its requirements. Spectrumwill be wasted if a consumer has to acquire excessspectrum rights just because the basic space-rights sizewas initially set too large. The second point to be takenfrom this example is that while the example is basedon current costs of a given network operator and thecurrent technological characteristics of those networks,basic block sizes should not be chosen to only reflect cur-rent technological capabilities. So while contemporarynetworks range in coverage from country-wide (cellu-lar), to city-wide (WiMAX) to LANs (WiFi) and PANs(Bluetooth), a somewhat future-proofed system shouldnot pre-empt technological and economic advances bybasing its definitions of spectrum rights units solely onexisting standards.

2) Combinations of Blocks - Spatial Analysis:Thebasis block size should also perhaps be consideredin the context of the framework for trading as well.Following on from the population based example fordetermining basic units, we can consider the trade-offbetween the flexibility afforded by the definition of verysmall units and the complexity introduced by creatingtoo many units as it may prove burdensome to searchthrough and package such basic rights. A lot thereforedepends on the combinatorial options within the tradingframework and how easy they are to determine and tosubsequently bid for and acquire. To put this in context,consider the following example that focuses on spacedimensions. It walks through a potential process involvedin how a spectrum consumer might go about assessing itsspectrum rights requirements and assembling a desiredpackage.

Figure 5(a) illustrates a sample terrain over which anetwork operator wants to establish a network based on asingle-transmitter network, say for a single DVB-T cell.In this case, the spectrum consumer has many variablesto consider such as those associated with antenna choices

(power, polarization patterns, height above ground, etc.)and with the terrain (elevations, typical climate etc.).Associated with this terrain would be the grid of basicspace-rights as depicted in Figure 5(a).

(a) Terrain Model with Basic Space-Rights Grid Overlaid

(b) Basic Space-Rights Grid withWorst-case Propagation Model Over-laid

Fig. 5. Fitting Worst-case Spectrum Requirements to Space-RightsGrid

Using propagation modeling software, the spectrumconsumer can arrive at a best-case/worst-case coveragefootprint for its intended network. Such a footprint, asdepicted in Figure 5(b), would outline the extent to whichthe radio signal propagates at a level which exceeds themaximum noise threshold. Once the potential networkoperator has assessed its propagation footprint, it mapsit to the the frequency/space-rights model, as shown inFigure 6(a). Finally, the spectrum consumer is able todetermine the combination of blocks of rights that it mustacquire to operate its network, as depicted in Figure 6(b),and knows what it needs to acquire in the market.

It could therefore be argued, that whatever marketframework exists for trading in blocks, the ease withwhich combinatorial bids can be made is a factor whichalso may determine the smallest unit that can viablyexist. The transaction costs for small units and the trans-action costs associated with larger packages of blocksneed to be assessed as the value of the trade mustbe substantially greater than the transaction costs. Tofurther complicate the problem, the actual technologythat is used to perform the trades may also play into thisequation. So for example a fully automated cognitivetrading system that automatically maximizes options forthe traders may lend itself to trading in block sizescomprising the smallest block unit, whatever that may be,

(a) Mapping of Worst-case Propaga-tion Model to Spectrum Units

(b) The Required Package of SpectrumUnits

Fig. 6. Worst-case Spectrum Package Requirements for SingleNetwork, Single Transmitter Case

while a more traditional paper-based and slower systemmay lend itself to trading in hundreds of units at any onetime.

Overall, however, it is important to create a flexibleenough system so that whatever commonly traded com-binations are useful, can emerge. One can envisage asituation where at different frequency ranges, while thepossibility of trading in small units theoretically exists,that combinations of less than X Blocks are never tradedand thatde factostandard trading sizes come into being.One can also envisage a system in which what is adefactotrade size changes as technology changes over time.

3) Technology Advancement - Spatial Analysis:Con-tinuing along the lines of the technological influenceson the block size, there are some communication sys-tem technological limits to realizing each of the fre-quency/space/time dimensions. Any consumer of a blockmay deem to divide and sublet that block and undoubt-edly technological barriers will be encountered at somestage of that division process. Figure 7 attempts tocapture the subletting concept. As the sublet blocks getsmaller, technical bottlenecks may arise.

