Response to the RA's Consultative Document entitled
"The Future of the Radio Spectrum"
Section 2

This section gives a specific response to each of the Government's proposals with explanation and should be read in conjunction with section 1.

(NB: The responses in this section have numbers that correspond to the numbers of the paragraphs in the Consultative document. To avoid confusion, these numbers are given in brackets. The first number refers to the summary chapter, the second to the main body of the document.)

Summary

Section 1: Executive summary of JRC views on all major issues. {15kB}

SECTION 2

1. Current RA Spectrum Management
2. Shortcomings in RA
3. Further Specific Actions
4. Have existing SMOs been successful in spectrum efficiency
5. Is there further scope for extending self management
6. Commercial SMOs and hence partial privatisation ofspectrum management
7. Would a commercial SMO lead to greater efficiency and/or greater end user satisfaction
8. What problems with management rights of SMO
9. Is there a need for an independent advisory committee
10. Is more open access desirable
11. Would any of the factors given below either singly or in combination form the basis for setting fees
12. What would the advantages/disadvantages be
13. Would administrative pricing have any advantage over auctions
14. What benefits/drawbacks of auctioning management rights to a commercial SMO
15. Benefits/drawbacks of direct auction to end users
16. Benefits/drawbacks of auctions only in congested bands
17. The need for safeguards for 'assured market access' for certain services
18. Scope for safeguards against market abuse
19. What rights of spectrum access and security of tenure would be given
20. Would a secondary market encourage re-sale of unused spectrum
21. Would a secondary market promote more efficient use
22. Would a secondary market make it easier for existing and potential users to acquire spectrum
23. How far should RA retain the enforcement role
24. How far should SMOs be given an enforcement role
    • 24b Should action be in users hands through civil court action
25. What factors should determine spectrum prices
26. How could SMOs be encouraged and what role could they play
27. What core spectrum management functions need to be performed by government
    • Comments on overall plan for reform as described in Chapter 8

Q1 Current RA spectrum management (1.5, 4.25)

JRC expectations of RA have been in terms of overall spectrum allocation rather than detail assignment, and the difficulties which have been experienced over the years have related to not enough emphasis or effort being put into long term frequency planning. The root cause of these difficulties have been at the international level, where it is acknowledged to be difficult to balance the needs of vastly different users, and the different national attitudes with a far looking view to the future. But, however caused, these difficulties have resulted in increased expenditure, a poorer communications service and ultimately less efficiency in the operations of the utility industries than might have been the case if the industries had the stability and capacity of radio systems they required.

Q2 Shortcomings in RA (1.5, 4.26)

The JRC believes that the challenges of achieving greater spectrum efficiency will require RA's role and funding to be enhanced.

Q3 Further specific actions (1.5, 4.26)

It is clear that pressure for more intensive use of the spectrum is continuing to grow, and in consequence the effort put into using the spectrum more effectively has to grow also. The consultative document has explored the ways in which market forces could be brought to bear, and has looked at activities in other countries who are adopting such approaches. It is, however, important to evolve a spectrum management policy which can cope with demand. The factors which are believed to be important are:

• balancing the demands and requirements of diverse users of spectrum, i.e. bro adcasting, defence, public and private services.
• ensuring that the pressure to improve spectral efficiency is shared equally by all users.
• coping with the re-development of spectrum over time to ensure that higher efficiency is practised by all users and not just the last comers.
• balancing the need for security of tenure with the need to adopt more efficient techniques.
• ensuring that co-ordination is maintained with Europe, with similar or compatible use of the various bands in the spectrum. Even if trans-European operation isn't needed, co-ordination is required to minimise long range interference problems.

A key problem is seen as the increasing pressure on parts of the spectrum by increasing traffic. With the availability of 'new' spectrum being severely limited there is a need to ensure re-working of existing spectrum, i.e. that already assigned and in use. This is considered to be a vital long term planning task for RA, so that if necessary, ongoing pressure over decades can be planned by ensuring that within sensible life spans of equipment a process of change can be facilitated to accommodate the growth of existing users and the entry of new users.

