Frequencies: International Spectrum Policy 9780228003120

Table of contents :
Cover
Copyright
Contents
Tables and Figures
Foreword
Acknowledgments
Abbreviations
Introduction
1 Radio Spectrum as Indigenous Space: Property Rights and Traditional Knowledge in New Zealand’s Spectrum
2 Finland: Surfing the Mobile Wave against the Tide of EU Spectrum Policy Consensus
3 Spectrum Policy across Africa
4 Wireless Carriers Competing? Canadian Mobile Policy, 2006–17
5 The Case of the Wholesale Mobile Network in Mexico: Red Compartida
6 The Growth of Broadband Mobile Communications in India: Trends, Policy Issues, and Challenges
7 Bridging the Urban–Rural Digital Divide: The Case of Remote Rural Broadband Systems in Canada
8 Spectrum Sharing
9 Polycentric Governance for Spectrum Sharing
10 Open Access Markets for Capacity and the Inseparability of Spectrum and Infrastructure
11 How Disruptive Is 5G?
Conclusion Frequencies: International Spectrum Policy
Contributors
Index

Citation preview

F r e q u e nci es

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Frequencies International Spectrum Policy

Edited by

G r e g o ry T ay lor a n d C at h e r i n e   Middleton

McGill-­Queen’s University Press Montreal & Kingston • London • Chicago

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©  McGill-Queen’s University Press 2020 ISBN 978-0-2280-0177-5 (cloth) ISBN 978-0-2280-0178-2 (paper) ISBN 978-0-2280-0312-0 (eP DF ) Legal deposit second quarter 2020 Bibliothèque nationale du Québec Printed in Canada on acid-free paper that is 100% ancient forest free (100% post-consumer recycled), processed chlorine free

We acknowledge the support of the Canada Council for the Arts. Nous remercions le Conseil des arts du Canada de son soutien.

Library and Archives Canada Cataloguing in Publication Title: Frequencies: international spectrum policy / edited by Gregory Taylor and Catherine Middleton. Names: Taylor, Gregory, 1967– editor. | Middleton, Catherine, 1963– editor. Description: Includes bibliographical references and index. Identifiers: Canadiana (print) 20200169319 | Canadiana (eb o o k ) 20200169394 | IS BN 9780228001782 (softcover) | ISB N 9780228001775 (hardcover) | IS BN 9780228003120 (P D F ) Subjects: LC S H: Telecommunication policy. | L CS H : Telecommunication— International cooperation. | L CS H: Radio resource management (Wireless communications) | L CS H: Radio frequency allocation— Government policy. | L CS H: Wireless communication systems— Government policy. | L CS H: Broadband communication systems— Government policy. Classification: L CC HE 7645.F 74 2020 | DDC 384—dc23

This book was typeset by Marquis Interscript in 10.5/13 Sabon.

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Contents

Tables and Figures  vi Foreword ix Adriana Labardini Inzunza Acknowledgments xiv Abbreviations xv Introduction 3 Gregory Taylor and Catherine Middleton   1 Radio Spectrum as Indigenous Space: Property Rights and Traditional Knowledge in New Zealand’s Spectrum  19 Zita Joyce   2 Finland: Surfing the Mobile Wave against the Tide of EU Spectrum Policy Consensus  46 Marko Ala-Fossi   3 Spectrum Policy across Africa  68 Steve Song   4 Wireless Carriers Competing? Canadian Mobile Policy, 2006–17 90 Benjamin Klass

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vi Contents

  5 The Case of the Wholesale Mobile Network in Mexico: Red Compartida 116 Judith Mariscal   6 The Growth of Broadband Mobile Communications in India: Trends, Policy Issues, and Challenges  138 Rekha Jain and Prabir Neogi   7 Bridging the Urban–Rural Digital Divide: The Case of Remote Rural Broadband Systems in Canada  162 Gregory Taylor   8 Spectrum Sharing  187 Michael J. Marcus   9 Polycentric Governance for Spectrum Sharing  207 Martin B.H. Weiss and Marcela Gomez 10 Open Access Markets for Capacity and the Inseparability of Spectrum and Infrastructure  237 Linda Doyle, Peter Cramton, and Tim Forde 11 How Disruptive Is 5G? 259 Martin Cave and William Webb Conclusion 286 Gregory Taylor and Catherine Middleton Contributors 295 Index 299

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Tables and Figures

ta b l es 3.1 5.1 5.2

African spectrum auctions and reserve prices  75 A L T A N stakeholders and shares  131 A L T A N sources of funding for design, installation, operation, and maintenance of the wholesale network infrastructure “Red Compartida” Banxico 04/27/2017  132 5.3 700 MHz band assignments in L AT AM 2013–15  133 5.4 M V NOs in the Mexican market  135 6.1 Telephone subscribers – snapshot September 2018  140 6.2 Internet subscribers – snapshot September 2018  141 6.3 Telecom service providers – market and revenue share figures – September 2018  141 9.1 Critical attributes of long surviving CP R systems  211 9.2 Distribution of rights by user type  211 9.3 A typology of interference events  213 9.4 Architecture requirements  220 11.1 Dynamic spectrum sharing  279 11.2 Dynamic spectrum sharing in 5G  279

f ig u r es 3.1 5.1 5.2

Spectrum pricing in the context of G D P  75 Mexican companies’ spectrum shares for mobile services. Annual percentage  121 Spectrum deployed for mobile use in Latin America – 2016 (MH z) 122

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5.3 5.4 5.5 5.6 5.7 7.1 9.1 9.2 9.3 9.4 9.5 9.6 10.1 10.2 10.3 10.4 10.5

Tables and Figures

Spectrum and GD P per capita – 2015  122 Spectrum and broadband prices – 2015  123 Mobile-phone subscriptions per capita. Selected countries 124 First phase  128 Second phase  129 Broadband service availability – urban vs. rural (% of households), 2016  164 Graphic representation of one ranch in the simulation environment 223 Interference zones  224 Aggregate interference incidents for RA 1 with 8 groups of cattle (mobile devices) in a worst-case scenario  226 Interference events when the R A’s transmit power and mobile device sensitivity are particular to each ranch 227 Configuration of second simulation environment 228 Interference events for the central cell in a 9-cell grid 229 Mv NO 1 desires to expand but any expansion is blocked by the MNO  239 A high-level view of the open access capacity market 244 Market clearing at a particular time and location 249 Spectrum demand for the 2025 motorway use case, for ­different sharing conditions 253 The maximum amount of spectrum (total spectrum) ­available in each sub-range 253

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Foreword

The fourth Industrial Revolution has happened, and it is here to stay and disrupt at an exponential pace the ways we live, communicate, rule, and work, as well as the ways things – including robots – will function and learn. Radio spectrum is playing an increasingly key role in this revolution (one that demands ubiquitous, permanent, highspeed connectivity), and it will remain for years to come an essential resource, access to which will be the focus of more than one battle in the national and international arenas. The question is whether governments, regulators, businesses, and citizens are prepared to switch and adapt accordingly in order to maximize the general welfare in the wake of this technological revolution, or whether inequality, unemployment, insecurity, and dehumanization will prevail. A multi-­ stakeholder, collaborative, efficient but inclusive approach could help us find the path toward win–win models. That path should include spectrum management models. The mechanisms for licensing and using spectrum in this era of exponential growth of data flows should be revisited, and new paradigms of access and use should be explored. Spectrum is an essential part to the smart-everything world around us – a must for robotics, smart cities, the Internet of Things (IoT), and big data gathering; and, like water, it should be available to all to some degree, for it is indispensable to the digital and data economy and an enabler of sustainable development. As a forum for great minds from around the globe to face the latest challenges together, and to explore innovative ideas and disruptive solutions for the development of spectrum management, the Canadian Spectrum Summit 2017 tackled these issues head on. That forum was the catalyst for this book.

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x

Adriana Labardini Inzunza

I met Gregory Taylor in the spring of 2016 at the Discoverability Summit in Toronto, organized by the Canadian Radio-television and Telecommunications Commission (C RT C), where I participated as a panelist with other North American regulators. While attending discussions about some of the issues Mexico and Canada have in common regarding wireless communications, Greg kindly invited me to participate as keynote at this momentous conference in the breathtaking Canadian Rockies to share our concerns, disruptive projects, and challenges in bringing wireless connectivity to both urban and rural Mexico in an efficient and competitive but also inclusive fashion. It proved to be an enlightening and enjoyable experience, one that allowed me to acquire a broader perspective on spectrum issues, as well as forward-looking ideas regarding 5G , net neutrality, mobile virtual network operators (M V N O s), and spectrum sharing. That conference also provided a space to share with academia the diverse spectrum initiatives and projects that Mexico, through the Federal Telecommunications Institute, was engaging in to trigger competition, broaden penetration, and open access, besides initiating a new wholesale 4G network on the 700 MHz band. The research results brought together in this book condense the expertise of international professionals from across the field, all of them united in the desire to enrich discussion of past and future strategies regarding key telecommunications issues common to most of the world’s countries. A focal point of debate is analyzing the efficiency of current spectrum assignment methods and their ability to address new technology requirements, such as 5G, and bridge the digital divide. In the present day, in many countries, efficient assignment of spectrum has been somehow in conflict with equality and inclusion. This is particularly true in developing countries. The small, poorer rural communities scattered across Mexico are not attractive to tier-one operators (see also Jain and Neogi’s chapter on India); and according to the most recent license renewals, those operators are not obligated to offer them coverage. So those communities must turn to the government for universal service funding, which has not succeeded so far in bridging the digital divide. Gradually, as demand for data services grows, these areas, where 22 percent of Mexicans live, have been getting more attention from operators, from groups willing to deploy community wireless networks – if backhaul and rights of way are available – and from the federal government. Yet 4G is far from being

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Foreword xi

mainstream, and mobile broadband penetration is 61 percent as opposed to 88 percent for mobile phone penetration. Alternative spectrum models are emerging but have yet to be authorized. These models aim to provide wireless solutions by taking advantage of new technologies that enable the dynamic and shared use of the spectrum. Relevant examples of such models include the following: spectrum sharing technologies such as T V white spaces – a high version of the listen-before-talk (L B T ) approach; cognitive radio, comprising dynamic frequency selection (D F S ); and spectrum access system (S A S ) techniques. As Steve Song points out in Chapter 3, dynamic spectrum allows the reuse of spectrum in a way that does not interfere with primary spectrum holders. It is also ideal for rural access, for it does not require that spectrum be reallocated. Spectrum sharing technology is already there, but in many cases the benefits are yet to be fully reaped. Happy exceptions can be found in several African nations that have taken advantage of spectrum sharing and Wi-Fi technologies, which makes those countries key to the connectivity growth of that continent. As Gregory Taylor shows, another success story involving spectrum sharing is the remote rural broadband systems (RRBS) initiative implemented in Canada to provide broadband access to rural communities. This program involves using spectrum that has been allocated for broadcasting services but that is not in use in rural areas. One reason why the potential of spectrum sharing has not yet been fully exploited is the regulatory challenge. Typically, governments assign spectrum under one of the following: (1) exclusive licenses, where no interference is allowed; (2) unlicensed spectrum, where coprimary users have to tolerate interference; and (3) rare secondary licenses, where users must avoid interfering with primary services. These models of assignment are often sharply at odds with current and forthcoming technology requirements. As the research results gathered in this book demonstrate, we need to change the way we assign and manage spectrum in order to maximize and indeed allow for the development of new technologies such as 5G. Spectrum sharing and Wi-Fi are ideal technologies for rural areas and indeed may be a good match for urban environments where high density of communications exists. For example, the City of London Corporation has launched a free, gigabit Wi-Fi network. As Michael Marcus points out in Chapter 8, at any given time and place

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there are oodles of unused spectrum. The great challenge is to determine when and how someone is authorized to exploit that spectrum. Dynamic spectrum demand is not uniform in space and time; it also varies greatly between different types of users. The overarching goal is to use spectrum more efficiently, to put idle spectrum to use, and to design an efficient “air traffic control” system for spectrum that avoids interference and fosters universal access. To share spectrum more efficiently among users and to reduce wireless interference, it will be crucial to consider and embrace a diversity of policy models. This implies exploring other types of licences to enhance sharing, not just of spectrum but also of infrastructure and capacity. The way I see it, this is the right time to explore flexible nonexclusive licences, as well as licences for capacity providers who do not supply services to end users. When we look ahead to new players, new sharing models, and new technologies, as Linda Doyle and Martin Cave highlight, we need to focus on new policies that allow (1) M VN O s to provide capacity rather than spectrum, (2) enhanced spectrum and network sharing, and (3) intensive use of unlicensed spectrum such as Wi-Fi and LTE-U for 5G. As described by Martin Cave and William Webb, 5G technology will allow not only faster and ultra-reliable services but also low latency communications for massive and ubiquitous connectivity among people and devices. This will lead to new niche services for particular users with specific coverage, time, service level, and capacity requirements. Plain old coverage operators with exclusive licence spectrum will no longer be able to completely satisfy these new user requirements. An open access market will thus need to emerge, where capacity can be bought or sold that meet different spatial and temporal needs. New 5G technology will require innovative sharing policies on many and varied bands, from 3–4 GH z to 50–80 G H z. This technology has the potential to disrupt the current structure of the industry. As Cave rightly remarks, it will require more radio access network (RAN) and backhaul sharing; more core and R A N network heterogeneity; the untying of R A N and core networks; and expanding verticals and MVNOs. This sort of regulation will probably require the development of cooperative light licences, as well as models that involve both licensed and unlicensed users.

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Foreword xiii

As we can see, there are many issues we will need to solve in order to provide connectivity for all and to address the diverse requirements that 5G represents. My own country is no exception in this regard. Actually, we are facing the two main challenges: we need to provide broadband access in rural areas, and we need to manage spectrum in a better and more efficient way. The challenges that Mexico is encountering are very similar to those that developing and developed nations all over the world are facing right now. I personally fear that conventional systems for auctioning spectrum may no longer satisfy the requirements for 5G . Those systems should thus be revisited, including with regard to how spectrum is taxed, so as to avoid jeopardizing investments for the deployment of next ­generation networks (NGNs). I consider it worth exploring flexible non-exclusive licences and far more intensive and efficient use of the spectrum through sharing schemes. The renowned scholars in this book explore such issues, problems, possibilities, and policies. This book is a must-read for anyone dealing with rural broadband, IoT issues, private networks, efficient use of spectrum, standards, sustainable development goals, and the future of regulation. I invite readers to peruse each of the chapters and to explore these innovative ideas and regulatory approaches for better management of electromagnetic spectrum as a means toward authentic progress for all, that is, as an enabler for the achievement of the United Nations Sustainable Development Goals for 2030.

Adriana Labardini Inzunza Commissioner (2013–18), Federal Institute of Telecommunications, Mexico

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Acknowledgments

Gregory Taylor would like to thank the Department of Communication, Media and Film at the University of Calgary. Also, Anuradha Gobin for love and support. This is for Max. Catherine Middleton would like to thank the Canada Research Chairs program and the Ted Rogers School of Management at Ryerson University. The editors would like to recognize the assistance of the Social Science and Humanities Research Council Insight Program, all those who have contributed to Canadian Spectrum Policy Research, and the copyediting skills of Katelyn Maureen Anderson at the University of Calgary.

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Abbreviations

2G 3G 4G 5G 3 G PP A PA A R R L A R S A WS B ER EC B R A N D C B R S C C TA C DMA C EPT C FE C MF C PR C R TC C SMA C DFS DoT DSA

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Second-generation cellular technology Third-generation cellular technology Fourth-generation cellular technology Fifth-generation cellular technology 3rd Generation Partnership Project Administrative Procedures Act American Radio Relay League Amateur Radio Service Advanced Wireless Services Body of European Regulators for Electronic Communications Broadband for Rural and Northern Development Citizens Broadband Radio Service Canadian Cable Telecommunications Association Code division multiple access Conference of Postal and Telecommunications Administrations Federal Electricity Commission China Mexico Fund L P Common-pool resources Canadian Radio-television and Telecommunications Commission Commerce Spectrum Management Advisory Committee Dynamic Frequency Selection Department of Telecommunications Dynamic Spectrum Access

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xvi Abbreviations

DSO Digital switchover DV B -H Digital video broadcasting-handheld EFTA European Free Trade Association ESA European Space Agency ESC Environmental Sensing Capability ETSI European Telecommunications Standards Institute FC C Federal Communications Commission FC FS First-Come-First-Serve FDMA Frequency division multiple access FTTH Fibre-to-the-Home FTTN Fibre-to-the-Node FTTP Fibre-to-the-Premise G SM Global System for Mobile Communications G SMA GSM Association G SO Geostationary orbit HSPA High speed packet access IFC International Finance Corporation IFT Instituto Federal de Telecomunicaciones IMT International mobile telecommunications IoT Internet of Things ISED Innovation, Science and Economic Development ISM Industrial, scientific and medical ISO Independent System Operator ISP Internet service providers ITU International Telecommunications Union LB T Listen before talk LFTR Ley Federal de Telecomunicaciones y Radiodifusión LMP Locational marginal pricing LSA Licensed Shared Access LTE Long-Term Evolution M2M Machine-to-machine MN Os Mobile network operators MV N Os Mobile virtual network operators MW Mediumwave MTS Māori Television Service N FC C National Frequency Coordinator’s Council N FV Network function virtualization NGN Next generation network N B P National Broadband Plan N OFN National Optical Fibre Network

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Abbreviations xvii

N TIA

National Telecommunications and Information Administration N TP National Telecom Policy NN Net neutrality N Z PO New Zealand Post Office OEC D Organisation for Economic Co-operation and Development OEM Original equipment manufacturer OTA R D Over-the-Air Reception Devices OTT Over the top PC A ST President’s Council of Advisors on Science and Technology PR S Personal radio services PR OMTE L Organismo Promotor de las Inversiones en Telecomunicaciones PSTN Public Switched Telephone Networks PSU Public sector units PTT Department of Posts and Telegraphs RA Radio Appliance RAN Radio access network R OW Rights of Way R R B S Remote Rural Broadband Systems SA S Spectrum Access System SC Supreme Court SDN Software defined networking SOE State Owned Enterprise SPV Special Purpose Vehicle TDMA Time division multiple access TPR P Telecommunications Policy Review Panel TR A I Telecom Regulatory Authority of India TV WS Television white space U HF Ultra high frequency U SOF Universal Service Obligation Fund U SSD Unstructured Supplementary Service Data VAU Village administrative units V HF Very high frequency V N O Virtual Network Operator V oIP Voice over Internet Protocol WISP Wireless Internet Service Provider WR C World Radiocommunication Conference

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F r e q u e nci es

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Introduction Gregory Taylor and Catherine Middleton

As the Model T Ford was to the 1920s, so are the smartphone, and mobile devices more generally, to the present day. These are the essential technologies that capture the zeitgeist of the current era. According to Cisco (2017), by 2021, more human beings will be using mobile phones (5.5 billion) than have bank accounts (5.4 billion) or running water (5.3 billion). The GSMA (a trade association representing mobile network operators worldwide) claims that in 2017, mobile technologies and services generated 4.5 percent of GDP globally (GSMA 2018, 4). Besides having a wide economic impact, mobile technology reaches all corners of the earth and is increasingly penetrating diverse areas of human behaviour. Mobile communication has changed how we work, how we parent, how we socialize, how we learn, and how we entertain ourselves – it is not hyperbole to say mobile communication technology has impacted nearly all aspects of contemporary life. And it has largely happened in less than ten years: 2017, when much of this book was written, marked the tenth anniversary of the iPhone. There were certainly other cellular phones before the iPhone that would qualify as “smart,” but it was the iPhone that changed the design of smartphones, brought them into the mainstream, and made them sought-after devices around the world. A book about the iPhone cited the device as being arguably “the pinnacle product of all capitalism to this point” (Merchant 2017). And that object in our pockets has had profound ripple effects for global spectrum policy. The iPhone’s high-quality screen, coupled with fourth-generation wireless technology offering greater speed, created a market for the high-­ definition video streaming that drives much of our increasing demand

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for mobile data. The modern era of mobile broadband began with the launch of the iPhone in 2007. And all of this rapid, society-shaking development in human communication relies on access to invisible, intangible, publicly owned radio frequencies. Spectrum is the avenue along which we transmit the mobile data that is a defining feature of this young century. The decisions we make now concerning spectrum management will substantially determine communication power dynamics for decades to come. The media “gatekeeper” theory – which suggests that broadcast owners, news editors, and movie studios filter and determine the content accessible to the general public – has long been a staple of communication scholarship; but in the current media ecosystem it is connectivity, not content, that is the real crux of power (Winseck 2017). Spectrum is increasingly about access to society. Mobile is how we engage. While the radio spectrum has always been with us (no one “invented” it), its management is a product of government policy and the technological advances of the last one hundred years. No one was concerned about the governance of spectrum until the arrival of radio broadcasting. Guglielmo Marconi used radio frequencies to send a signal from England to Newfoundland in 1901 and in doing so captured the world’s imagination for the potentials of wireless. However, while Marconi’s historic call consisted of three dots (Morse code for the letter “S”), today’s mobile users are streaming high-definition video and music and exchanging other data-intensive messages. We are asking more of the public airwaves than ever before. The quality of the images we watch on the screens of our hand-held mobile devices is far higher than what we could see on our living room T Vs less than two decades ago. As the potentials of mobile communication have evolved, despite enormous gains in spectral efficiency, demand continues to grow. As Thomas Hazlett notes: “We today enjoy one trillion times the wireless capacity of networks a century ago,” yet “access to prime radio spectrum has become more contentious, not less” (Hazlett 2017, 2, 317). In its 2014 Spectrum Strategy, the U K communications regulator Ofcom noted that “planning and use of spectrum involves ranking the relative public values of various uses” (Cave and Webb 2015, 221). Spectrum is about more than smartphones. Radio, satellite, television, astronomy, the military, and air traffic control are just a few of the sectors that also rely on access to radio frequencies. The priorities we

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Introduction 5

set for access are a reflection of our social values. Spectrum management is also about the clash between exclusive licences, such as those assigned to major mobile providers, and publicly accessible frequencies, such as those used for Wi-Fi. In a rapidly changing technological environment, governments worldwide find themselves having to assess their societies’ particular needs and develop policies for meeting those needs. Spectrum is a constantly morphing policy puzzle. At some point along the arc of technological development it is essential to reassess what we need from technology, not just how we can get more of it. For the spectrum infrastructure required for increased mobile data demand, policy-makers have by and large fallen into a routine of reshuffling (or re-farming) spectrum users, such as television broadcasters, to clear frequencies to be auctioned to the highest bidders – usually mobile network operators. Spectrum auctioning was pioneered by New Zealand in 1991 (see Joyce, Chapter 1) and has since become the default method in many countries, replacing the government-led administrative paradigm (i.e., governments or regulators decided how to assign spectrum) that had been the standard since the launch of radio (Sims, Youell, and Womersley 2015, 15). After two decades of relying on classical-economics-based auctions that allowed mobile network operators (M N O s) to acquire exclusive licences to expand their operations and broaden their services, governments must now ask whether constantly “throwing spectrum” at the problem is the correct solution (Dobby 2015). What are the other options? Access to affordable, accessible mobile communication is an important goal for spectrum policy. But what are the best policy tools to get us there? Are we utilizing the true potential of the spectrum resource? This book is about more than spectrum. It is also about how we use technology to better society or, as some call it, to advance the public good. Radio frequencies are the foundation for our ever more mobile society, and this happens to be an area in which the general public holds a degree of power. First and foremost, the spectrum is ours – it is a public resource. This ownership is explicitly stated in government documents: the International Telecommunications Union describes spectrum as “a scarce but renewable public resource” (ITU 2015); the 2016 Federal Communication Commission incentive auction in the United States was subtitled “A Groundbreaking Auction to Realign Use of the Public’s Airwaves” (F C C 2016). Spectrum is also increasingly valuable. Canada’s former industry minister referred to spectrum as “the oil of the 21st century” (Industry Canada 2010). The public

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has legal ownership of this precious resource that enables contemporary mobile communication. That being so, it is incumbent on us to ask: how are we to achieve greater public value for our collectively owned spectrum? It is time for fresh thinking. This book’s title, Frequencies, is clearly a reference to the spectrum waves, but it is also meant to invoke the common and recurring dilemmas often faced by government spectrum regulators around the globe. The early administrative method of spectrum assignment (commonly known as a “beauty contest”), where government departments chose licence recipients, was used for most of the last century but was justly criticized for its lack of transparency, which left governments open to accusations of regulatory capture (Sims, Youell, and Womersley 2015, 39). The current auction paradigm, in vogue for two decades, has often seen market competition restricted as large telecom corporations amass vast reserves of spectrum, while smaller M N O s find themselves unable to compete in or even enter the marketplace (Cramton et al. 2011). Given the changes in mobile technology and persistent problems of access in various parts of the globe, are auctions the best option for ensuring the maximum public value from spectrum? Considering how complex an issue spectrum policy is, the focus of this book is deceptively simple: to challenge common assumptions about the management of the public airwaves. For the concerned citizen, it is hard to know where to enter the debate about this key public resource. New paradigms of spectrum policy require conceptualization at various levels of engagement. To affect change in this spectrum arena is a daunting task. Christian Sandvig speculates that “discussion of the spectrum is off-putting because it is even more heavily cloaked by jargon than other technology topics” (Sandvig 2013). Despite the centrality of mobile media to our daily lives and the public nature of the frequencies that underpin it, spectrum policy is often left to a discussion between private industry and government. The “public interest” or “social good” aspect of spectrum management can be a tough sell to even the most veteran communication rights activist. Other key digital media debates such as the ones over net neutrality (NN) and media ownership may result in a deluge of letters and emails to politicians; yet the high-stakes politics of spectrum largely reside, invisibly, in the background. This book aims to reduce the jargon surrounding this foundational element of modern communications and to demonstrate shared areas of

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Introduction 7

concern and visions for our mobile future across disparate regions of the globe. The international cooperation required for spectrum management is not a recent construct. Radio frequencies do not recognize borders, and for more than one hundred years spectrum policy has been an international challenge at the global, regional, and national levels. The first International Conference on Wireless Telegraphy was held in 1903; three years later, in Berlin, the International Radio Convention was drafted (Raboy 2016, 278). The signatories to that agreement shed light on the international ramifications of spectrum even that early in its mass adoption: Argentina, Austria, Belgium, Brazil, Bulgaria, Chile, Denmark, France, Germany, Great Britain, Greece, Hungary, Italy, Japan, Mexico, Monaco, Norway, Persia, Portugal, Romania, Russia, Spain, Sweden, the Netherlands, Turkey, United States of America, and Uruguay. The I T U , a United Nations agency, now hosts the World Radiocommunication Conference every four years or so to coordinate spectrum use within and between three international regions: (1) Europe, the Middle East, and Africa; (2) the Americas; and (3) Asia and the Pacific (I T U 2019). National governments determine the spectrum allocation plans for their respective countries based on the parameters set out for their I T U region. For more than one hundred years, spectrum has been the subject of intricate international negotiations. Notwithstanding this long multi-national history, contemporary research is often conducted within national silos, with engineers, academics, and state agencies exploring how spectrum policy contributes to their country’s economy and culture. The global “bigger picture” rarely enters the debate, with the notable exception of the ITU’s highly specialized world conferences. Other academic gatherings (such as the International Telecommunications Society biennial conference and the Research Conference on Communications, Information, and Internet Policy; T P R C ) do offer venues for international spectrum policy discussion, but they regularly include industry contributions that may be seen as supporting a vested interest. International scholarship and wireless policy should be a natural fit for publication, yet it is hard to find a clear example of an international, interdisciplinary spectrum policy book even after more than one hundred years of spectrum research. This book seeks to fill that gap. Frequencies offers a unique perspective. It is a collection of original, independent academic research on spectrum policy from scholars

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Gregory Taylor and Catherine Middleton

working in different disciplines, representing various corners of the globe. The field of spectrum policy encompasses economics, political science, communications studies, history, engineering, and science and technology studies. This book’s diverse chapters serve to clarify common global concerns as well as significant local differences. Two Canadians edited this book, but its purpose is to shed light on the collective challenges that countries face in separating fact from fiction in the contentious, high-financed world of spectrum policy. Spectrum policy is a field on which academics – especially in the social sciences and humanities – often fear to tread. But why? The current policy climate surrounding spectrum policy will clearly benefit from what the arts and humanities have to offer. In a 2015 report out of the U K titled Incorporating Social Value into Spectrum Allocation Decisions, the broader social value of spectrum was explicitly recognized for its impact on social goods such as social capital, political freedoms, national culture, security, and inequality (Barwise et al. 2015). In less explicit fashion, Industry Canada’s publication “Spectrum Policy Framework for Canada” (2007) is guided by the policy objective “to maximize the economic and social benefits that Canadians derive from the use of the spectrum.” Such social advances, which are key to the implementation of current spectrum policy objectives, involve fields that are the domain of the social sciences and humanities. These areas are not as strongly recognized in the common discourse around the private value of spectrum – discourse that has dominated policy for more than twenty years. In 2001, communications scholar William Melody noted that under current institutional frameworks that favour exclusive private licences, it is inevitable that social and cultural goals will be sacrificed or delayed to make wireless markets financially viable (Melody 2001). It is time to reassess our spectrum trajectory and to ask whether we are truly receiving maximum social and economic benefit. No single academic discipline can offer the range of tools required to adequately address that question. In order to accomplish this, the book explores key themes running through much of the current debate surrounding spectrum policy: •

•

The effects of twenty years of liberalization on national market structures. New potential business models and technologies that offer more efficient use of spectrum and that challenge entrenched oligopoly structures.