However, this paper focuses on the primary (meaningmain in this case) trading market for spectrum, and isnot concerned with the subletting process and hence itis not envisaged that technical limits will play a majorrole in this overarching fluid market structure. Although,it should be noted, that by not proscribing in advance thedegree to which subletting can occur, the possibility ofallowing future communication system advancements to

Fig. 7. The Subletting Process

be naturally incorporated into the system as they arise,is strong.

Figure 7 is also useful in terms of conceptualizingwho the traders will be. In the examples in the previoussections, a network operator-like entity was consideredto be the first level of trader. While we advocate thislevel of access, i.e. access by any network entity to thepurchase of spectrum usage rights, it is still an openquestion as to who would trade.

D. But this is just an Idealistic View?

The discussion thus far has been general and ide-alistic in order to present an overarching view of afluid spectrum market and to focus simply on the fre-quency/space/time spectrum block of spectrum usagerights. Even at this simple stage broad questions aboutthe dimensions of these blocks can be posed and it ispossible to begin envisaging frameworks within whichthese blocks could be traded. The more difficult analysisbegins now. The somewhat ideal concept images ofFigures 2 and 3 come up against serious problems whenit comes to theexercising of the rightsassociated witheach individual block. In fact it can be argued thedefining of usage rights is not the problem but in factthe defining of how to avail of those rights is.

III. T HE PROBLEM OF EXERCISING YOURRIGHTS TO

THE FREQUENCY/SPACE/TIME BLOCK

A large number of papers have been written that ad-dress the issues involved and provide useful backgroundmaterial. In a nutshell the problem is that electromag-netic waves cannot be fenced in and hence spillagebeyond the boundaries of the blocks occurs. Hence,exercising your rights to your blockin such a manner soas not to infringe on the rights of others can be extremelytricky. Not alone can the waves not be confined, it isdifficult to determine by how much a given signal goes

beyond a boundary as the actual distance which a givensignal can travel can vary. Depending on frequency, radiowaves propagate in different ways, making use of theground or the atmosphere, and can be reflected frommultiple surfaces such as buildings or landscape featuresand/or refracted and bent around obstacles. Signals canpropagate different distances depending on time of day,weather conditions or the season. The signals from anyone block therefore have the potential to interfere withsignals in other blocks. The are no simple fences thatcan be erected to keep the signal within the frequencyand space boundaries associated with the block of usagerights. This means that typically at the edges of aspectrum block, the signal will not be zero, i.e currenttechnology cannot produce a signal that forms a niceneat cuboid shape. The impact of this is when it comesto exercising the rights, that frequency, space and timeare not adequate for defining the block of rights fully andsome notion of signal behavior at the boundaries mustbe introduced.

A. Co-channel & Adjacent Channel Interference

In technical terms the spillage beyond the boundariesof the block manifests itself in two ways, as co-channelinterference and as adjacent channel interference.

Co-channel interferencemay be experienced by net-works that are operating on thesame frequencybutwhose transmitters are not sufficiently physically sepa-rated or whose transmission power is too high. Figure 8depicts two slices of spectrum consumers in the RFspectrum rights continuum, that are at any time intervalusing the same frequencies in different locations. Whenone spectrum consumer owns the entire slice, as inthe case of the red colored block in Figure 8, thepositioning of transmitters can be collectively chosenso not to cause co-channel interference and at the sametime to optimize the capacity of the network. This leadsto, for example, a cellular network planning in whichneighboring basestations operate on different frequenciesso as not to interfere, while more remote basestations canthen re-use the same frequency (there is what is known asa frequency reuse distance). Hence users A and B fromthe red slice in Figure 8 will have collaboratively dividedup the range of frequencies available within the blocks,so that they are not using the exact same frequenciesfrom the range that they are entitled to use.

