By Nick Pimlott, senior solicitor in the communications group at Field Fisher Waterhouse LLP.
Spectrum management in Europe is in a state of flux. The traditional model under which national regulators grant licences prescribing frequency bands, technologies and services (“command and control”) is under attack. According to its critics, soviet-style “command and control” limits technological and service innovation, creates artificial spectrum scarcity and results in inefficient use of a valuable resource.
A new approach to spectrum management based on “spectrum usage rights” that are neutral as to technology and services is therefore taking hold (“spectrum liberalisation”). This combined with spectrum trading and increasing use of unlicensed spectrum is intended to allow the market rather than regulators to decide how spectrum should be used. However, important questions relating to interference management and the transition from legacy licences remain to be answered.
The European Commission has recently embraced spectrum liberalisation. On 29 June 2006, it published proposals to abolish all technological and service restrictions on spectrum use other than where limits were necessary to avoid harmful interference or to meet other justified public policy goals (such as audiovisual policy or safety of life). It also proposes to improve coordination between national regulators in implementing spectrum trading and identifying spectrum bands to be made available on a licence-free basis.
The Commission’s proposals are easier said than done. As Ofcom’s experience of liberalising spectrum in the UK over the past few years shows, two difficult issues need to addressed in order to make liberalisation (and trading) work. They are interference and transition management.
The control of interference between radio systems is the underlying rationale for the regulation of spectrum use. It is only where there is no serious risk of harmful interference that national regulators are required to make spectrum available on a licence-free basis. However, there has never been any attempt to identify what levels of interference should be deemed to be acceptable and what “harmful”.
Liberalisation, by moving away from central control, raises questions as to how harmful interference is to be avoided. Liberalisation will place a greater onus on spectrum users to protect themselves, perhaps by agreeing coordination between themselves, but they will need a legal framework to determine how much interference they can reasonably expect to cause or suffer. Establishing robust benchmarks for acceptable and unacceptable levels of interference is therefore essential to making liberalisation work.
There has to date been little sign that the proponents of liberalisation, driven by economic theory as much as practical reality, have given much thought to the interference question. Even in the UK, Ofcom has only recently made the first tentative steps in this direction by attempting to define “spectrum usage rights” in terms of energy levels at boundaries. The Commission may have a welcome role to play in ensuring a consistency of approach to interference across the EU but the technical and practical difficulty of establishing such benchmarks should not be underestimated.
The other major unresolved issue in spectrum liberalisation is managing the legacy of existing allocations. Many users, especially in the mobile sector, have made significant investments in what were taken at the time to be exclusive spectrum licences. Others such as equipment manufacturers have invested in new radio technologies in the knowledge that dedicated spectrum has been allocated for the purpose. Over-hasty liberalisation may threaten operators’ ability to recover those investments. Protecting existing investments (and incentives to invest) whilst not engaging in “protectionism” is a highly controversial issue that, like interference, is far from being resolved.
The Commission has a long way to go.