Q4 Have existing SMOs been successful in spectrum efficiency? (1.7-1.9, 5.11-5.12)

The JRC was faced with a reduced amount of spectrum in which its members needed to carry an increasing level of traffic, and only achieved this by adopting significantly more efficient spectrum utilisation techniques than before. In anticipating that its member industries will need to accommodate further increases in traffic demand, techniques for achieving significantly higher levels of traffic within the existing allocation are being studied. In the JRC's case it is considered that a degree of self management has resulted a spectrally efficient system, and will continue to do so.

In addition to its role of day to day management of its bands, it also brings together the long term issues being considered by its user industries. This brings into the long range planning process the essential element of end user and organisation requirements which is so often under represented. A combination of an understanding of current and long term requirements, with the issues of long term planning give an SMO a sound basis for spectrally efficient planning. For this to be fully effective however there needs to be an open interchange with the overall spectrum management body which can bring together the requirements from other users and potential users to balance their differing requirements and ensure a long term plan with the required capacity.

Q5 Is there further scope for extending self management? (1.7-1.9, 5.11-5.12)

As an organisation which believes it has been successful in the partial self management of its specific allocation of spectrum, the JRC sees this as potentially useful in other situations. It is also aware of the environment in which self-management is likely to successful and the limits to what can be expected of the approach. In particular the issue of balancing requirements and justifications amongst widely different classes of user, and the need to be able to re-work frequency assignments over the longer period, mean that the self-management functions need to be closely dovetailed into the responsibilities and functions of the RA.

Q6 Commercial SMOs and hence partial privatisation of spectrum management. (1.7- 1.9, 7.20-7.27).

The devolution of management to a commercial organisation, presupposes that there is stability with time and the commercial SMO isn't going to be subject to the re-working of spectrum as pressure continues to build for greater traffic.

The objective of spectrum management is to ensure the availability of radio spectrum to all those who have a need for it. There are cost mechanisms inherent in the process of adopting techniques giving greater spectrum efficiency, so that using commercial SMO's and market pricing mechanisms could distort the cost pressures which will inevitably exist.

Q7 Would a commercial SMO lead to greater efficiency and or greater end user satisfaction? (1.7-1.9, 7.24)

Presumably the perceived advantage of commercial SMOs is that potential users will pay what the spectrum is worth to them, and hence allow a 'market forces' balance of supply and demand to be reached. But is spectrum a sufficiently simple 'product' to be traded on this basis? One of the key characteristics of spectrum is the way it can be re-used more intensively by changing the RF design parameters of an overall group of co-channel systems, or alternatively change the channelling and, or modulation techniques to achieve higher capacity for a given bandwidth and area. It can be expected that pressure for spectrum will continue to grow and that spectrum will have to be re-worked with one or more of these parameters changing. The existence of a commercial intermediary could be anticipated as being more of a hindrance than a help in such a long term development, and would thus detract from overall efficiency. Since the objective must be to ensure that spectrum is utilised as efficiently as necessary to allow access to those who wish to use radio, then the commercial SMO could detract from efficiency.

It would be necessary to provide checks to ensure that the SMO didn't exploit its position, by being linked with a particular technique for spectrum usage and an organisation which supplied that technology.

Q8 What problems with management rights of SMO? (1.9-7.27)

A SMO could be even more sensitive to security of tenure issues, than the current users of systems, since the need to re-work spectrum would be a factor outside their control and would impinge on the SMOs financial credibility.

Q9 Is there a need for an independent advisory committee? (1.10, 5.8-5.10).

The major allocations of spectrum are between defence, broadcasting, emergency services, public services and a myriad of smaller but important users. It is in this context that there needs to be some arbitration between the legitimate but sometimes conflicting interests. This interests are at core just different facets of the needs of the community, and it is probably appropriate that the balancing of these interests are performed by a body such as the National Radio Spectrum Committee as suggested in the Stage 3 Spectrum Review. In general the JRC supports the views put forward in section 10.15 to 10.26 of that report for bringing together the various interests.

Because of the need to reconcile a wide range of national interests it is suggested that a Parliamentary Committee should be appointed to ensure that the structures operate in the overall public interest.

Q10 Is more open access desirable? (1.11, 5.27)

While some services may wish to keep channel and usage details from becoming public knowledge, there can be little argument against general details of what band is assigned to who being publicly accessible. The US context in which this is raised doesn't seem relevant to the UK.