In the fluid spectrum market that we advocate,such collective planning is not always an option. Inother words, users A and B, depicted in the multiply-owned slice in Figure 8, will not tend not to be

Fig. 8. Co-channel Interference

part of a co-operative network planning scheme. Theway to ensure that co-channel interference does nothappen in this case, is by specifying the power lev-els that should be met at the boundaries of theblock. White’s [15] phrasing comes in useful here.He speaks about spectrum-band/area/beyond-perimeter-signal-strength-limit/time-period ”parcels”. Changing”area” to ”space” to take the fuller three dimensionalnature of the signals into account and using our phrase-ology, we now can speak aboutfrequency/space/beyond-space-signal-strength-limit/time-period blocks.

Adjacent channel interference occurs when powerfrom one frequency channel leaks into an adjacent fre-quency channel. Figure 9 depicts two slices of spec-trum consumers in the RF spectrum rights continuumthat use adjacent frequencies within the same space.As with co-channel interference, adjacent channel maycause too much noise at the receiver, such that thereceiver cannot decipher incoming signals. The slice ofspectrum consumers depicted towards the front of thediagram attempts to capture the current regime whichconsists of a limited and controlled number of spectrumconsumers, each of which is only free to use veryspecific technologies to deliver very specific services.Because of these restrictions, it is possible to regulate forinterference through the use of predefined guardbands inwhich no spectrum consumers are allowed. The widthof the guardbands are known, as the regulators willhave decided in advance what technologies and servicescan be neighbors and hence the amount of space (infrequency terms) needed between each.

In the spectrum market we advocate, there are norules governing what services should be deliveredby neighboring blocks and what technologies shouldbe used to deliver them. So, users A and B in the

Fig. 9. Adjacent Channel Interference

background slice in Figure 9 can deliver any servicesthey so choose, using any technology they see fitand hence predefining guardbands is not an option.Therefore, just like in the co-channel case we needto specify boundary conditions, this time in termsof frequency. Using the phraseology from abovewe now speak about a frequency/beyond-frequencyband-signal-strength-limit/space/beyond-space-signal-strength-limit/time-period block. Users must respectthese boundaries in order to avoid adjacent channelinterference.

B. The Theory of Interference Relativity

The previous discussion emphasizes the need todefine a frequency/beyond-frequency band-signal-strength-limit/space/beyond-space-signal-strength-limit/time-period block. However what it does notfully capture is the relativity of the situation at theboundaries. To understand this point consider the twocases of neighbors illustrated in Figure 10. The toptwo neighboring houses of Figure 10 are owned bytwo individuals, which together comprise Scenario 1.The individual in the left hand house is deaf and theindividual on the right hand side plays excessively loudmusic. The playing of the music does not interfere withthe deaf owner of the neighboring house.

The bottom two houses in Figure 10 are owned bytwo other individuals and comprise Scenario 2. Theindividual on the left has built an array of highly sensitivemicrophones around his property. The individual on theright plays music at a low level but because of howthe neighbor has constructed the house, the individualis deemed by that neighbor to be causing unacceptablelevels of noise.

In both these cases, the perceived interference is acombination of the circumstances at the boundaries. It

Fig. 10. Relative Interference

may be argued that the circumstances at the boundaryin Scenario 1 are fortunate for the neighbor playingthe loud music. It may also be argued that in Scenario2 it is unreasonable that the individual in the housesurrounded by microphones can deem the neighborto be interfering. The scenarios here appear as twoextremes, but in fact are not that far removed fromreality, as will become evident in the co-channel andadjacent channel examples below. The key point fornow is that the exercising of the rights associated withthe frequency/beyond-frequency band-signal-strength-limit/space/beyond-space-signal-strength-limit/time-period block, even in the scenario where metrics forlimits at the boundaries have been establish can becomplicated. In other words the story does not endwith the defining of the frequency/beyond-frequencyband-signal-strength-limit/space/beyond-space-signal-strength-limit/time-periodblock.

C. X Marks the Spot

The spreading of electromagnetic waves beyond adefined boundary occurs in a complex manner as can beseen from the previous discussion. Figure 11 attemptsto bring the various concepts together. In this Figurethe Red Block depicts the rights of a given spectrumconsumer at a certain time, for a given frequency rangeand spatial extent. The area shaded in dark grey rep-resents the potential for interference (i.e. whether it bevia co-channel or adjacent channel interference). Pleasenote again that the cubic representation is not meant tosuggest the radiation patterns are in neat cube formatsbut are used merely to delineate a volume of interferenceirrespective of what the exact shape will be.