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Introduction 9 •

•

Opportunities for the state to restructure how spectrum is assigned and in so doing fundamentally change the opportunities for accessibility (i.e., alternative governance). How local concerns and priorities are reflected in spectrum policy.

These themes are not neatly delimited: they cross-cut and blur into one another. But taken as a package, and through dialogue between the authors, the chapters of this book reveal patterns and possibilities for contemporary spectrum policy. Hanging over much of the research offered here are fundamental questions that will determine the future direction of mobile communication. There are no absolute answers to these inquiries, which is why it is so important that we keep asking questions from a range of perspectives. New models for sharing and using spectrum respond to, and often counter, concerns about spectrum shortages in the face of anticipated demand growth. Three common areas of uncertainty include predictions of spectrum demand, the effectiveness of auctions as an assignment method, and visions for the future of wireless technologies.

S p e c t ru m P o l icy ’ s C l oudy Crys tal Ball Given the skyrocketing prices paid for spectrum in much of the world over the last two decades, it is surprising how much uncertainty and even disagreement there is regarding how much spectrum is needed to satisfy demand and how much is currently in use (Taylor, Middleton, and Fernando 2017). The recent history of spectrum policy is replete with dire warnings of impending catastrophe. In 2010 the F CC forecast that the United States would be facing a spectrum deficit of 300 MH z by the end of 2014 (F C C 2010). However, some industry watchers noted in 2015 that there were problems with the FCC calculations, arguing that as of the end of 2014 there was in fact a spectrum surplus of nearly 300 MHz (T MF 2015). Whatever the truth of this essential debate, the wireless apocalypse, has thus far not come to pass in America: not in Times Square, not in rural Montana. In her 1999 essay “The Ethnography of Infrastructure,” Susan Leigh Star coined the term “the deletion of modalities,” by which she meant “the process by which a scientific fact is gradually stripped of the circumstances of its development, and the attendant uncertainties, and becomes an unvarnished truth” (Star 1999). Over recent decades, the looming spectrum crunch has been stripped of its circumstances and

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become the unvarnished truth and a strong driver of spectrum management. In fact, in the realm of spectrum policy, many uncertainties are attendant that challenge the orthodoxy of limited spectrum (Calabrese 2013). Research has shown that policy and infrastructure decisions are often based on projections that have later been proven wrong (Mehta and Musey 2014). There are many variables involved when estimating spectrum requirements, including the level of technology deployed (newer generations of mobile technology are more efficient), use of smaller cells that require less spectrum, and deployment of fibre backbone (realWireless 2011; Taylor, Middleton, and Fernando 2017, 157). Will the predictions that were used to usher in the era of spectrum auctions in the 1990s hold true in the 2020s? Put bluntly, some of our assumptions have been incorrect. So now is the moment to reassess where we are. This book is about recognizing the circumstances of the current state of spectrum development and, through exploring global case studies and alternative governance models, exploring the possibilities.

R e - e va l uat in g Aucti ons The wireless world is now more than twenty years into a once dramatic revision in the governance of our airwaves: the shift from a government-led administrative approach to managing spectrum, to the application of classical economic models using market-based auctions. The auction method received widespread support among economists as it grew to become the world standard in the 1990s (Cave and Valletti 2000, Cramton 1998, Hazlett 1998). There is broad consensus among governments that auctions are a more open and efficient method for awarding valuable publicly owned spectrum to those who require it most and have the financial ability to build systems. The supposed benefits of the auction method include efficiency, generation of government revenues, greater competition, and transparency (Cave and Webb 2015, 73). However, if auctions have indeed delivered, it is not without some controversy. The auctions themselves employ sophisticated software and algorithms to determine licence winners and prices; however, the development of auction frameworks and determination of eligibility to participate in auctions remain highly political processes. In 1998, Noam persuasively argued that the use of spectrum auctions had been finally approved in the United States as a means to reduce

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the federal budget deficit while avoiding service cuts or tax increases (Noam 1998). Spectrum auctions should not be seen as easy government money. The chapters by Song (Chapter 3) and Jain and Neogi (Chapter 6) in this book expose the limitations posed by high minimum-bid requirements, which limit the number of participants as well as government revenues and (later) market competition. Within broader public policy development, one-time auction revenues can offer governments a false sense of financial security. Governments can be incentivized to limit the amount of spectrum available for auction, for this can increase auction prices. In effect, this turns the government into a spectrum warehouse (see Marcus in Chapter 8). As a consequence, scarcity becomes a false construct and valuable spectrum remains idle. Auctioning of spectrum may serve the state’s short-term financial goals, but it does not necessarily provide the best result for the public. For twenty years, auctions have been the hegemonic method for most governments; it is time to re-evaluate whether auctions are truly serving the public interest. In a 2015 book Sims, Youell, and Womersley (2015, 210) summarize the perceived flaws in the current spectrum auction regime: • •

•

• • •

•

It contributes to oligopoly, not a competitive market. High prices impede the deployment of new services and technologies (the winner’s curse, as noted by Ala-Fossi, Jain and Neogi, and Song). It is effective in new markets but less so when markets are established. Incumbents bid to obstruct competition. Governments become dependent on revenues. Auction policy tools such as spectrum caps and set-asides cloud the original purpose: to assign spectrum to the highest bidder. Complex formats such as the combinatorial clock auction (CCA) can lead to uncertainty in the process.

These shortcomings are not universally recognized. For example, some have argued that the high prices paid for spectrum in the United States have not led to limited rollouts of newer technologies or to higher consumer prices (Cave and Webb 2015, 69). However, cracks have started to appear in the forward momentum of auctions, causing concern that perhaps it is time to look to other options. According to some, even the previously dismissed administrative option must be considered anew (Sims, Youell, and Womersley 2015, 195).

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Auctions are certainly not the financial slam-dunk for governments they appeared to be at the start of the millennium (Given 2018). The introduction of auctions across Europe for 3G licences resulted in extremely high prices in the UK in 2000 during the heights of the dot. com boom and the commercial growth of the internet. However, the U K generated much lower bid results than expected in its 2013 4G auction.1 Meanwhile, in March 2013, the Czech Telecommunications Office put its 4G auction on hold out of concern that bid prices were rising too high.2 When the auction was rerun in November 2013, total bid prices were less than half of what they’d been when bidding was halted less than a year earlier.3 Spectrum auction tea leaves are becoming increasingly difficult to read. Certainly the long (one year) and expensive (US$207 million for administrative costs) 2017 incentive spectrum auction in the United States failed to live up to financial expectations. The intricate auction of 126 M H z of prime spectrum had originally set $86 billion as a revenue goal, but in the end only 84 M H z was sold, for $19.6 billion ([Anon.] 2017). This was a clear disappointment in the shadow of the 2015 A WS-3 auction, which saw $41 billion paid for 65 M H z. Once again, there was an abrupt and unforeseen change in what bidders were willing to pay. These examples demonstrate that we are in a period of flux for spectrum policy. Even staunch advocates for spectrum auctions have been given reason for pause. This book reassesses auctions as the default method for assigning spectrum. Several of the chapter authors demonstrate the limitations of the auction approach for achieving efficiency, revenue maximization, competition, and transparency. As Klass establishes in his examination of the Canadian mobile industry (Chapter 4), spectrum auctions, even those designed to encourage new entrants, are no guarantee of competitive markets. Ala-Fossi demonstrates how Finland runs against the European current of auctions and enjoys some of Europe’s least expensive monthly fees (Chapter 2). Mariscal outlines a bold approach under way in Mexico to assign spectrum to providers without the costly and increasingly unreliable method of spectrum auctions (Chapter 5).

W h y N ow? It is safe to assume that mobile communications will proliferate in the years to come. Exactly what form that mobility will take is far

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less certain. This is another key reason why this collection is so timely. There have been fantastic predictions about the near future of mobility: about a fifth generation of wireless technology, the much-­ ballyhooed Internet of Things, autonomous cars … all of which have truly disruptive potentials and all of which rely on spectrum access. But as Martin Cave and William Webb point out in Chapter 11, there are still great uncertainties surrounding the brave new world of wireless communication that is repeatedly, emphatically announced as fast approaching. A degree of skepticism is warranted. The MIT Technology Review declared that 2013 would be the year of the Internet of Things. Apparently the IoT is still just on the horizon, where it has by and large remained since Kevin Ashton coined the phrase in 1999 (Emerging Technlogy from the ArXiv 2013). In a similar vein, in 2016, Susan Crawford wrote: “Noise about 5G is incessant and triumphant, a constant drumbeat of predictions crowing about the arrival any day now of seemingly costless, ubiquitous, instantaneous, unlimited connectivity” (Crawford 2016). Not all analysts are dancing to this drumbeat. Also in 2016, William Webb challenged whether anyone actually needs the speeds promised by 5G (Webb 2016). Will 5G lead to a whole new approach to offering mobile service, such as the “verticals” described in Cave and Webb’s chapter? Once again, we simply don’t know; however, given the enormous money at stake, and the huge implications for our communications infrastructure, taking a critical perspective at this stage is prudent. Now is the moment when many of these fantastic predictions are malleable. In his classic essay “Do Artefacts Have Politics?,” Langdon Winner writes: “By far the greatest latitude of choice exists the very first time a particular instrument, system, or technique is introduced. Because choices tend to become strongly fixed in material equipment, economic investment, and social habit, the original flexibility vanishes for all practical purposes once the initial commitments are made” (Winner 2010). In the latter years of the 2010s, we live in what may very well prove to be a brief moment of latitude. After decades of dramatic advances, the next steps in the global story of mobile communication are uncertain. Spectrum auctions no longer offer a guaranteed financial windfall for governments, and the latest generation of mobile gadgetry does not arrive with the same breathless anticipation and accompanying consumer lineups as in the heady days of even five years ago. For

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spectrum policy, this is a positive development, because it allows for a necessary period of reflection. As Winner notes, at this moment there is flexibility, but it will not likely last. This book seeks to exploit this period of reflection in hopes of a more robust debate about our mobile future. Frequencies is organized into three sections. The first explores spectrum policy case studies from across the globe. It offers a snapshot of this moment in the world’s development of mobile communications and demonstrates many of the shared experiences. Zita Joyce, Marko Ala-Fossi, Steve Song, Ben Klass, Judith Mariscal, and co-authors Rekha Jain and Prabir Neogi explore current experiences of spectrum policy in New Zealand, Finland, various countries in Africa, Canada, Mexico, and India respectively. This broad sweep reveals several common policy threads in spectrum policy, such as the urban-rural divide (Mexico, India, Finland), problems with the auction paradigm (Africa, New Zealand, Finland), and market concentration (Canada, Mexico). The middle section of the collection includes two chapters that explore the concept of spectrum sharing as an underapplied possibility for contemporary spectrum policy. Michael Marcus, a former F C C engineer as well as foundational researcher for the development of Wi-Fi spectrum, offers an overview of the history and growth of spectrum sharing (Chapter 8). Marcus argues that this approach has a long history and that its potential has been largely under-realized in the current policy environment. Gregory Taylor offers a unique case study of the shared-spectrum approach in Canada. Remote rural broadband systems (RrBS) utilize television white space to offer fixed wireless services to battle the stubborn global issue of rural access (Chapter 7). Spectrum sharing poses a challenge, as it runs contrary to the exclusive licence model that has dominated spectrum policy for twenty years. The final third of the book offers three bold visions for the future of spectrum policy that are not beholden to any one country. These authors engage with new technological possibilities, offer innovative governance models, and present clear analyses of potential social benefits. The changes proposed could alleviate some of the common problems we encountered in the national case studies. In Chapter 9, Martin Weiss and Marcela Gomez present a study of spectrum governance that allows for sharply localized spectrum sharing without need of a centralized regulator. They argue that the regulatory flexibility in

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their model offers new avenues and applications for mobile technologies. In Chapter 10, Linda Doyle, Peter Cramton, and Tim Forde present a unique open access model of spectrum-trading that involves pricing based on demand in specific locations. The temporal and spatial precision of this model could allow for small and larger players to enter the market. In final chapter, Chapter 11, Martin Cave and William Webb look ahead to the still-unfolding future of 5G mobile technology and offer provocative views of how this new technology may fundamentally challenge the existing economic and regulatory foundation of the mobile sector. Now is the time to reconsider what we need from the incredible potentials of mobile technology and to assess the best policy avenues for rendering these services accessible to all. To do this, we must look outside our national and disciplinary silos and challenge prevailing orthodoxies with new and inventive research. Frequencies offers unique contributions to our current understanding of spectrum policy; it presents a range of national case studies from scholars and offers threads between seemingly divergent experiences; and it combines contributions from the arts and social sciences, engineering and economics, for a truly interdisciplinary approach. We sincerely hope this forward-thinking book contributes to the necessary global discussion on the future of spectrum policy.

N otes  1 http://www.bbc.com/news/business-21516243  2 http://www.telecoms.com/171762/czech-regulator-reschedules-lte-auction  3 http://www.ctu.eu/main.php?pageid=341&page_content_id=5597

r efer e nc e s [Anon.]. 2017. “Inventive Auction; Radio Spectrum.” The Economist, 18 February, 56. Barwise, Patrick, Martin Cave, Peter Culham, Tony Lavender, Neil Pratt, and Damian Tambini. 2015. Independent report: “Incorporating Social Value into Spectrum Allocation Decisions.” Department for Culture, Media and Sport. https://www.gov.uk/government/publications/ incorporating-social-value-into-spectrum-allocation-decisions.

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Calabrese, Michael. 2013. “Solving the ‘Spectrum Crunch’: Unlicensed Spectrum on a High-Fiber Diet.” http://www.twcresearchprogram.com/ pdf/TWC_Calabrese.pdf. Cave, Martin, and Tommaso Valletti. 2000. “Are Spectrum Auctions Ruining Our Grandchildren’s Future?” info 2(4): 347–50. Cave, Martin, and William Webb. 2015. Spectrum Management: Using the Airwaves for Maximum Social and Economic Benefit. Cambridge: Cambridge University Press. Cisco. 2017. “Cisco Mobile Visual Networking Index (V NI) Forecast Projects 7-Fold Increase in Global Mobile Data Traffic from 2016– 2021.” https://newsroom.cisco.com/press-release-content?articleId= 1819296#_ftn1. Cramton, Peter. 1998. “The Efficiency of the FC C Spectrum Auctions.” Journal of Law and Economics 41(2): 727–36. Cramton, Peter, Evan Kwerel, Gregory Rosston, and Andrzej Skrzypacz. 2011. “Using Spectrum Auctions to Enhance Competition in Wireless Services.” Journal of Law and Economics 54(S4): S167–S188. Crawford, Susan. 2016. “The Next Generation of Wireless – “5G” – Is All Hype.” Wired, 11 August. Dobby, Christine. 2015. “The Battle for Spectrum: Canada’s Coming Wireless Wave.” Globe and Mail, 1 May. Emerging Technlogy from the ArXiv. 2013. “2013: The Year of the Internet of Things.” M I T Technology Review, 4 January. https://www. technologyreview.com/s/509546/2013-the-year-of-the-internetof-things. F C C (Federal Communications Commission). 2010. “Mobile Broadband: The Benefits of Additional Spectrum.” https://transition.fcc.gov/ national-broadband-plan/mobile-broadband-paper.pdf. – 2016. “Broadcast Incentive Auction and Post-Auction Transition.” https://www.fcc.gov/about-fcc/fcc-initiatives/incentive-auctions. Given, Jock. 2018. “Did It Work? An Update on the Costs and Benefits of the Transition to Digital TV in Australia.” International Journal of Digital Television 9(1): 43–52. GS MA . 2018. “G S M A Mobile Economy 2018.” https://www.gsma.com/ mobileeconomy/wp-content/uploads/2018/05/The-Mobile-Economy2018.pdf. Hazlett, Thomas W. 1998. “Assigning Property Rights to Radio Spectrum Users: Why Did FCC License Auctions Take 67 Years?” Journal of Law and Economics 41(2): 529–75.

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– 2017. The Political Spectrum: The Tumultuous Liberation of Wireless Technology, from Herbert Hoover to the Smartphone. New Haven: Yale University Press. Industry Canada. 2007. “Spectrum Policy Framework for Canada.” http:// www.ic.gc.ca/eic/site/smt-gst.nsf/eng/sf08776.html. – 2010. “Speaking Points. The Honourable Tony Clement, PC , MP, Minister of Industry. An Interim Report on the Digital Economy and Telecom Strategies.” International Institute of Communications Canada Conference. I T U (International Telecommunication Union). 2015. “Spectrum Management for Developing Countries.” https://www.itu.int/pub/D-STG-SPEC2015-V5.0. – Radiocommunication Sector. 2019. “Welcome to ITU-R.” http://www. itu.int/en/ITU-R/information/Pages/default.aspx. Mehta, Aalok, and J. Armand Musey. 2014. “Overestimating Wireless Demand: Policy and Investment Implications of Upward Bias in Mobile Data Forecasts.” CommLaw Conspectus 23, 300. Melody, William H. 2001. “Spectrum Auctions and Efficient Resource Allocation: Learning from the 3G Experiences in Europe.” info 3(1): 5–13. doi:10.1108/14636690110801770. Merchant, Brian. 2017. The One Device: A People’s History of the iPhone. London: Transworld. Noam, Eli. 1998. “Spectrum Auctions: Yesterday’s Heresy, Today’s Orthodoxy, Tomorrow’s Anachronism. Taking the Next Step to Open Spectrum Access.” Journal of Law and Economics 41(2): 765–90. Raboy, Marc. 2016. Marconi: The Man Who Networked the World. New York: Oxford University Press. RealWireless. 2011. “Report for Ofcom – 4G Capacity Gains Final Report.” Pulborough: Real Wireless. http://stakeholders.ofcom.org.uk/ binaries/research/technology-research/2011/4g/4GCapacityGainsFinalR eport.pdf. Sandvig, Christian. 2013. “The Internet as an Infrastructure.” In The Oxford Handbook of Internet Studies, ed. William H. Dutton, 86–108. Oxford: Oxford University Press. Sims, Martin, Toby Youell, and Richard Womersley. 2015. Understanding Spectrum Liberalisation. Boca Raton: C R C Press. Star, Susan Leigh. 1999. “The Ethnography of Infrastructure.” American Behavioral Scientist 43(3): 377–91.

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Taylor, Gregory, Catherine Middleton, and Xavier Fernando. 2017. “A Question of Scarcity: Spectrum and Canada’s Urban Core.” Journal of Information Policy 7, 120–63. T MF (Teleccom, Media, and Finance Associates). [Blog post.] 2015. “I come to bury Caesar, not to praise him …” http://tmfassociates.com/ blog/2015/06/22/i-come-to-bury-caesar-not-to-praise-him. Webb, William. 2016. The 5G Myth: When Vision Dcoupled from Reality. London: CreateSpace. Winner, Langdon. 2010. The Whale and the Reactor: A Search for Limits in an Age of High Technology. Chicago: University of Chicago Press. Winseck, Dwayne. 2017. “The CBC’s Role in ‘the Internet Age.’” Policy Options (March).

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1 Radio Spectrum as Indigenous Space: Property Rights and Traditional Knowledge in New Zealand’s Spectrum Zita Joyce

1   In t ro ducti on Developments in New Zealand spectrum policy since 1990 reflect the country’s political, geographical, and cultural context. New Zealand was the first country to introduce trading in spectrum property rights, in 1989 (Cave, Minervini, and Mfuh 2008; RSM 2005a; Chaduc and Pogorel 2008; Geradin and Kerf 2003), following a process of intensive deregulation across the economy. However, as a group of islands lying far to the southeast of Australia, without complex radio boundary issues and with a population of less than 5 million people, New Zealand has a limited market for spectrum (Cave, Minervini, and Mfuh 2008; Geradin and Kerf 2003). Responses to spectrum auctions have also drawn on New Zealand’s particular colonial history and to the process of reparations to indigenous Māori for breaches of the 1840 Treaty of Waitangi. This chapter details three aspects of the legacy of spectrum auctions in New Zealand: the development of auction strategies; a shift away from the ideals of a pure auctions regime toward one that reflects the local market and the future of spectrum technologies; and Treaty-based challenges to the government’s right to assume ownership of spectrum. The Treaty of Waitangi was signed by representatives of Queen Victoria – the British Crown – and the Iwi (tribal) chiefs of New Zealand. However, a complicated history has arisen from differences in the English and Māori versions and the consequent expectations of

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governance, including of resources like radio spectrum. The Waitangi Tribunal was established in 1975 to address and redress the Treaty’s legacy. It is a permanent commission of inquiry that hears and makes recommendations on claims by Māori that actions or omissions of the Crown – or of the New Zealand State acting as the Crown1 – have breached the Treaty and prejudiced Māori interests (Waitangi Tribunal 2016b, 2018).2 Claims for radio spectrum brought to the Waitangi Tribunal have challenged the state’s right to sell radio spectrum without consulting Māori. The claimants argue for a broad conceptualization of radio spectrum, one that embraces the value of broadcast frequencies for supporting language and culture as well as the potential for economic development in wider areas of communication infrastructure and ICT. More fundamentally, the claims rest on a definition of spectrum as a natural rather than an economic resource. In this process a document signed decades before the first intentional transmissions of electromagnetic waves has enabled what appears to be the only sustained challenge in the world to the state’s right to sell property rights in radio spectrum.3 There are two interweaving threads in this chapter. One is the introduction and management of tradable property rights in spectrum, and the other is the long struggle for recognition of a Māori partnership role in spectrum management, as well as the value of radio spectrum for supporting Indigenous language, culture, and economic development.

2  Ra d io F r e q u e n cy A l l ocati on pre-1990 The regulation of radio frequency allocation and broadcasting in New Zealand has tracked the country’s broad political and economic development through the late twentieth century: a long period of protectionist economic policy was swept aside by neoliberal economic reforms introduced in 1984 by the Labour government finance minister, Roger Douglas (Geradin and Kerf 2003, 119). In the 1980s, deregulation opened industries to competition and reframed the economy “as a confluence of self-operating forces.” Past forms of economic management were now seen as inefficient and overly interventionist; the new economy would look to the future (Hope 2017). Prior to deregulation, frequency allocation in New Zealand was administered by the New Zealand Post Office (NZPO), working within the overall designations of the I T U.4 The approach granted radio licences largely on a “first come first served” basis (R S M 2017b),

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“provided the NZ P O monopoly on provision of telecommunication services was not compromised.” In practice, the relevant frequency bands were self-administered by the government departments that used them, those being the NZ P O , the Broadcasting Corporation of New Zealand (B C NZ ), and Airways Corporation (N E RA 1988, 44). The first deregulatory measure to affect radio frequencies was the 1986 State Owned Enterprise (S O E ) Act, which established a new structure of government-owned business that was required to operate competitively and return a dividend to the government as sole shareholder. This applied directly to the N Z P O , which was divided into three companies in 1987: New Zealand Post, which remains stateowned; the Post Office Bank, which was sold to an Australian bank in 1989; and New Zealand Telecom, which was privatized and sold in 1990 to the US companies Bell Atlantic and Ameritech,5 in preparation for competition in providing telecommunication services that superseded the NZPO monopoly. The NZPO’s radio spectrum management function moved to a newly created Radio Frequency Service in the Department of Trade and Industry (N E RA 1988). Under the auspices of the N Z P O , whose role it was to manage radio frequencies, a body for adjudicating broadcast warrants was established in 1969 as the Broadcasting Authority (Broadcasting Authority Act 1968); this was replaced by the Broadcasting Tribunal in 1976 (Broadcasting Act 1976). A broadcast warrant enabled the holder to obtain a licence “to establish and operate a broadcasting station” from the Post Office (Broadcasting Authority Act 1968, Section 16). The Broadcasting Tribunal granted authorization “to establish and operate a broadcasting station,” either for television or for “sound-radio” (Broadcasting Act 1976, 70(1), 71(1b)), and specified conditions relating to “locality, power, hours of transmission, frequency, and advertising hours” and the ability of a warrantholder to participate in a network of broadcasting stations. When the Broadcasting Authority was established, both radio and television were dominated by state-owned broadcast networks, operating as the New Zealand Broadcasting Corporation. The first warrants for independent commercial radio were issued in 1970. The authority (later, the tribunal) issued a range of broadcast radio warrants throughout the 1970s and 1980s, though these were often short-term, small-scale, and with limited commercial scope. A single warrant was granted for privately owned commercial television in 1987, and T V 3 went to air in November 1989. At that time, radio and television

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remained almost entirely state-run and directly funded by the public broadcasting licence fee. This state-run structure was dismantled in stages in 1988 and 1989. The Broadcasting Amendment Act of 1988 dissolved the N ZBC and created Television New Zealand Limited and Radio New Zealand Limited as individual S O E s (Broadcasting Amendment Act (No. 2) 1988). The Broadcasting Act 1989 dissolved the Broadcasting Tribunal and created several new bodies with responsibility for aspects of the tribunal’s brief. Policy advice shifted from the tribunal and BCN Z to the Ministry of Commerce (Broadcasting Act 1989). A Broadcasting Commission, later renamed New Zealand on Air, was created to manage and disburse the public broadcasting fee that had previously been paid directly to NZ B C . Throughout the 1980s, several groups worked through established state mechanisms to develop Māori radio and television services, but the Broadcasting Tribunal warrant process was slow, and the state did not actively support the development of Māori broadcasting. The first Māori-focused radio broadcast took place during Māori Language Week in 1983, organized by Nga Kaiwhakapumau i te Reo (the Wellington Māori Language Board), using the studio and transmitter of Victoria University of Wellington’s student radio station, Radio Active. Piripi Walker, who was a producer in the continuing education unit at Radio New Zealand, worked “on loan” from the state broadcaster for this (Browne 1996, 141). Further short-term broadcasts took place in subsequent years, with a six-week licence for broadcast in May and June 1987. The success of that more extended broadcast enabled Te Upoko o Te Ika to launch permanently in April 1988 – on the strength of its support rather than a warrant granted by the Broadcasting Tribunal. In this it was followed by a number of stations established by Iwi in other parts of the country. Walker identifies a lack of support for Māori radio and television in a belief within the B C N Z that neither medium could be sustained by Māori alone: “At that point all my colleagues were still of the view … [that] what Māori were proposing was to them utter fantasy – a significantly funded Māori television channel, even in ’88 … Through to ’88 the idea of Māori stand-alone radio stations without Samoans and Polynesians involved was utter fantasy too.” When the Broadcasting Tribunal called for bids for a proposed third television channel in 1985, the Māori Council lodged a bid with support from the BCN Z. However, the B C N Z withdrew its support in order to bid for the licence itself,

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and the channel warrant was then issued to the private commercial company that launched T V 3. Rather than supporting Māori television, the BCNZ launched Radio Aotearoa, a Māori radio station in Auckland, in 1988, as a step toward establishing a national Māori radio network, something that BCN Z had been promoting for a number of years (Mill 2005). Walker argues that in doing so, B C NZ was going against the wishes of Māori radio producers to develop Iwi-based regional radio stations rather than a single national network, and that Radio Aotearoa was offered as a low-budget “consolation prize for them withdrawing $172 million in funding from the 1985 Māori television bid.” In 1989, after the BCNZ was dissolved, the station governance shifted to an independent trust, the Aotearoa Māori Radio Trust. Radio Aotearoa developed regional stations in Wellington, Bay of Plenty, and Christchurch, but as Anaru Mill (2005) details, these were discontinued in 1994 after it became apparent that there were not enough personal and financial resources to sustain both a national network and a local, Iwi-based network. Government support shifted to an Iwi-based network. In 1985, while maintaining efforts to develop Māori broadcasting, Nga Kaiwhakapumau i te Reo lodged a claim with the Waitangi Tribunal that argued the Crown had failed to protect the taonga (treasure) of the Māori language (te reo), and sought redress for the Crown’s ongoing failure to support it. That claim, Wai 11,6 led to the 1987 Māori Language Act, which established te reo as an official language of New Zealand. Part of Wai 11 sought recognition that broadcasting support for Māori language was part of the Crown’s obligation to “recognise and protect” the language as a taonga under the terms of the Treaty (Browne 1996). However, the Tribunal declined to address broadcasting alongside the broader language considerations, so the broadcasting elements of that claim were relodged as Wai 26 in 1986. This was not addressed by the Tribunal until the first specific radio spectrum claim was lodged in 1990.

