Radio spectrum is the channel through which today’s wireless communications travel. It is a scarce resource that governments have a responsibility to manage intelligently and efficiently with a holistic, long-term vision. This makes spectrum a critical element for the digitisation of society and the economy that should not respond to occasional public sector funding needs.
Artificial scarcity of spectrum usage rights makes deployments more expensive and impacts negatively on end-users, who will have less network capacity available at a higher price. However, spectrum scarcity in any band can also occur because demand is greater than supply, and indeed this is the most common situation.
The way in which spectrum is allocated in such cases is critical and, so far, the conditions set in spectrum auction processes tend to seek to: increase the level of competition in the end market by determining the number of competitors, bring service to areas where it is not profitable through coverage obligations, and maximise revenues for the state.
The result of these conflicting policy objectives is often that customers are unable to enjoy the networks they need, as the limited resources of operators end up being devoted to buying spectrum at artificially high prices rather than to improving the coverage and capacity offered to users. To reverse this situation, a change in the bidding processes is needed, including:
- Limiting spectrum reservations for entrants and small operators to clear cases of lack of competition that cannot be remedied by the measures foreseen in the regulatory framework.
- Setting reserve prices based on the value of spectrum in alternative uses, rather than on estimated availability to pay.
- Provide economic incentives for operators to offer coverage commitments in exchange for reductions in spectrum fees.
- Increase the duration of new licences and enable renewal of existing licences in exchange for coverage or capacity commitments, where this does not have a significant impact on competition.
It is common that frequencies potentially useful for broadband service are occupied by other services and technologies, such as satellite communications or broadcast TV channels, whose users have legitimate usage rights and have invested heavily to take advantage of them.
Spectrum policy should create incentives and provide mechanisms for incumbent users and potential new users to find synergies and reach voluntary sharing agreements that maximise the value and use of spectrum.