Because of a low level of spectrum management there it appears that users do there own investigations of where a free channel might be. With the current reasonably effective spectrum management in the UK, access to detail information doesn't seem to be a significant issue.

It can be envisaged that issues of commercial confidentiality as well as security could be significant restraints on allowing unlimited access to information.

It is likely that SMOs would need to access RA databases and through RA to access those of neighbouring countries, in order that they can carry out their spectrum management effectively. This is particular important for co-ordination with other services, both in the UK and with our European neighbours.

Q11 Would any of the factors given below either singly or in combination form the basis for setting fees? (1.12-1.15 including sub questions a-e, 6.20- 6.27).

• By frequency band
• by spectrum used
• by channels used
• by degree of loading
• by efficiency of equipment
• by transmit power/coverage area
• by geographical location

Factors which appear relevant to determining administrative pricing. The JRC believes that it would be fair and equitable for spectrum fees to reflect the use made of the spectrum, with the basic dimensions of this usage being the product of bandwidth and area. Support for fees based on these broad principles assumes that the revenue raised is used to provide the overall spectrum management necessary to ensure that an equitable access to the spectrum for all who have a reasonable demand and that a policy of spectrum re-working is practiced which ensures improvements of efficiency in line with the growth of demand.

Fees proportional to the quantity of spectrum would seem to be fair approach particularly for major users where nation-wide use of the spectrum is involved.

In the case of limited area schemes the coverage area of a scheme is a significant factor in measuring spectral efficiency (Erlangs/Hz/km2 or bps/Hz/km2) In the case of two way schemes the coverage of both ends would be relevant (i.e. ensuring a balance of base and mobile power in a mobile system. Thus for limited area schemes, coverage area would be a valid basis for fees, although using effective radiated power would be easier to administer.

Taking up the theme of the stage 3 Spectrum Review, paragraph 11.36, it could be appropriate to include the 'protection factor' as a measure of the quality of the spectrum allocation.

Thus an allocation for an area would have associated with it a protection factor such as 'interference not exceeding -147dBW in 8kHz bandwidth for more than 10% of time for 10% of locations.' A practical approach would be to have segments of spectrum giving a range of quality of services, based on design protection ratio and hence density of frequency re-use, with a range of fees reflecting spectrum re-use.

One of the key questions is whether it would be useful to react to the popularity of some parts of the spectrum by loading the spectrum fees for the most popular sectors. On the basis that steps will need to be taken to improve spectrum efficiency to match demand for increased traffic and new services, and that there will therefore need to be a policy of re-working of the spectrum to bring this about, it is proposed that the use of higher efficiency techniques should be mandated in those parts of the spectrum subject to the greatest demand. The change to systems capable of greater capacity would involve users or provider organisations with significant costs, and would provide the stimulus to consider other spectrum which would allow a lower overall system cost. It is suggested in this way existing economic pressures could be utilised to balance the demand on the total spectrum while encouraging the drive for greater efficiency of spectrum use which will be the key to allowing existing users to continued access and growth while providing spectrum for new entrants. It would be necessary for the overall spectrum regulator to have set out a policy for meeting increasing demand with a policy of adopting increasing efficiency techniques in those bands where demand is seen to be exceeding available capacity. There would be a role in encouraging spectrum efficiency techniques, both through focusing R & D efforts to solve the technical problems, and through ensuring that the regulatory and spectrum management environment supports the more efficient radio system techniques and manages re-working of the spectrum to allow for the installation of new systems and the phasing out of old in time scales which permit the economic life of existing systems to be achieved.

For microwave links a complex method based on bandwidth might be derived.

Through the use of spectrum pricing reflecting the frequency and spatial dimensions of usage, in which the revenues derived are used to fund the spectrum management process, together with regulation to set spectrum efficiency standards, a reasonably costed method of ensuring expansion of spectrum efficiency and capacity could be achieved.

Q12 What would the advantages/disadvantages be? (1.15, 6.20-6.27)

By selection of parameters appropriate to the tenure of spectrum, administrative pricing could be tailored to reflect the basis of efficient spectrum utilisation. For major users a charge based on spectrum occupied and the band which it is in would provide an incentive to develop spectrally efficient systems within the spectrum they occupy. For smaller uses, not using channels nationally then it would be appropriate to base the fee on bandwidth occupied, and the area of coverage, related in some way to the measure of E/Hz/km2, or E/Hz related to population density.