3   D e r e g u l at io n and Treaty o f W a ita n g i Clai ms In preparation for deregulating radio frequency allocation in the context of comprehensive neoliberal economic reforms, the government commissioned a report from London-based consultants National Economic Research Associates (NE R A). The report “Management of

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the Radio Frequency Spectrum in New Zealand” advised that the extant administrative allocation system offered some advantages by centralizing engineering expertise; it also offered ease of dispute resolution and was similar to management practices used by governments all over the world. However, the report also argued that centralized allocations would be too inefficient and inflexible for radiocommunications industries’ evolving frequency needs. N E RA recommended that an open system of rights trading be established, with minimal government involvement; under such a regime, holders would contract with one another to resolve interference issues, and rights would ideally be disbursed by auction (NE R A 1988). In response, the Radiocommunications Act 1989 created two kinds of property rights in radio spectrum, under the oversight of what was then the Ministry of Commerce.7 The broadest are “management rights,” which cover nationwide blocks of frequencies and grant their holders “exclusive rights” to the use of those frequencies. “Tradable spectrum licences” then apply to individual frequencies and may be issued by management rights holders for use within their block (RSM 2005a, 13). Management rights are held by government, for broadcasting, and by commercial entities for functions such as cellular telephony and satellite communications. Both management rights and licences are transferable and mortgageable, which determines their status as “property rights” (RSM nd, 2014, 4). The 1989 act delineated a searchable register of radio frequencies, including details of ownership and technical aspects of transmission; the result has been a considerable degree of transparency over frequency ownership. The act reflected some adjustments to NE R A ’s proposals, described as modifications “to meet both technical and political concerns,” (Ministry of Commerce 1994, 9) and as “considerable refinement to reflect the Ministry’s practical experience in administering the spectrum and the needs of principal users” (Ministry of Commerce 1995, 4). Most significantly, rather than offering full property rights in perpetuity as recommended by NE R A , the act limits management rights and frequency licences to a twenty- year period (Ministry of Commerce 1994, 9). RSM Group’s manager for policy and planning, Len Starling,8 has described the decision to establish twenty-year management rights as a last-minute change, reflecting an unwillingness to sell spectrum rights in perpetuity. The 1989 act does not specify how management rights or licences should be assigned. Following the NERA recommendations, however,

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the New Zealand government adopted an auction system on the principle that this would allow the market to set the value and ideal use of frequencies. In practice, the design of auctions has been an ongoing issue in determining the efficacy of spectrum allocations. N ER A recommended a system based on sealed-bid, second-price tendering, which was the method used for the first three New Zealand spectrum sales in 1989 and 1990 (Slane 1989). Sealed bids were intended to “reduce the likelihood of collusive bidding,” while the “second price” meant that the auction winner would only pay the price offered by the second highest bidder (Ministry of Commerce 1995, 86). This, it was argued, “would avoid winning bidders having to pay more than necessary to obtain spectrum rights, as well as offering certainty that the tender would be won by the bidder with the most valuable use for the spectrum” (Ministry of Commerce 1995, 86). As spectrum tendering had not at that stage been tested elsewhere in the world, the second price method was intended to “promote rational bidding in a market place where the real value of spectrum was unknown” (Ministry of Commerce 1995, 86). The method was abandoned after three tenders because, “the media and many of the participating bidders neither understood, nor fully accepted, the second-price mechanism” (Ministry of Commerce 1995, 86). In response to the 1989 Radiocommunications Act and the proposal to sell frequencies by auction, Nga Kaiwhakapumau i te Reo applied for an injunction, claiming that the Radiocommunications Act represented a breach of the Treaty of Waitangi. The injunction was lodged at the High Court in Wellington and challenged by the Crown at the Court of Appeals. As a result, the auction was delayed so that the case could be heard by the Waitangi Tribunal, where it was lodged as Wai 150, incorporating Wai 26 – the broadcasting component of the previous Māori language claim. The Waitangi Tribunal, established in 1975, is “tasked with determining the meaning and effect of the Treaty … [as] the Treaty of Waitangi Act requires the Tribunal to ‘decide issues raised by the differences between’” the English and Māori versions of the Treaty (Waitangi Tribunal 2016a).9 The key differences lie in Articles One and Two of the Treaty, and Wai 150 and later claims to radio spectrum rest on two key points arising from these: the argument that spectrum is a taonga, a treasure, over which Māori were guaranteed “chieftainship” in Article Two of the Treaty, and the argument that under the principles of the Treaty there is an expectation that the Crown and Māori will act in partnership with respect to

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resources. In Article One of the English text, Māori ceded sovereignty to the Crown; however, in the Māori text, the British were given “kawanatanga” – the right to govern. There was no clear wording in Māori for the concept of ceding sovereignty. In Article Two, the English version “guaranteed to Māori the undisturbed possession of their properties, including their lands, forests, and fisheries, for as long as they wished to retain them.” This not only “emphasises property and ownership rights” (Waitangi Tribunal 2016a) but also establishes the principle that Māori could be open to selling these things. However, in the Māori version, for “possession” the word “rangatiratanga” was used, which was understood as “chieftainship” or sovereignty. In addition, where the English text uses the word “property,” the Māori text uses “taonga,” which refers more broadly to both material and non-material “treasures.” The Tribunal also serves a productive purpose in interpreting the Treaty, its principles, and its implications for a growing range of resources (Hayward 2004, 30). The Tribunal considers the Treaty in terms of a set of principles10 derived from the English and Māori texts, as well as the context in which the Treaty was drawn up and signed. Those principles form the basis of the claims regarding radio spectrum. They include the principle that the Crown will actively protect taonga, and the principle of partnership extending from Article One, which is the expectation that the Crown will consult Māori and “obtain the full, free, and informed consent of the correct right holders in any transaction for their land” (Waitangi Tribunal 2016b) – or other taonga. In relation to radio spectrum, the principle of partnership has been used to argue that the “Crown’s kawanatanga does not empower it to create property rights in any part of the universe, or any activity which utilises a special quality of the universe, prior to negotiation with, and the express agreement of, rangatira Maori”11 (Waitangi Tribunal 1990b, 50). Wai 150 argued on the principle of partnership and good faith that the Radiocommunications Act had been introduced without Māori consultation and without provision for Māori consultation and thus fundamentally represented the Crown assuming “prior authority and possession as of right.” In setting aside the social obligations embedded in the previous broadcast warrant system, the act also disposed of the Crown’s “potential power to protect and guarantee te reo Māori.” This applied to broadcast frequencies the principle established in Wai 11, and the resulting Māori Language Act, that the Crown has a responsibility to protect Māori language and culture as a taonga

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(Waitangi Tribunal 1990a, 51). This claim for the value of broadcasting frequencies for supporting language and culture challenged not only the right of government to create and sell property rights in radio spectrum but also the understanding of spectrum that underpinned that process. A grant meant the group was able to commission several significant pieces of research on Māori understandings of spectrum that could underpin the claim to taonga.12 The researchers included a number of key leaders and academics, including pākehā (European New Zealander) economist Brian Easton, who carried out an analysis that broadly supported the claim to rangatiratanga over spectrum (Easton 1990). Professor Whatarangi Winiata oversaw the whole claims process, along with Taranaki elder Te Huirangi Waikerepuru, whom Walker describes as “the supreme effective Māori leader, the generator of support.” The conceptual core of the claim is the document compiled by Walker for Nga Kaiwhakapumau i te Reo, Māori, “Maori Views on the Radio Spectrum,” which articulates a particularly Māori understanding of wireless signals that reframes the radio spectrum: rather than a technical phenomenon, it is a culturally based, mythological object. Piripi Walker characterizes Wai 150 as one of the most successful Waitangi claims in terms of both its success in court and its outcomes, although it was subjected to great derision. Walker calls it “the most mocked claim in New Zealand history,” and later claimant Graeme Everton13 recalls how his pākehā radio technician colleagues in New Zealand Telecom joked about it at the time.14 Wai 150 made dual arguments for a Māori role in radio spectrum as a means of supporting language and culture, and a tool of economic development. However, the outcomes were firmly located in support for language and culture. As a result of Wai 150, in 1991 the government formally reserved frequencies for Iwi organizations to broadcast programming that would support Māori language and culture for a predominantly Māori audience.15 The Māori funding body Te Māngai Paho was then established in 1993, specifically to fund “broadcasting and the production of programmes to be broadcast” in order to “promote Māori language and Māori culture” (Broadcasting Amendment Act 1993).

4   1 9 9 0 s : A u c t io ns and Clai ms Spectrum tenders and auctions continued through the 1990s while Nga Kaiwhakapumau i te Reo and others followed a number of strategies to advance Māori interests in television and radio. The first

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spectrum sale, in December 1989, was for analogue UHF-TV licences between 520 and 800 MH z (R SM 1995a). Most of these went to Sky Network Television and became the basis for a nationwide satellite television service. The second auction included management rights for cellular services: one band went to the incumbent, New Zealand Telecom, and another to BellSouth; then, after a re-tender in 1993, a third went to the Australian telecom Telstra, which opened the New Zealand market up to cellular competition (Geradin and Kerf 2003, 134–35). Other sales-by-tender before 1996 included frequency licences for further UHF channels and for regional and national AM and FM radio (RSM 1995b). These sales facilitated expansion of New Zealand broadcasting beyond the state-owned radio and television networks, by erasing conditions that had adhered to previous (and rarely granted) warrants. Mobile telephony and other backbone and communications technologies expanded through sales of management rights for cellular service bands at 850 and 900 M H z, as well as multichannel distribution services at 2.3 G H z. After 1996, auctions were conducted by a number of methods as new areas of spectrum were cleared for other uses. Remaining U H F and V H F (172–800 M H z) television licences were sold until 2003, and localized A M and F M broadcasting licences as recently as 2015. Management rights were created to accommodate new developments in cellular technology and shifting spectrum uses; all of this led to the “3G ” auction in 2000, which included “41 management rights and 995 licences” between 1.71 and 2.3 GHz (R SM 2015b). The 3G sale was subject to the second Waitangi claim, Wai 776, lodged in 1999. Graeme Everton and his mother Rangiaho Everton, with Nga Kaiwhakapumau i te Reo, Māori, led Wai 776. Everton had served as a radio technician for NZPO and then Telecom, working on the major high frequency long-distance telephone transmitter, wireless rural telephone networks, and the early cellular phone networks, so he had a technical understanding of spectrum technologies and a strong sense of their potential for Māori economic development. He led the research on the claim, supported by Winiata through a position at the tertiary institution te Wānanga o Raukawa. Despite the success of the Wai 150 claim, Everton had to look long and hard for a legal team willing to pursue further spectrum claims. Finally he found lawyers Leo Watson and Maui Solomon, who have remained with the claims process. Wai 776 responded to the 3G auction, but extended beyond the 2 G Hz band, as a full claim to “tino rangatiratanga,” or sovereignty,

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over the entire radio spectrum. The extent of this claim was framed by the claimant counsels as a response to concern that “every time the Crown proposes to auction a band of frequencies under the Radiocommunications Act, Maori are required yet again to prove that they have an interest which must be recognised” (Cull and Watson 1999b, 2). Thus, the claim attempted to address several central issues in relation to the sale, use, and possibilities of the radio spectrum: it argued that “Maori have a right to a fair and equitable share in the radio spectrum resource” and that this was especially the case “where the Crown has an obligation to promote and protect Maori language and culture” (Waitangi Tribunal 1999, 3-4). It further developed the arguments, first made in Wai 150, that the Crown had breached the principle of partnership under the Treaty and that it had not fulfilled its responsibility to protect the treasure of Māori language and culture, through the radio spectrum itself. Wai 776 was the claim that most thoroughly expressed an understanding of radio spectrum as a taonga, and it did so in non-­ technological terms as a concept that was meaningful to and understood by Māori in 1840 (see below). Instead of seeking to assert ownership and control of spectrum exclusively for Māori, the claimants suggested that a “desirable” outcome of the negotiations would be “sharing and joint management of the spectrum” (Walker 1989, 13). The claim defined radio spectrum as a shared natural resource with cultural meaning, against the Crown’s claim that it was a purely technological and economic resource. The majority of the Tribunal found for the claimants. It asserted that the Crown was in breach of the Treaty of Waitangi in that it had alienated management rights to the radio spectrum without consulting with Māori “and without allowing them a fair and equitable portion of those frequencies” (Waitangi Tribunal 1999, 51). This finding agreed that the natural radio spectrum is a taonga and that Māori “have a right under Treaty principles to the technological exploitation of that spectrum after 1840” (Waitangi Tribunal 1999, 51). By contrast, a minority of the Tribunal disputed the conceptualization of spectrum as a taonga and a natural resource and disagreed with the Tribunal majority’s framing of the “principle of partnership” ascribed to the Treaty (Waitangi Tribunal 1999, 57–70). The minority also rejected the association of radio spectrum with Māori economic, cultural, and linguistic development. In its final report on the claim, the Tribunal recommended that the 3G auction be suspended until the Crown had negotiated with Māori to reserve a fair and equitable portion of the frequencies for

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Māori. “In our view, such an arrangement is preferable to some form of compensation by the Crown in lieu of spectrum frequencies. Maori must have hands-on ownership and management if they are to foot it in the ‘knowledge economy,’ as we believe they must in the coming millennium” (Waitangi Tribunal 1999, 52). However the Crown, unusually, rejected both the Tribunal’s findings in Wai 776 and its recommendations. The Crown chose not to negotiate with the claimants about reserving appropriate portions of the 3G frequencies for Māori use. Instead, when the 2 GHz auction commenced in July 2000, the Crown offered a Māori trust $5 million16 and the right to purchase one quarter of the auctioned bands at “a price equivalent to the average price of other 3G spectrum realised at the auction less a discount of 5%” (New Zealand Government 2000). Te Huarahi Tika Trust then raised a further $350 million with investment from the South African company Econet Wireless in order to establish the 2 Degrees mobile phone network through its commercial arm Hautaki, and so fulfill part of the claim’s intentions. Further investment in 2008 came from the US venture capital firm Trilogy. By 2015 the Hautaki Trust held only 7.4 percent of 2 Degrees, with Trilogy becoming the majority owner. Graeme Everton describes the strength of the Wai 776 claim: once it was fully comprehended by the cellular phone companies of the time, Telecom and Bell South (later Vodafone), they started approaching key figures in the claims process and making offers to buy or partner with Māori on any spectrum resource that might be won through the Tribunal. For Everton, this demonstrates the importance of Māori ownership of spectrum rights – the economic development opportunities from being able to fully participate. More spectrum blocks were sold after the 1999 claim, and the Wai 776 claimants and Nga Kaiwhakapūmau i te Reo used a range of legal processes to pursue the unresolved claim to rangatiratanga over spectrum and to reiterate “that spectrum should be reserved for Māori, and there should be negotiations.”17 However the Crown has continued to disregard the Tribunal’s findings and recommendations. The “long struggle” to establish Māori television broadcasting was finally resolved in this period, when the Māori Television Service (MTS) was launched in 2004 (Smith 2016). MTS retains a management right for the U H F frequencies between 606 and 622 M H z, and Walker identifies Māori Television, its frequencies, and the funding agency Te Māngai Paho as Treaty rights protected by legislation.

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The third major claim of this period, Wai 2224, remains unheard by the Waitangi Tribunal. It began with a request for an urgent hearing to injunct the sale of spectrum in the 700 M H z range after the analogue-to-digital television switchover process cleared that band of television transmissions. The urgent hearing was denied, on the basis that the Tribunal had twice ruled that radio spectrum is a taonga. Meanwhile, the claimants continued to argue that the Crown had persisted in rejecting the findings and recommendations of Wai 776 (Winiata 2013). The claim process lasted from 2009 to 2012, encouraged by a statement by then Prime Minister John Key that after a review of the “development of Maori interests in spectrum over the last twenty years, the current situation, and options for the future … the Crown will be positioned to engage with Maori about the allocation and management of spectrum” (Key 2009). After pursuing the claim for three years, at the end of 2012 the claimants were offered a fund of $30 million for Māori ICT development, without any spectrum allocation or recognition of its status. Several Māori groups had participated in discussions with the government over the claim. For some a development fund was a worthwhile compromise; others were more focused on the value of spectrum itself for economic development and on the Crown’s continued rejection of the Tribunal’s findings. Among grounds for rejecting the request for an urgent hearing on Wai 2224, the Tribunal observed that “the Crown has already had the benefit of a report and recommendations” on Wai 776 and that “the Crown is unlikely to be further informed by the repetition of those recommendations as is now sought” (Waitangi Tribunal 2013, 13). For now the claimants feel there is no further recourse to pursue recognition of spectrum rights.

5   Is s ues 5.1  Spectrum as Taonga The Waitangi claims to radio spectrum rest on two key arguments: that under the principles of the Treaty there is an expectation that the Crown and Māori will act in partnership with respect to resources; and that spectrum is a taonga, a treasure, over which Māori have been guaranteed “chieftainship” under Article Two of the treaty. In describing radio spectrum as a taonga, the Waitangi claims argued that it was known to and valued by Māori in a conceptual, mythological, form

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prior to the signing of the Treaty of Waitangi in 1840. The focus of the claims was not on prior “possession” of a space or resource, but on prior knowledge of the possibilities of communication through a radio spectrum–like dimension: an attempt to re-conceptualize what the radio spectrum is. Proving knowledge of the radio spectrum prior to 1840 required articulating a view of it that was not reliant on technology. None of the claims’ concepts of spectrum directly relate to the properties of electromagnetism; rather, they are attempts to articulate other properties of the air, the extension of the land into the sky, the connections found in that liminal space, and the knowledge that is passed through that space by the gods. The radio spectrum is part of this space and is another means of forging connections and communications that expand understanding of the space (Winiata 1999, 4). This spectrum is part of a continuous flow of culture and interrelationships between the earth and the heavens. This flow is unbounded, and it is global insofar as it extends through the known and imagined worlds. These arguments serve to affirm Māori understanding of a form of the radio spectrum at the time of the signing of the Treaty, and also to identify the spectrum as a taonga, for which sovereignty may be claimed under Article Two of the Treaty of Waitangi, and to which the principle of partnership applies. In arguing that spectrum is a taonga, the claimants described it as the entity linking all things between the earth and the sky and as the conduit for transferring knowledge from the gods. Evidence presented in support of Wai 150 and Wai 776 by the New Zealand Māori Council and Nga Kaiwhakapumau i te Reo, summarizing Māori views on the spectrum, explored several different tribal understandings of the gifts of the gods and the ancestors who navigated the heavens.18 The story of Rangi and Papa, and their separation by their children, locates the spectrum in the space between the earth and the sky and therefore as one of the gifts of Māori, an “inheritance from Ranginui and Papatuanuku and the gods who brought knowledge from the heavens to man.” Ngati Porou tohunga relate the journey of Tane-nui-a-rangi, who brought baskets of knowledge from the heavens – from the “most senior whare wananga, Rangiatea.” Another journey through the sky was made by Pourangahua, who brought the kumara from Hawaiki to Aotearoa, flying on the back of a bird. Ngati Awa relate a similar story of Tāwhaki’s knowledge-retrieval journey through the heavens. In these traditions, the space between the heavens and the earth acts as a conduit for “knowledge and education both of a good and bad

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aspect [that] come from the skies” because “the skies are inhabited by … gods who render service to the people.” Many iwi consider the matter and bodies of the universe to be ancestors to the Māori people. Expanding on the relationship of “descent and whakapapa [genealogy]” with the universe, the evidence of Te Huirangi Waikerepuru discusses the taonga of the spectrum in terms of an understanding of the interconnection between all of the “elements and resources of the universe.” Interconnection with the elements of the universe means that the air and airspace above a tribal area may be seen as a space of spiritual affinities for that tribe, which includes the “airwaves” of radio spectrum. The key point of contention between the Waitangi claimants and the Crown was over this definition of radio spectrum as a natural resource that could be considered a taonga. The Crown argued, and continues to argue,19 that radio spectrum is not a natural resource (Waitangi Tribunal 1999, 31) and that the management rights being sold are in fact the “rights to artificially generated radio waves,” which cannot be categorized with the kinds of prior knowledge described in the claim evidence. Against this, the claimants have cited examples of radio spectrum being classified as a natural resource, including in the convention of the International Telecommunications Union, to which New Zealand is a signatory (Cull and Watson 1999a, 11-12). 5.2 Auctions The design of auctions can determine the success and economic value of spectrum sales. In New Zealand, the first four sales of management and frequency rights used a sealed-bid, second-price method as recommended in the NERA report (NERA 1988). This was followed by three first-price tenders, as the process was adjusted to accommodate the country’s small market for spectrum rights. Comparing the experiences of New Zealand and the United States in 1998, Crandall (1998, 828) observed of the initial second-bid tender process that “the New Zealand market was extremely thin with few potential bidders for large management rights … Were it not for the presence of Sky Network and Bell South, two foreign entities, the second highest bids might have been very close to zero in the first three tenders.” In his analysis of the European auctions for “third generation” mobile phone spectrum licences in 2000 and 2001, Klemperer (2004) observed that the success of different auction designs varied considerably between

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countries. Governments’ expectations of earnings were seldom met, and the pricing and winning bids were ultimately decided by the internal mechanisms of the auction, as well as by the policies of bidding companies. New Zealand’s R S M noted on this theme that “an underlying assumption, that market mechanisms will ensure spectrum is allocated to its highest value use, has not necessarily been realised in practice,” and initiated a review of auction design along with other aspects of the system in 2005, to “optimise the spectrum market” (R S M 2005a) with a more comprehensive review launched in 2014 (R S M 2014). After 1996, New Zealand spectrum sales were conducted by auction, mostly on a “multiple round ascending bid” structure, until a shift to sequential auctions in 2008. These have used a number of platforms, including oral outcry auctions in commercial auction houses, and Internet based auctions (as detailed in R S M 2015b). Notably, the 2014 sequential auction for “Licences for AM and F M sound broadcasting (Auction 13),” managed by a commercial auction house, took place over seven days from 27 November to 3 December on the general “online trading community” Trademe – a New Zealand– specific auction site. This auction platform was chosen to “attract smaller players to the local area licences in a cost-effective way” (Starling 2015); it was seen as more efficient for selling 124 relatively low-value local licences than a traditional outcry auction in a physical auction house. In practice the sale prices ranged from the reserve price of $1,200 in small rural areas to $7.8 million for a frequency in Christchurch – at the time the highest winning bid ever recorded on Trademe (Fulton 2014). In contrast, the previous auction – for “cellular management rights in the 700 M H z band (Auction 12),” the frequencies previously used by analogue television and cleared by the switchover to digital broadcasting – had been a “simplified combinatorial clock auction” for which bidding took place by email between October 2013 and June 2014. The differences in these reflect the value and specialization of the frequency bands. The 700 MHz band auction had a reserve price of $22 million per lot (Ministry for Business, Innovation, and Employment 2013), while nearly half of the broadcast licences sold for less than $10,000 (R S M 2013). Besides continuing to develop auction systems, New Zealand has maintained a higher level of government involvement in the allocation of spectrum than was initially recommended. The RS M manager for policy and planning, Len Starling, describes the Radiocommunications

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Act as a product of the laissez-faire policy environment of its time, for it was based on an assumption that the entire spectrum would be sold off under management rights. Issues of interference and competition would thus be resolved by the market, with, as Starling describes, only “a minor administrative role for the bureaucracy as a transitional step while this is happening.” In practice, “there are a couple of little clauses20 at the end that say the chief executive of what’s now MBIE 21 can issue radio licences under the terms and conditions that they see fit. And two thirds of our work sits under that little clause.” This process has been structured by a substantial set of rules and regulations. Without scarcity in many areas, frequencies can simply be allocated on what Starling calls a “first come first served regime … If you want to apply for it, get an engineer to check it’s not going to cause a problem for somebody else, and then go and do it.” Tradable management rights have remained largely concentrated in “scarce, high-value, high-demand spectrum” bands, such as those used for mobile phone provision. The dual system of administrative and property rights has enabled the state to retain considerable flexibility over the allocation and use of radio spectrum. In the decades since 1989, new technologies and changing requirements of users, transmission operators, the I T U , and the government itself have meant that the legislation has required a significant amount of interpretation. One immediate aspect that the legislation was first silent on was how to administer the rollover of management rights when the initial twenty-year period expired. An amendment to the act in 2000, and a policy revision in 2003, enabled reassignment to the incumbents of commercial management and licence rights every five years, “subject to review on a case-by-case basis,” up to a further twenty-year limit. A fee is attached to renewal of licences, but these costs are to be settled for each case individually, based on market values, and “with the general objective of maximising the value of the spectrum to society as a whole” (RSM 2005a, 36). The RSM explained in its 2005 five-year review that this right of renewal reduced “the weight of the argument” that rights should be issued in perpetuity (R SM 2005a, 37). R S M instigated a review of the entire Radiocommunications Act in 2014, which is ongoing in 2019, in recognition of the administrative gaps in the act and the needs of continually developing technologies. The act is described in the 2014 review documentation as “an enabling act; … intended to minimise the regulatory burden associated

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with managing radio spectrum” (R S M 2014, 6). The review covers issues such as competition law and interference, but also asks questions about the scope of the 1989 Act to accommodate new lowpower and shared-spectrum technologies (see Chapter 8 by Marcus and Chapter 9 by Weiss and Gomez), as well as the administrative work of the RSM itself in view of the practical limitations of property rights. With respect to “regulation of competitive uses of the radio spectrum and downstream markets,” the review document describes the act as “mostly silent,” (40) with competition in relation to ownership of management rights and spectrum licences falling under the Commerce Act. Because spectrum management and competition regulation are split between two bodies in New Zealand, “the boundary between competition regulation by the Commerce Commission and managing competition through the particular parameters of an allocation process has become blurred” (RSM 2014, 40, 42). Whether and how to resolve potential conflict and duplication between spectrum management and competition regulation is one of the key questions addressed by the review. Limitations of property rights arise partly from the extensive technological development since the NERA report and 1989 Act, including considerable expansion of mobile broadband (refer to Chapter 11 by Cave and Webb for details on the evolution of mobile broadband standards), the “Internet of things,” and a range of new technical possibilities and standards around low-power and spread spectrum. The RSM’s five-year outlook 2017–21 identifies emerging allocation and authorization regimes beyond administrative licensing, in flexible rights and licence-exempt (spectrum commons) approaches (RSM 2017a). The RSM is also mindful of the need for new forms of regulation over potentially malicious uses of radio technology and the possibilities of drone technologies. As wireless connectivity is integrated into more objects, the RSM’s role is increasingly one of technology forecasting: analysing emerging technologies, determining which may require future allocations of spectrum, and planning for that capability. Future uses of spectrum are likely to conflict with the existing property rights regime. Starling observes that technologies that enable sharing are “not easily contemplated via the legislation.” The Five Year Spectrum Outlook phrases this as the need to “effectively and efficiently accommodate new innovations and the increased demand for spectrum use while, at the same time, protecting existing investments and maintaining a sustainable wireless ecosystem” (RSM 2017a, 40).

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The challenge is how, or whether, to maintain the established property regime and its associated infrastructures in a potentially more open spectrum future.