The extent of the grey area is then dependent onthe actual physical propagation characteristics of theelectromagnetic radiation at the frequencies in question

Fig. 11. The Affect of Interference: The Usage Rights are markedin Red. The area shaded in Dark Grey depicts the Potential forInterference

which in turn can be dependent on the characteristics andsettings of the transmitters, the terrain, object movementetc. in the area associated with the usage rightscombinedwith the characteristics and settings of the receivers inthe area outside of that associated with the usage rights.

Viewed in this way we can conclude that theexercising of the rights associated with a givenblock involves the interactive creation or formingor constructing of a frequency/beyond-frequencyband-signal-strength-limit/space/beyond-space-signal-strength-limit/time-periodblock. In other words weneed interference management policies that are notalone about metrics and their desired values but are alsoabout block construction behavior.

IV. A CTIVE INTERFERENCEMANAGEMENT

APPROACHES

The notion of the interactive creation or formationof the frequency/beyond-frequency band-signal-strength-limit/space/beyond-space-signal-strength-limit/time-period block is best illustrated by returningto a discussion of co-channel and adjacent channelinterference in order to tease out the options forspectrum consumers.

A. Co-channel Interference and Options

Consider now two users A and B operating at thesame frequency but separated in space, from the fluidmarket diagram in Figure 8. Assume now that user Bis not remaining within itsfrequency/beyond-frequencyband-signal-strength-limit/space/beyond-space-signal-strength-limit/time-periodblock and its signal strengthbeyond its space is exceeding the required level andinterfering with user A, i.e. user A is experiencing

co-channel interference. The following are potentialsolutions to this problem:

1) User B reduces its power significantly so as todecrease the boundary power levels and be sureit is meeting its boundary conditions for the worsecase scenario. Some of the factors that mightbe adjusted to minimize interference include theantenna height, antenna gain, antenna orientation,transmitter and antenna location and transmitterpower. It may be necessary to try a combinationof several of these methods to effect a satisfactorysolution.

2) User B decides to use technology that combinesreal-time sensing techniques with cognitive func-tionality to monitor and adjust in real time thepower levels at the boundaries rather than justdealing with the worse case scenario.

3) User B gets user A to agree it does not matter.4) User B makes an offer to User A and buys out the

usage rights to the spectrum block currently ownedby User A.

5) User B gets user A to buy it out.6) User A / User B find an alternative solution we

have not yet envisaged

The solutions listed above, may or may not be eco-nomically viable. The technical solutions have costs. Theblunt lowering of the power may have the overall effectof reducing coverage and losing customers. The sophis-ticated and dynamic power adjusting scheme, while notblunt, may currently be prohibitively costly to install.The bargaining with other users that leads to the buyingout of one or other of the users may be prohibitive bothin terms of transaction costs as well as in terms of actualvalue of the rights. There may be game playing involved,for example on the part of user B, to force a buy-out.The option for getting user A to say it does not matterwould is akin to Scenario 1 in Figure 10 where user B isthe loud music playing neighbor and user A is the deafneighbor. Of course the ownership of the rights to blockA can change and the solution that B gets A to say itdoesn’t really matter, becomes null and void.

Hatfield’s and Jackson’s comments on the lack ofsuitability of the AM frequencies as tradable commodi-ties can be revisited in terms of the listed suggestedsolutions [3],[16]. Hatfield states ”For a band like thattraditionally used for AM broadcasting, it seems totallyimpractical, if not impossible, to provide licensees withanything close to certainty in terms of interferenceprotectionat least using the classic property law trespass

concept. If, for example, a station in an adjacentor moreremotegeographic area could prosecute a trespass claimagainst a transmitter that created interference, it couldseek damages or injunctive relief based upon a seriesof natural conditions that happen only infrequently”.Jackson, who is also of this mind, believes that thecellular and PCS bands are more amenable to a propertyrights regime because oflimited signal range, systemsoperating over large blocks of spectrum and over largegeographic regions, and control over both transmittersand receivers by the system operator.

