Simon Forge SCF Associates Ltd All rights reserved 2008 1.

Simon Forge SCF Associates Ltd All rights reserved 2008 1

Simon Forge SCF Associates Ltd All rights reserved 2008 2Simon Forge SCF Associates Ltd All rights reserved 2008 2

•What do we mean by collective?

•Demands and rewards•Why do we need collective spectrum – the business case•The Economic aspects

•Economic balance between approaches•Stimulating the EU economy

•Achieving collective operation in the EU•The technical aspects

•Means to an end•Barriers and catalysts

•A strategy for usage – when how where why•A strategy for combination – mix n’ match models•Criteria for usage



•Economic balance between approaches•Stimulating the EU economy



•A strategy for usage – when how where why•A strategy for combination – mix n’ match models•Criteria for usage

AgendaAgenda


•Managed – command and control – delegation of central authority

•Markets – and secondary markets – the property owning model

What do we mean by collective? - forms of spectrum allocation

Governments and regulators have essentially four choices before them:-

‘ExclusiveUse’models

‘Sharing’ models

The commons – unlicensed spectrum and use of open source software concepts for any user for any purpose. Uses technological developments for sharing of spectrum. Questions whether spectrum can even be considered as a resource, let alone a scarce resource.

A mixed or collective approach – any arrangement for multiple simultaneous users in same geographic area and spectrum range. Includes sharing spectrum in the commons and by overlap and ‘white space’ or ‘hole filling’ (dynamically) in other traditionally occupied spectrum regions, relying on technical developments to balance the need for the property ownership –

The commons – unlicensed spectrum and use of open source software concepts for any user for any purpose. Uses technological developments for sharing of spectrum. Questions whether spectrum can even be considered as a resource, let alone a scarce resource.

A mixed or collective approach – any arrangement for multiple simultaneous users in same geographic area and spectrum range. Includes sharing spectrum in the commons and by overlap and ‘white space’ or ‘hole filling’ (dynamically) in other traditionally occupied spectrum regions, relying on technical developments to balance the need for the property ownership –

But which choice will maximise economic growth?But which choice will maximise economic growth?


Spectrum utilisation studies in USA and by UK’s Ofcom have investigated the degree of usage of the radio spectrum; they indicate many areas of the radio spectrum are not fully utilised.

Is the crowded spectrum all a myth? Is it really free for all ?

Source: OFCOM /Dettmer R, ‘Up the revolution’, IEE Review, May 2005, p. 44

RURAL UK

SUBURBAN UK

DENSE URBAN UKToday’s spectrum scarcity is very much an

artificial product of archaic public policies

On average, only slightly more than 5% of the USA radio spectrum is used nationally at any given time.McHenry, Mark A., NSF Spectrum Occupancy Measurements Project Summary, 15 Aug. 2005, Vienna, Va. USA, Shared Spectrum Company.

Unused

Heavilyused


•Regulatory proposals based on spectrum as a physical asset denominated by frequencies artificially constrain mechanisms that exploit this ‘super’-commons, producing economic inefficiencies

•Moreover the property model invokes the tragedy of the anti –commons ** - whereby a scarce resource is prone to under-use because multiple owners are each endowed with the right to exclude others

•A better approach is to draw on usage privileges that do not presuppose ownership, for a universal communication right, allowing anyone to transmit anywhere, at any time – and that this is the baseline rule for wireless communication

•The commons model refocuses wireless regulation away from the ether as scarce transmission medium and toward the devices used for communication.

•Unlicensed bands such as Instrument Medical and Scientific are a useful model

*EG see : Kevin Werbach, Supercommons: Toward a Unified Theory of Wireless Communication, Texas Law Rev., Vol. 82 P.863 (2004) **see Michael A. Heller, The Tragedy of the Anticommons, 111, Harvard Law Review 621, 623 (1998)

A conceptual sea-change about spectrum economics A conceptual sea-change about spectrum economics

- Gradually, we must question whether spectrum is an ownable asset

- Is it just an intellectual construct* whose utility is rapidly decreasing as technology develops?

- Gradually, we must question whether spectrum is an ownable asset

- Is it just an intellectual construct* whose utility is rapidly decreasing as technology develops?