Q13 Would administrative pricing have any advantage over auctions? (1.15, 6.20-6.27)

Auctions put the decision making as to the value of spectrum directly or indirectly, into the hands of the providers of the communications service. This provides a very simple mechanism although it is expected that a variety of safeguards would have to be incorporated to avoid abuse. However the simplicity of the mechanism is likely to be ill suited to the complexity needed to deal with the variety of different uses to which radio can be put. The balancing of security of tenure with the need to move on to more efficient systems requires on going assessment of rate of traffic growth, the requirements of current occupiers of spectrum and the demands of potential new users. The use of administrative pricing reflecting spectrum efficiency principles, and used to finance the necessary strategic and detailed planning by RA, and SMOs where appropriate, is thought to be an approach which will give the stimulus to the highest growth to radio capacity with maximum benefit to the community.

It is noted that the FCC has recently ruled that spectrum pricing will be targeted at service providers only, and not private users.

Would auctions improve spectrum management? (1.17 -1.19, 7.58)

Bidding processes provide a simple mechanism for allowing potential system operators to express their valuation of the spectrum and hence how confident they are that they can make efficient use of it. Such a simple approach does not take sufficient account of the long term nature of increasing the capacity of the radio spectrum. The overall balancing of the requirements of various current and future potential users requires a high level administrative input to assure even handed treatment of the diverse users of radio. In addition to the opening of new spectrum it is highly probable that current bands will require to be re-worked to achieve higher spectral efficiency. It is anticipated that an efficiently administered system, funded from spectrum use fees, would provide radio spectrum accessible to the wide range of potential users, with overall greater efficiency and capacity, and at lower cost to all users, than could be achieved by an auction system

Q14 What benefits / drawbacks of auctioning management rights to a commercial SMO?

Q15 Benefits/drawbacks of direct auction to end users?

Q16 Benefits/drawbacks of auctions only in congested bands?

Q17 The need for safeguards for 'assured market access' for certain services?

Q18 Scope of safeguards against market abuse?

Q19 What rights of spectrum access and security of tenure would be given? (1.17- 1.19, 7.39-7.58)

The questions 14 through to 19 relate to the detail of auctioning, and the comments given here relate to the overall issue of auctioning. As has been commented elsewhere in this reply, the complexity of the issues of achieving continuing improvements in spectral efficiency demand a central co-ordinating role. The use of a simplistic mechanism such as competition for spectrum through auctions would detract from the achievement of spectral efficiency. It would tend to a method of 'rationing' on the basis of price, rather than regarding spectrum as a resource which can be re-worked to yield increasing traffic capacity to meet the demands which may be placed on it in the coming decades.

If the Government were looking for novel methods of generating revenue, then, as the quoted Polish and Mexican use of auctions indicates, auctions can indeed be used to translate spectrum into money, however it is understood from the consultative document that is not the intention in the UK.

Q20 Would a secondary market encourage re-sale of unused spectrum? (1.20-1.22, 7.8-7.13)

It is presumed this relates specifically to individual schemes using spectrum in a limited geographic area, where there is a diversity of small users looking for a frequency-space slot for there own limited scheme. Even in this limited situation it is thought likely that an efficiently administered system would provide a more effective mechanism for re-allocating spectrum.

Q21 Would a secondary market promote more efficient use? (1.20-1.22, 7.8-7.13)

As above, the use of a balanced spectrum fee to fund an efficient administration of frequency-space slots is thought to offer more efficient usage.

Q22 Would a secondary market make it easier for existing and potential users to acquire spectrum? (1.20-1.22, 7.8-7.13)

An efficient administration is thought to be able to offer both existing and potential users a more effective way of acquiring unused or under used spectrum. In simple financial incentive terms, the difference between not paying the administrative fee, as against being able to sell 'rights' to redundant spectrum is not thought to be significant. The single approach to spectrum administration is likely to give better administration and a greater availability of spectrum to users.

Q23 How far should RA retain the enforcement role? (1.23, 7.28-7.38)

Please refer to the answer to Q24

Q24 How far should SMOs be given an enforcement role? (1.23, 7.28-7.38)

It is probably administratively efficient for a SMO to be the first line of enforcement of delegated licence enforcement powers, but that the ultimate powers of enforcement need to reside with RA.