6   D is c u ss i on New Zealand’s adoption of property rights in radio spectrum enabled other countries to observe and adapt the market-based allocation system.22 New Zealand has continued to innovate in auction design, but administrative approaches to spectrum management have remained far more expansive than envisaged by the 1989 Radiocommunications Act or the N E R A report that precipitated it. New Zealand’s spectrum management model remains predicated on the assumed right of the state to create and trade property rights in radio spectrum at all. The Waitangi claims to spectrum challenge this fundamental assumption. After a long struggle for broadcast rights under the previous warrant system, the propertization of spectrum created the context for Treaty claims that have had varying success in terms of material outcomes for Māori, but have drawn attention to the auctioning of radio spectrum in New Zealand. The Waitangi claims remain the only substantial Indigenous challenge to a settler state’s right to assert control over spectrum, and as such they are used as a point of comparison in other settler states such as Australia and Canada (Bertram, 2016). Three major points stand out about the Waitangi claims to spectrum. For now they remain legally unresolved, although the process has contributed significantly to international understandings of radio spectrum, particularly for Indigenous communities. Over the entwined history of spectrum auctions and Waitangi claims, the relative scale of gains has significantly declined. The 1990 claim (Wai 150) was the most significant, leading to major broadcasting progress; the 1999 claim (Wai 776) produced a less financially significant outcome but did enable the establishment of a third mobile phone operator in competition with NZ Telecom and Vodafone, and some space for Māori in the cellphone spectrum space; the 2009 claim (Wai 2224) was least “successful” in relation to spectrum itself, resulting in a comparatively small funding pool and no spectrum allocation. The result of Wai 2224 did represent a shift by the Crown away from treating spectrum primarily as a space for language and culture and toward accepting a relationship between spectrum and economic development – albeit

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without providing any access to spectrum for that purpose. Everton and Walker both expressed a belief that the framework of the Treaty of Waitangi means that Māori claims to spectrum will ultimately prevail. New Zealand’s radio spectrum was articulated as a whole in the shift to a market-based allocation system under the control of a centralized RSM Group. Allocations prior to 1989 referred primarily to radiofrequency management, suggesting specific frequencies that were allocated, sparingly, rather than the New Zealand radio spectrum as a whole. The radio spectrum was identified as a whole in order that it could be divided into property rights. It is possible that the radio spectrum was the first resource to effectively come into being at the same time that the first Waitangi claim was made on it: lands, language, and other resources had all long pre-existed claims for redress, but the conceptualization of radio spectrum was effectively brand new at the time. There was an opportunity, therefore, to carve out this new conceptual, if not actual, resource in partnership, with the responsibility and benefits shared between the crown and Māori, supporting language, culture, and economic development for all (Easton 1990). Instead, the story of New Zealand radio spectrum is about the limits of the property rights regime. More fundamentally, it is about the right of the state to create property rights in previously unpropertized resources, and the right of Indigenous peoples to challenge this propertization, posing traditional forms of knowledge and resource use against state discourses of technology and material value.

N otes   1 The relationship between the Crown and the State in New Zealand is ambiguous, as noted by Shore and Kawharu (2014) in a study of how the Crown is discursively produced in New Zealand. The Crown is invoked in discourse about the Treaty in reference to the original signatories and in summary of the colonial oppression that followed. The term is used in this chapter because of its position in Treaty discourse but also in recognition that specific actions are those of the New Zealand government: “While a number of interviewees noted the ambiguous nature of the Crown, for Treaty settlement negotiators and other Crown officials, there is a clear and technical definition which is set out in the Public Finance Act and Crown Proceedings Act according to which the Crown is the ‘Sovereign in Right of New Zealand’ and ‘Her Majesty in Right of New

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  2

  3   4

  5

  6

  7

  8   9

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Zealand,’ including all ministers ‘of the Crown’ and departments of government – but not Parliament, Crown entities, state enterprises, or the judiciary. In a strictly legal sense, the Crown is the legal embodiment of the state in its permanent form: an abstract entity that transcends the apparatus of government. However, as the Attorney General of New Zealand conceded, “even in its own statutes the term is not entirely clear” (Shore and Kawharu 2014, 23). Waitangi Tribunal, https://www.waitangitribunal.govt.nz/; Waitangi Tribunal “Principles of the Treaty,” https://www.waitangitribunal.govt.nz/ treaty-of-waitangi/principles-of-the-treaty. Interview with Piripi Walker. All quotes from Walker are from interviews in January and December 2017. “Allocation” is the commonly used term in New Zealand spectrum management, and the Radio Spectrum Management group explains the relationship between this usage and the I T U definition in this footnote from its 2005 paper on spectrum auction design: “In I T U Radiocommunications terminology, frequencies are allocated to services, and then within that allocation to services, assignment of frequencies within an allocation to users. In this paper, however, the term “allocation” is used in its economic sense, rather than in its formal Radiocommunications sense” (R S M  2005b, 1). Wireless infrastructure for microwave-based long-distance phone connectivity, international telephone transmission and reception, and early cellular phone service shifted from the N ZPO to Telecom, along with the radio technicians who maintained it. In 2008 Telecom further divided into three business units: mobile wholesale and retail, and Chorus the fixed line infrastructure provider. Cellular phone infrastructure is owned and maintained by Telecom, now operating as Spark. In this cataloguing system Wai refers to the Tribunal claim, and the number reflects that issued when the claim is lodged. The earliest claims therefore have the lowest numbers, and the numerical jumps from Wai 150 (1989) to Wai 776 (1999), to Wai 2224 (2009) reflect the growth in claims made to the Tribunal as Iwi (tribes) and others have been able to gather the evidence required to enter into the claims process. Now administered in the Radio Spectrum Management Group, following restructuring outlined in the document “A new era in radio spectrum ­management” (Ministry of Economic Development 2002). All quotes from Len Starling are from an interview in January 2017. During 1840 the Māori text of the Treaty was signed by chiefs around the country, so that 500 Māori signed the te reo Māori version of the treaty,

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while the English version was signed by 39 Māori (Ministry for Culture and Heritage 2016). The differences between the versions lead to conflicting interests and understandings of the relationship between Māori and English settlers from the beginning. 10 The core principles underlying the contemporary role of the Treaty are partnership, reciprocity, Māori autonomy, active protection of Māori interests by the Crown, a free and unconstrained choice for Māori in how to live in settler New Zealand, the mutual benefit of the Treaty, equitable treatment of both Maori and settlers by the Crown, and the principle of redress, “where the Crown is required to act so as to ‘restore the honour and integrity of the Crown and the mana and status of Māori’” (Waitangi Tribunal 2016b). 11 Note: the use of macrons to indicate lengthened vowel sounds in written Māori language was recommended as standard by the Māori language commission in 1995, but this orthography has only become widespread as fonts have developed to enable it (Taira 2006). In this text, as is standard practice, quotations that did not originally use macrons are reproduced as published, but in later quotations, and the rest of the text, macrons have been used according to contemporary practice. 12 Grants from Cabinet to support Waitangi claim research are a core part of the process. 13 All quotes from Graeme Everton are from an interview in January 2017. 14 Media responses to the later Wai 776 claim are summarised by Keel (2015, 48-52): “In popular discourse, the radio frequencies claims […] became a lightning rod for Pākehā animosity and were frequently used as an emblem to caricature the perceived overreach of Māori claims and the tribunal process at large.” 15 A small number of Iwi radio stations, like Te Reo Irirangi o Te Upoko o te Ika, were already broadcasting by 1991, but the reservation of frequencies enabled all Iwi to establish radio stations. 16 Unless otherwise noted, all dollar amounts listed in this chapter are in New Zealand currency. In 2000, N Z$5 million was about US$2.27 million. The New Zealand dollar fluctuated substantially during the time period discussed in this chapter, trading at about US$0.60 in 1989 and at about US$0.71 in 2017 (World Bank 2018). 17 Graeme Everton. 18 The examples here summarize the document by Piripi Walker (Walker 1989, 2-8). 19 As reiterated by the RS M Manager for Policy and Planning, Len Starling, in an interview for this chapter.

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20 Starling is referring to clauses in the Review of the Radiocommunications Act 1989: Discussion Document (2014, 38). 21 M B I E is the Ministry for Business, Innovation, and Employment. At the time of the Radiocommunications Act this was the Ministry of Commerce, and from 2000 to 2012 it was the Ministry for Economic Development. 22 McGuire (1999, 471) noted that by 1996 New Zealand’s Radio Spectrum management regime “was unique by world standards, in that it provided for tradable long-term rights in relation to radio spectrum access, plus administered annual licensing for some radio services. A number of other radio administrations have emulated elements of this approach, but not to the same extent as New Zealand.”

r efer e nc e s Broadcasting Act 1976 (1976 No. 132). http://www.nzlii.org/nz/legis/hist_ act/ba19761976n132149. Broadcasting Act 1989. (1989 No. 25). http://www.nzlii.org/nz/legis/hist_ act/ba19891989n25149. Broadcasting Amendment Act 1993. No. 69 s.53 (B). 1993. http://www. nzlii.org/nz/legis/hist_act/ba19761976n132149. Broadcasting Amendment Act (No. 2) 1988. (1988 No 161). http://www. nzlii.org/nz//legis/hist_act/baa219881988n161256. Broadcasting Authority Act 1968. (1968 No. 33). http://www.nzlii.org/nz/ legis/hist_act/baa19681968n33277/baa19681968n33277.html. Radiocommunications Act 1989. (1989 No. 148). http://www.nzlii.org/nz/ legis/hist_act/ra19891989n148245. Bertram, Kris Michael. 2016. “Decolonizing the Digital: Radio Spectrum in an Age of Neocolonialism. Major Research Paper.” MA thesis, York University, Toronto. Browne, Donald. 1996. Electronic Media and Indigenous Peoples: A Voice of Our Own? Ames: Iowa State University Press. Cave, Martin, Fulvio Minervini, and Windfred Mfuh. 2008. “Review of the Literature on Market–Based Methods of Spectrum Management: Report to the I TU .” http://www.itu.int › net4 › ITU-D › C DS › bdtint › prj › prj_document_open. Chaduc, Jean-Marc, and Gérard Pogorel. 2008. The Radio Spectrum: Managing a Strategic Resource. London and Hoboken: Wiley. Crandall, Robert W. 1998. “New Zealand Spectrum Policy: A Model for the United States?” Journal of Law and Economics 41(S2): 821–40.

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Cull, Helen, and Leo Watson. 1999a. Closing Submissions for Claimant Document B46: Presented in Claim Wai 776. – 1999b. Further Closing Submissions for Claimant On: (a) Issues Arising from Questioning; and (B) The Development Right (Wai 776). Easton, Brian. 1990. “The Maori Broadcasting Claim: A Pakeha Economist’s Perspective.” https://www.eastonbh.ac.nz/1990/09/ the_maori_broadcasting_claim_a_pakeha_economists_perspective. Fulton, Tim. 2014. “N ZM E Pays Record for Radio Frequency.” Stuff. http://www.stuff.co.nz/business/industries/63777442/nzme-paysrecord-for-radio-frequency. Geradin, Damien, and Michel Kerf. 2003. “New Zealand.” In Controlling Market Power in Telecommunications: Antitrust vs Sector-Specific Regulation, ed. Geradin and Kerf, 119–62. Oxford and New York: Oxford University Press. Hayward, Janine. 2004. “‘Flowing from the Treaty’s Words’: The Principles of the Treaty of Waitangi.” In The Waitangi Tribunal: Te Roopu Whakamana I Te Tiriti O Waitangi, ed. Hayward and Nicola R. Wheen, 28–39. Wellington: Bridget Williams Books. Hope, Wayne. 2017. “Epochality, Temporality, and Media-Communication Ownership in Aotearoa-New Zealand.” MEDIANZ 17(1): 6–27. Keel, Mat. 2015. “To Radio Waves, Are We the Ghosts? Wai776: The Māori Claim to the Electromagnetic Spectrum at the Waitangi Tribunal.” M A thesis, U CLA. Key, John. 2009. [Quoted in] Submission on Behalf of the Claimants in Wai 2224 Claim before The Waitangi Tribunal, to the Finance and Expenditure Select Committee. https://www.parliament.nz/resource/ 0000156888. Klemperer, Paul. 2004. Auctions: Theory and Practice: The Toulouse Lectures in Economics. Princeton: Princeton University Press. McGuire, Ken. 1999. “The Radio Spectrum – the Effect of International Regulation.” In NZACL Yearbook 5, 471–481. Wellington: New Zealand Association of Comparative Law. Mill, Anaru. 2005. “Māori Radio Industry: The Foundation of Te Reo Māori Broadcasting.” In The Great New Zealand Radio Experiment, ed. Karen Neill and Morris W. Shanahan, 195–214. Southbank: Thomson. Ministry for Business, Innovation, and Employment. 2013. “700 MHz: Auction Catalogue.”https://www.rsm.govt.nz › auction-12-700-mhz-2009auction-catalogue

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Ministry of Commerce. 1994. “Radiocommunications Act Review: Discussion Paper. “Wellington. – 1995. Radiocommunications Act Review: Discussion Paper: Preliminary Conclusions. Wellington. Ministry for Culture and Heritage. 2016. “Signing the Treaty.” https:// nzhistory.govt.nz/politics/treaty/making-the-treaty/signing-the-treaty. Ministry of Economic Development. 2002. “A New Era in Radio Spectrum Management.” Wellington. NE R A (National Economic Research Associates). 1988. “Management of the Radio Frequency Spectrum in New Zealand.” http://www.jacksons. net/Pubs/NZ%20Spectrum%20Report%201988.pdf. New Zealand Government. 2000. “2G Hz Auction: Information Sheet.” http://www.scoop.co.nz/stories/PA0005/S00332/2ghz-auctioninformation-sheet.htm R S M (Radio Spectrum Management). 1995a. “Radio Frequency Tender 1” https://www.rsm.govt.nz/assets/Uploads/documents/auctions/ 2858eb8e3c/Tender-1-results.pdf. – 1995b. “Radio Frequency Tender Number 6A.” https://www.rsm.govt.nz/ assets/Uploads/documents/auctions/9ddd29b4f1/Tender-6A-results.pdf. – 2005a. “Review of Radio Spectrum Policy in New Zealand.” http:// www.itu.int/osg/spu/stn/spectrum/spectrum_resources/general_ resources/report_NewZealand.pdf. – 2005b. “Spectrum Auction Design in New Zealand.” Wellington: Ministry of Economic Development. https://www.rsm.govt.nz/assets/ Uploads/documents/8380f2d85e/spectrum-auction-design-in-new-­ zealand.pdf. – 2013. “Auction 13 results.” https://www.rsm.govt.nz/assets/Uploads/ documents/auctions/472c09bdea/auction-13-am-fm-sound-broadcasting-winning-bidders.xlsx. – 2014. “Review of the Radiocommunications Act 1989: Discussion Document.” Wellington: Ministry of Business, Innovation, and Employment. http://ndhadeliver.natlib.govt.nz/delivery/Delivery ManagerServlet?dps_pid=IE21844072 http://www.rsm.govt.nz/cms/ pdf-library/policy-and-planning/radio-spectrum/review-of-the-­ radiocommunications-act-1989/review-of-the-radiocommunications-act1989-discussion-document-1-mb-pdf – 2015. “Completed spectrum auctions 1996-present.” https://www.rsm. govt.nz/projects-and-auctions/auctions/completed-spectrum-auctions1996-present/

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– 2017a. “Five Year Spectrum Outlook 2017–21.” https://www.rsm.govt. nz/assets/Uploads/documents/annual/b451a64aad/rsm-five-year-­ spectrum-outlook.pdf – 2017b. “Radiocommunications History in New Zealand.” https://www. rsm.govt.nz/assets/Uploads/documents/384b04ec58/radiocommunicationshistory-in-new-zealand.pdf. – n.d. “Register or discharge a mortgage.” https://www.rsm.govt.nz/­ licensing/how-do-i/register-or-discharge-a- mortgage/?m=73996#search: UmVnaXN0ZXIgYSBNb3J0Z2FnZS4=. Shore, Cris, and Margaret Kawharu. 2014. “The Crown in New Zealand: Anthropological Perspectives on an Imagined Sovereign.” Sites: A Journal of Social Anthropology and Cultural Studies 11(1): 17–38. doi: doi:10.11157/sites-vol11iss1id267. Slane, Bruce. 1989. “Trading in the Radio Spectrum: A New Management Rights Approach.” Communications Law Bulletin 9(4): 17–18. Smith, Jo. 2016. Māori Television: The First Ten Years. Auckland: Auckland University Press. Starling, Len. 2015. [Quoted in] “Policy Tracker – NZ Uses Commercial Auction Site for AM and FM Licences.” https://www.policytracker.com/ nz-uses-commercial-auction-site-for-am-and-fm-licences. Taira, Eliana. 2006. “Māori Media: A Study of the Māori ‘Media Sphere’ in Aotearoa/New Zealand.” PhD diss., University of Canterbury. Waitangi Tribunal. 1990a. “Report of The Waitangi Tribunal on Claims Concerning the Allocation of Radio Frequencies.” https://forms.justice. govt.nz/search/Documents/WT/wt_DOC_68476762/Allocation%20 of%20Radio%20Frequencies%201990.pdf. – 1990b. “Statement of Claim: Wai 26. In Report of The Waitangi Tribunal on Claims Concerning The Allocation of Radio Frequencies.” Wai 26, Wai 150. https://forms.justice.govt.nz/search/Documents/WT/ wt_DOC_68476762/Allocation%20of%20Radio%20Frequencies%20 1990.pdf. – 1999. The Radio Spectrum Management and Development Final Report, Wai 776. Wellington: GP Publications. https://forms.justice. govt.nz/search/Documents/WT/wt_DOC_68205950/Wai776%20final. pdf. – 2013. Decision of the Tribunal: Wai 2224. – 2016a. “Meaning of the Treaty.” https://www.waitangitribunal.govt.nz/ treaty-of-waitangi/meaning-of-the-treaty. – 2016b. “Principles of the Treaty.” https://www.waitangitribunal.govt.nz/ treaty-of-waitangi/principles-of-the-treaty.

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– 2018. “Waitangi Tribunal: Te Rōpū Whakamana i te Tiriti o Waitangi.” https://www.waitangitribunal.govt.nz. Walker, Piripi. 1989. Prepared for Nga Kaiwhakapumau i te Reo Māori. “Maori Views on the Radio Spectrum.” Document A21: Presented in Waitangi Tribunal Claim Wai 776, 1999. Winiata, Whatarangi. 1999. Evidence of Whatarangi Winiata (Document B11: Presented in Waitangi Tribunal Claim Wai 776). – 2013. Letter to Hon. Amy Adams, Minister for Communications and Information Technology. (Document 1.1.1(a)(iii): Presented in Waitangi Tribunal Claim Wai 2224). World Bank. 2018. “Official Exchange Rate (LCU Per US$, Period Average) New Zealand.” https://data.worldbank.org/indicator/PA.NUS. FCRF?locations=NZ.

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2 Finland: Surfing the Mobile Wave against the Tide of EU Spectrum Policy Consensus Marko Ala-Fossi

1   In t ro du c ti on Finland is on a spectrum policy collision course with the E C. It was the only EU member-state to vote with the United States and Canada in favour of allocating the ultra-high-frequency (UHF) broadcast band (470–694 M H z) for mobile communications instead of television, going against the joint E U policy position drafted by the E C for the 2015 World Radiocommunication Conference1 (W R C -15). At first sight, it may be difficult to understand why repurposing the UHF band frequencies from television use to mobile use was so important to the Government of Finland that it deliberately deviated from all the other EU countries on this issue. Radio spectrum for broadcast or mobile use has never been an extremely scarce or expensive resource in Finland, a sparsely inhabited country in the northeastern corner of the European Union, next to Russia. Finland is about the same size as Germany or Poland, but it has only 5.5 million inhabitants, which means the entire Finnish consumer market is about the same size as the city of Saint Petersburg in Russia. So one would expect the demand for spectrum to be quite modest compared to that of most other E U member-states. However, in 2016 the volume of data transferred on Finnish mobile broadband networks by this population of 5.5 million was about the same as the total traffic of the mobile network operators in Germany, population 81 million, or in Italy, population 60 million

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(Jungerman 2016b). Within three years, from 2014 to 2016, the average monthly use of mobile data per subscription almost tripled, from 3.8 to 10.9 gigabytes, making Finland the world leader in mobile data usage per capita (O E C D 2017). Helsinki-based consulting company Rewheel estimated that the largest of the three major Finnish mobile network operators, Elisa, was the world’s most efficient company in “spectrum usage” or in the business of turning megahertz into gigabytes (Zarandy 2016). So in the European and even in the global context, it is by no means an exaggeration to say that Finland has a unique mobile telecom market. There are other countries with even higher mobile broadband market penetration (152% in Japan), unlimited data plans, and very high monthly mobile data usage per subscription (8.2 GB in Latvia and 6.28 G B in Austria in 2016). But no other country in the world has a similar combination of very high market penetration of mobile broadband (147%), relatively inexpensive, tiered but unlimited data plans (e.g., €21.90 per month), a very low population density (18 persons per square kilometre), rather low share of households with fixed broadband (61%), and a very high share of households (30%) using only mobile broadband at home. In other words, the Finns are using mobile broadband for countless different purposes all the time and everywhere, partly because they do not have to worry about the network capacity or data caps and partly because they may not have any other choice of broadband service (EC 2017b; OECD 2017; Tefficient 2017). The contrast with the rest of the Europe is most striking in rural areas, where ultra-fast fixed (100 Mbps) broadband is available for only 8.2 percent of the Finnish households, compared to the EU average of almost 40 percent (E C 2017a). Rural broadband connections in Finland have been lagging behind for some time, and the Finnish government has tried to address the problem. In 2008, a report commissioned by the Ministry of Transport and Communications suggested using spectrum auctions to finance special public subsidies for new fibre projects so that everybody would have 100 Mbps fixed broadband available by 2015 (MT C 2008). However, spectrum auctions were not introduced in Finland until 2013 – which made it the last country in the EU to adopt this approach – and none of the auction proceeds have been used for financing fibre network projects. From the perspective of broadband network operators that proposal – and the entire broadband strategy – was highly controversial, for three companies, Elisa, DNA, and Telia (TeliaSonera

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until March 2017), dominate the Finnish fixed and mobile broadband markets. Both markets are oligopolies. In fixed broadband, these three network operators have 90 percent combined market share, and in mobile communication, their combined market share is 99 percent. By 2008, these companies had invested heavily in their 3G mobile networks using spectrum they had obtained at no cost, so they prioritized their existing mobile broadband business over any new fixed-line projects for the same potential customers (National Audit Office 2016). With mobile broadband reaching record-breaking figures year after year (since 2012 also with 4G), by 2015 it was obvious that the ambitious national project to make ultra-fast fixed broadband available for every Finn had failed miserably. This chapter examines why Finland stands out from the rest of Europe by examining the Finnish spectrum and communication policy in historical and wider European policy contexts. The Finnish policy has been shaped by a series of political and economic developments related to its specific cultural, geographic, and demographic conditions. Finland is also the home base of former mobile phone giant Nokia. The company did not vanish after selling its mobile handset division to Microsoft in 2014; instead it took over Alcatel-Lucent a year later. Nokia is again the most important company for the Finnish economy in terms of gross domestic product (GDP); it is also the second-largest telecom network manufacturer in the world after Chinese Huawei, and a global player in a small nation (Ali-Yrkkö, Seppälä, and Mattila 2016, Lindén 2016). The analysis uses a combination of political economy and new institutionalism theories, with emphasis on political and economic power structures. The new institutionalism approach provides tools for explaining policy choices by analyzing institutional structure, which frames the process of policy-making (Brevini 2013, Galperin 2004). The analysis of historical context and policy decisions is based on previous research supplemented with a large number of public documents. The main objective of this work is to answer four questions about the development of Finnish spectrum and communications policy: •

First, has Finland taken a radical turn in its spectrum policy by voting alone against the E U commission and all the other member-states, or has it remained faithful to its long-term goals?

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•

•

Second, why was the rapid release of additional U H F spectrum below 700 MHz such an important issue for the Finnish government that it intentionally opposed a European consensus on spectrum policy? Third, what have the main motives of the Finnish spectrum policy been so far, and which factors have made Finland a special case in the European context? Finally, are there any wider lessons from Finnish spectrum policy of relevance elsewhere, or is Finland just an exception on the edge of Europe?

These questions are examined by focusing on the policy decisions regarding the implementation of new communication technologies using the very-high-frequency (V H F ) (30 M H z–300 M H z) and U H F (300 MH z–3 GH z) spectrum bands. In addition, the analysis covers more recent decisions on spectrum auctions as well as other broadcast and telecom policy decisions concerning spectrum use in Finland.

2  N e w T e c h n o l o g ie s a nd New S pectrum as T ool s f o r S o lv in g G e o p oli ti cal Challenges When the telephone was introduced in the autonomous Grand Duchy of Finland in the late 1870s, there was at first uncertainty: who should grant the licences for utilizing this invention? The Russian empire already had a telegraph monopoly, but the Senate of Finland succeeded in gaining administrative control of the telephone in 1881. The telephone never became a state monopoly in Finland; instead, a competitive market based on numerous regional network operators developed. However, after Finland gained its independence in 1917, the new republic also became a telephone network operator. By the Great Depression of 1930s, the state played a central role as a telephone network operator in sparsely inhabited eastern and northern Finland, but its market share remained relatively small (Moisala et al. 1977). In broadcasting, the model of regional or private network operators was not commercially successful in Finland, and local, volunteer-based stations did not have sufficient resources for a nationwide service. As a consequence, a broad-based private company for nationwide programming, the Finnish Broadcasting Company, Yleisradio (Yle) was established in 1926. The political turbulence of the early 1930s led

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the state of Finland to acquire 90 percent of Yle shares in 1934, and the company became a de facto broadcast monopoly for more than twenty years (Ala-Fossi 2005). There was no shortage of broadcast spectrum in Finland until the late 1940s. At that time, domestic A M radio broadcasting in Finland became almost impossible because the powerful propaganda transmitters of the Cold War era took over most of the A M frequencies assigned to Yle. This is why Finland introduced regular F M radio broadcasting on the V H F I I band (at the time, 87.5–100 M H z) in 1951. The crisis with radio made Yle postpone the introduction of television services. Then in 1955 the Soviet Union started T V broadcasting with its own 625-line standard from Tallinn, Estonia, covering most of the Southern Finland. This made Yle launch regular T V broadcasts using the German P A L standard in 1958 and by 1963, Yle operated 31 T V transmitters on the V H F I I I band and one test transmitter on the U H F broadcast band (Ala-Fossi 2005; Ilmonen 1996). Most European countries introduced their first TV services on VHF channels just like Finland, but as the number of channels increased, U HF band frequencies were gradually put to use as well. By 1996, when the Finnish government made a decision about rapid digitalization of all T V and radio broadcasting, 34 T V transmitters on the V H F  I I I band (channels 3–12 or 174–230 M H z) were delivering mostly Yle TV1, and 79 transmitters on the UHF band (channels 22–60 or 470–790 MHz) were broadcasting Yle TV2 and the first commercial station with its own licence, MT V 3, at 36 T V broadcasting stations around the country (Ilmonen 1996; Näränen 2006). There was still plenty of unused spectrum capacity left for additional analogue broadcasting. The Finnish government granted two entirely new nationwide private and commercial analogue broadcast licences, one for radio and another for TV. Radio Nova was introduced in 1997 on the upper part of the FM/VHF II band (100–108 MHz), which had originally been reserved for the introduction of digital audio broadcasting (D A B ). And even though the fourth nationwide T V channel Nelonen (Channel Four) was launched on U H F , the uppermost part of the U H F broadcast band (the 800 M H z band, or channels 61–69) was never used by broadcasters in Finland. Channels 66 to 69 were fully occupied by Russian military avionics, and the Finnish Defence Forces had reserved channels 61 to 65 for themselves (Ala-Fossi and Bonet 2018; F C R A 2008).