The principles of a collective use of spectrum as a layeredarchitecture of ownershipThe principles of a collective use of spectrum as a layeredarchitecture of ownership

Collective Usages

Primary ownershipPrimary ownership

Sole usage(safety of life)

restricted topublic services

Sole ownershipAuctions, lotteries,Markets & trading

of a purchased licenceby private operator

Sole ownershipAuctions, lotteries,Markets & trading

of a purchased licenceby private operator

Public ownsLicence-exemptfree Commons

-any user, any usage

Public ownsLicence-exemptfree Commons

-any user, any usage

Sole usage(Command & Control

selection - beauty contest etc) private

operators lease public holdings

Sole usage(Command & Control

selection - beauty contest etc) private

operators lease public holdings

Legacy mechanismsLegacy mechanisms

Subletting type Sharing

- Commercial terms

Subletting type Sharing

- Commercial terms

‘Borrowing’ type sharing -

agreed or involuntary

‘Borrowing’ type sharing -

agreed or involuntary

Co-existencemode

Co-existencemode

SecondaryownershipSecondaryownership




•Economic balance•Stimulating the EU economy



•A strategy for usage – when how where why•A strategy for combination






•A strategy for usage – when how where why•A strategy for combination

AgendaAgenda


VALUE in ‘000 Euros/MHz/year

150

700

1500

16 mn Euro

Aeronautical Terrestial Terrestrial Fixed links Defence Maritime Private PMR 2G mobile Other 3G Mobile Radio TV & Emergency (Taxis) Source: Dettmer R, ‘Up the revolution’,

IEE Review, May 2005, p. 44

The value of spectrum in one EU country which follows a market policy for auctions and secondary market resale (Ofcom’s view of the UK)

Will an authoritarian managed allocation be

replaced by an (authoritarian) search for

treasury funds through disposal of public

property?


Why do we need collective spectrum – the business caseWhy do we need collective spectrum – the business case

Needs analysis - new uses for new radio:-

•Basis for social collateral - higher quality medical & elderly care at far lower cost•Diverse industrial usages - manufacture, logistics/retail ( from RFID on)•Social and quality of life benefits – constant contact – EU migratory work patterns – juggling multiple lifestyles/workstyles•Modes of use in consumer/ professional products –Internet concepts of open usage

Needs analysis - new uses for new radio:-

•Basis for social collateral - higher quality medical & elderly care at far lower cost•Diverse industrial usages - manufacture, logistics/retail ( from RFID on)•Social and quality of life benefits – constant contact – EU migratory work patterns – juggling multiple lifestyles/workstyles•Modes of use in consumer/ professional products –Internet concepts of open usage

The value to the EU:-

•Job creation, in knowledge worker segments

•GDP stimulation from productivity spillover effects – 0.1% - 0.2% ?? - & GDP/head

•GDP stimulation directly in revenues and product sales - already 3% of EU GDP comes from mobile in some way (GSM-E)

•GDP stimulation long-term, by new industries, technologies and service innovation

•Mobile Price rebalancing – the new business model for e-communications (Internet) and the economic stimulus (0.05 -0.1% ??) of lower costs

The value to the EU:-

•Job creation, in knowledge worker segments

•GDP stimulation from productivity spillover effects – 0.1% - 0.2% ?? - & GDP/head

•GDP stimulation directly in revenues and product sales - already 3% of EU GDP comes from mobile in some way (GSM-E)

•GDP stimulation long-term, by new industries, technologies and service innovation

•Mobile Price rebalancing – the new business model for e-communications (Internet) and the economic stimulus (0.05 -0.1% ??) of lower costs

“ONLY TRANSCEIVE”“ONLY TRANSCEIVE”


The commons as economic driver – the commons provide

Mobile TV CollectiveLicenced ‘Licence’ / Licence Exempt

Jobs Employment in sectorEmployment stimulated by spend from sector

0.5 m [6] 0.4 m [7]

2.3 m 1.8 m [9]

Indire

ct

Economic stimulus of mobile working, cumulativedriving effect of mobile productivity to 2020 [4]Indirect stimulus to the economy by spend of direct impact revenues in other sectors:-

