Increased reliance on market forces, rather than government oversight, results in the most economically efficient use of spectrum, in the development of the most innovative technologies, and in the universal deployment of wireless services.
It is difficult for any government regulator to predict with great reliability what specific services the public will demand in the future. It is also a challenge for a regulator to keep pace with the rapid technological change, or to foresee what services will be available within particular frequency bands even a few years from now.
Modifying outdated regulatory decisions becomes a costly and protracted process that ultimately discourages investment and inhibits innovation, as there is little incentive for being first to market or coming up with novel uses of spectrum.
If spectrum can be used for those services most in demand, companies will have a greater profit motive for entering the wireless market. In this way, market forces will encourage an efficient, innovative and flexible use of the spectrum and will serve as the best arbiter among competing technologies and the services they provide. Administrations, therefore, should both permit and promote the growth of competitive market forces in the management of spectrum.
A management framework that relies on market forces does not necessarily preclude government administrations from playing a significant role within that framework. There are, in fact, specific, essential tasks the regulator should undertake. These include determining how best to apportion spectrum among mutually exclusive services and among licensed and unlicensed services; maintaining services for the public welfare; ensuring a level playing field among competitors; protecting networks from interference; and protecting the public's health from any potentially harmful effects of radio transmission.
However, other decisions regarding spectrum, such as types of specific services offered, technologies used, consumer pricing and network performance, are best left to the marketplace as business drivers.
Flexible and Neutral Spectrum Allocation
Regulators should establish the initial geographic scope and bandwidth of licenses, taking into account the various characteristics of different frequencies, electromagnetic compatibility, public safety, and, in general, the different spectrum needs of broad categories of service. This flexible approach allows technological developments that may make the most effective and efficient use of bandwidth provided for certain services and permits the introduction of new services.
A flexible approach also means governments forbear from mandating what particular technology or which equipment an authorized network operator shall deploy. Technical flexibility gives spectrum users the ability and incentive to develop and install innovative, spectrum-efficient, low-cost technologies that respond to the needs of consumers. This gives service providers the ability to compete on the basis of what they believe to be the best technology at the best value for the consumer.
Allocating spectrum without an understanding of marketplace and technical demands can lead to fractured markets, increased equipment costs, delayed research and product development and increased time-to-market, as well as increased potential for interference among users. In some cases, it could undermine public-interest goals. Moreover, many new terrestrial and satellite services are global in coverage and therefore require harmonized spectrum worldwide.
This potential conflict can be resolved as market players work within standardization organizations and try to agree on one or several harmonized standards for specific markets (as opposed to regions). Market forces will lead the market players to adopt the optimal set of standards voluntarily.
Economically Efficient Spectrum Assignment
When assigning spectrum, regulators need to assign licenses quickly and with minimal administrative costs, and in a way that ensures that the entity obtaining the license will make the best use of this public resource.
Although spectrum auctions may be an effective license assignment tool for certain services, this tool should be applied with the proper rationale. That is, there should first be a determination as to whether a need exists for the spectrum and whether the assignment of this spectrum generates mutually-exclusive applications.
Spectrum auctions should not be a substitute for sound spectrum assignment decisions or used solely as a means of revenue generation. The cost of auctions and associated relocations places a tremendous financial burden on operators, which trickles down to end users. Allowing the highest bidder to determine the use of the spectrum causes inconsistency and uncertainty, which in turn raises users' equipment costs, negates economies of scale, slows manufacturer investment, increases the potential for interference and threatens the investment of existing operators. Moreover, implementation of spectrum auctions can inadvertently discourage allocations for very beneficial spectrum uses that do not generate auction revenue, for example, public safety systems.
In the case of global satellite services and other services that need to be provided on a transnational basis, auctions could seriously inhibit market and technology developments.
Because spectrum is a limited resource, regulators should consider refarming spectrum that is currently underutilized, recognizing the inherent cost associated with relocating existing users to other frequency bands, if necessary. TIA encourages regulators to continue to transition unused or underutilized spectrum allocations from government to commercial use.
Regarding spectrum that has been allocated and is currently in commercial use, refarming should be minimized, because it increases wireless service providers' business risks and consequently increases their cost of capital while deterring investment in the wireless services industry. Flexibility, long-term licensing regimes and a more certain regulatory environment will provide operators with easier access to capital markets when necessary and support the ongoing deployment of advanced radio services around the world.
Open, transparent, objective and non-discriminatory procedures are a requirement of the World Trade Organization (WTO) telecommunications agreements and related national commitments.
Open and transparent procedures offer service providers and manufacturers a clearer understanding of the relevant rules and regulations. Such procedures should allow input from all interested parties during the regulatory process. Objective procedures are equitable and reasonable and should be no more burdensome than necessary to assure quality of service.
By adhering to non-discriminatory procedures, regulators will not only improve economic efficiency and pave the way for the inception of new technology, but will also be in a better position to ask their trading partners to follow comparable procedures.
International Outreach and Coordination
On a regional and international basis, regulators should coordinate issues related to spectrum usage with the goal of stimulating innovation, producing economies of scale for equipment manufacturers, reducing time to market for products and meeting user needs, such as regional and global roaming. To the extent possible, domestic policies should support global systems and seamless international networks, both in terrestrial and satellite systems, without precluding other uses and technologies.
Where the value of some frequency band is likely to be for a particular worldwide service, administrations should optimize the use of the relevant band for that service without foreclosing other uses of that spectrum, preventing the market from reconfiguring the spectrum or limiting the ability of service providers to use the standards and technologies they want to satisfy their customers' needs.
The International Telecommunication Union (ITU) plays a critical role in spectrum coordination and globalization, as well as in standards development. Administrations are encouraged to actively participate in the ITU Study Groups and World Radio Conferences (WRCs) and to reach out to other administrations toward developing a common view. Consultations should be extended to other international and regional forums to build consensus on relevant issues affecting the telecom industry.
In summary, sound spectrum policies form the basis upon which companies make decisions regarding investments in capital, technology and manufacturing, and, in turn, help drive the demand for products and services. Such policies should be based on: 1) reliance on market forces, rather than government mandates; 2) streamlined spectrum assignment mechanisms that promote the efficient use of the spectrum and the introduction of new technologies to the marketplace; and 3) active participation in the ITU and other international and regional forums with the view toward building a global consensus on important telecom issues.