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Finland cleared the VHF III band for DAB digital radio use in 1996. Yle introduced its new all-digital DAB radio channels in 1998, but closed these services as part of cost-cutting in 2005. By the end of 2006, Yle had also shut down its A M radio services, which left the Finnish shortwave (S W ) and medium-wave (M W ) spectrum largely without any regular use. Counter to the Finnish government’s original intentions, these cuts made Finland the first country in the world to switch off digital radio. However, they also released the VHF III band again for allocation to any possible new purposes (Ala-Fossi 2012). In 2009, this band was reallocated to terrestrial television, with Finnish telecom operator D N A licensed to build a nationwide T V network using the more advanced D V B -T 2 digital television standard. New regular TV services capable of HD (high-definition) broadcasting were introduced two years later, in 2011 (F CRA 2008). Finland set out to become the world pioneer in digital terrestrial television, but failed in that endeavour. The switchover was completed in September 2007, following the Netherlands, which had shut down analog TV in December 2006. After the switchover it was possible to fit all of Finland’s terrestrial broadcast TV channels into three DVB-T (digital video broadcasting – terrestrial) multiplexes on the lower portion of the UHF band (470–790 MHz); meanwhile, a fourth nationwide multiplex was reserved for new mobile television services using brand-new DVB-H (digital video broadcasting – handheld) technology developed by Nokia. This would have left space for three or four analog UHF TV channels on the side, or, alternatively, for at least two more new nationwide DV B -T multiplexes – and the VH F I I I band was also empty at the time. But despite the government-led rush to digital TV, there were no plans for making use of all this vacant spectrum (Alkio 2007; MT C 2007b). More detailed national planning was not even possible before WRC07 and an international agreement on the size and location of the “digital dividend,” the part of UHF band to be released for mobile services. But the W R C -07 decision to reallocate only the 800 M H z band from broadcasting to mobile in I T U Region 1 (Europe, the Middle East and Africa) created a problem for Finland, where it was exactly that part of the UH F band that remained in military use. It took three years of negotiations with the Russian authorities before Finland could start preparations to launch mobile services on the 800 MHz band – and only with very strict frequency limitations on the eastern border zone (MT C 2012).

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This is why Finland was unable to introduce 4G on 800 MHz until 2014, a year after the joint European deadline set by the commission – even though at the same time about 50 percent of the spectrum capacity on the U H F broadcast band remained completely unused (Miettinen 2014; Miettunen 2013). In this context, it is not too surprising that when W R C -12 opened the 700 M H z band for mobile in I T U Region 1 after 2015 (World Radiocommunication Conference 2012), Finland was the first country in Europe to decide to release it and to develop a national plan for rapidly clearing even more U H F spectrum from broadcast TV through another digital switchover. Thus, the WRC-15 decision confirming the release of the 700 MHz band for mobile and leaving the rest of U H F band untouched had practically no impact on the plans Finland had made already (Ala-Fossi and Bonet 2018). The 700 M H z band was made available for 4G mobile use in January 2017, and terrestrial pay T V channels switched to D V B -T 2 in May 2017. V H F /U H F spectrum capacity for broadcasting all the free-to-air T V channels using both D V B -T and D V B -T 2 will remain available until April 2020 – and there is still one UHF multiplex completely unused. If the number of terrestrial T V channels remains the same in Finland, after the 2020 switchover to D V B -T2 about 50 percent of the U H F broadcast spectrum capacity will be left vacant (Holopainen 2017).2 And as Finland has no spectrum set aside for digital broadcast radio (like for example Norway, where nationwide F M radio services on V H F II were replaced with D A B radio services on VHF III in 2017), Finland has more vacant UHF spectrum capacity than the other Nordic countries.

3  Avo id in g S p e c t ru m A u c ti ons at Any Pri ce The Finnish government’s policy for rapid digitalization of broadcasting and an early release of V H F and U H F broadcast spectrum from analogue T V use was not motivated by any domestic need for additional spectrum. Nor has the government been planning to sell the spectrum as a means to finance the state budget. On the contrary, it can be argued that the government has never promoted any direct fiscal interests of the state when it comes to telecommunications and spectrum policy. But this does not mean that these policies would not have been based on considerations of international competitiveness and industrial growth.

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In the nineteenth century the Nordic countries were early adopters of telecommunication technologies. Their regional economic and technological cooperation has increased and intensified since the 1950s. One result of this cooperation was Nordic Mobile Telephony (N MT), the first fully automatic analogue cellular system capable of international roaming, introduced in 1981. The success of N M T laid the foundation for the enormous growth of mobile telecommunication markets and of Nordic mobile telecom manufacturers such as Ericsson (Sweden) and Nokia (Finland). It also paved the way for the panEuropean development of the digital G S M (Groupe Spécial Mobile) mobile phone system, which became an even bigger success worldwide. Within ten years of the world’s first G S M call, made in Finland by Prime Minister Harri Holkeri in 1991, there were half a billion G S M subscriptions in almost 170 countries (GSMA 2001; Manninen 2002). Traditionally, both broadcast and telecom licences were granted through political processes using an administrative selection procedure – the so-called “beauty contest” method, in which the authorities select the most suitable and able licensees to use the public resources in the public interest. In Europe, all the NMT licences for the 450 MHz band and 900 M H z band (1G – first-generation mobile), as well G S M licences for the 900 MHz and 1800 M H z band (2G ), were granted in this manner. However, the idea of auctioning spectrum licences instead of handing them over for free made a breakthrough in the Western world in the 1990s (Sims, Youell, and Womersley 2015), with New Zealand being the first country to implement auctions (see chapter 1 by Joyce on this point). By the end of the 1990s, the digitalization of broadcasting was already under way, but any spectrum release (i.e., reallocation of spectrum from broadcasting to mobile) was still years off. The hype surrounding “Internet in every pocket” was rising (Silberman 1999), but the availability of additional spectrum bands for the introduction of the new UMTS (Universal Mobile Telecommunications System) or third-generation (3G ) mobile telephony was relatively limited. This created an illusion that the mobile network operators would need to get 3G spectrum around the 2 G H z band (1900–1980 M H z, 2010– 2025 M H z, and 2110–2170 M H z)3 in order to keep their customers. Both Ericsson and Nokia anticipated the risk of spectrum overpricing (which would make it difficult for mobile network operators to finance investment in the networks needed to offer 3G service) and lobbied against spectrum auctions throughout Europe. The Finnish

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Minister of Communications Kimmo Sasi seriously considered a 3G auction, but he was eventually convinced that it was better to support Nokia’s business interests (i.e., to ensure that operators had sufficient capital to invest in networks) instead of the fiscal interests of the state (Lindén 2016). Finland granted the first 3G licences in the world to three domestic and one Swedish mobile operator (Telia) in a beauty contest in March 1999.4 There was no public discussion in advance about the rationale for granting the 2 GHz band licences for free – such discussion did not start until the UK and Germany auctioned their 3G licences for record prices. Haaparanta and Puhakka wrote a newspaper article in 2000 arguing that the Finnish government had made a big policy mistake in 3G licensing. Based on the size of the Finnish population and spectrum prices paid to that point in other countries, they estimated that Finland’s mobile industries received about €3.9 billion in state subsidies without any public discussion on the issue (Haaparanta and Puhakka 2002). In making these calculations, the two professors of economics did not pay any attention to the loose conditions of the Finnish 3G licences. Besides getting the spectrum for free, the 3G operators were allowed to build the new networks at their own pace, avoiding any extra expenses and debt for the new investments. Later, in 2004, the government allowed the 3G operators to build joint networks provided that each separate network operator had at least 35 percent population coverage. In 2006, Finland was the first country in Europe to allow operators to use the 900 MHz band for 3G networks. This made it possible to build even less dense and less expensive 3G networks by basing system upgrades on the existing 2G structures (MTC 2005, Pursiainen 2017). By June 2001, 3G licences had been granted in eleven E U memberstates. Through five auctions, Europe’s mobile network operators had paid almost €136.6 billion into state coffers. Some European mobile network operators – such as Sonera, the former Telecom Finland – paid so much for their spectrum licences (for operations outside Finland) that they were unable to invest in the new 3G networks. This was exactly what Ericsson and Nokia had been trying to prevent, because with no network investments they had no customers buying new equipment. At the time, Sonera was the largest telecom operator in Finland, but after spending €4.3 billion on 3G spectrum licences in Germany and Italy, it was taken over by and merged with Telia, the former Telecom Sweden. Sonera’s adventure in European 3G auctions

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has been described as the most catastrophic deal in all of Finnish business history (Junkkari 2001, Miettinen 2014, Sims, Youell, and Womersley 2015). In the joint context of the Finnish policy tradition, Nokia’s specific interests, and the bitter experience with Sonera, spectrum auctions remained a rather unpopular idea in Finland for many years. As the other Nordic countries gradually introduced spectrum auctions (Norway and Denmark in 2001, Sweden in 2005), Finland stayed on another path. Eventually it became the last E U member to allocate spectrum licences based purely on administrative considerations and without any significant fees. In 2008, spectrum auctions were proposed as a means of financing subsidies for fixed broadband networks (MTC 2008). A year later the Ministry of Transport and Communications organized an “experimental auction” for a small piece of mobile telecom spectrum for the first 4G services (2.6 GHz band, or 2500–2690 MHz), which generated almost €3.8 million. However, the Finnish government did not push this idea any further. At the time, there was no permanent legislation regarding the use of any market mechanisms in spectrum licensing. Three years later, following general elections, a new government revised the spectrum policy principles (M T C 2012) and changed the legislation. This made market value–based spectrum fees legal and permitted auctions as a means for allocating mobile spectrum. The 800 M H z band (72 M H z) was auctioned in October 2013, generating €108 million in revenue for the state. But when the 700 MHz band (96 MHz) was auctioned in November 2016, the total price for this larger slice of spectrum was only €66.33 million. To summarize, the fiscal income from mobile spectrum auctions has been rather small in Finland so far, generating revenues of only about €180 million, much lower than Haaparanta and Puhakka (2002) would have expected.5 This is not too surprising, for at least two reasons. First, their original calculations were based on the excessive prices paid for spectrum in Western Europe in 2000, and since then, the proceeds from spectrum auctions throughout the world have been much lower (Kalinowski 2013). Second, in both auctions, all the licences were won by the same three major mobile operators in Finland. Collectively, these three operators, Elisa, DNA and Telia, have 99 percent market share. For new operators wishing to enter the small, oligopolistic Finnish market, getting a return on investment would not be easy. Without market entry, there is sufficient spectrum for

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existing operators, which means they do not have to outbid one another to ensure access to spectrum. The auction revenues are also modest when compared to the extra expenses paid by broadcasters and by consumers in the process of releasing the UHF . It has been estimated that by 2007, Finnish consumers had invested about €700 million in new TV receivers – for the most part prematurely, because of the unnecessarily rapid pace of the digital transition (Alkio 2007). It is highly questionable whether the auctions have really brought any other added value into the licensing process. The Ministry of Transport and Communication recently decided not to use auctions in granting the F M radio licences for the next term starting in 2020.

4   S p e c t ru m P o l icy Objecti ves o f F in l a n d a nd Noki a Finland took its first steps toward European integration in 1961, when it became an associate member of the European Free Trade Association (EFTA). This unique arrangement was the only way to continue trading simultaneously with Western European countries and the Soviet Union - and for about the next three decades, the big eastern neighbour was still the most important export market for Finnish industries, including Nokia. But in the mid-1980s, Finland was able to open more toward Europe, and things started to change. In 1985, Finland became a founding member of new pan-European research and development program E UR E K A , as well as an associate member of the European Space Agency (ESA) and, a year later, a full member of EFTA. Thanks to these new connections, Nokia was soon part of a pan-European project developing a new analogue H D T V standard. Nokia’s top management at the time strongly believed there would be a huge market for HDTV receivers and that mobile phones would remain just a small business. Based on this strategic vision, Nokia made major acquisitions, becoming the third-largest T V receiver manufacturer in Europe in 1987 (Ala-Fossi 2012; 2016, Häikiö 2001). However, two unexpected and unrelated events would soon have a big impact on developments in Finland. First, in late 1990 the Soviet Union suddenly cancelled its bilateral trade relations with Finland; and the Soviet Union dissolved in 1991. After losing its most important export market overnight, the Finnish economy entered a steep recession, which lasted two years. Second, also in 1990, a small US

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research group made a breakthrough in digital T V development, one that shifted the paradigm about the future of television. European analogue H DT V turned out to be a dead end, and the E U abandoned the HDT V project in 1993. It was replaced with a new, industry-led European project for D V B (digital video broadcasting) digital television, which was based largely on an earlier joint European project on D A B (digital audio broadcasting) digital radio. Nokia and its Finnish partners were involved in both projects to create new products for Western export markets, especially as the TV business was creating losses for Nokia (Ala-Fossi 2012, 2016). By the time Finland became a member of the European Union in 1995 (at the same time as Sweden and Austria), Nokia already had a sophisticated D A B receiver prototype and the company expected digital radio to make an international breakthrough by the end of the century. In addition, the digital G S M mobile phones manufactured by Nokia were selling very well, which made it much easier to recover from the recession caused by the collapse of Soviet exports. The Finnish government thus had every reason to believe that by adopting policies for rapid digitalization of broadcast radio and television it could support this next technological success story to increase Western exports and economic growth in Finland. While Nokia obviously played a key role in setting the pace for the Finnish government’s 1996 decision on digitalization of all broadcasting, the decision was also intended to support the development of the information society and to protect Finnish culture from satellite broadcasters (Ala-Fossi 2012). Television manufacturing turned out to be the largest misinvestment in the history of Nokia. By the time the Nokia T V division was sold in August 1996, it had generated cumulative losses of €1.3 billion, and without rapidly growing revenues from GSM phones, the company could have faced bankruptcy. Relatively soon, Nokia abandoned all its projects related to DAB digital radio to focus even more on mobile handset development and manufacturing. However, one small unit in Turku, Finland, did continue developing a mobile version of the European D V B digital television. This new Nokia system, called D V B - H (digital video broadcasting-handheld), was accepted as an official standard in 2004. Nokia was convinced of its market potential, and both the Finnish government and the EC were quite eager to help “mobile broadcasting” become a global success (Ala-Fossi 2012, European Commission 2007a; 2007a; Häikiö 2001).

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At WR C-07, both Finland and the E C were promoting the opening of the entire U H F broadcast band for mobile telephony (with coprimary allocation) to support the introduction of DVB-H. However, as the commission has no right to vote at W RCs, in practice most of the EU member-states ignored the commission communication, with only Finland supporting this idea in its own single-country proposal (EC 2007c; MTC 2007a). But this was by no means the worst setback for DV B -H services, which had been introduced in Finland in 2006 thanks to the large UH F spectrum reserve. The mobile T V receivers were expensive, the DV B - H signals were incompatible with D VB-T , and consumer interest remained low. Nokia gave up in 2009, and the last DVB-H services in Finland were closed in 2012 (Ala-Fossi 2016). If the WR C -12 decision about releasing the 700 M H z band in I T U Region 1 by 2015 (World Radiocommunication Conference 2012) was an unpleasant surprise for most of the European nations as well as their broadcasters, it was by no means a surprise for Nokia, which had never stopped lobbying for increasing the mobile allocation on the U HF broadcast band. Nokia was already a global player, and it lobbied at the domestic level together with the major Finnish mobile operators, at the European level together with the Finnish government, and at the global level with the other telecommunications companies via GSMA (GSM Association). The mobile industries had developed a new mobile broadband plan for the 700 MHz band (APT700) for the Asia-Pacific (ITU Region 3). They encouraged African and Arab countries to raise the issue about the release of 700 M H z band on the WR C -12 agenda so that the A P T 700 band plan could also be used in ITU Region 1 (Ala-Fossi and Bonet 2018; El-Moghazi, Whalley, and Irvine 2014). At WR C-15, Finland remained faithful to its long-term spectrum policy objectives for rapid release of additional UHF broadcast band below 700 MHz for mobile, and voted for a proposal supporting the interests of Nokia and mobile industries throughout the world. Nokia’s recent transformation into a mobile network manufacturer emphasized the importance of spectrum. However, this time neither the E C nor most of the other E U member-states were ready to let digital terrestrial television go, which was a bitter disappointment for the Finnish Ministry of Transport and Communications (Ala-Fossi and Bonet 2018; Pursiainen 2015). In I T U Region 1, even most of the African countries wanted to keep the rest of the U H F broadcast band solely for television. This left Finland in the minority with Egypt, Jordan,

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Lebanon, and Morocco in Region 1 – and globally with the Bahamas, Barbados, Belize, Canada, Colombia, Mexico, New Zealand, Papua New Guinea, and the United States (G S M A 2015).

5   D is c u ss i on The conventional wisdom about the long, dark, cold winters and long distances as special geographic and demographic conditions for early adoption of all kinds of new technologies is insufficient to explain the development of Finnish spectrum policy – there are places with similar characteristics elsewhere in the Northern Hemisphere. But Finland is also a rather young nation with no heavy ballast of tradition, a republic with strong shared beliefs in equality, enlightenment, and education. Also, after the Second World War, public investments made in new technologies in Western societies including Finland aimed to increase economic productivity by increasing citizen welfare. Investments in new communication technologies were no exception to this (Jessop 2002). Finnish technology and spectrum policies also have a geopolitical dimension. This has been so since the early days of the telephone, and it was especially relevant in decisions to abandon AM radio for F M radio as a means to preserve national broadcast radio, and to introduce P A L T V on V H F III with an accelerated schedule in order to create a national television service. Rapid implementation of new technologies for new kinds of networks or new parts of spectrum (telephony, F M radio, P A L T V ) has served Finnish interests. In this context, releasing spectrum for new technologies and promoting spectrum efficiency were most of all means to achieve ends (i.e., to allow service delivery) rather than explicit policy goals as such. But after the collapse of the Soviet Union, a deep economic recession in Finland, deeper integration into the E U , and a growing economic dependency on a single giant multinational company based in Finland, national priorities changed. Increasing spectrum release and spectrum efficiency became public policy means for improving national competitiveness (Jessop 2005), and the oversupply of broadcast spectrum as such became a justification for abandoning content regulation (Miettunen 2013). The pragmatic tradition of Finnish broadcasting and communications policy (Hellman 2010; Jääsaari 2007) is also evident in spectrum policy decisions. Even when the decisions have been highly political – like digitalization of broadcasting, or the granting of 3G licences

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– the issues have been treated as administrative or technological problems, which can be best solved by the experts at the Ministry of Transport and Communications in cooperation with the stakeholders without any wider public discussion over the policy choices (Haaparanta and Puhakka 2002, Näränen 2006). In fact, this ministry alone coordinates all spectrum issues in Finland (Pursiainen 2015). Although digital television was marketed as offering interactivity and new information society services as well as increasing the number of channels, none of these ways of improving citizen welfare would have required the earliest possible digitalization of all broadcasting in Finland. Instead, the rapid digitalization was expected to help Nokia create another GSM-phone-like consumer electronics product for the export markets. Nokia abandoned several technology projects already under way, but DVB-H mobile television, as developed in Finland, survived to be officially endorsed by not only the Government of Finland but also the EC . Their joint desire to repeat the success of G S M and to regain global leadership in mobile telecommunications for Europe with DVB-H led both Finland and the commission to promote opening the entire U H F band for mobile use at WR C-07. However, these efforts failed, and despite its award-winning technological solutions, so did the entire DV B - H project. Instead of a new success story, it became a large misinvestment, which paved the way for the fall of Nokia handset manufacturing. The total costs of Finnish spectrum policy decisions have been largely overlooked, not considering that consumers were forced to make premature investments in new equipment, and private broadcasters invested in digitalization without any public support (besides free licences). The Finnish people paid indirectly for spectrum policy decisions as citizens and as taxpayers as public property was privatized (the broadcast networks owned by Yle) to finance digitalization or to subsidize domestic industries (granting 3G spectrum licences for free) – or was lost as a result of bad business decisions (Sonera investments in German 3G licences). Different platforms – broadcast and telecom, fixed and mobile broadband - have been treated very differently in policy decisions. The question of what else could have been done with these public resources spent on rapid digitalization of television and the introduction of new mobile broadband technologies is open to debate, but now Finland has an increased number of TV channels and almost ubiquitous mobile broadband.

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The record-breaking Finnish mobile broadband data consumption patterns cannot be fully explained by generous public subsidies, favourable licensing conditions, and competition between operators in a small consumer market. That said, a real “data divide” does exist within the EU. The same three populous European countries – the UK, Germany, and Italy – that cashed in the most with 3G auctions at the turn of the century now have the worst 4G availability in Europe and much higher mobile data prices (Jungerman 2016a; Sheftalovich 2015). After international roaming charges were abolished within the EU in June 2017, all three leading Finnish mobile network operators and one virtual operator were granted a national exemption from the new system. While other EU consumers now pay only domestic prices for mobile use elsewhere in Europe, Finns must pay some extra abroad in order to maintain their cheap domestic mobile prices (FCRA 2017). When you take in to account that the development of high-speed broadband is lagging in Finland because of policy and business decisions favouring mobile broadband (for instance, not realizing the proposal to use spectrum auction proceeds to finance fixed broadband network construction in the late 2000s), it is hard to say whether the public investments in providing cheap mobile data have paid off and served public interests more than private interests. Another question, which remains without a proper answer, is whether Finland has any independent public interest spectrum policy goals beyond the interests of Nokia and the largest operators. By now it is quite clear that such goals have, at a minimum, not been pushed forward if they have been in conflict with or violated key mobile industry interests. As the economic importance and political and social influence of Nokia and its employees – both current and former – is undeniably high, it is tempting to describe Finland as Nokialand (Ali-Yrkkö, Seppälä, and Mattila 2016; Cowell 2002; Lindén 2016). Finland has tried to reject this image, for Nokia has never openly bullied the government, but it seems that there have never been any real conflicts of interest either. So when Finland positioned itself against the E U and the rest of Europe at W R C -15 by continuing to support the release of the entire U H F broadcast band for mobile, it was not as if Nokia and other companies had to compel the Finnish government to adopt such a position. The government made this choice independently, as it equated the interests of mobile industries with Finland’s national interest and the development of the Finnish economy.

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6   C o n c l u si ons Based on this historical analysis of Finnish spectrum policy decisions, it is obvious that Finland did not take any radical turn in its spectrum policy at WRC-15 when it voted alone against the EC and its memberstates. Rather, it has remained faithful to its long-term spectrum policy goals aimed at rapid release of UH F broadcast band for mobile use, goals that were first adopted more than two decades ago. The plans for the new use of the released UHF spectrum have changed several times over the years, but the main goal of clearing television broadcasting off the UH F band has stayed the same. There are no obvious national cultural or political goals that would require the release of the entire UH F spectrum in Finland, especially as the country is currently going through another digital switchover of television to release an additional part of the U H F . It was for economic reasons that the Finnish government supported the rapid release of additional U H F spectrum in 2015 and intentionally opposed a European consensus on spectrum policy. The economic importance of the mobile industries in Finland remains very high. Nokia is again the number one company in the national economy, and a mobile gaming company (Supercell) and a mobile network operator (Elisa) have joined the top ten of Finnish companies (Ali-Yrkkö, Seppälä, and Mattila 2016). After the Second World War, Finland set about building a Keynesian welfare state. Its spectrum policy decisions were intended mainly to improve citizen welfare through better communication and productivity and to protect the nation’s cultural and political integrity. The release of spectrum or the use of it through the introduction of new technologies was a means to an end rather than a policy goal as such. Finnish society’s shift toward Schumpeterian competition policies happened in the 1990s. Since then, the main driver of spectrum policy in Finland has been national economic competitiveness, and this has had both positive and negative impacts on consumers in communication markets. It is probably not possible to directly replicate Finnish spectrum policy or its mobile markets anywhere else, because few other countries have similar contexts for policy-making. But based on the Finnish experience it seems that if a state shapes its policies time after time in order to create the most favourable conditions for one form of

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communication, in the long run this tends to place all other forms of communication in a less favourable position, even though that would not have been the intention.

n otes   1 World Radiocommunication Conferences are convened by the International Telecommunications Union (ITU) and provide a forum for international discussion of spectrum usage. See the International Telecommunication Union’s conference page website (2019) for details and links to the various W RC conferences mentioned in this chapter.   2 In October 2018, the switchover to DVB-T2 was postponed from 2020 after D T T distributor DN A made a complaint to market court over how Yle calculates its distribution costs.   3 See the so-called U M TS decision of the European Commission (128/1999/ E C ) (European Parliament and Council of the European Union 1999).   4 By the end of 2002, Spain, Norway, Portugal, Sweden, France, Luxemburg, and Ireland had also granted their 3G licenses through beauty contests (Sims, Youell, and Womersley 2015).   5 In 2018, Telia, Elisa and DN A paid in an auction €77,6 million for 3.5 GH z spectrum (3410–3800 M Hz) intended for 5G use.

r efer e nc e s Ala-Fossi, Marko. 2005. Saleable Compromises: Quality Cultures in Finnish and US Commercial Radio. Tampere: Tampere University Press. – 2012. “For Better Pictures on Radio: How Nokia’s Efforts for Multimedia Radio Have Shaped the Radio Landscape in Finland.” In Palgrave Handbook of Global Radio, ed. John Allen Hendricks, 109128. Basingstoke: Palgrave Macmillan. – 2016. “Why TV Bits and Radio Bits Did Not Fit Together? Digitalization and Divergence of Broadcast Media.” In Media Convergence Handbook, vol. 1: Journalism, Broadcasting, and Social Media Aspects of Convergence, ed. Artur Lugmayr and Cinzia Dal Zotto, 265-285. Berlin and Heidelberg: Springer. Ala-Fossi, Marko, and Montse Bonet. 2018. “Who’s Afraid of a PanEuropean Spectrum Policy? The EU and the Battles over the UHF Broadcast Band.” International Journal of Communication 12: 337–58.

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Ali-Yrkkö, Jyrki, Timo Seppälä, and Juri Mattila. 2016. ”Suurten Yritysten Ja Niiden Arvoketjujen Rooli Taloudessa” [The Role of Largest Companies and Their Value Chains in the Economy]. ETLA Reports no. 53. Helsinki: Research Institute of the Finnish Economy. Alkio, Jyrki. 2007. “Mitä tehdä tyhjillä taajuuksilla? Analogisten kanavien sulkemisella ei olisi ollut kiirettä” [What to Do with the Vacant Frequencies? There Was No Hurry to Close the Analogue Channels]. Helsingin Sanomat, 2 September. Brevini, Benedetta. 2013. Public Service Broadcasting Online. Basingstoke: Palgrave Macmillan. Cowell, Alan. 2002. “Not in Finland Anymore? More Like Nokialand.” New York Times, 6 February. E C (European Commission). 2007a. “Commission Opens Europe’s Single Market for Mobile TV Services.” Brussels. http://europa.eu/rapid/ press-release_IP-07-1118_en.htm. – 2007b. “Communication from The Commission to The Council, The European Parliament, The European Economic and Social Committee and The Committee of The Regions.” I T U World Radiocommunication Conference 2007 (W RC-07). Com (2007) 371 Final. Brussels. http:// ec.europa.eu/information_society/newsroom/cf/dae/document. cfm?doc_id=4368. – 2007c. “Results of the World Radiocommunication Conference 2007 (WR C -07) - Information from the Commission.” 15493/07. Brussels. – 2017a. “Broadband Coverage in Europe 2016. Mapping Progress Towards the Coverage Objectives of the Digital Agenda.” Study prepared by I HS Markit Ltd and Point Topic. Brussels. http://ec.europa.eu/ newsroom/document.cfm?doc_id=47090. – 2017b. Europe’s Digital Progress Report 2017 – Connectivity. Broadband Market Developments in the EU. Brussels. http://ec.europa. eu/newsroom/document.cfm?doc_id=44389. El-Moghazi, Mohamed, Jason Whalley, and James Irvine. 2014. “European Influence in I TU -R : The End of an Era of Dominance?” info 16(4): 1–17. European Parliament and Council of the European Union. 1999. “Decision No 128/1999/EC of the European Parliament and of the Council of 14 December 1998 on the Coordinated Introduction of a ThirdGeneration Mobile and Wireless Communications System (UMTS) in the Community.” https://eur-lex.europa.eu/legal-content/EN/ TXT/?uri=celex:31999D0128.

