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Workshop on Spectrum Management: dot-GOV

Held at Ministry of Communications and Information Technology (MCTI)
Bucharest, Romania
22-23 May 2003
Sponsored By

Romanian Information Technology Initiative (RITI)- Policy, dot-Gov
With Funding From U.S. Agency for International Development (USAID)

On May 22-23rd May, 2003, Dale N. Hatfield, Adjunct Professor at the University of Colorado at Boulder and Richard M. Nunno, Telecommunications Policy Analyst at the Federal Communications Commission, delivered a series of presentations in conjunction with the Workshop on Spectrum Management. The purpose of this synopsis is to summarize the presentations and some of the discussions that resulted.

Day One
Following introductions by Jerker Torngren , Project Director of RITI dot-Gov, Hatfield began the formal presentations. In his opening remarks, Hatfield indicated that his prepared presentation was divided into three parts: Module I, Background and Introduction, Module II, Elements of Spectrum Management - Institutions and Processes, and Module III, Advances in Wireless Technologies and Applications.

Hatfield then proceeded with the first module. Because of the wide range of backgrounds of the personnel in attendance, Hatfield began with tutorial material (a) answering the question "What is spectrum," (b) describing a basic radio system and how it is used to convey information over a distance without wires, and (c) discussing the unique nature of the radio spectrum resource. He noted how spectrum, although infinitely renewable, is increasingly a scarce economic resource that can also be polluted in ways that diminish its value. Hatfield then defined spectrum management more formally and identified its four fundamental parts - allocation, service rules/license conditions, assignment and enforcement. He then stressed the importance of spectrum management as it relates to (a) industry structure and performance (both in terms of the ICT sector and the economy as a whole), (b) the performance of institutions devoted to the ensuring the safety of life and property and to the national defense, (c) the performance of the electronic mass media (i.e., radio and television broadcasting) and (d) its use as a policy tool for facilitating universal service especially in developing countries. Hatfield concluded the first module with a brief introduction to the international dimensions of spectrum management.

Following a break which included informal discussions among the presenters and participants, Hatfield turned to his second module. He began by discussing the broad goals of spectrum management (e.g., in terms of promoting economic efficiency versus responding to equity concerns) and then talked about more specific goals. He briefly touched upon spectrum management institutions in the United States and then defined certain key spectrum management terms with more precision. Hatfield then spoke at some length about the nature of the spectrum allocation problem and the traditional approaches that had been used in the past to distribute the scarce resource. He noted for example that, in the past, the FCC made allocations based upon (a) public need and benefit considerations, (b) technical considerations and (c) apparatus limitations.

Hatfield then shifted his attention to the assignment problem - the problem of distributing a limited number of valuable licenses when all potential providers cannot be accommodated. He then went through the various techniques that have been used to make assignments - including "first-come, first-serve," comparative hearings/"beauty contests," lotteries, and auctions. Hatfield described each of them and then discussed the advantages and disadvantages of each technique. He also provided anecdotes regarding the history of the use of the different methods. He then touched upon various "hybrid techniques" which, for example, combine elements of a beauty contest and auctions as well as payment approaches that allow for risk sharing between the government and the private sector provider.

Hatfield then closed this portion of his presentation by emphasizing that these techniques do not alleviate the challenges associated with making allocations and developing appropriate service rules. He stressed the increasing pressure being put on the traditional "command and control/engineering" approach to spectrum management by rapid changes in the marketplace, by demand growth and rapid technology development. He noted that the existing allocation techniques - both international and domestic - are too rigid and inflexible and have a great deal of difficulty keeping up with these changes. He stressed that in the U.S. and elsewhere, it was widely recognized that the allocation process was in need of reform.

He then briefly described some of the techniques that the FCC in the U.S. had already adopted to reduce the rigidities in the traditional system. These market-oriented techniques include giving incumbent licenses more flexibility to change the services that they offer and the technology they use without seeking delay-prone regulatory approvals. Specific techniques such as dissaggregation and partitioning were described. He also mentioned that there was increasing use of unlicensed spectrum and increasing interest in an expanded "spectrum commons" approach as a way of providing spectrum users with more flexibility. He summarized the three methods to spectrum management reform as (a) improvement in the traditional command and control system, (b) movement toward a more market-oriented system utilizing property-like rights, and (c) movement towards a spectrum commons with minimal regulatory restrictions.

