Create independent regulatory agency for spectrum management: Report

Industry Canada's spectrum management operations should be spun off into an independent regulatory agency to safeguard against political interference, according to a government-commissioned study obtained by Report on Wireless through Access to Information.The report, A Study of Market-based Exclusive Spectrum Rights, says Canada should scrap its current spectrum management program if it wants to manage the resource with a more market-friendly hand. This would require moving Industry Canada away from an administrative or command and control type of spectrum management approach to one where spectrum licences are considered property of their owners.To achieve this, the report recommends a major overhaul to Industry Canada's spectrum management operations, including the creation on an independent regulatory agency "responsible only for the regulation of the spectrum resource."This is only one of the three main recommendations that the 113-page report relays to Industry Canada. The study also recommends the implementation of spectrum trading "along with defined, flexible user rights" and the development of a two-phased plan with specific milestones for adopting the new principles.The report, prepared by McLean Foster & Co. in collaboration with Martin Cave, Robert Jones and William Lehr, was commissioned by Industry Canada in the spring of 2007 in the wake of recommendations from the Telecommunications Policy Review Panel. The TPRP suggested the federal government implement market-based approaches to spectrum management to more effectively manage the scarce resource.Industry Canada won't comment on the report until after the federal election, but in a September 2007 interview, Pat Carrey, a senior advisor in the department's spectrum branch, said "There's a lot of detail , so we plan on using this as a reference for further consultations and studies, but we don't have anything at this time."Speculation has it that Industry Canada wasn't happy with the report, but it's not clear why.Currently, Industry Canada dictates when, how much and in what manner spectrum is going to be licensed. And while the department has implemented some market-based mechanisms to spectrum management in recent years such as spectrum licence trading in certain bands - licences are divisible both geographically and in block size - all transactions require Ministerial approval. This is an aspect of the current system that would be eliminated in a new spectrum user rights (SUR) regime.At the Spectrum 20/20 conference earlier this year in Ottawa, Cave, a professor and director for the Centre for Management under Regulation at the Warwick Business School in the UK, said current administrative methods of managing spectrum don't meet the needs of a market-based economy. The way forward, he noted, is to convert licences to property, which in effect would turn spectrum to a tradeable good.The UK telecommunications regulator Ofcom has already started the transition to a SUR and hopes to have to mostly complete by 2010.SUR have been gaining momentum in many parts of the world as demand for spectrum particularly below the 3 GHz range has increased dramatically. While the traditional command and control method of spectrum management works when demand for spectrum is below the supply, this isn't the case when demand exceeds supply."The economic significance and intensified competition among the many different applications using spectrum, particularly for bands lying below 3 GHz, is undermining the effectiveness of the traditional model," reads the report. "As the traditional approach targets technical factors and focuses primarily on harmful interference, it is relatively inflexible and less amenable for dealing with criteria such as economic efficiency."Key RecommendationsIndustry Canada should accelerate the pace of reform of spectrum management in Canada by specifically adopting policy directives which give greater force to the implementation of secondary markets, namely by enabling spectrum trading along with flexible user rights and defined spectrum user rights.Ministerial approval for every trade should be required and should be replaced by a self-certification process in which those involved in the trade certify that they have met all of the government requirements.Spectrum usage rights should be established on a firm technical footing to ensure technical and service neutrality.The spectrum manager should be constituted as an independent regulatory agency subject to policy direction from the federal government as to the objectives of spectrum management but with the power to choose its own means of accomplishing these objectives. Such an arrangement removes the details of spectrum management from the political arena.Industry Canada should develop a two-phased implementation plan with annual milestones that detail specific actions to be taken as part of this transition. This will be necessary to ensure that sufficient spectrum is made available at the same time to avoid congestion, hoarding and allegations of unequal treatment.In the first phase, trading without department approval and with defined flexible spectrum user rights would begin for a) spectrum already assigned through an auction; b) spectrum to be auction and spectrum licensed by comparative review prior to the Radiocommunication Act of 1996; and c) all other frequencies/bands allocation to space or terrestrial services used for the commercial supply of telecom services, including trunked radio, paging and mobile telephony.In the second phase, a significant part of the spectrum used to provide services in the public interest should be made available for trading, permitting the disposal of any permanent or temporary surpluses. As well, organizations serving the public interest should be required to anticipate their spectrum needs and given the means to acquire additional spectrum if need be.There should be longer licence terms of 15-20 years and very long-term licences of of 30-40 years.Spectrum freed as a result of the switch-off of analog terrestrial broadcasting services should returned to the government and auctioned to provide a "digital dividend" for all Canadians in the form of new highly valued services, auction revenues or perhaps subsidies as in the US for costs incurred by households.

Create independent regulatory agency for spectrum management: Report

News | 10/02/2008 7:37 pm EDT

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