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F C R A (Finnish Communications Regulatory Authority). 2008. ”Tekniset reunaehdot analogisilta televisiolähetyksiltä vapautuneiden taajuuksien käyttömahdollisuuksille” [Technical Conditions for Re-Using the Frequencies Vacated from Analog TV Broadcasting]. Memorandum 112/04/2008. Helsinki. – 2017. “Four Operators Authorised to Apply Roaming Surcharges.” https://www.viestintavirasto.fi/en/ficora/news/2017/fouroperators​ authorisedtoapplyroamingsurcharges.html. Galperin, Hernan. 2004. New Television, Old Politics: The Transition to Digital TV in the United States and Britain. Cambridge: Cambridge University Press. GS MA . 2001. “G S M Mobiles Reach Half Billion Landmark.” http://www. prnewswire.co.uk/news-releases/gsm-mobiles-reach-half-billion-landmark-154783325.html. – 2015. “G S M A Welcomes Multi-Country Support for Sub-700 MHz Spectrum for Mobile Broadband at W R C -15.” http://www.gsma.com/ newsroom/press-release/ gsma-welcomes-multi-country-support-for-sub-700mhz-spectrum-formobile-broadband-at-wrc-15. Haaparanta, Pertti, and Mikko Puhakka. 2002. “Johtolangatonta keskustelua: tunne ja järki huutokauppakeskustelussa” [Clueless Discussion on Wireless: Sense and Sensibility in the Auction Debate].” Kansantaloudellinen aikakauskirja 98(3): 267–74. Häikiö, Martti. 2001. Globalisaatio. Telekommunikaation maailmanvalloitus 1992-2000. Nokia Oyj:n historia 3. [Globalization: The World Conquest of Telecommunications 1992–2000. The History of Nokia Ltd, vol. 3]. Helsinki: Edita. Hellman, Heikki. 2010. “Liberal Turn in Media Policy: The Case of Finland’s Digital Television.” International Journal of Digital Television 1(2): 193–213. Holopainen, J. 2017. “TV-verkko vajaakäytössä: UHF-D-Mux Tyhjä” [TV Network Underutilized: U HF-D-Mux Is Empty]. Yle Commercial and Media Policy Environment Review. https://goo.gl/c2lhMo. Ilmonen, Kari. 1996. Tekniikka, kaiken perusta. Yleisradion historia, osa 3. [Technology, the Basis of Everything: The History of Finnish Broadcasting Company, vol. 3]. Helsinki: Yleisradio. International Telecommunications Union. 2019. “World Radiocommunication Conferences (W RC).” https://www.itu.int/en/ITU-R/conferences/ wrc/Pages/default.aspx.

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Jääsaari, Johanna. 2007. Consistency and Change in Finnish Broadcasting Policy: The Implementation of Digital Television and Lessons from the Canadian Experience. Turku: Åbo Akademi University Press. Jessop, Robert Douglas. 2002. The Future of the Capitalist State. Cambridge and Malden: Polity Press. Jungerman, Fredrik. 2016a. “4G Paradox: Countries with Highest Population Last Served.” http://tefficient.com/4g-paradox-countries-withhighest-population-last-served. – 2016b. “Finland: The Land of Five Thousand Megabytes.” http://­ tefficient.com/finland-the-land-of-five-thousand-megabytes. Junkkari, Marko. 2001. “Telekomissaari Liikanen sysää vastuun UMTSkatastrofista EU :n jäsenmaille” [Telecommunications Commissioner Liikanen: The EU Member States Responsible for the UMTS Catastrophe]. Helsingin Sanomat, 14 June. Kalinowski, Jerzy. 2013. How Does the Investment Community View Spectrum Assets?” Presentation. Warsaw: K MPG. https://studylib.net/ doc/12923114/how-does-the-investment-community-view-spectrumassets%3F. Lindén, Carl-Gustav. 2016. Nokian valtakunta. Raportti hulluilta vuosilta [Kingdom of Nokia. Report from the Crazy Years]. Helsinki: Gaudeamus. Manninen, Ari T. 2002. Elaboration of NMT and GSM Standards: From Idea to Market. Jyväskylä: University of Jyväskylä. Miettinen, Anssi. 2014. “10 pahinta bisnesmokaa” [Top 10 Business Mistakes]. Helsingin Sanomat, 6 April. Miettunen, Hannu. 2013. “Kaupallinen potentiaali ei riitä Suomessa kuin puoleen kapasiteetista; tyhjän panttina 80 tv-kanavaa” [Finland Has Commercial Potential Only for Half of the Capacity: 80 TV Channels Standing Empty]. Turun Sanomat, 16 November. Moisala, Uuno Erkki, Kauko Rahko, Oiva Turpeinen, and Eino Jutikkala. 1977. Puhelin Ja Puhelinlaitokset Suomessa 1877–1977 [Telephone and Telephone Operators in Finland 1877–1977]. Turku: Puhelinlaitosten Liitto. MT C (Ministry of Transport and Communications). 2005. “Matkaviestinverkkojen tulevaisuus” [Future of Mobile Telecommunication Networks]. Nordic Adviser Group Report. Helsinki. – 2007a. “Proposals for the Work of the Conference.” Agenda Items 1.4 and 7.2. Committees 4 and 6. Document 128-E. World Radiocommunication Conference (W RC-07), Geneva. Helsinki.

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– 2007b. “Taajuuksien kehittämistyöryhmä, väliraportti” [The Working Group for Frequency Development, Interim Report]. Helsinki. – 2008. “Making Broadband Available to Everyone. The National Plan of Action to Improve the Infrastructure of the Information Society.” Helsinki. – 2012. “Government Resolution on Spectrum Policy.” Memorandum L V M/2006/07/2011. Helsinki. Näränen, Pertti. 2006. Digitaalinen televisio. Analyysejä alkuhistoriasta, viestintäpoliittisista haasteista ja tv-järjestelmän muuttumisesta [Digital Television: Analyses on Early History, Challenges to Media Policy, and Transformation of Television]. Tampere: Tampere University Press. National Audit Office. 2016. “Conclusions of the National Audit Office. Support for the Building of Broadband Network.” Helsinki. O E C D (Organisation for Economic Co-operation and Development). 2017. OECD Digital Economy Outlook 2017. Paris. Pursiainen, Harri. 2015. “Taantumuksen taajuuspolitiikkaa” [Stagnant Spectrum Policy]. Kauppalehti, 6 December. https://www.kauppalehti.fi/ uutiset/taantumuksen-taajuuspolitiikkaa/Qnk8xWxJ. – 2017. “Digitaaliset verkot tukivat digivallankumousta” [Digital Networks Supported Digital Revolution]. In Digitaalinen Suomi 2017 [Digital Finland 2017], eds. Matti Lehti and Matti Rossi. Helsinki. Sheftalovich, Zoya. 2015. “Europe’s Great Data Divide.” Politico.com, 21 May. http://www.politico.eu/article/data-telecoms-europe-divide. Silberman, Steve. 1999. “Just Say Nokia.” Wired Magazine, September. https://www.wired.com/1999/09/nokia. Sims, Martin, Toby Youell, and Richard Womersley. 2015. Understanding Spectrum Liberalisation. Boca Raton: C R C Press. Tefficient. 2017. “Unlimited Pushes Data Usage to New Heights. Industry Analysis #5/2016 – Updated Version. Mobile Data 1H 2016.” http:// media.tefficient.com/2016/12/tefficient-industry-analysis-5-2016-­ mobile-data-usage-and-pricing-1H-2016-ver-2.pdf. World Radiocommunication Conference. 2012. Resolution 232 (WR C -12): “Use of the Frequency Band 694-790 MHz by the Mobile, except Aeronautical Mobile, Service in Region 1 and Related Studies.” Geneva: International Telecommunication Union. https://www.itu.int/dms_pub/ itu-r/oth/0c/0a/R0C0A00000A0010PDFE.pdf. Zarandy, Pal. 2016. “Finnish-Like Unlimited Mobile Data Model Now Proliferating in Europe.” https://www.linkedin.com/pulse/ finnish-like-unlimited-mobile-data-model-now-europe-pal-zarandy.

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3 Spectrum Policy across Africa Steve Song

1   In t ro du c ti on The exponential growth of mobile telephony in Sub-Saharan Africa is a well-documented phenomenon. As of 2015, about two thirds of the region’s population had mobile phone reception and about one quarter had access to 3G or better mobile data services (Ericsson 2015).1 Yet mobile network subscriber growth in Africa is slowing, as is revenue growth for mobile network operators (GSMA Intelligence 2016; 2017). This slowdown is linked to the fact that a significant percentage of newer users are now coming from lower income brackets and live in regions that present challenges to operators, ranging from sparse population distribution to lack of power infrastructure. As turnover for voice and SMS services declines, operators are looking to mobile broadband to maintain or increase their revenue levels. In the past ten years, massive investment in undersea and terrestrial fibre optic networks in the region has brought terabits of broadband capacity within reach of most African countries. This has resulted in significantly lower international backhaul costs for operators, laying the foundation for mobile broadband service delivery. Yet in order to deliver mobile broadband, operators require access to new spectrum frequencies. The combination of increased demand and technological evolution has placed tremendous pressure on communication policy and regulatory bodies that manage the allocation and assignment of wireless spectrum. Spectrum auctions are rapidly becoming the default mechanism for African regulators to make new, high-demand spectrum available. Recent spectrum auctions in a number of African countries

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are examined in this chapter as well as developments in unlicensed and dynamic spectrum. Experience to date suggests that spectrum auctions in emerging markets may need to be adapted or at least complemented with other strategies if affordable, ubiquitous access for all is to be achieved. As a region, Africa may be the most challenging frontier for affordable access, because of low ability-to-pay combined with relatively sparsely populated rural areas. Both these factors challenge the capital and operating models of network operators. However, in the same manner that African countries have challenged traditional banking practices with mobile money services (Raithatha 2016), the opportunity exists to introduce innovative spectrum access models that are more likely to benefit the unserved.

2   S p e c t ru m Roadblock The traditional means for telecommunications operators to make wireless spectrum available is through an exclusive licence for a particular frequency, usually over a period of ten to twenty years. Yet the acceleration of technological change in recent years has resulted in a situation where market-disrupting products can emerge and reach maturity in less than a decade. It is increasingly impractical for spectrum managers to make such lengthy commitments in the face of rapid technological change, although operators argue that longer terms are needed to encourage investment in networks (G S M A 2018). An apt illustration of the challenge faced by regulators is the transition from analog to digital terrestrial broadcasting in African countries, which is intended to free up spectrum in the ultra-high frequency (UHF) bands. Digital broadcasting needs only a fraction of the amount of wireless spectrum required by analog broadcasting. In 2006, African countries agreed to participate in a digital switchover (DSO) transition process that would, among other things, free up hundreds of megahertz of spectrum (ITU 2006). The completion date was set for 2015. As of early 2017, few African countries have completed the transition, with economic leaders such as Nigeria and Ghana only committing to complete by 2017 (Ogundeji 2016b). The reasons for this lag are bound up in a combination of technological and standards challenges, financing problems, and power politics. As spectrum regulation processes go, it is not unusual for deadlines like this to slip by. Traditional spectrum re-farming, which typically involves moving

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existing spectrum licence holders onto new frequencies, can take years, with millions of consumers being affected by these changes. What makes the D SO spectrum decision in Africa different from previous spectrum decisions, is what has transpired since that decision was taken. In 2006, many technologies that are taken for granted today had yet to come to market. The first Apple iPhone, herald of the modern smartphone era, was only introduced in January 2007. Other technologies, such as tablets, arrived in 2010. Netflix, as an online service, began streaming movies over the Internet in 2007 in the United States and internationally in 2010. The streaming music service Spotify launched in 2008. By 2014, a host of over-the-top (OTT) video distribution companies had emerged in Nigeria, South Africa, Kenya, and beyond, challenging the traditional distribution channels (Kabweza 2014). In the meantime, terrestrial television is facing growing competition from satellite TV services in African countries (Eutelsat 2016). It is conceivable that digital terrestrial broadcasting will be largely overtaken by OT T and satellite services before the D S O is fully complete on the continent. The policy and regulatory challenge presented by the D S O is symptomatic of a more general problem: the challenge of making spectrum available in a manner that can accommodate the many inevitable yet unforeseeable changes in media and communication technologies to come.

3   P ro g r e s s w it h L ic e nsed S pectrum Technological change is not the only problem that regulators in emerging markets face. Spectrum auctions are widely regarded as “best practice” in the assignment of wireless frequencies where demand exceeds availability, typically in popular mobile frequencies (Friend 2011). Yet as of 2013 among African countries, only Nigeria had successfully conducted a spectrum auction. This is perhaps not surprising as spectrum auctions are notoriously difficult to run well from the point of view of ensuring fair play and even more so from the point of view of ensuring the growth of competition (Jochum and Leonhard 2015). The last four years have seen a number of African countries embracing spectrum auctions. Others have engaged in spectrum assignment processes that appear more ad hoc and negotiated.

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3.1 Nigeria In late 2013 the Nigerian communication regulator announced a spectrum auction for 30 M H z of 2.3 G H z spectrum (Nigerian Communications Commission 2013). The auction attracted only two bidders and was won by a new entrant consortium called Bitflux (Ugwu 2014). Bitflux paid just over the reserve price of US$23 million for the spectrum licence. At the time, this was lauded as a success in bringing a new market entrant into the field of LTE services in Nigeria. By mid2015, however, pundits (Adepetun 2015) were beginning to wonder why Bitflux had yet to offer services. In late 2016, the commencement of commercial rollout (Okonji 2016a) was announced, but as of early 2017, there appeared to be little evidence of widespread rollout. Later in 2014, the regulator attempted to launch an auction in the 2.6 G H z band. This was withdrawn and reattempted in 2015, but again withdrawn (Okonji 2016b). Finally, in March 2016, the regulator announced an auction of spectrum in the 2.6 GHz band (Nigerian Communications Commission 2016). In total, fourteen lots of 2x5 MHz spectrum (140 MH z of spectrum in total) were put up for bid. By the end of the bidding process only one operator, MTN Nigeria, was willing to meet the reserve price of US$16 million per lot. M T N bid for six lots, paying a total of US$96 million for 60 M H z of spectrum. The remaining spectrum remains unsold. 3.2 Mozambique In April 2013, the Mozambiquan regulator announced the auction of five lots of 2x5 MHz (a total of 50 MHz) of 800 MHz spectrum with a reserve price of US$30 million per lot (TeleGeography 2013). The auction did not attract any bids and was widely perceived as having had an excessively high reserve price. The auction was quietly withdrawn, and no subsequent auction has been attempted by the regulator. 3.3  South Africa Since 2010, the South African regulator has attempted to convene a spectrum auction three times (Mawson 2016). The first two attempts were in 2.6 G H z and 3.5 G H z; the most recent were in 800 M Hz, 2.6 GHz, and 3.5 GHz. Each time the auction has been withdrawn,

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with the most recent one being cancelled in February 2017. There are multiple causes of these serial auction failures. In part, those failures can be attributed to debates sparked by the regulator’s embedding of Black Economic Empowerment objectives into the spectrum auction design, which require any company participating in the auction to have a minimum of 30 percent black ownership. They can also be attributed to a lack of coherent vision from the Ministry of Communications, which has seen seven different ministers since 2009. The ministry’s current vision of removing all exclusive-use spectrum in favour of a national wholesale network has attracted widespread criticism (Mcleod 2016) and left the current policy and regulatory environment in turmoil.2 In July 2017, the Minister of Finance announced a target of December 2018 for the regulator to release high-demand spectrum as part of a government action plan (Gilbert 2017). 3.4 Ghana In 2015, the Ghanaian regulator announced an auction of 800 M H z spectrum, offering two lots of 2x10 MHz spectrum (a total of 40 MHz) with a reserve price of US$67.5 million per lot (2015). While local companies were encouraged to participate, none of the three Ghanaian companies that registered for the auction were able to meet the reserve price (Dowuona 2017). The only company to meet the reserve price was Scancom (M T N ), resulting in an effective monopoly for M T N in the 800 MHz band. The regulator has announced plans to attempt to auction the remaining spectrum with the intention of using auction proceeds to fund the rollout of digital terrestrial broadcasting infrastructure (Ogundeji 2016a). The Minister of Communication announced in July 2017 that bidders for the remaining spectrum would have to meet the reserve price set in the initial auction (Adepoju 2017). 3.5 Kenya The assignment of spectrum in the 800 MHz band in Kenya began in 2014 with a request (Alwala 2015) from the Kenyan government to the largest operator, Safaricom, that it build a national police communications network. Safaricom initially agreed to pay US$56.2 million and to build the requested network in exchange for access to 2x15 MHz of 800 MH z spectrum (Wanjiku 2014). After complaints

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from Airtel and Telkom Kenya, the regulator compelled Safaricom to relinquish 2x5 MH z of spectrum (Mwita 2015) so that each of the three incumbent mobile network operators would be assigned 2x10 MHz of 800 MH z spectrum each for a total of 60 M H z of spectrum. The three operators have agreed to each pay US$25 million for the spectrum licences. The cost of the national police network has now been disaggregated from the spectrum sale (Okuttah 2016). It is not clear how the final spectrum price was determined. 3.6 Senegal In late 2015, the Senegalese regulator invited applications for L T E spectrum in the 700 MHz, 800 MHz, and 1800 MHz bands: specifically, three blocks of 2x30 MH z in 800 MH z, four blocks of 2x20 M H z in 700 MHz, and three blocks of 2x30 MHz spectrum in 1800 MHz (Edjo 2015). The reserve price for a twenty-year licence was set at X O F 30 billion or approximately US$50 million. Operators responded in December 2015 by drafting a collective letter to the regulator (Edjo 2016a) to express their concern over the high reserve price for the spectrum. Their effective boycott of the auction resulted in a standoff between the regulator and the operators. This was resolved when the regulator restarted the licensing process, having negotiated a deal with the former fixed-line incumbent operator, Sonatel, to pay XOF 32 billion or US$53 million for 2x10 MHz of spectrum in the 800 MHz band and 2x10 MHz in the 1800 MHz band (Edjo 2016b). 3.7 Egypt In mid-2016, the Egyptian regulator announced the availability of 40 MHz of spectrum to existing operators at a price of approximately US$50 million per MHz. Operators protested the high price, the relatively small allocation of spectrum, and the requirement that 50 percent of the licence fee be paid in US dollars. Only Telecom Egypt accepted the terms set by the regulator, agreeing to pay 7.08 billion Egyptian pounds (US$797 million) for 5 M H z in 900 M H z and 2x5 MHz in 1800 MHz. The regulator held firm with the other operators and ultimately came to agreement with all four of them, with Orange and Etisalat each receiving 10 MHz of spectrum and Vodafone 5 MHz (El-Din 2016). Total revenue from the spectrum sale exceeded US$1.9 billion.

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3.8  Common Themes Participation is essential to the success of any auction. The lack of participation in the above auctions can be directly attributed to the high reserve prices set in each country. There appears to be a conflict of interest for governments, who may see spectrum auctions as a source of direct revenue as opposed to simply an effective means to fairly allocate resources. Complete participation failures such as in Mozambique and South Africa have resulted in valuable spectrum laying fallow for many years. Some operators have claimed that this has directly impacted their ability to roll out telecom infrastructure (Mcleod 2017a). The opportunity cost of spectrum that is not successfully assigned does not appear to be a significant factor in auction planning. Examples such as Bitflux in Nigeria suggest there may also be a “winner’s curse” associated with these auctions, which may inhibit investment in network rollout. Another unintended consequence of spectrum auctions is their precedent-setting impact on future spectrum pricing, as may be seen in the case of the 800 MHz auction in Ghana. Figure 3.1 helps to explain the significant difference in spectrum price/G H z/person in terms of Egypt’s significantly higher G D P per capita. However, across Sub-Saharan African countries, spectrum pricing doesn’t appear to have a strong correlation to GDP per capita. It is also worth noting that, even where the spectrum price is significantly lower in comparison to G D P per capita, such as in Nigeria, the up-front cost of winning a spectrum auction is still in the millions of dollars (see Table 3.1), a cost that may yet prove a barrier to market entry.

4   G row t h o f A lternati ves Technological change has not only improved the communication technologies in use but also created new possibilities for how spectrum might be managed.3 Industries that are dependent on effective resource management such as the taxi and hotel industries have been disrupted by software-driven services like Uber and Airbnb. Spectrum management is also a resource management problem, and it remains an open question as to whether the ultimate transition to software management of spectrum assignment will be a disruptive or a managed transition. Because the rapid growth of wireless infrastructure in Africa is comparatively recent, regulators on the continent have a particular

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Table 3.1 African spectrum auctions and reserve prices Spectrum fee (USD millions)

Country

Year

Operator

Frequency

Spectrum

Nigeria Nigeria Mozambique Ghana Kenya Senegal

2013 2014 2013 2015 2015 2016

Bitflux MTN N/A MTN Multiple Sonatel

30 M Hz 2x5 M H z 2x5 M H z 2x10 M Hz 2x10 M Hz 2x10 M Hz + 2x10 M H z

23 16 30 67.5 25 53

Egypt

2016

Telecom Egypt

2.3 GHz 2.6 GHz 800 M H z 800 M H z 800 M H z 800 M H z & 1800 MHz 900 MHz & 1800 MHz

5 M Hz & 2x5 M H z

797

$12,000

$555

$8,000

$400

$6,000

$300

$4,000

$200 $122

$113

$86

$2,000

16 20

6 ga l2

01

15 ne Se

20 K

en y

a

20 na G ha

M oz

am

bi

qu

e

20

15

13

14

$0

20

13 ig er ia

20 N

ig er ia

$100

$26

$9

$4

$0

N

price /g hz/person

$500 gdp per capita (p p p ) price / gh z / person

Eg yp t

g dp / captia (p p p )

$10,000

$600

Figure 3.1  Spectrum pricing in the context of G D P Source: GDP per capita data from the World Bank

opportunity to engage in low-risk experimentation with alternative approaches to making spectrum available. For example, terrestrial television broadcast frequencies are largely unoccupied in most African

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countries, meaning that experimentation in dynamic spectrum can occur there without risk of interference to broadcasters. Doubtless there are other instances where a historical lack of development could amount to an opportunity to leapfrog traditional models, especially when it comes to connecting regions and people not currently being served by existing operators. 4.1 Wi-Fi The most successful alternative to traditional spectrum management has been the license-exempt spectrum frequencies originally dedicated for industrial, scientific, and medical (I S M ) purposes. I S M bands are probably best-known for enabling the success of Wi-Fi communication. Wi-Fi has changed from being a niche technology for geeks and experimenters, ignored by telecommunications companies, to one of the most pervasive communication technologies on the planet (Groenewegen, Lemstra, and Hayes 2012). Some industry analysts predict that, for consumers, 90 percent of Internet data will be carried over Wi-Fi by 2020 (Kinney 2016). This prediction highlights the importance of unlicensed spectrum as a last-mile technology.4 There is a popular, yet mistaken, perception that the success of Wi-Fi can be attributed to a lack of regulation. Licence-exempt spectrum is regulated – but it is the devices that use it that are regulated, not the spectrum. Wi-Fi devices are designed to have low power outputs that limit their ability to interfere with other devices. They are also designed to “play nicely” with one another, listening for other devices before transmitting. This design allows for a rich ecosystem to evolve without the necessity of offering exclusive rights to the spectrum to any particular user. The integration of Wi-Fi into every modern smartphone has opened up new possibilities for access. Wi-Fi integration creates an alternative to mobile network infrastructure for accessing data networks by connecting the phone to Wi-Fi hotspots in homes, hotels, airports, and so on. As more consumers acquire Wi-Fi-enabled devices, Wi-Fi has emerged as a serious alternative infrastructure to mobile data networks, inevitably leading to more competition and lower prices for data. Network operators deploying metropolitan fibre networks in African countries have discovered that by offering Wi-Fi networks wherever they deploy fibre, they can also offer effective consumeraccess infrastructure at very low marginal cost, thanks to the

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comparatively infinite capacity of fibre backhaul (Dikuelo and Dichabe 2015; Beres 2015; Malakata 2015). Many municipalities have seen the strategic advantage of Wi-Fi and have begun to roll out their own Wi-Fi networks, providing free and/or subsidized access to the public. The year 2016 appears to have been a tipping point with multiple announcements of large-scale, municipal Wi-Fi deployments in Lusaka, Zambia (Mvula 2017), Dar Es Salaam, Tanzania (Rutenge 2016), Johannesburg, South Africa (Venktess 2016), Dakar, Sénégal (Agence Ecofin 2016), and Harare, Zimbabwe (Gambanga 2016) to name but a few. This opportunity is not limited to wealthy urban networks. Poa! Networks in Kenya is rolling out a Wi-Fi network in Kibera, outside of Nairobi (Southwood 2016), and Mawingu Networks is delivering affordable Wi-Fi networks in rural Kenya (Ochieng 2015). Facebook has also embraced the potential of Wi-Fi through its Express Wi-Fi initiative, which offers a simple platform for access entrepreneurs to resell Internet services locally. Express Wi-Fi’s attempt to achieve Wi-Fi network deployment at scale is worth noting. Since 2016, Express Wi-Fi has launched in Uganda, Nigeria, and Kenya (Chelagat 2017), with hundreds of Wi-Fi hotspots being deployed in Kenya alone. The above initiatives differ in market focus and sustainability, but all are betting on the commercial success of Wi-Fi as affordable access infrastructure in Africa. The rapid spread of Wi-Fi services across the continent is evidence of pent-up demand for affordable access to the Internet, but perhaps more importantly it is also evidence of the opportunity that is created when there are low financial and administrative barriers to the deployment of access technologies. 4.2  Dynamic Spectrum The success of Wi-Fi encouraged advocates for affordable access to lobby communication regulators to make more spectrum available on an unlicensed basis. More than ten years ago, researchers began to see the potential of serendipitously making use of unused television channels on part of the UHF spectrum band (450–698 M H z). These buffer channels were initially referred to as television white space (TV WS) spectrum but have now come to be more generically known as dynamic spectrum. Serendipitous reuse of spectrum occupies a middle ground between traditional spectrum licensing and unlicensed

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spectrum. Dynamic spectrum management does not confer exclusivity in the way that licensed spectrum does, yet it offers the regulator some control over the use of the spectrum by obliging dynamic spectrum access devices to check in with a geolocation database that determines spectrum availability at a given location and time. Having this degree of control allows the regulator to move forward in making this spectrum available without the high risks entailed by completely reallocating frequencies. Dynamic spectrum in the television bands has particular application in Sub-Saharan Africa because most countries in the region have few existing terrestrial broadcast channels. This means there are many channels in television broadcast frequencies currently lying fallow. Sub-Saharan Africa has more dynamic spectrum pilots under way than any other region in the world, with eleven pilots in eight African countries (Dynamic Spectrum Alliance 2016). These pilots have built a convincing evidence base that dynamic spectrum technologies can coexist with broadcasters without interference. In spite of the numerous successful pilots, as of Q1 2017, no African country had enacted formal regulations in support of TVWS spectrum or dynamic spectrum more generally. A number of factors may have contributed to this lack of progress. The lack of wide availability of mass market T V WS/dynamic spectrum devices for purchase may be a factor.5 This may be a “catch-22,” in that manufacturers may be waiting for formal dynamic spectrum regulation to be enacted before launching larger-scale manufacturing. The International Telecommunication Union (ITU) may also be a contributing factor. As an institution, it has urged caution and deliberation with regard to this regulation. Regulators that look to the ITU for guidance may feel that it is unwise to push forward with dynamic spectrum regulation in the absence of their direct guidance. This is especially true for smaller, less well-resourced regulators. The mobile operator industry association, the GSMA, has also come out in against dynamic spectrum regulation (Oxford 2015), perhaps out of concern that it might distract communication regulators from the GSMA priority of speedier assignment of long-term, exclusive spectrum licences to mobile network operators. In spite of this, in April, 2017, the South African regulator announced draft regulations for T V W S spectrum (Mcleod 2017b). Formal regulations followed in March 2018 (I CAS A 2018) and may lead to more rapid evolution of this interesting middle ground between unlicensed and licensed spectrum. Two things that could significantly

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accelerate the adoption of TVWS regulation by African communication regulators are the emergence of large-scale, mass-market manufacturing of TVWS equipment, which will lower costs and increase availability, and more overt encouragement and support from the ITU for dynamic spectrum regulation in general. A more proactive and positive stance on dynamic spectrum from the ITU would directly assist champions of T V WS within national communication regulatory agencies. 4.3  Rural Global Systems for Mobile (GSM ) Communications G SM networks have proven extremely successful in Africa, yet large mobile operators are still challenged to find economically sustainable models for delivering access to sparsely populated rural areas. In recent years, much lower-cost alternative G S M platforms based on open source software have emerged; as a result, a generation of new startups are now offering mobile technologies and network services with dramatically lower capital and operating costs. Such companies include Range Networks, Vanu, Africa Mobile Networks, and Fairwaves. Populations and regions deemed uneconomic by incumbent mobile network operators are now being targeted by these companies for sustainable network development. Limiting the spread of these start-ups is the fact that the popular GSM spectrum bands have typically been assigned on an exclusive, national basis to existing mobile network operators. Low-cost GSM start-ups are left with the option of trying to sell their technology to incumbents, whose supply chains are often closely tied to large equipment suppliers. Where unassigned spectrum is available, regulators are typically reluctant to take the risk of making spectrum available on a long-term basis to companies without a substantial track record. A way around this challenge can be found in Mexico. In 2015, the Mexican communications regulator, Instituto Federal de Telecomunicaciones (IFT), published its new frequency plan (Instituto Federal De Telecomunicaciones Mexico 2015). IFT has set aside mobile spectrum in the 800 MHz band to serve the social good. For a company to have access to this spectrum, the population of the community being served must be less than 2,500, or, that community must be designated as an Indigenous region or priority zone.6 This regulatory decision builds on the success of a non-governmental organization that has been delivering GSM access to rural areas for several years. Rhizomatica is a not-for-profit organization that has been providing GSM services to

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Indigenous communities around Oaxaca since 2012 (Salazar 2016). Until 2015, it operated under a special dispensation from IFT, but the allocation of spectrum for this purpose has now been made official, and any organization may apply for access to this spectrum under the conditions specified. The amount of allocated spectrum is not large compared to what the big operators have access to, but it is more than enough for smaller communities. Currently, Mexico remains unique in this groundbreaking regulation. Regulators in Sub-Saharan Africa (and elsewhere) could use a similar strategy to ensure that sparsely populated rural areas have the potential to solve their own access challenges. There is a common perception that the GSM bands for 900 MHz and 1800 MHz are fully occupied in most countries. However, estimates typically do not take into account the more modest amounts of spectrum required by these initiatives that target smaller populations.