Although a lack of time prevented a full exploration of the topic, Hatfield briefly talked about the ways of effectively increasing the amount of spectrum available - i.e., ways of relieving spectrum shortages. In doing so, he identified four techniques for finding spectrum for new services: (a) increased sharing, (b) increased technical efficiency, (c) "band clearing"/reallocation and (d) extending the upper limit of the useful frequency range.

Hatfield then turned the podium over to Nunno, who provided an extensive over-view of the FCC's more recent thoughts on reforming the spectrum management process. In particular, he reviewed in detail the findings and recommendations of the agency's Spectrum Policy Task Force and provided an up-dated description of the status of its recommendations.

Day Two
On the second morning of the workshop, Hatfield returned to podium and concluded his second module by discussing the issue of spectrum fees. He began by noting that there were two basic ways of setting spectrum prices - e.g., through auctions/secondary markets and administratively. He discussed a recent ITU report on the economics of spectrum management and called attention to its recommendations. He then described the four methods of spectrum pricing; namely, basing them (a) upon the cost of the spectrum management function, (b) upon revenues derived from the licensees' use of the radio spectrum, (c) upon providing incentives for achieving spectrum management objectives such as encouraging more efficient use of the resource and (d) upon the economic cost associated with the use of the spectrum by a licensee. Hatfield noted the difficulties of setting fees administratively.

Nunno then returned to the podium where he discussed the importance of the international aspects of spectrum management and, in particular, in the importance of effective representation at international conferences (e.g., the World Radio Conferences) to protect national interests.

Hatfield then turned to the final module of his presentation - the module dealing with advanced wireless technology. He began the module by reviewing the different categories of wireless systems and challenges in wireless system design. He then spoke at some length about how technological constraints had, in the past, added to the rigidity in the spectrum management process and had thereby contributed to spectrum scarcity (e.g., through administrative scarcity). He then identified recent technological developments such as software defined/frequency agile/cognizant radios that have the potential for greatly improving the use of the scarce spectrum resource by, for example, facilitating increased sharing. He indicated that a major challenge facing regulators is to adapt their policies and regulations to encourage the deployment of such advanced technologies. He then provided a brief list of techniques for encouraging the development of wireless services.

Following lunch, the workshop concluded with a long discussion among the presenters and participants. The discussion focused on the need for policy-makers and regulators to move away from the command-and-control approach toward more flexible approaches where they facilitate rather than dictate the use of the spectrum resource. Among other things, the presenters responded to very thoughtful questions about other techniques that policy-makers and regulators may use to encourage investment in the sector.

Major Conclusions
Overall, five major themes or conclusions emerged from the presentations and discussions:

First, spectrum management is increasingly critical as a component of telecommunications policy and regulation because of its importance to not only to the communications and information sectors (including the electronic mass media), but to the economy as a whole and to the safety of life and property, the national defense and homeland security.

Second, the inflexibility and inherent rigidities associated with the traditional "command and control"/engineering approaches to spectrum management are generally inadequate in responding to increasingly rapid changes in the marketplace, to continued growth in demand for spectrum that is produced by both more users and increasingly bandwidth-hungry applications (e.g., multimedia), and to rapid changes in the technology.

Third, some of the basic technological developments propelling the growth and producing the dynamic changes in the wireless industry also hold out the hope for relieving some of problems produced by burgeoning demand by, for example, facilitating increased sharing of the resource; the challenge for the regulator is to develop ways of facilitating the development and use of advanced technologies such as Software Defined Radios or Ultra-wideband Systems that could potentially relieve some of the pressure on the resource.

Fourth, in light of the three themes discussed above, policy-makers and regulators need to seek ways of reducing the administratively induced rigidities in the present methods of spectrum management and to develop appropriate incentives for more efficient and productive uses of the resource; promising techniques include facilitating market-place based actions such as voluntary reallocations and sharing based upon spectrum leasing; increased reliance on unlicensed or lightly regulated spectrum using a spectrum commons approach also has promise.

Fifth, given the international nature of spectrum resource and its importance to individual nations - both developed and developing, effective representation at international conferences, regional conferences, and bi-lateral discussions is increasingly vital to administrations both to protect their own national interest and to promote economic growth and to protect the safety of life and property on a global scale.

May 30, 2003 Dale N. Hatfield

For more information

Rolf Jerker Torngren, Project Director, RITI-Policy
Tel: +40 21 323 46 13, Mobile: +40 72 31 31 086

Sarah Tisch, Program Director, dot-GOV
Tel: +1 202 833-5740


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