•User surplus - Social and economic value – difference between what paid and prepared to pay•Producer surplus – difference between margins to stay in business and margins actually achieved

0.6% GDP Negligible Growth

€165B,EU-272007 [5]

€95B [8]

Direct

Operators - services provision - revenues, SCF projected time series estimateSuppliers/distributors - hardware (handsets), software, networks, content, estimate based on 2004 ratio [2]Economic output per MHz at 900 MHz [3]

€208B, 2007 €87B, €30B, 2007 2006 €168 m, € 28 m, 2006 2006

€43B,2005[1]

Economic significance for EU

Sources : 1 OFCOM, 2006; 2 CEBR, 2004; 3 Vodafone/OFCOM, 2006; 4 M. Maliranta & P. Rouvinen, 2006; 5 Extrapolation from R. Mourik, 2003 ; 6 GSMA, 2004 ; 7 J. Cardona, 2002; 8 Estimate, OFCOM study, Europe Economics, 2006; 9 Pro rata estimate

Novel usages in Health, Elderly care, E-comms networks, RFID etcDirect stimulus in sales, of products and servicesIndirect stimulus on other parts of the economyIndirect stimulus by spend from sector

Novel usages in Health, Elderly care, E-comms networks, RFID etcDirect stimulus in sales, of products and servicesIndirect stimulus on other parts of the economyIndirect stimulus by spend from sector

LOW V. LOWLOW V. LOW

TBD

TBD

Significant

TBD

TBD

TBD

TBD

Significant

TBD

TBD


Why do we need collective spectrum – the business caseWhy do we need collective spectrum – the business caseComparing the value to the EU of a commons with the markets based approachComparing the value to the EU of a commons with the markets based approach

Licensed – more likely usagesLicensed – more likely usages Licence- exempt – more likely usagesLicence- exempt – more likely usages

•Mobile services - cellular•TV /radio entertainments & ads•Fixed radio local loop

•Mobile services - cellular•TV /radio entertainments & ads•Fixed radio local loop

•Mobile services – non-cellular /cellular•Fixed radio local loop•Innovation in radio-based services

•Health•Elderly care•Service sector and Industrial processes

•Innovation in radio-enabled products using ICT based models

•Mobile services – non-cellular /cellular•Fixed radio local loop•Innovation in radio-based services

•Health•Elderly care•Service sector and Industrial processes

•Innovation in radio-enabled products using ICT based models

Repricing impacts on existing servicesRepricing impacts on existing services


Catalysing maximum economic growthCatalysing maximum economic growth

Spectrum management method

Innovation Effect Economic Growth Impact (GDP growth and jobs)

Administratively Managed - command and control

•Low innovation and glacial pace of introduction

•Incumbents protect territory

•Low opportunities for new job creation as unlikely to seed new industries, segments or competition

Markets – and secondary markets

•Low/medium and slow – must return investment from last generation – the 3G affect.

•Spectrum bought to shut out or slow others/new technols

•Higher than command and control

•But medium/large sums required imply slow release of general economic benefits as a series of large-scale builds

The Commons •High – fast and easy entry

as little or no red tape

High if and when technology appears for sharing effectively

Mixed or collective approach

High – as low barriers to entry and can share outside commons

High – opportunity for new products/services and secondary spillover effects


Economic- social FactorsCommand

and control

Markets &Trading with

exclusive usage rights

Commons with

appropriate technologies

Collective approach – Commons/Markets/C&C & ‘co-existence

techniques

Promote competition (in services, infrastructures and technologies)

- +/- ++ ++

Incentive to invest in new technology & equipment - - + ++Promote new services - + + ++Promotion of spectrum neutrality – technical and application service - flexibility for any service or technology

- + ++ ++

Promotion of broadband access in rural areas +/- +/- + ++More flexibility in spectrum usage to overcome “scarcity” - create a friendly environment for innovation

- + ++ ++

Empowering spectrum users (the market players) to decide upon usage as much as possible

- + ++ ++

Prevention of abuses of market power/ monopoly +/- - ++ ++Promotion of social interest factors eg cultural diversity, public/minority interests

