Best Practice Spectrum Management
The principles of best practice spectrum management are well established and their implementation can enhance the socio-economic value of spectrum and how much operators are prepared to pay to acquire new spectrum. Whilst most regulators in developed markets have adopted best practice, the same cannot be said for developing markets. Coleago recently studied the regulatory environments in 16 African markets and recorded the extent to which best practice had been adopted.
The study revealed big differences between markets and in all cases, there were opportunities for improving the management of spectrum. Our project work in regions such as Latin America, the Middle East and Asia has revealed similar trends in other developing markets. In this article we provide a high-level overview of what is generally regarded as best practice spectrum management and we invite regulators (and operators) to compare their markets against international best practice.
Related insights
Principles of best practice spectrum management
Regulatory approach
The regulator responsible for managing spectrum should be independent and should seek to pursue the transparent, fair and economically efficient management of spectrum in the public interest.
Review existing spectrum assignments
A review of existing assignments should be undertaken as many existing band plans reflect the needs of 2G and 3G technologies and are not optimised for 4G and 5G technologies. The regulator should facilitate an industry wide review of existing assignments and develop a plan to optimise the existing band plan.
Ensure transparency
A key element of transparency is to publish a spectrum roadmap, developed in consultation with the industry, which sets out which bands, in which quantities will be made available and when.
Optimise spectrum availability
Spectrum should be made available when it is needed and spectrum should not be withheld or “drip fed” into the market in order to create artificial scarcity to secure higher spectrum prices.
The universal maturity of telecom markets across the globe means that spectrum should not be set aside for new entrants as this is likely to result in spectrum not being used efficiently.
Similarly, very careful analysis should be undertaken prior to setting aside spectrum for industry verticals and alternative approaches such as sharing and leasing arrangements should be considered to avoid reducing the spectrum available for the mobile industry.
Avoid single wholesale networks, most of the time
Single wholesale networks do not have a strong track record and are generally not regarded as best practice. However, a single, wholesale network may be a potential solution for addressing issues related to deep rural coverage.
Licensing policy and framework
The licensing framework should be fit-for-purpose but otherwise as simple as possible. Best practice typically calls for some form of unified service licence which allows operators the flexibility to offer customers a wide range of services combined with spectrum licences which define the rights related to specific frequency bands.
Spectrum licences should be technology and service neutral to allow operators to decide how to use the spectrum as efficiently as possible. The conditions set out in any spectrum licence should be clearly defined and regulators should avoid onerous licence conditions which may result in the spectrum not being economically viable for an operator. Overly demanding coverage and quality of service obligations can be particularly problematic, and in some cases, can result in spectrum being left unassigned.
The licence term associated for new spectrum should be as long as possible or even indefinite (if accompanied by provisions for spectrum trading). Long licence terms, such as 20 years or more, provide incentives for investment.
Spectrum award mechanism
The mechanism by which spectrum licences are awarded should reflect the demand for the spectrum relative to the supply. Where demand for the spectrum exceeds supply, then if a suitable auction can be designed, then this will potentially support the economically efficient allocation of spectrum. The auction should be well-designed and when auctions are not appropriate, a fair and transparent administered approach should be adopted.
Spectrum caps
The use of spectrum caps should be approached with great care and regulators should seek to strike an appropriate balance between technical efficiency, economic efficiency and competition considerations.
Spectrum pricing
When adopting an auction, the reserve price should be low, but non-trivial and when spectrum prices are determined by auction, then any ongoing, annual spectrum usage fees should be low and based on the regulator’s costs of spectrum
management.
Where auctions are not adopted, then where there is no excess demand, the cost of spectrum should be based on the costs of spectrum management. Where there is excess but an appropriate auction cannot be implemented, then some form of Administered Incentive Pricing could be considered but regulators should ensure that the resulting AIP prices are not so high that they deter the efficient use of spectrum or investment.
Spectrum licence renewal
The renewals process should be well-defined and should commence a minimum of three years before the end of the licence term and ideally earlier. There should be a presumption of renewal in favour of the incumbents and renewal fees should be appropriate and not excessive.
Spectrum sharing, leasing and trading
Frameworks should be in place to support spectrum sharing, leasing and trading, subject to suitable regulatory approvals to ensure that effective competition in the market is not compromised.
Conclusion
Adopting the principles of best practice spectrum management should be a priority for regulators in all markets, but especially in developing markets. Adopting best practice spectrum management principles will enhance the socio-economic value of spectrum and generate benefits for consumers, businesses and public organisations alike. A transparent and equitable approach to telecoms regulation will also promote and encourage investment and innovation.
How Coleago can help
Coleago has worked with regulators in both developed and developing markets. We can support regulators through a review of their existing policies and practices and compare these with best practice. We can identify gaps and provide a practical set of recommendations to move towards best practice. Please get in touch to explore how we can help you implement a best practice spectrum management framework in your market.
Other insights
The Case for Strategic Spectrum Renewal
As spectrum licences approach their expiry date, a strategic approach to spectrum renewal is crucial. Traditional presumption of renewal in favour of incumbents may no longer serve the industry’s needs. Instead, a more strategic approach to renewal can optimise spectrum assignments and improve spectral efficiency by up to 40%.
Learning From Best Practice Spectrum Management in Botswana
The Botswana Communications Regulatory Authority conducted a review of its spectrum management strategy to align with international best practice. The Authority was advised by Coleago and in this paper, Project Director Graham Friend highlights the lessons to be learned for other regulators in developing markets.
The End of Telecoms History? – Not Quite!
At the European 5G conference, Stefan Zehle highlighted that differences in mobile data usage across countries result from variations in price and network availability. While European policymakers celebrate 89% 5G coverage, gaps in both outdoor and indoor connectivity limit usage. William Webb’s prediction that data traffic will plateau at 20 GB per user per month by 2027 seems unlikely, given that top users already exceed 100 GB. To fully realise 5G’s potential, policymakers must address these coverage issues in a cost-effective manner.
Insights from a Strategic Spectrum Review
The mobile industry has accumulated a fragmented spectrum portfolio, consisting of various frequency bands that are sub-optimally allocated for modern technologies like 4G and 5G. As operators transition from legacy technologies such as 2G and 3G to newer, bandwidth-intensive solutions, the need for contiguous spectrum blocks has become critical.
The End of Telecoms History? Not Really
In his book The End of Telecoms History, William Webb uses extrapolation of mobile data usage growth curves to claim that mobile data user requirements are nearly met
and that we have all we need
. He predicts mobile data usage to plateau at around 15-20 Gbytes/user/month
. Webb claims that no further investment in 5G capacity is needed and that the only remaining problem is ubiquity, notably in-building coverage. This article provides evidence that, while the author makes some good points, his analysis with regards to mobile data usage is flawed and hence the conclusions he draws are quite wrong.
Mobile Network, Spectrum, and Public Policy Outlook to 2030
The report is based on the Coleago report ‘Mobile Services, Spectrum and Network Evolution to 2025’ (March 2021), updated to align with the latest developments as well as with market projections to 2030. It provides a review for telecoms regulators and mobile operators of key global developments, insights, trends, and best international practices, to inform future spectrum policy and management as well as operator strategies.
