Regulators need to “remove” themselves from spectrum management, ACA says

Governments should consider a laissez-faire approach to regulating spectrum as a way to better exploit the resource. That was one of the key arguments from a short presentation by John Grant, senior executive manager of radiocommunications with the Australian Communications Authority (ACA), at the recent Spectrum 20/20 conference in Ottawa. Grant said that forcing companies to milk the maximum out of their spectrum holdings is an effective way to manage spectrum. "We have to look at private spectrum regulators. Government isn’t necessarily the best regulator of spectrum," he stated during the session on innovation, engineering and economics. Asked how spectrum managers can ensure true economic efficiency from spectrum when economic principles are only applied to a small portion of available bandwidth, Grant responded that the Australian regulator uses a number of methods. The ACA uses auctions, spectrum trading and leasing, gives greater discretion to licensees and applies an annual fee to un-auctioned spectrum as tools for ensuring greater economic efficiency. Grant said, however, that simultaneous, multiple-round auctions have been applied poorly in the past and they don’t necessarily generate the greatest return. In cases where this type of auction has been used, the regulator determined the number of bidders, number of licences and bands. In countries where this didn’t occur - Austria, Australia and Germany - he argued the result was greater use of the spectrum. He also said that one could argue that those countries that set limits on the number of players and licences created an artificial scarcity of spectrum. Citing a successful bidder in Australia’s third-generation wireless auction, Grant said the company wasn’t even contemplating 3G services when it entered the auction. It chose to implement a wireless data service, using smart antenna technologies, that now offers speeds far greater than those that could be achieved with 3G. Grant said regulators have to step back and let the market play out. "If we are to achieve economic efficiency, regulators have to be less deterministic" and let the market set out the number of licences and players, he stated. The Australian regulator added that the problem associated with the lack of land mobile spectrum below the 1 GHz range also has to be addressed. Regulators tend to take a conservative estimate in assigning spectrum below 1 GHz and that a market-based approach should be adopted for these "old" bands. Another way to get more out of spectrum is to assign a value to non-auctioned spectrum. This will allow the regulator to force inefficient users out of the band and let those in that will use the resource more effectively. Responding to two questions from Earl Hoeg, Industry Canada’s director of spectrum management operations, requesting advice on spectrum leasing and how the regulator stays out of a spectrum leasing dispute, Grant said the licensee can do nearly anything it wants with the spectrum. In most cases, the regulator is not even aware that a transaction has taken place. In others, the regulator would only know that two companies entered into a spectrum leasing arrangement if a radio transmitter had to be installed. Grant said the ACA is still struggling with moving to a market-based environment for spectrum below 1 GHz, but noted the U.S. Federal Communications Commission is making headway in that regard. The ACA is even considering auctioning incumbents’ spectrum as a potential solution to the lack of land mobile spectrum.

Regulators need to “remove” themselves from spectrum management, ACA says

Broadcast | December 16, 2003

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