+/- +/- ++ ++

Maturity of technology - feasibility of full usage of new sharing technologies in the near-term

++ ++ - +

Resolve single market and harmonisation issues - +/- + ++Control interference to single frequency technologies + + + ++Adaptability to novel technology development - + + ++

Stimulating the EU economy - measuring spectrum management methods against Economic success factors

Stimulating the EU economy - measuring spectrum management methods against Economic success factors

Key : Positive force + ; Negative impact - ; Neutral effect +/- ; Strongly positive ++ Key : Positive force + ; Negative impact - ; Neutral effect +/- ; Strongly positive ++ Simon Forge SCF Associates Ltd All rights reserved 2008 13





•Achieving collective operation in the EU•Technical aspects - the means to an end•A strategy for usage – when how where why•A strategy for combination




•Achieving collective operation in the EU•Technical aspects - the means to an end•A strategy for usage – when how where why•A strategy for combination

AgendaAgenda


•New technology which:-- allows transparent overlap of multiple signals (direct spread spectrum)

- reuses ‘occupied’ spectrum - adapts and compensates with cognitive radio/SDR

Growing demand for radio usage means the spread of Growing demand for radio usage means the spread of

•More Unlicensed bands in breadth and number•More sharing – explicit agreements or unknown borrowing

•More Unlicensed bands in breadth and number•More sharing – explicit agreements or unknown borrowing


Technologies that could change how spectrum may be allocated

•Software Defined Radio (SDR)

•Cognitive radio (CR) and the white space / ‘borrowing’ opportunity

•Sharing concepts of underlay and overlay- direct spread spectrum and UWB

•Spatial multiplexing using multiple-input, multiple-output (MIMO) beam forming

•Mesh and ad hoc networks – self organising, self optimising – coverage extension

•Compression: coding of digital signals in less bandwidth

•Bit rate encoding: number of bits per Hertz of bandwidth transmitted


Methods of sharing for ‘Collective use’Methods of sharing for ‘Collective use’

Interstitial- White spaces- Dynamic temporal (CR)

Short range low power(?High freq?)

True sharing transparently-advanced signal processing

Spatial/ directional mux(mesh/MIMO)

High transparency

High transparency

LowLow

UWB

Spectrum utilisation efficiencySpectrum utilisation efficiency

Transparency= 1/interference

probability

Transparency= 1/interference

probability

Hi

Lo

Underlay and overlayUnderlay and overlay


Radio advances to meet demand for spectrum

•Highly spread signals (‘code’ or spread spectrum) such as UWB

•Cognitive Radio – dynamic adaptive co-working (‘time’)

•Smart Antennae – directionally muxed MIMO channels

•Mesh Networking – self organising (‘space’)

Direction

Space (cell/domain)

CodeTime We can multiplex in (at least) four orthogonal

dimensions


Radio prolongation of wired access point


A strategy for usage – when how where why to use what

– Legacy command and control– Legacy markets based– Shared/ co-existence– Commons

– Leads to A strategy for combination …..


A strategy for combination – mix n’ match models – how to

•A strategy for living with legacy models of allocation:-

•Respect existing licensing agreements in terms of bandwidth allocated in medium term

•Extend licences with sub-let permission clauses (market and public service)

•Open guard bands where necessary to white space sharing

•Examine reform of existing allocations where technology enables more efficient usages (eg military and ATC primary radar)

•A strategy for Introducing CUS models in a regulated manner :–

•Introduce new rules for co-existence in each part of the spectrum – sub-lets, borrowing, white space and guard bands

•Introduce EU-agreed commons bands and mechanisms for co-existence with type testing and monitoring, specifically in UHF region (above 4GHz less of a problem)

•A strategy for co-existing - CUS together with legacy models: progressive developments of CUS application – and how much to give to each type of usage

•A strategy for living with legacy models of allocation:-

•Respect existing licensing agreements in terms of bandwidth allocated in medium term

•Extend licences with sub-let permission clauses (market and public service)

•Open guard bands where necessary to white space sharing

•Examine reform of existing allocations where technology enables more efficient usages (eg military and ATC primary radar)