Using the list of solutions above and applying them tothe AM case, it would, for example, be possible to useadaptive systems to manage the day/night propagationcharacteristics of the AM waves. Alternatively, solution3, in which A gets B to say that interference does notmatter, can be nicely illustrated with an AM scenario.Suppose for a moment that user B is a 24-hour RadioStation, while A is a daytime only Radio Station. Thefurther propagation of B’s signals during the night willhave no effect on A. Failing either of these options,the buying of more usage rights blocks might makemost sense. In fact what may emerge is that certainfrequencies will end up being sold in combinations ofcertain numbers of blocks and never in individual blocksunits, along the lines of the discussion in Section II-C

It is clear that a very fluid market for spectrum usagerights trading would indeed be quite a complex entity.However, it is clear that solutions to the co-channel prob-lem exist. Whether all options are currently economicallyviable or currently technically feasible should not beseen as a barrier to the advent of such markets, but thepossibility for the broadening of the solution space overtime should be built into the system.

B. Adjacent Channel Interference and Options

Consider now two adjacent frequency users, A and B,in the fluid market part of Figure 9. Suppose now thatpower from the frequencies used by user B leaks into thefrequencies used by user A and causes interference abovean acceptable level. The following is a list of potentialsolutions to this problem:

1) User B improves the spectral masks it is using inits system. (From a network operator’s point-of-view, out-of-band-emissions can be minimized bythe use of appropriate transmission masks. Suchmasks have the purpose of shaping the signal as itleaves the transmitter, blocking or reducing powerleakage to adjacent frequencies. A transmissionmask will guarantee that within some X MHz of

the desired signal bandwidth that the leaked powerwill taper off to an acceptably low limit).

2) User B creates a self-imposed guardband betweenit and user A

3) User A creates a self-imposed guardband betweenit and user B

4) User B and User A both create self-imposed guardbands.

5) User B gets user A to agree it does not matter.6) User B makes an offer to User A and buys out

the usage rights to the spectrum block currentlyowned by User A. This effective allows use A toencroach on frequencies originally owned by userB.

7) User B gets user A to buy it out.8) User A / User B find an alternative solution we

have not yet envisagedThe solutions listed above need perhaps a little expla-

nation. For example the self-imposed guardband shouldbe explained. Under our proposal, we would like to seea situation in which the spectrum consumer exercisesmore choice over whether it wants to acquire excessivebandwidth rights and operate cheap radios with leakytransmission masks, or spend money on more expensivetransmission masks so that it can save on spectrumcosts. Figure 12(a) depicts the two consumers settingup a service within each of its exclusive usage-rightsblock with each consumer choosing to impose differentguardbands so as not to violate its neighbor’s rights.

(a) Self-imposed Wide and Narrow Guard Band

Fig. 12. Variable Guard Bands

The options for the creation of guardbands in thesolution listed above cover all potential interference sce-narios. So, for example, if B is actually the cause of the

interference it alone can use a self-imposed guardband.If, however, A has chosen to use overly-sensitive re-ceivers and is picking up stray frequencies more readily,much like in Scenario 2 in Figure 10, then A will have tore-adjust its operating frequencies and use a self-imposedguardband too. This would be akin to the owner of thehouse surrounded by the sensitive microphones movingthe microphones indoors for example. Alternatively asin Figure 12(a) both parties can choose to use them.

The deployment of very good masks is a valid optionoption. An interesting finding of a recent study of theproblems posed by the adjacent placement of UMTS andDVB-T systems was the fact that standard, off-the-shelfDVB-T transmitters were now meeting thecritical casesmode mask of the DVB standard [17], as shown in Figure13. The critical cases mode mask is mandated for DVBtransmitters that are adjacent to very senistive systems,above and beyond the level of care needed to site a DVBservice next to an UMTS service. This study shows thateven at this early stage, radio equipment is meeting andexceeding some of the challenges necessary for the fluidassignment of services in adjacent bands.