Q24b Should action be in users hands through civil court action? (1.23, 7.28-7.38)

This seems to be an answer to a lawyers prayer.

Q25 What factors should determine spectrum prices? (1.24-1.29, 8.7)

It would seem reasonable that the cost of ensuring that effective spectrum management can be achieved, both current and into the future, should form the basis of the overall income required and hence the determining factor in the total income required from spectrum charges.

The underlying measure of spectrum utilisation is the use of bandwidth per unit area (Hz/km2). For large scale users, and where an SMO acts on behalf of a group of users, then allocation can be on a national basis and the spectrum charge would be based on bandwidth used UK wide. For users wanting spectrum over a limited area, then the definition of what area to use has to be resolved, and this possibly could be in terms of the area over which signals capable of creating significant interference can exist. This would need to be generalised to a workable measure, such as the effective radiated power of the transmitter.

The differences of radio propagation over the range of frequencies, mean that some services are easier and cheaper to implement in particular bands. Typically wide area coverage mobile communications is easiest and cheapest at VHF. The central theme of the consultative document is that market forces should establish what users are prepared to pay for any part of the spectrum, and even where auctions or similar market mechanisms are not used the level of pricing would be based on the market test values. It is implicit in this argument that the higher price a user or commercial SMO pays, will cause them to develop more spectrally efficient systems, to allow more users onto that spectrum. The costs of changing to more spectrally efficient techniques are high and with spectrum pricing determined by a market forces mechanism it can be anticipated that the levels of spectrum price will be correspondingly high. This could be expected to have two major impacts, one on increasing the costs to end users, and also to raise the threshold below which potential applications of radio will be turned away. In effect introducing a form of rationing by price. Since it is generally agreed that communications plays a significant part in promoting the efficiency of the overall national economy, it is highly undesirable to inhibit the growth of radio services and applications by the application of the pricing mechanism described in chapter 8.

It is argued that the development of the radio spectrum to accommodate an increasing number of users and level of traffic is a complex issue requiring technical developments, international agreements and the re-working of spectrum to give the capacity likely to be demanded in the future. The RA and other nations governmental bodies are seen as having a central role in co-ordinating the efforts of system developers, users and potential users to develop standards and international co-ordination. These activities are seen as being funded by the fees charged for spectrum usage.

Q26 How could SMOs be encouraged and what role could they play? (1.24-1.29, 8.20)

The JRC have demonstrated that the RA can delegate frequency allocation responsibility to an SMO and that the SMO can indeed respond to the limited availability of spectrum by adopting techniques to achieve higher spectrum efficiency. The efforts at the organisation dealing with the development of a small part of the spectrum, need to be supplemented by work at a higher level to ensure that the wider issues of spectrum efficiency are being tackled.

Q27 What core spectrum management functions need to be performed by government? (1.24-1.28, 8.23)

SMOs can, based on our experience in the JRC, effectively carry out the detailed frequency assignment and plan and implement their own improvements in spectrum efficiency. However, the government needs to maintain the responsibility for co-ordination between SMO managed spectrum and be the organisation which carries the overall responsibility for ensuring that the spectrum as a whole is developed to yield the traffic capacity required by all reasonable users. It is highly likely that the demand for additional radio capacity will continue to grow for decades and there will be major issues in responding to this with continuing improvements in spectral efficiency. This is likely to require re-working of the spectrum and a careful balancing of users security of tenure with the need to adopt more efficient techniques.

Comments on overall plan for reform as described in Chapter 8.(1.24, 8.24)

We believe that the expansion of the use of SMOs, can be beneficial in allowing detailed frequency assignment to be carried out closer to the end user of the radio services. The JRC member companies are generally satisfied with the way in which the JRC has dealt with the detail of frequency assignment, and it can be anticipated that this delegation of powers by RA could be applicable to other situations. Spectral pricing reflecting spectrum efficiency is also seen as a reasonable method of highlighting spectrum efficiency issues.

However, it is considered that the complexity of the ongoing process of improving spectrum efficiency requires the involvement of government, and that the market forces mechanism does not provide the appropriate means to provide equitable development of spectrum efficiency, nor is it likely to ensure access to radio spectrum to every one with a reasonable claim to it.