•A strategy for Introducing CUS models in a regulated manner :–

•Introduce new rules for co-existence in each part of the spectrum – sub-lets, borrowing, white space and guard bands

•Introduce EU-agreed commons bands and mechanisms for co-existence with type testing and monitoring, specifically in UHF region (above 4GHz less of a problem)

•A strategy for co-existing - CUS together with legacy models: progressive developments of CUS application – and how much to give to each type of usage

Needs several components- Needs several components-


Projections of Percentages of each type of spectrum allocation in the EU


A strategy for usage – How much to give to collective usages

Command & Control

Market based approach

Collective Sharing - subletting

Collective - Commons

Collective Sharing – borrowing impacts

Market National Technology Social General EUDemands* priorities development priorities EconomicsMarket National Technology Social General EUDemands* priorities development priorities Economics

- Leads to a strategy for unlicensed allocation - and whether pro-active or trails demand- Leads to a strategy for unlicensed allocation - and whether pro-active or trails demand

CriteriaCriteria

* Latent or expressed* Latent or expressed


A strategy for usage – who is responsible?

• Central accord (EC-level) on bands for an EU commons across all MS (eg a first 20 MHZ in Digital Dividend)– Member State ratified and implemented

• NRA/MS extensions of licences (commercial and public service) for– Sharing by subletting as formal contract– White space agreements if acknowledged use - eg in guard bands –

requires official interference testing– White space type-testing if ‘free’ use, and monitoring– Type testing for CR dynamic seizing or ‘borrowing’ if tacitly

acknowledged

• Leads to a blueprint for a new spectrum management structure and strategy for NRAs and EC-level spectrum management, with an EC facilitator/co-ordinator


General Implications for EU regulators – NRAs mainly, with EC co-ordination and guidelines where useful

a) Reshape existing licences (for all management types) subletting clauses added

b) Public services - command and control licences incentives to sublet/share added Incentives to relinquish spectrum for commons emphasised Technical audits of efficient usage in periodic reviews for those with

mandates to spectrum

c) More “active” regulatory role in deployment of radio technology:- National interference monitoring continually Type testing laboratories and rigs for interference level

conformance, for pre-set power and frequency specs Greater international participation and agreements at technical level

d) Gradually, less regulatory activity in commercial licence markets for auctions and trading possibly

a) Reshape existing licences (for all management types) subletting clauses added

b) Public services - command and control licences incentives to sublet/share added Incentives to relinquish spectrum for commons emphasised Technical audits of efficient usage in periodic reviews for those with

mandates to spectrum

c) More “active” regulatory role in deployment of radio technology:- National interference monitoring continually Type testing laboratories and rigs for interference level

conformance, for pre-set power and frequency specs Greater international participation and agreements at technical level

d) Gradually, less regulatory activity in commercial licence markets for auctions and trading possibly


The next step : further estimating the economic impacts of spectrum allocation approaches

Create Create scenariosscenarios

to outline maineconomic

impacts of eachallocation

mechanism, for first directions of economic

impacts

Analyse each scenario

using economic

impact estimation approach

and compare results

(via Tri-level economic

aggregation Micro-Meso-

macro)

Includeimpacts of

the e-factor*, the

tele-economy*,on results,

and specifically

on socialoverhead

capital

*Following World bank study on models for long-term impacts of new technology and specifically ITC developments at a global level, 2000 and also impacts of near-zero pricing on demand

*Following World bank study on models for long-term impacts of new technology and specifically ITC developments at a global level, 2000 and also impacts of near-zero pricing on demand


1911 1983 2015?

Spectrum allocation will advance with demand for ubiquitous, pervasive services with new radio access techniques

Open Open WorldWorld•Unlicensed Unlicensed bandsbands•Collective Collective shared usageshared usage•Packet RadioPacket Radio•BroadbandBroadband•Markets Markets

Markets with Markets with administrationadministration•No sharing No sharing •AuctionsAuctions•Spectrum tradingSpectrum trading•Property rightsProperty rights•Legislative Legislative managed managed command & command & controlcontrol•Circuit switchedCircuit switched

StateStateAllocationAllocationWorldWorld•Command & Command & controlcontrol•BroadcastBroadcast•MilitaryMilitary

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