5  I mpac t o f A f f o r da b l e Open Acces s Backhaul o n S p e c t ru m S t rategi es The first high-capacity open access7 undersea cable to reach countries in Sub-Saharan Africa went live in mid-July 2009 with little fanfare (Sinico 2009). Less than ten years later, more than a dozen undersea cables encircle the continent, offering many terabits of digital capacity. The arrival of high-capacity fibre on the shores of African countries, combined with market reforms and regulatory reforms, has triggered a wave of investment in terrestrial fibre optic infrastructure, to the point that nearly every African nation has at least one fibre optic backbone connected to those undersea cables – indeed, many have several. Although much of the investment in fibre optic infrastructure has been spurred by the need to provide better, faster, and cheaper backhaul for mobile networks, it has also created an enabling environment for complementary last-mile solutions – a positive side effect for all. Previously, the cost of building a communication access network involved solving an array of expensive problems – from international backhaul, to national network access, to middle- and last-mile challenges and the diffusion and maintenance of access devices. Now, with the advent of locally available open access fibre networks in primary and secondary cities in Sub-Saharan Africa, new opportunities have opened up for access providers, who can now focus their efforts on the last mile.

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Changes in satellite technology are also opening alternative backhaul options for network operators. African countries have a long history with satellite technology. For many years, it was the only practical means of gaining access to global communication networks. Typically, satellite access has been only within the reach of well-resourced organizations such as telecommunications operators, banks, and multilateral organizations. However, there are new trends in the satellite industry that show promise for cheaper, faster Internet access via satellite in the future. New-generation high-throughput satellites (HTSs) are able to offer broadband speeds to clients at prices similar to those of terrestrial retail broadband services. Instead of providing a large footprint covering an entire subcontinent, HTS satellites use steerable spot-beams that target smaller, more specific regions. For example, YahSat’s YahClick internet service offers service in ten countries in Africa at prices starting at $60 per month for 2 Mbps. HTS coverage is expected to expand, and prices are expected to become more competitive, as several HTS satellites are planned for launch in the next few years. The generic availability of affordable international broadband backhaul services will encourage new operators to enter the last-mile marketplace, but their success will largely depend on the availability of wireless spectrum.

6   C o n c l u s i on Wireless spectrum is the de facto last-mile technology in African countries. For operators new and old, gaining access to spectrum frequencies is essential to success. For better or worse, long-term, national, exclusive-use spectrum licences are likely to continue to play a critical role in increasing affordable access to communication. As spectrum auctions emerge as an increasingly used mechanism for assigning spectrum, the large amounts of money associated with spectrum auctions and licensing have attracted a great deal of public attention. Yet a closer look at the results of recent spectrum auctions in Sub-Saharan Africa suggests that those auctions may be failing to achieve some of the basic goals they set out to address. Lack of participation undermines the very purpose of an auction. All of the recent auctions profiled here had challenges in getting operators to participate, typically because the reserve price was higher than most operators were willing to pay. And even where there is participation, the “winner’s curse” of high auction prices may inhibit the useful

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rollout of infrastructure. It seems likely that auction designers are being directed to prioritize an immediate and lucrative financial windfall from spectrum auctions instead of the longer-term (and more diffuse) economic benefits that increasing affordable access can bring. In both the 2.6 GHz auction in Nigeria and the 800 MHz auction in Ghana, the sole successful bidder was the mobile network giant MTN. This did not deliver optimal outcomes in terms of increasing competition. Even a seemingly positive case such as the 2.3 G H z auction in Nigeria, where the auction was won by Bitflux, a new market entrant, requires closer analysis. The cost per MHz per person of the spectrum was relatively low compared to other auctions in the region, yet three years on, Bitflux does not appear to have rolled out substantial infrastructure. It may be that the financial burden of spectrum auctions is only bearable by incumbent operators with greater resources. Research carried out by the GSMA on the use of set-asides and other mechanisms to encourage the participation of new market entrants in spectrum auctions seems to bear this out (G S M A Intelligence 2015). G SMA suggests caution in the use of set-asides because of the high rate of failure of such strategies. In light of this, it seems likely that regulators wishing to increase competition should not consider auctions as the sole strategy for assigning spectrum. Kenya’s somewhat chaotic auctionless path to the assignment of 800 M H z spectrum seems to have resulted in an outcome that has worked at least as well as if not better than an auction. In the end, each of the major operators has received a significant amount of spectrum ideal for LTE rollouts, paying less per megahertz of spectrum than most auctions in the region. Other African countries have had less optimal outcomes. South Africa’s ongoing attempts to integrate its transformation agenda with spectrum has resulted in a roadblock that has no obvious resolution at this point. The auction failure in Mozambique in 2013 due to the high reserve price for a small amount of spectrum has ensured that 800 MHz spectrum will lie fallow for at least five years. The economic cost of that failure is arguably higher than the original expected revenue from the auction. There is a dearth of research on the opportunity cost of failed spectrum auctions. In Egypt, the hard line taken by the Egyptian regulator may be an economic windfall for the Egyptian treasury, but time will tell whether it results in more affordable access in the country. The lack of willing

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participation of operators in spectrum auctions suggests that spectrum auction reserve prices need more careful evaluation. The large amounts of money associated with spectrum assignments may be part of the problem, attracting the attention of governments and network operators alike. Civil society groups often find it a challenge – both financial and technical – to engage in national strategic debates on spectrum, although there are signs that this is beginning to change as spectrum is increasingly recognized as a critical roadblock to affordable access (Foditsch 2017). From a technological infrastructure perspective, we are seeing a trend toward more pervasive availability of affordable backhaul infrastructure through the spread of fibre infrastructure and newgeneration satellite technology. When this is combined with dramatically less expensive wireless access technology, there is an opportunity for a more granular and dynamic approach to spectrum management as a complement to traditional long-term licence strategies. It is possible to envision a set of regulations that will enable local access providers through the use of a combination of unlicensed, dynamic, and traditional spectrum licensing aimed at increasing access in unserved regions.

N otes   1 For more recent country-by-country statistics, refer to the International Telecommunication Union (I TU 2017).   2 Chapter 5 by Mariscal in this volume offers a detailed exploration of the risks and potential benefits of Mexico’s decision to implement a national wholesale 700 M Hz network.   3 Alternative models are explored elsewhere in this book. In chapter 8, Marcus examines the technological and regulatory future of spectrum sharing. In Chapter 10, Doyle and colleagues consider an open-access market for wireless capacity that is abstracted from specific frequencies. In Chapter 9, Weiss and Gomez develop a model for a decentralized ­governance system for spectrum.   4 See Chapter 6 by Jain and Neogi for a discussion of the use of Wi-Fi in the last mile in India.   5 As with Taylor’s study of rural broadband in Canada, TV WS initiatives were limited by poor policy structure and hardware limitations.

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  6 Note that this regulation is independent of the Red Compartida Open Access wholesale 700 M Hz network described by Mariscal in Chapter 5.   7 Open access policies ensure that access to essential communication infrastructure is available to all licensed operators on fair and reasonable terms and in a manner that is transparent and non-discriminatory.

r efer enc e s Adepetun, Adeyemi. 2015. “2.3ghz Spectrum: Why We Are Yet to Roll Out, by Omoniyi.” The Guardian – Nigeria. https://guardian.ng/ technology/2-3ghz-spectrum-why-we-are-yet-to-roll-out-by-omoniyi. Adepoju, Paul. 2017. “Ghana’s Govt Rejects Calls for 4G License Price Slash.” ITWeb Africa. http://www.itwebafrica.com/networks/341-ghana/ 238882-ghanas-govt-rejects-calls-for-4g-license-price-slash. Agence Ecofin. 2016. “Sénégal: Sonatel Teste Le Wi-Fi Public Gratuit À Rufisque, Aux Parcelles Assainies Et À Sacré-Coeur/Mermoz.” TIC & Telecom. http://www.agenceecofin.com/operateur/0408-39933-senegalsonatel-teste-le-wi-fi-public-gratuit-a-rufisque-aux-parcelles-assainies-eta-sacre-c-ur/mermoz. Alwala, Rachael. 2015. “Regulator: Safaricom to Pay Sh6 Bn for New LTE Frequency.” http://www.cofek.co.ke/index.php/news-and-media/ 1364-ca-safaricom-to-pay-sh6-bn-for-new-lte-frequency. Beres, Ela. 2015. “Bringing Better Wi-Fi to Kampala with Project Link.” https://africa.googleblog.com/2015/12/bringing-better-wi-fi-to-kampalawith.html. Capacity Media. 2015. “Four Players to Enter Ghana Spectrum Auction.” 13 November. http://www.capacitymedia.com/Article/3506182/ Four-players-to-enter-Ghana-spectrum-auction. Chelagat, Joy. 2017. “Facebook Launches Low-Cost Internet Service, Express Wifi, in Kenya.” Citizen Digital. https://citizentv.co.ke/business/ facebook-launches-low-cost-internet-service-express-wifi-inkenya-162150. Dikuelo, Pauline, and Amanda Dichabe. 2015. “BoFiNet Rolls out 600 Wi-Fi Hot Spots.” MmegiOnline. https://web.archive.org/web/ 20170906021438/http://www.mmegi.bw/index.php?aid=49764. Dowuona, Samuel. 2017. “4G Spectrum Pricing: Politics Vrs Industry, Consumer Interest.” Ghana Business News. https://www.ghanabusiness news.com/2017/01/12/4g-spectrum-pricing-politics-vrs-industryconsumer-interest.

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Dynamic Spectrum Alliance. 2016. “Worldwide Commercial Deployments, Pilots, and Trials.” http://dynamicspectrumalliance.org/pilots. Edjo, Muriel. 2015. “Sénégal: Le Gouvernement a Lancé L’appel À Candidature Pour L’attribution D’une Licence 4G “ TIC & Telecom. http://www.agenceecofin.com/gestion-publique/1711-33882-senegal-legouvernement-a-lance-l-appel-a-candidature-pour-l-attribution-d-unelicence-4g. – 2016a. “Sénégal: L’appel À Candidature Pour La 4G Est Ouvert À De Nouveaux Opérateurs.” TIC & Telecom. http://www.agenceecofin.com/ regulation/1901-35196-senegal-l-appel-a-candidature-pour-la-4g-est-­ ouvert-a-de-nouveaux-operateurs. – 2016b. “Sénégal: Les Détails De La Nouvelle Convention De Concession D’orange Sur Sonatel Dévoilés.” TIC & Telecom. http:// www.agenceecofin.com/gestion-publique/1908-40194-senegal-lesdetails-de-la-nouvelle-convention-de-concession-d-orange-sur-sonateldevoiles. El-Din, Mohamed Alaa. 2016. “Vodafone Loses Most after Redistribution of 4G Frequencies among Companies.” Daily News Egypt. http://www. dailynewsegypt.com/2016/10/22/vodafone-loses-redistribution-4gfrequencies-among-companies. Ericsson. 2015. “Sub-Saharan Africa – Ericsson Mobility Report November 2015.” Stockholm: Ericsson. https://www.ericsson.com/res/ docs/2015/mobility-report/emr-nov-2015-regional-report-sub-saharanafrica.pdf. Eutelsat. 2016. Press Release: “Satellite TV One of the Fastest-Growing Media in West Africa.” http://news.eutelsat.com/pressreleases/ satellite-tv-one-of-the-fastest-growing-media-in-west-africa-1307643. Foditsch, Nathalia. 2017. The Power of Airwaves: The Role of Spectrum Management in Media Development. Washington: Center for International Media Assistance. Friend, Graham. 2011. “Best Practice Spectrum Renewal and Pricing – a Review of International Best Practice and the Lessons for the Government of Bangladesh.” Prepared for the World Bank. Coleago Consulting. http://documents.worldbank.org/curated/en/90869 1468210579972/pdf/832430WP0P122200Box379886B00PUBLIC0. pdf. Gambanga, Nigel. 2016. “Netone Extends Broadband Services Introduces a Public Wi-Fi Option.” TechZim. http://www.techzim.co.zw/2016/07/ netone-extends-broadband-services-introduces-public-wifi-option.

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Gilbert, Paula. 2017. “Gigaba’s Action Plan for Spectrum.” ITWeb Africa. http://www.itweb.co.za/index.php?option=com_content&view=article& id=163359:Gigaba-s-action-plan-for-spectrum. Groenewegen, John P., Wolter Lemstra, and Vic Hayes. 2012. The Innovation Journey of Wi-Fi: The Road to Global Success. Cambridge: Cambridge University Press. GS MA . 2018. Mobile Policy Handbook: An Insider’s Guide to the Issues. London. www.gsma.com/publicpolicy/handbook. GS MA Intelligence. 2015. “Spectrum for New Entrants, Lessons Learned.” London: G S M A. https://www.gsmaintelligence.com/research/?file=3f4ec 58d593cdd88d2a7e71995e82733&download. – 2016. “The Mobile Economy – Africa 2016.” London: GSMA . https:// www.gsmaintelligence.com/research/?file=3bc21ea879a5b217b64d62fa 24c55bdf&download. – 2017. “The Mobile Economy – Sub-Saharan Africa 2017.” London: GS MA . https://www.gsmaintelligence.com/research/?file=7bf3592e6d75 0144e58d9dcfac6adfab&download. I C A S A . 2018. “Electronic Communications Act 2005 (Act No. 36 of 2005) – Regulations on the Use of Television White Spaces. Notice 147 of 2018.” https://www.ellipsis.co.za/wp-content/uploads/2017/04/ Regulations-on-Use-of-TVW S -23-March-2018.pdf. Instituto Federal De Telecomunicaciones Mexico. 2015. “Acuerdo Mediante El Cual El Pleno Del Instituto Federal De Telecomunicaciones Modifica El Programa Anual De Uso Y Aprovechamiento De Bandas De Frecuencias 2015.” http://www.dof.gob.mx/nota_detalle.php?codigo=53 87867&fecha=06/04/2015. I T U (International Telecommunication Union). 2006. “Digital Broadcasting Set to Transform Communication Landscape by 2015.” https://web.archive.org/web/20170709130641/http://www.itu.int/newsroom/press_releases/2006/11.html. – 2017. “Measuring the Information Society Report.” Geneva. http:// www.itu.int/en/ITU-D/Statistics/Pages/publications/mis2016.aspx. Jochum, Jan, and Mathias Leonhard. 2015. “Impact of Spectrum Auctions.” Cologne: Detecon Consulting. http://www.detecon.com/en/ Publications/impact-spectrum-auctions. Kabweza, L.S.M. 2014. “Here’s a List of Africa’s Video on Demand and Pay T V Providers.” TechZim, 7 October. http://www.techzim. co.zw/2014/10/heres-a-list-of-africas-video-on-demand-pay-tvproviders.

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Kinney, Sean. 2016. “Mobile Experts Predicts 90% of Data Will Be Transmitted over Unlicensed Spectrum by 2020.” RCR Wireless, 7 July. http://www.rcrwireless.com/20160707/network-infrastructure/wi-fi/ analyst-wi-fi-carriers-80-mobile-data-tag17. Malakata, Michael. 2015. “Kenyan Counties Eager to Tap into Liquid.” ITWeb Africa, 26 November. http://www.itwebafrica.com/network/ 262-kenya/235528-kenyan-counties-eager-to-tap-into-liquid. Mawson, Nicola. 2016. “Spectrum Meltdown.” Brainstorm Magazine, 6 September. http://www.brainstormmag.co.za/technology/12667spectrum-meltdown. McLeod, Duncan. 2016. “I CT White Paper under Fire.” TechCentral, 9 October. https://techcentral.co.za/network-nationalisation-slammedas-huge-risk/69076. – 2017a. “We Have Run Out of Spectrum: Vodacom.” TechCentral, 1 August. https://techcentral.co.za/run-spectrum-vodacom/76040. – 2017b. “Progress on TV White-Spaces Spectrum in SA.” TechCentral. 12 April. https://techcentral.co.za/progress-on-tv-white-spaces-spectrumin-sa/73146. Mvula, Steven. 2017. “Lusaka Residents to Have Free Wi-Fi.” Daily Mail Zambia, 18 March. https://www.daily-mail.co.zm/lusaka-residentsto-have-free-wi-fi. Mwita, Martin. 2015. “Safaricom to Give up Part of 4G Frequency.” The Star Kenya, 16 December. http://www.the-star.co.ke/news/2015/12/16/ safaricom-to-give-up-part-of-4g-frequency_c1261544. National Endowment for Democracy. http://www.cima.ned.org/publication/ power-airwaves-role-spectrum-management-media-development. Nigerian Communications Commission. 2013. “Information Memorandum 2.3 G Hz Spectrum Auction.” https://www.ncc.gov.ng/ documents/460-information-memorandum-on-2-3ghz-spectrumauction-for-wholesale-wireless-access-service-wwasl/file. – 2016. “2.6 G Hz Spectrum Auction Information Memorandum.” https:// www.ncc.gov.ng/documents/690-information-memorandum-on-2-6ghzspectrum-auction/fil. Ochieng, Lilian. 2015. “Wireless Internet Provider Mawingu Networks Gets U.S. Funding.” Daily Nation – Kenya, 24 July. https://www.nation. co.ke/business/Wireless-internet-provider-signs-funding-deal/9962806156-waonof/index.html. Ogundeji, Olusegun. 2016a. “Ghana Looks to Spectrum Sales to Fund Digital Migration.” ITWeb Africa, 18 March. http://www.itwebafrica.

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com/network/341-ghana/236018-ghana-looks-to-spectrumsales-to-fund-digital-migration. – 2016b. “Nigeria, Ghana Commit to Digital Broadcast Transition by 2017.” ITWeb Africa, 17 March. http://www.itwebafrica.com/ ict-and-governance/523-africa/236013-nigeria-ghana-commit-to-digitalbroadcast-transition-by-2017. Okonji, Emma. 2016a. “Bitflux Begins Commercial Rollout of 2.3ghz Services.” This Day Live, 21 April. https://www.thisdaylive.com/index. php/2016/04/21/bitflux-begins-commercial-rollout-of-2-3ghz-services. – 2016b. “The Untold Story of Ncc’s 2.6ghz Spectrum Auction.” This Day Live, 20 October. https://www.thisdaylive.com/index.php/2016/10/20/ the-untold-story-of-nccs-2-6ghz-spectrum-auction. Okuttah, Mark. 2016. “Safaricom to Slap State with Sh9bn Bill for Security Network.” The Nation, 11 August. http://www.nation.co.ke/ business/Safaricom-to-slap-State-with-Sh9bn-bill-for-security-network/ 996-3340054-pausg/index.html. Oxford, Adam. 2015. “Telkom ‘Couldn’t Give Away’ LLU If It Wanted To: Gsma’s African Head on TVW S , Regulation and More.” Htxt.africa, 18 August. http://www.htxt.co.za/2015/08/18/telkom-couldnt-give-awayllu-if-it-wanted-to-gsmas-african-head-on-tvws-regulation-and-more. Raithatha, Rishi. 2016. “From East to West: The Growth of Mobile Money in Sub-Saharan Africa.” GSMA , 10 July. https://www.gsma.com/ mobilefordevelopment/programme/mobile-money/east-west-growthmobile-money-sub-saharan-africa. Rutenge, Justice. 2016. “Will Internet Data Determine the Outcome of 2020 Polls?” The Citizen Tanzania, 16 November. http://www.the​ citizen.co.tz/magazine/politicalreforms/Will-Internet-data-determinethe-outcome-of-2020-polls-/1843776-3454274-format-xhtml-p7ovjt/ index.html. Salazar, G. 2016. “So Long, Phone Companies. Mexico’s Indigenous Groups Are Getting Their Own Telecoms.” Global Voices, 26 July. https://globalvoices.org/2016/07/26/so-long-phone-companies-mexicosindigenous-groups-are-getting-their-own-telecoms. Sinico, Sean. 2009. “Seacom Project to Increase Affordable Internet Access in Africa.” Deutsche Welle, 22 July. http://www.dw.com/en/seacomproject-to-increase-affordable-internet-access-in-africa/a-4507743. Southwood, R. 2016. “Kenya’s Low Cost Data Operator Poa! Internet Moves from Soft Launch in Kibera to Hard Launch and Will Roll Out Nationally and in East Africa.” http://www.balancingact-africa.com/ news/telecoms-en/38380/t-kenyas-low-cost-data-operator-poa-

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internet-moves-from-soft-launch-in-kibera-to-hard-launch-and-will-rollout-nationally-and-in-east-africaop-story. TechCentral. 2017. “Icasa Defers Spectrum Auction Indefinitely.” February 17, 2017. https://techcentral.co.za/icasa-defers-spectrumauction-indefinitely/71904. TeleGeography. 2013. “I N CM to Offer 800 MHz Frequencies in Jun-13 Auction.” https://www.telegeography.com/products/commsupdate/­ articles/2013/03/18/incm-to-offer-800mhz-frequencies-in-jun-13auction. Ugwu, P. 2014. “Bitflux Wins 2.3 G Hz Spectrum Auction with $23.1m.” Nigeria Communications Week, 19 February. https://nigeria communicationsweek.com.ng/bitflux-wins-2-3-ghz-spectrumauction-with-23-1m. Venktess, Kyle. 2016. “Joburg Promises Free Wi-Fi for ‘All Residents.’” Fin24 Tech, 22 August. http://www.fin24.com/Tech/News/joburgpromises-free-wi-fi-for-all-residents-20160822. Wanjiku, Rebecca. 2014. “Kenya’s Regulator Starts Spectrum Sale.” TechAdvisor, 18 December. http://www.techadvisor.co.uk/feature/­ network-wifi/kenyas-regulator-starts-spectrum-sale-3591601.

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4 Wireless Carriers Competing? Canadian Mobile Policy, 2006–17 Benjamin Klass

1   In t ro du cti on This chapter explores the question of whether Canada’s spectrum policy has succeeded in promoting access to mobile telecommunications for all Canadians.1 It focuses on the years from 2006 to 2017, when Canada’s federal government was attempting to use spectrum policy to increase competition in the mobile telecommunications market. The Canadian experience shows that, while spectrum policy is a key part of the toolkit for increasing competition in mobile markets, on its own it has been insufficient to address the problems associated with Canada’s industry. Although the industry saw substantial economic success, a disappointingly low level of mobile service adoption persisted, due in large part to the high prices and restrictive terms and conditions of service on offer from a largely unregulated oligopoly comprising large incumbent firms. If equitable outcomes are to be achieved by communication policy, ones that reflect the interests of all stakeholders, not just industry players but consumers and the general public as well, coordinated and consistent efforts on the part of policy-makers and regulators will be required. This chapter is structured as follows. First, the relevant policy and regulatory actors are identified, along with the legislative instruments from which their authority is derived; this includes a discussion of policy motivations and objectives. Second, facts concerning the structure of the mobile industry are presented. These include data on the industry’s economic performance, adoption figures, and ownership concentration or market structure. The chapter then discusses and

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assesses the policy approaches applied to the Canadian market. While many of the facts and circumstances examined below are unique to the Canadian case, there are nevertheless lessons of broader application to be gleaned. These lessons can be useful for understanding how to develop and improve effective communication policy, at the very least by learning from the mistakes made by the Canadian government. To put a finer point on it: Canada’s mobile policy from 2006 to 2017 failed in its stated objective of ensuring that all citizens have affordable access to mobile services. It is my hope that learning about this failure will help policy-makers in other similarly situated countries avoid the obstacles over which Canada has stumbled.

2   P o l icy B ackground Unlike the situation in many countries, jurisdiction over the telecommunications industry in Canada is split between two regulators. The Ministry of Innovation, Science and Economic Development (I S E D and its predecessor Industry Canada2) licenses spectrum to mobile network operators (M N O s) under the Radiocommunication Act (­Canada 1985)3 and provides some funding for rural broadband expansion. The Canadian Radio-television and Telecommunications Commission (CRTC) is the federal quasi-judicial administrative tribunal (sometimes called an “administrative agency,” “commission,” or simply “regulator”) that regulates the telecommunications industry under authority of the Telecommunications Act.4 Although they share jurisdiction over the same industry, the CRTC’s oversight authority is legislatively distinct from the powers and role of ISED. The CRTC is involved with the operations of MNOs and other telecommunications service providers on a more fine-grained level than ISED, operating in furtherance of nine policy objectives enumerated in the Telecommunications Act (Canada 1993, Section 7). These objectives include developing a telecommunications system to “safeguard, enrich and strengthen the social and economic fabric of Canada and its regions” and ensuring that high-quality, reliable, and affordable services are available in all urban and rural parts of the country. The provision of telecommunications services is to rely on market forces where possible, and when needed, regulation is to be efficient and effective. In 2005, the Minister of Industry struck a committee with a broad mandate to review Canada’s telecommunications policy. In March 2006, after a year of consultation, the Telecommunications Policy

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Review Panel (T P R P ) delivered its final report to the newly elected Conservative government of Stephen Harper (Telecommunications Policy Review Panel 2006). The report was intended to provide the government with expert advice on how to modernize Canada’s telecommunications policy, with an eye to ensuring that the domestic telecommunications industry is internationally competitive and that policies produce social and economic benefits. Almost 400 pages in length, the influential report was widely received as a call for government to embrace a laissez-faire approach to telecoms policy. The report placed a heavy emphasis on market mechanisms – competitiveness, efficiency, innovation, and so on – as the preferred means to achieving legislative policy goals, and thus it did not diverge substantially from the rhetorical thrust of several decades of telecom reform. Indeed, then–Industry Minister Maxime Bernier wasted little time acting in pursuit of the quixotic ideal that the state ought to minimize its involvement in coordinating the terms on which telecommunications markets operate (Mosco 1988). For the first time since the prevailing legislation (1993 Telecommunications Act, Canada 1993) was enacted, an industry minister was exercising his statutory prerogative to influence the independent regulator’s policy approach. The “Bernier directive” went into force in late 2006, directing the CRTC to “rely on market forces to the maximum extent feasible” and “when relying on regulation, [to] use measures that are efficient and proportionate to their purpose and that interfere with the operation of competitive market forces to the minimum extent necessary” (Privy Council 2006). Other recommendations from the T P R P , including revisions to policy objectives outlined in the Telecommunications Act, extension of broadband coverage across the country, and the transfer of spectrum regulation duties from Industry Canada to the C R T C , were not implemented. Thus, through its continuing role as spectrum regulator, Industry Canada and now I S E D maintains a strong and ongoing influence over the structure of the market, guided by a single policy principle, established in 2007, that is as concise as it is broad: “to maximize the economic and social benefits that Canadians derive from the use of the radio frequency spectrum resource” (Industry Canada 2007b). Spectrum management has long been an important file, and as the mobile sector has grown in relative importance, so has the public profile for actions that affect the terms under which it operates. I S E D has consistently sought to use spectrum policy to expand

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the number of firms operating in the market in order to address perceived shortcomings in affordability and competitiveness of the Canadian mobile industry. This approach has sometimes been controversial, as we will see. In contrast to Industry Canada and ISED, the CRTC’s involvement in the mobile segment was negligible for many years. Between 1994 and 1996, the C R T C unconditionally forbore from exercising its regulatory powers over MNOs. It only began to recognize and address problems beginning in 2009, when its approach to assessing the eligibility of M N O s to operate in accordance with Canada’s foreign ownership restrictions came into conflict with actions taken by Industry Canada (regarding Wind Mobile, see Elder 2012). Since that time, however, the C R T C has become increasingly intent on tackling issues related to vertical integration and market concentration. The C R T C is bound by the 2006 policy directive, which offered a loud and clear message: cut the red tape, then throw away the scissors. According to a 2017 report by Masse and Beaudry, both of whom were policy advisers to Bernier at the time of the order, “for a while, it seemed like the message stuck. The C R T C took the principles of the Policy Direction seriously” (Masse and Beaudry 2017, 29). But while the directive’s intent was clear, its results have been mixed. In 2017, Masse and Beaudry expressed disappointment that “today, the C R T C too often merely pays lip service to the principles of the Policy Direction, and has largely gone back to its old interventionist ways” (Masse and Beaudry 2017, 31). And they are not alone. There is no shortage of voices calling for government to give up on regulation and vacate the field to make way for “market forces.” But terms such as “market forces,” “maximum extent feasible,” and “minimum extent necessary” do not lend themselves to a priori definition. They are constantly being interpreted in light of changing facts and circumstances. The reality is that the relationship between state, industry, and civil society rarely, if ever, boils down to a binary choice between whether to regulate or not. As Salter observed a decade before the height of the deregulatory fervour, “regulatory change is far more complex than the term “deregulation” suggests … The administrative functions associated with regulation are not being abandoned so much as they are being reconstituted with different priorities and roles for their key participants” (Salter and Salter 1997, 68). The recent history of Canadian mobile policy provides fertile ground for examining the dynamics that have led to the disconnect between

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policy and outcome described above. The following section examines developments in the Canadian mobile market during the years after the Bernier directive came into force. Tracing the contours of this evolution casts light on how and why decision-makers’ understanding of their role has shifted from one in which regulation takes a back seat to “market forces” to one in which structured regulation is seen as necessary for achieving successful policy outcomes.