Fig. 13. DVB Masks

As in the case for the co-channel interference, thesolutions listed for the adjacent channel interference,may or may not be economically viable. The technicalsolutions have costs. So for example, as with mosttechnologies, the better the mask, the more expensiveit is. The bargaining with other users that leads to thebuying out of one or other of the users may be prohibitiveboth in terms of transaction costs as well as in terms ofactual purchasing of the rights. Again there may be gameplaying involved, for example on the part of user B, toforce a buy-out. Of course, again, the rights to block A

can change ownership and the solution that B gets Ato say it doesn’t really matter, becomes null and void.However, it is worth stressing that while we recognizedthat the situation is hugely complex, we also recognizedthat the problems are solvable and that as time advancesthe solution space may even grow.

C. Discussion

While the previous case studies were illustrative thereare two distinct points that must be made.

Point 1: The Essential Move from Inputs to Out-puts: Firstly, in discussing the possible solutions for theco-channel and adjacent channel interference problemsin the previous sections, we embraced the ideas ofDe Vany when he calls for a shift from prescriptivelyregulating practices and activities (e.g. individual trans-mitter locations, powers, and antennas antenna heights)to focusing only on the desired result (e.g. the strengthof the signal at the boundary). The reality of this is thatthe consumer of the usage rights block gets to decidewhat exactly suits it best. In other words, the onus is onthe exerciser of the rightsto behave in whatever way ismost suitable to achieve the goals of staying within theboundaries of its rights, be that in terms of frequency,space, time and signal strength. In the examples inthis section the spectrum consumer of the block makeschoices as the consumer sees fit. The concept of theconstruction of blocks of rights and the argument forthe need for policies that should be associated withconstruction behaviors, encapsulates this ethos.

Point 2: The Need for Open Negotiation: Thesecond point worth stressing is that the above list ofsolutions also encompasses some notion of interactivebehavior across boundaries, what we are callingopen ne-gotiation. On one level this is not such a huge step fromwhat currently happens, albeit in a slow and cumbersomemanner, e.g. when operators inadvertently encroach oneach others’ territories and come collectively to somekind of solution. It also has echoes of what happenswhen bilateral roaming agreements are hammered outbetween different operators. On another level, it is ahuge move forward to a more sophisticated engagementwith the nuances of a fluid market. Open negotiation canbe thought about on multiple levels, ranging from moredefined technical approaches to more complex economicscales. On the broader front, Forde [18], in a companionpaper to this, explores the concept of Coasean bargainingwhich may serve as a template for many of the types ofnegotiations mentioned here. The need for negotiationfurther underlines the need for polices that encapsulate

behaviors and policies that are flexible.The key point to take from this discussion is that

policies that are flexible are needed to facilitate fluidand dynamic spectrum markets. They must be flexibleso that a spectrum consumer can exercise choice onhow it meets it obligations as a spectrum user. Theyneed to be flexible to allow an element of negotiationto feature in the system. Whether negotiation occursbefore or after the trade is an open question. Froman engineering point of view, trading with no regardto who your neighboris or who theymight be in thefuture is the more attractive solution (with the possibilityof automated cognitive negotiation becoming a featureof networks of the future). However, negotiations inadvance of trading may prove economically viable.

V. CONCLUSION

In this paper we begin to argue for the designof policies that can encode both the interactiveprocess involved in exercising of rights and thedesired outputs of that process. By this we mean thatexclusive usage rights are all about the exercisingof those rights through the sculpting and shapingof the electromagnetic frequency/beyond-frequencyband-signal-strength-limit/space/beyond-space-signal-strength-limit/time-periodblock so as not to infringe onothers (or for them to infringe on you). A large bodyof work is needed to further progress the ideas in thispaper. In particular, it is necessary to bring the actualimpact of evolving and emerging technologies on anexclusive usage-rights market into the discussion. Inthe concluding sections of the paper we therefore laythe groundwork for further research. There are threetechnological influences that must be considered8.

