Wednesday 9 October 2013

Europe needs a coherent and coordinated radio spectrum policy

The mobile broadband has become the most dynamic ICT market and much more important than the underlying technology. It has a transformational impact, driving far-reaching social and economic transformations through new services and changes in consumer habits. It is changing the way we live and work. Europe was once a leader in mobile communications, but has in recent years fallen behind South Korea, Japan, Australia and United States, where markets now enjoy much higher penetration rates of 4G mobile broadband communications than in Europe.

Even within Europe, there are big differences between countries in deployment of 4G mobile broadband networks. There is an eight-year lag between the leaders and laggards in auctioning spectrum for mobile broadband (c.f. Reforming Europe's Telecoms Regulation to Enable the Digital Single Market). The first European countries auctioned tranches of spectrum for 4G mobile broadband communications already in 2007. By the end of 2013, twenty EU Member States will have assigned the 800 MHz spectrum. The remaining eight states will auction the spectrum in 2014 or 2015, with the exception of Bulgaria

Such differences in spectrum allocations and assignments for mobile broadband communications across Europe are unacceptable. Europe needs a coherent and coordinated radio spectrum policy that will enable a smooth transition from 3G to next generation mobile networks (4G and beyond) and application of knowledge and skills to foster economic growth and social development. The success of spectrum policy in general and spectrum assignments in particular must be judged primarily on how successful they are in pursuing these goals.

While the key objectives of EU spectrum policy are defined by the Radio Spectrum Policy Programme (RSPP), the objectives can broadly be summarised as efficiency of delivering benefits to the economy and society (maximising the total net benefits of licensed services) and equity (fairness) of distribution of benefits amongst key stakeholders (e.g. operators and service providers, consumers and businesses, and the treasury). Spectrum proceeds are usually considered as a distinct policy goal, but they have to be considered as a mean to improve efficiency and equity (see, e.g, Where Do We Go from Here?: FCC Auctions and the Future of Radio-Spectrum Management).

The current implementation of the RSPP is inefficient and fragmented. The delays in spectrum assignments for mobile broadband communications reduce both efficiency and equity. According to Cramton, such delays may be in favour of incumbents as impeding competition through delays may be far less costly than outbidding an entrant in an auction. Therefore, “avoiding economic loss from delay should be a main priority of the regulator.”

The spectrum policy objectives can be further jeopardised by governments (or regulators) that use spectrum auctions to maximise proceeds. Focusing simply on maximisation of proceeds may be short-sighted and may even result in monopolies (e.g. the Slovenian 3G spectrum award in 2001). Operators in high priced auctions may be pushed to their financial limits with insufficient resources for investment, resulting in slower rollout of mobile broadband networks.

Some regulators also use discriminatory rules and procedures in spectrum assignment processes, such as reserved spectrum, benefiting new entrants, which may have a substantial negative impact on network investments.

An urgent policy response is required at the EU level to ensure a coherent and coordinated radio spectrum policy across the continent. We need better coordination of spectrum, harmonised spectrum assignment conditions and lower deployment costs. Without consolidation and harmonisation of spectrum policy, the achievement of EU spectrum policy objectives will be threatened and Europe will fall further behind leading international markets in mobile broadband communications.

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