A. The Technologies of Electromagnetic Sculpting

The first set of technologies are those associated withexercising of exclusive usage rights. This essentiallymeans technologies that facilitate the sculpting andshaping of the the electromagneticfrequency/beyond-frequency band-signal-strength-limit/space/beyond-space-signal-strength-limit/time-periodblock so as notto infringe on others. Hardware that provides goodfiltering to stop frequencies leaking into other bands isa straightforward example of a technology that helpsshape the usage-rights block. Complex technologiesthat would allow neighboring (in frequency or space)

8Note that the term technology is used in a very broad senseand generally refers to hardware and software techniques, methods,approaches, algorithms or solutions.

communication systems to automatically negotiate witheach other along the lines described in the paper thus far,or approaches that allow radios to read from a databaseof usage rights consumers and accordingly adjust theirradiation patterns to take neighbors into account, areall included here. The development of metrics such asthe interference temperature, the use of interferencetemperature services (e.g. a sensor network that providesspatially distributed interference temperature data), thedesign of clever sensing techniques that contributeto being able to sense the strength and pattern ofthe radiated signals and hence inform the process ofelectromagnetic sculpting are other examples. Note thatthe Interference Temperature metric was introducedby the FCC. Kolodzy [19] provides details of thisapproach to interference management. Adaptive beamforming, adaptive power selection etc. all form part ofthe approach to shaping a signal to make best use of theusage rights so as not to infringe on others. Includedalso are all techniques and approaches which not aloneform the radiation pattern associated with the shape ofthe block but also are focused on extracting maximumcapacity from the block in terms of users who haveaccess to the spectrum.

B. The Technologies of Spectrum Fungibility

The second set of technologies are those associatedwith the fungibility of spectrum. Fungibility is a measureof how easily one good may be exchanged or substitutedfor another example of the same good at equal value.In the case of spectrum we are interested in how easyit is to exchange or substitute the spectrum used indelivering a service from one range of frequencies tothe other. This is a very important concern. The useof software and reconfigurable radios will play a rolehere. In an ideal world, these kinds of radios and deviceswould have wideband frequency agile frontends coveringthe whole electromagnetic spectrum and and be capableof reconfiguring to use any available spectrum. At theterminal end, i.e. the end consumer, it is possible toimagine users being able to reconfigure to avail ofwhatever service they require using whatever spectrumis available. However, when thinking of the generalinfrastructure associated with many networks, the practi-cality of enabling spectrum fungibility is challenging. So,for example, a cellular operator offering a service thatcovered a particular areaX, with a particular numberof basetationsY and a given range of frequenciesZ,would have to cover the same area with the same servicewere the frequency range changed toZ2. But, this

might necessitate a change in numbers of basestationsfrom Y to Y 2, where Y 2 >> Y . It may be thatthis way of thinking about network infrastructure andservice delivery will become obsolete, but it is likelythat fungibility will only increase to a certain point, andpossibly only apply within groups of frequency ranges.

C. The Technologies of Trading

The final set of technologies that will play a role inthe evolution of exclusive usage-right markets are thetechnologies associated with the trading itself. So, forexample, whether the trades are carried out using a paperbased mechanism or whether a fully automated marketin which software agents compete for spectrum for thespectrum consumers is used, will have an influence asthese issues may be interlinked with the transaction coststhat might occur. There are many kinds of transactioncosts. For example, search and information costs arisein determining that the required good is available on themarket, and who has the lowest price, etc. Or, bargainingcosts are the costs that are incurred when coming toan acceptable agreement with the other party to thetransaction, drawing up an appropriate contract and soon. The technology involved in these costs will play arole as the ease and the speed at which these transactionscan occur will influence the dynamics of the market aswell as the size of the trading units.

D. In Summary

There is an intensive margin in exercising the us-age rights measured by the cost of the technologiesneeded to do to squeeze the maximum usage from thoserights while managing interference. There is an extensivemargin measured by the cost of making frequenciesmore fungible. The interplay of these margins needsto be further investigated as does the impact of thetechnologies of trading. In a somewhat contradictorymanner, technology neutral policies that will not hamperinnovation and progress, can only be embraced throughlooking at the technology implications in detail andthrough understanding the dynamics of the interactionbetween the various influences.

VI. A CKNOWLEDGMENTS

This material is based on work supported by ScienceFoundation Ireland under grant no. 03/CE3/I405.

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