3   T h e M o b il e In du s try i n Canada The number of mobile subscriptions in Canada increased from roughly 20 million in 2006 to 30.4 million at the end of 2016. In terms of subscriptions per 100 residents – a number referred to as “mobile penetration” – there were roughly 57 subscriptions per 100 residents in 2006 and 84 per 100 in 2016 (C R T C 2017a). In economic terms, healthy demand for mobile data services drove a boom in the sector: revenues almost doubled over those ten years, from $12.7 billion in 2006 to over $23 billion in 2016, significantly outpacing the growth in subscribers (C R T C 2007; 2017a). The mobile sector’s growth has been such that it is now the single largest source of revenue for the Canadian communications industry. It accounts for more than half of all telecommunications revenues and on its own generates more revenue than the entire broadcasting sector (CRT C 2017a). During this period, mobile carriers large and small participated in several major spectrum auctions (discussed at greater length below) that enabled the near-ubiquitous deployment of next-generation mobile broadband networks. First, carriers collectively spent $4.3 billion at the 2007–8 auction of A WS (advanced wireless services) frequencies, which were put to use upgrading existing voice- and text-centric networks to support third-generation (3G ) broadband protocols and for new 4G services (Industry Canada 2008). In 2014, $5.3 billion was spent on low-band 700 M H z spectrum repurposed from the broadcasting sector, providing the additional resources necessary for mobile companies to further upgrade their networks and extend 4G L T E (long-term evolution) coverage to their subscribers (Industry Canada 2014). L T E has become the industry standard, covering roughly 98 percent of Canada’s population in 2016 (CRT C 2017a) and supporting a wide range of bandwidth-intensive applications, including social networking, shopping, banking, and audiovisual entertainment (C R T C 2017a, Figure 5.5.16).

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This growth may seem impressive and the changes drastic, but they tend to overshadow the mobile industry’s persistent shortcomings. If adoption of mobile services is a metric of success,5 then the truth is that there has been nowhere to go but up – in 2006, among the thirtyfour OECD member countries, Canadian mobile penetration was the second-lowest (next to Mexico). This unfortunate trend has continued through the transition from networks centred on carrying traffic in the form of voice and text to the more general-purpose broadband networks that are common today. For 2016, the OECD reported that Canada was in twenty-seventh place for overall mobile broadband penetration, or twenty-third among the thirty-three countries that reported figures for “standard” mobile broadband penetration – the voice and data plans that correlate closely with smartphone adoption. On each measure, Canada is last among G 7 nations (O E CD 2017). Well-off families almost universally avail themselves of mobile service; low- and middle-income households are substantially less likely to subscribe to mobile services and pay relatively more of their income when they do (C R T C 2017a). Comparatively high prices by international standards and service quality issues have consistently stood out as points of frustration, not just for consumers but for policy-makers as well. Canada is among the most expensive of the G 7 countries for mobile plans that include data (Nordicity 2016; 2017), and more than half of all complaints received by the telecommunications industry ombudsman relate specifically to a wide range of mobile service issues such as incorrectly billed charges, one-time fees, contract disputes, and overall service pricing (C C T S 2016; 2017). At the root of problems such as low adoption, high prices, and service issues lies another seemingly unchanging factor – Canada’s mobile industry remains highly concentrated. The industry is controlled by three national firms – Rogers Communications, Bell Canada Enterprises (BCE), and Telus. In 2006, these firms collectively accounted for 95 percent of all mobile wireless revenues and 94 percent of subscribers (C R T C 2007). At the end of 2016, despite efforts by policy-makers to increase competition (discussed below), the three national carriers’ market share remained stubbornly high, at roughly 91 percent of revenues and 89 percent of subscribers. By standard economic measures, the wireless market in Canada is highly concentrated – astonishingly so, according to several prominent scholars in the field (Winseck 2016; Noam 2016).

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The oligopolistic character of Canada’s mobile wireless market has not escaped the notice of federal policy-makers. Indeed, concerns about the state of competition in the wireless sector and the problems that have resulted from oligopoly behaviour have driven numerous major actions taken by ISED and the CRTC in the wireless sector over the past decade. In what follows, these actions are outlined and their effectiveness is assessed.

4   T ru s t U s : In du stry Canada a n d “ R e l ia n c e o n M arket Forces ” Industry Canada’s 2007 “Spectrum Policy Framework for Canada” guides spectrum licensing for Canadian radiocommunication service providers, including mobile network operators. As Taylor (2013) has noted, this framework is heavy on rhetoric and light on substance, in that it has reduced the explicit goals of spectrum policy from seven to one, which “sets as the government’s primary goal to maximize the economic and social benefits that Canadians derive from the use of the radio frequency spectrum resource.” The evolving way in which this high-minded but ambiguous goal has been interpreted by subsequent ministers has had a significant impact on Canadian wireless policy approaches over the past ten years, as the following section demonstrates. Maxime Bernier was replaced as industry minister by fellow Conservative Jim Prentice in 2007. In November 2007, when Prentice announced the details of the upcoming “advanced wireless services” (A WS) spectrum auction, it was immediately clear that his administration’s interpretation of what it meant to “rely on market forces” differed from that of his predecessor. Recognizing that “recent studies comparing international pricing of wireless services show Canadian consumers and businesses pay more for many of these services than people in other countries,” Prentice declared his motivation directly: “we are looking for greater competition in the market and further innovation in the industry” (Prentice 2007). That goal was similar to a previous government attempt to introduce competition in the mid-1990s, although this time a “market mechanism” (i.e., an auction, rather than licensing by comparative assessment) was the chosen method. To address the entrenched market power of the incumbent oligopoly, Industry Canada established a 40 M H z “spectrum setaside” that prevented incumbents from bidding on certain blocks of

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spectrum; it also exercised regulatory authority by attaching conditions to the spectrum licences, requiring the national providers to provide roaming and access to cell towers on “commercial terms” to “new entrants” (Industry Canada 2007a). In taking an active hand in structuring the auction’s outcome, Prentice had already differentiated his approach from Bernier’s more laissez-faire one. The federal government was tacitly acknowledging that wireless markets, absent state intervention, tend to levels of ownership concentration that are inimical to the goal of ensuring universal access to high-quality, modern telecommunications. Several new firms acquired spectrum licences in this AW S auction, which was completed in 2008. The “new entrants” comprised a mosaic of different types of firms, some of which were already established in other sectors of the communications services industry (e.g., Québec cable conglomerate Vidéotron and Atlantic Canada’s diversified conglomerate Bragg), and some that were totally new (e.g., Wind Mobile, Mobilicity). These new players were mostly regional; only one was “national” (Wind Mobile). Also, some were larger corporate entities while others were smaller niche players.6 At the time, the auction was viewed as a success by industry observers, and it served to legitimize the government’s “consumer friendly” search for more competition. Numerous challengers had appeared to take on the incumbent providers, and hopes were high that the oligopoly’s position would begin to erode (Mobile Syrup 2008). However, the new competitors were plagued with setbacks from the start. Regional cable operator Shaw never deployed a mobile network despite winning licences,7 and Public Mobile was unable to offer upto-date handset equipment due to a lack of devices compatible with the spectrum it had acquired. Mobilicity was slow to launch and had highly limited coverage to boot. Wind’s connection to foreign capital became the subject of substantial friction between Industry Canada, which endorsed Wind’s entry into the market (Globalive Wireless Management Corp. 2009), and the C R T C , which made a contradictory finding in 2009 that Wind was ineligible to operate under the foreign ownership restrictions in the Telecommunications Act (C R T C 2009). Over the next few years, Wind became a lightning rod for reform, not only of Canada’s internationally unique restrictions on foreign ownership in the telecom market, but of the regulatory approach to wholesale relationships among M N O s more generally (Sturgeon 2012; Paré 2012).

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This conflict between the CRTC and Industry Canada over whether the new entrant Wind would be eligible to operate was ended when Industry Minister Tony Clement issued a variance of the CRTC’s decision (Privy Council 2009) – his prerogative as minister. This episode placed the confrontational and contested nature of telecoms markets, and of regulation of those markets, on full public display. CRTC chairman Konrad von Finckenstein remarked that “it no longer makes sense to have a single regulator for wireline service providers, but two different civil regulators for wireless service providers. More to the point, the lack of regulatory coherence is an obstacle to innovation and competition, and makes it difficult to maximize economic and social benefits for Canadians” (as quoted in O’Brien, 2010). The conflict highlighted the challenge of coordinating regulatory action across two agencies (a challenge that has yet to be overcome); it also had the more immediate effect of exposing what some view as the counterproductive character of Canada’s stringent restrictions on foreign ownership in telecoms. Even after the restrictions were loosened in 2012 to allow small firms (i.e., those that control less than 10 percent of national telecommunications market revenues) to be completely foreign-owned (Canada 2012), the legacy of Canada’s “closed-door” policy on foreign ownership persisted: as of 2017, the entire Canadian mobile market was controlled by M N O s operating under the umbrella of existing Canadian incumbent telephone or cable T V conglomerates. Another variance from Clement in 2011 – this time in the surprising form of a tweet8 responding to public opposition to a new CRTC ruling that would have forced independent I S P s in Canada to adopt monthly data caps for fixed broadband services – signalled the beginning of an overall shift in approach for the federal government and the CRTC, away from a reluctance to regulate toward a more engaged and proactive stance. By this time, mobile services occupied a central place in communications systems in Canada (and elsewhere), and the reinvigorated attention on the part of policy-makers reflected recognition of this fact as well as a changing perspective on the role of “market forces” in the wireless sector (and beyond). This series of events represented a turning point in the government’s general approach to telecommunications policy; it would result in a new, more clearly consumer-oriented direction for the C R T C as well. Policy-makers, when acceding to industry preferences for “light touch” regulation, expect in exchange that the industry will be able to “deliver the goods,” which in the case of mobile means

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competitively priced access to increasingly important modern communication technologies for citizens, delivered by a competitive, efficient, and innovative industry. Under the light touch approach, Canadian MNOs have been successful in economic and technological terms. For the most part they have made the large necessary investments in modern plant and equipment and have done so in a timely and highly profitable fashion, as documented in their corporate annual reports. On the measure of affordability, however, the operators have fallen short, as repeatedly attested to not only by government statements but also by ongoing public sentiment to that effect.9 In other words, left to their own devices, Canadian MNOs have maintained oligopoly pricing, which presents a policy problem for a government committed to ensuring universal access to modern telecommunications services. The persistent pricing problems associated with the deregulatory or self-regulatory model represented by the 2006 policy direction have led the Canadian government to move away from the “hands off” approach toward a more interventionist stance, as described below. Although the 2006 Policy Direction remains in force, under Tony Clement’s leadership (from 2008 to 2011) Industry Canada did an about face, taking a more “populist” interpretation of the Direction. Erik Waddell, former senior policy adviser to Clement, described this position as “a pro-consumer, pro-competition agenda that more and more has led to direct market intervention” (Waddell 2013). In 2013, Industry Canada became explicitly concerned that its efforts to spur increased competition in the mobile sector, limited thus far to engineering market entry through spectrum auctions, were faltering. In April, then–Industry Minister Christian Paradis intimated that the government would deny a proposed transfer/sale of Shaw’s unused spectrum licences to incumbent MNO Rogers, effectively scuppering the deal and signalling recognition of the need for increased support of the floundering entrants it had created in 2008 (Ljunggren 2013). Several months later, Paradis announced amendments to Industry Canada’s “Spectrum Licence Transfer Framework,” making official the policy of opposing further market concentration (Industry Canada 2013a). At the same time, the minister sent another clear signal to the industry when he refused to allow Telus to take over the struggling new entrant Mobilicity, stating forcefully that “I will not hesitate to use any and every tool at my disposal to support greater competition in the market” (as quoted in Acharya-Tom Yew 2013).

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Canada’s 700 MHz auction was announced in March 2013 after a lengthy consultation process that had begun in 2010 (Canadian Spectrum Policy Research 2014). Expectations were high among the public that a foreign firm might enter the market and shake up the oligopoly status quo. The federal government had helped fuel these hopes by publicly endorsing a pro-competition policy that explicitly sought to bring a “fourth carrier” to every region of the country by once again limiting the amount of spectrum that incumbent firms could purchase (Industry Canada 2013b). During the lead-up to the auction, the national press reported that Verizon, the large American telecommunications firm, was considering entering the Canadian wireless market by bidding for 700 M H z licences and possibly acquiring AWS new entrant Wind Mobile (Chase, Erman, and Trichur 2013). The incumbents, fearing that a well-capitalized entry by Verizon could spur price competition, launched a wide-ranging, pre-emptive public relations campaign against the “foreign giant.” The incumbents were openly and directly critical of the government’s policy, arguing that Canada’s “precious resources” should not be put under foreign ownership and control and that Canadians should support home-grown industry and not “special treatment” for foreign corporations (Klass 2013b). Not surprisingly, the public reaction to the industry’s histrionics was less than sympathetic (O’Neil 2013), and numerous industry observers criticized the incumbent’s claims as inaccurate, self-serving, and hypocritical (Geist 2013, Klass 2013a). When James Moore was shuffled into the role of industry minister in July 2013, he immediately took up the pro-consumer pro-competition mantle and ran a media campaign to counter the wireless carriers’ own (Dobby 2013a). Moore’s P R campaign revolved around the promise of a fourth wireless carrier and “lower prices, better service, and more choice,” reflecting very closely the approach taken in 2008 as well as those of the 1990s (Industry Canada n.d.). The ensuing standoff made one thing very clear: self-regulation by “market forces” comprising a three-firm national oligopoly would not, as far as government was now concerned, be sufficient to meet the policy objectives. Going forward, the government would be prepared to take concrete measures to address the incumbents’ market power. Spectrum policy, as the primary lever available to Industry Canada, was once again the chosen mechanism. However, it proved ineffective when the 700 MHz auction’s result in January 2014 saw no new firms

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enter the market. Broader measures were, however, already in the offing. The focus shifted to regulatory action as a necessary component of successful policy outcomes in the face of spectrum policy’s failure as a stand-alone option.

5  T h e C R T C S t e p s In : S oci al Regulati on Despite industry consolidation, rising prices, and the growing importance of mobile services in the Canadian communication system, the C R TC has historically taken a passive approach toward the wireless sector. Between 2000 and 2008, few public consultations were held and only one major decision was issued regarding mobile networks.10 In 2010, the C R T C modified its forbearance framework to reassert regulatory authority over mobile wireless data services, authority that had previously only applied to voice (CRTC 2010). This decision was important for two reasons. First, it confirmed that MNOs must abide by net neutrality rules, and second, it marked the first time that the C R T C explicitly re-engaged powers it had forborne with regard to mobile, thus setting the stage for further engagement in the coming years. However, the regulator remained passive until 2012. Following Industry Canada’s shift in approach, the CRTC was positioned to take a more active role, oriented toward protecting consumers and promoting fair competition in the face of a persistently oligopolistic industry (Lawford and White 2014). Shortly after Jean-Pierre Blais assumed leadership of the CRTC in 2012, the commission initiated a consultation “to establish a mandatory code for mobile wireless services” (CRTC 2012a) in response to an earlier finding that the mobile market was not competitive enough to protect consumers from excessively long contracts and “bill shock” (i.e., unexpected overage fees). The consultation resulted in the establishment in 2013 of a “Wireless Code of Conduct” that addressed consumer issues such as contract length, termination fees, locking of devices, and roaming fees (CRTC 2013c). The Wireless Code was a response to a market failure, designed to ensure that service offerings would meet the needs and expectations of the public. In the media, it was received as a consumer-friendly move (CBC News 2013), although its establishment in part represented an effort by the wireless firms to steer regulatory developments into an arena more receptive to industry influence than the provincial legislatures, which had begun to develop their own regulatory codes in response to public pressure (Trichur 2012).

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The Wireless Code can be seen as the inauguration of a more active stance by the C R T C in mobile affairs. However, it is equally true that the move served to legitimize the government’s “consumer friendly” approach, while also protecting the industry from potentially stricter provincial regulation. Shepherd and Middleton (2013) note that the proceeding served to legitimize a neoliberal discourse about markets and consumer agency, leaving more fundamental issues such as competition, affordability, and broader social goals off the table. Indeed, the Wireless Code (released in June 2013; effective as of 2 December 2013; reviewed and updated in 2017; CRTC 2017b) has proven to be no panacea for consumer problems in the wireless market (in fact, prices rose following the implementation of the Code; Fan 2013). Instead, it only marked the beginning of a period of increased regulatory involvement in the Canadian mobile market.

6   T h e C R T C : E c o n o m i c Regulati on At the end of August 2013, the C R T C announced it would be undertaking a fact-finding exercise after having “been made aware of concerns with respect to the rates, terms, and conditions associated with wireless roaming” (in Canada) by consumer groups the Public Interest Advocacy Centre and OpenMedia (C R T C 2013a). The industry’s response to the regulator’s inquiry revealed real anxiety that the CRTC was preparing to regulate roaming rates, an outcome that incumbents feared might undermine their market position (Bell Canada Enterprises 2013). These suspicions were well founded: roaming was targeted for attention in the October throne speech (Government of Canada 2013), and in December the C R T C announced that its investigation would result in regulatory proceedings to consider whether roaming regulation should be implemented, and if so, how (CRT C 2013b). The CRTC was particularly concerned that “some Canadian wireless carriers are charging or proposing to charge significantly higher rates in their wholesale roaming arrangements with other Canadian carriers than in their arrangements with U.S.-based carriers.” In effect, the C R TC was raising the red flag concerning anti-competitive practices targeted at new entrants by incumbent firms. Initially, the regulator concluded that the rates incumbents were charging to smaller competitors were in fact discriminatory, and that the exclusive contracts that were the norm were discriminatory and would be prohibited (C R T C 2014a). As a result of this finding,

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the C R T C extended its consultation to consider rate regulation of roaming (C R T C 2014b). Shortly afterward, Parliament took the unprecedented step of introducing temporary rate regulation directly into the Telecommunications Act itself (Canada 2014),11 all but guaranteeing the C R T C would ultimately regulate roaming rates. Together these factors signalled a change in approach for the C R T C . Its previous laissez-faire stance toward wireless was being revised – for the first time since the 1993 Telecommunications Act came into force, there was serious consideration of subjecting wireless services to economic regulation. The C RT C ’s “review of wholesale mobile wireless service” focused on three main issues: whether and how to regulate roaming services, possibilities for regulating the sharing of cellphone towers, and “other” wireless services, which referred to whether the commission should mandate wholesale access for resellers known as mobile virtual network operators (MV NOs) (C R T C 2014b). The review was broad in scope and involved all of Canada’s wireless carriers. It comprised several rounds of interventions, several written question-and-answer periods (known as “interrogatories”) between the CRTC, carriers, and other interveners, and an oral public hearing. Numerous independent parties intervened, including the Competition Bureau, the Canadian Network Operators Consortium (C N O C, a trade group representing independent ISPs, mainly resellers), the French telecom giant Orange, several public interest advocacy groups, equipment manufacturers, municipal governments, and individuals (the author included). A decision in the matter was issued in May 2015 (C R T C 2015), wherein the C R T C opted to regulate wholesale rates for roaming but stopped short of opening the market to resale as it has in the wireline sector. That the commission stopped short of endorsing the “mobile virtual network operator” or MV NO resale model is worthy of note: while few regulators internationally mandate M N O s to offer service to resellers, many O E C D nations have a healthy number of M VN O s in the market (OECD 2014). In Canada, by contrast, MVNO competition is virtually non-existent. The CRTC’s hesitance to mandate access to MVNOs therefore highlights the limits of the regulatory action, and the restraining inertia of the prevailing “hands off” model, even on regulatory action in the face of a highly concentrated market. Nevertheless, the commission’s roaming framework, and its establishment of an industry code of conduct, together represent a departure from the previous twenty years of wireless forbearance, as well as a

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milestone in the federal government’s approach to mobile telecommunications regulation. Faced with Industry Canada’s recognition that spectrum management alone was insufficient to achieve policy objectives, the C R T C recognized, for the first time, that “wholesale roaming is not subject to a sufficient level of competition” and pushed back against concentrated corporate power by enacting regulations to remedy the problem (C R T C 2015). By reversing its long-standing position of forbearance from economic regulation of certain aspects of the wireless industry, the CRTC had reconstituted what it means to “rely on market forces” in wireless policy. To be clear, any single decision that invokes greater regulation will not magically conjure competitors capable of swiftly eroding the current oligopoly, but nor will it necessarily harm the incumbent firms, for which profits continue to increase and which continue to invest at historical levels. The C R T C ’s decision to regulate wholesale services was intended to contribute to a more functional market, with better outcomes for consumers, but it will not be a panacea. Time will tell what comes of this decision, but at the time it was clear that the federal government had broken from its historical inertia and had engaged with problems that had been brewing in the wireless market for a number of years. It may have taken several failed attempts, but Industry Canada/ISED’s attempts to increase the number of competitors through the use of spectrum licensing mechanisms were eventually recognized as insufficient as a stand-alone approach to solving Canada’s wireless woes. In order to address the persistent problems associated with marketplace competition in the mobile sector, action was required not just from the spectrum policy-maker but by the existing administrative tribunal as well. Overall, the approach amounts to one of actively fostering competition rather than passively encouraging it, and a form of economic regulation has had to be embraced to achieve this goal.

7   R e c e n t D e v e l opments The CRTC did not finalize the regulated rates for wholesale roaming access until 2018 (CRTC 2018). The regulatory framework came too late to help the firms that needed it most – the independent mobile carriers Mobilicity and Wind.12 Between 2014 and 2017, the mobile industry in Canada underwent a wave of consolidation that further entrenched the national carriers’ collective position of market power,

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demonstrating that market power may not be as transitory as often assumed by Schumpeterian economists. By 2016, all of the A W S entrants had failed outright or been acquired by incumbent firms (Bradshaw 2016). The federal government’s “fourth carrier policy” was (un)officially pronounced dead in 2017, when the federal Competition Bureau, now operating under the new Liberal government of Justin Trudeau, approved the sale of regional competitor MTS (Manitoba Telecom Services) to Bell with ISED’s blessing (Government of Canada 2017), despite finding that the national carriers collectively possess market power and have actively used that power to maintain monopoly pricing in populous provinces such as Ontario (Competition Bureau 2017). This string of transactions has sparked concerns that further consolidation is still to come – concerns that have not been assuaged by the Saskatchewan government’s recent decision to consider a partial sale of its publicly owned provincial telco Sasktel (Fekete 2017). Although three “new entrants” continue to operate – Vidéotron in Québec, Eastlink in Atlantic Canada and northwestern Ontario, and Shaw in Alberta, B C , and southern Ontario – their overall effect on marketplace outcomes remains limited in both geographic and economic terms, as reflected in the stubbornly high market share of the national firms. In addition, each of the remaining new entrants is also affiliated with a former cable monopoly, which lessens their potential to disrupt the existing state of affairs. While this relationship could be seen as a boon due to the entrants’ existing marketplace position and ready access to capital, it also comes with a host of problems associated with the highly concentrated state of the market, as well as the unique and potentially harmful behavioural incentives that are attached to firms that are vertically, horizontally, and/or diagonally integrated (Klass et al. 2016). As future initiatives are considered, policy-makers would do well to address them by first recognizing the root of the issue: persistent market concentration. Despite setbacks to ISED’s “fourth carrier” policy, however, there is little reason to believe that the recent wave of consolidation signals a return to the laissez-faire approach represented by the 2006 policy direction. Neither ISED nor the CRTC has ceased “rel[ying] on market forces” when addressing communications policy objectives; instead they have demonstrated that their understanding of what “market forces” means and the extent to which carriers are allowed to operate independently can change along with social, political, and historical facts and circumstances. Each has demonstrated this propensity in its own way.

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I S E D Minister Navdeep Bains and the Liberal government under Justin Trudeau remain committed to a course of action that involves an ongoing and active relationship between state, industry, and civil society, at least rhetorically. In other words, the federal cabinet’s failure to achieve increased competition in the national wireless market has not resulted in the state’s withdrawal from the field of communications policy and regulation, but has instead brought about a shift in the way it understands and approaches the problems that lie before it. Nowhere is this more evident than at the CRTC, which over the past decade has made significant strides by simply recognizing that it has a role to play in coordinating the terms on which markets operate.

8   Im p l ic at i ons This chapter set out to provide input into the policy and regulatory debates on how to stimulate development in communication markets and how to achieve progressive policy goals such as universal service for modern telecommunication services. The facts and circumstances surrounding the events described are specific to the Canadian situation; however, there are lessons of general relevance to policy-making in the mobile area. The first and more general idea demonstrated by the Canadian situation is that spectrum policy, in isolation from coordination with other policy and regulatory initiatives, will likely prove to be an ineffective mechanism for attaining competitive outcomes that reflect broad public interest objectives such as universal service. Using spectrum to induce entry into markets that are perceived as oligopolistic or otherwise competitively lacking will not be effective without continuing support for the entrants through more specific ongoing regulatory and policy provisions. To be sure, access to spectrum is a threshold barrier to entry in mobile industries everywhere, but it is far from the only barrier. As explained in other chapters in this book, there are other approaches to facilitating market entry that require less capital investment – for instance, by allowing M VN O s to enter the market (see Doyle et al., Chapter 10, and Mariscal, Chapter 5). As discussed by Joyce in Chapter 1, a combination of financial support, investment from foreign partners, and spectrum set-aside facilitated entry of a new competitor in the New Zealand market. During the first half of the period surveyed (2006–17), Canada’s policy approach to the mobile industry was limited to encouraging

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entry through spectrum set-asides. The government’s policy preference for a “hands off” approach effectively precluded involvement by the regulator, even after it had become apparent that the entrants were struggling in the absence of more direct intervention. It took several years before the government realized that its “if you auction it, they will build” approach had severe limitations. It was only after the policy failure was apparent that foreign ownership rules were loosened and social and economic regulation was engaged, and by that time, several of the entrants had already failed. The lesson to be drawn here is that successful policy demands coordination between relevant authorities and stakeholders. Although Canada’s division of responsibility between spectrum and operational oversight may be unique among comparable countries, conflicts of a similar kind might arise elsewhere, for instance in the context of the federal relationship between E U member-states’ national regulators and the European Commission. It is imperative that policy formation and implementation take place in a coherent and harmonious manner that includes all relevant authorities. To do otherwise, as the Canadian case has shown, is akin to fighting with one arm tied behind your back. The second lesson that can be observed is that liberalization policies do not automatically result in the dissolution of firmly entrenched incumbents. Despite more than thirty years of liberalization policy in the Canadian mobile industry, the market remains dominated by an oligopoly comprising erstwhile telephone and cable television monopolies. Oligopoly behaviour – restricted supply, supra-competitive pricing – stands as an intransigent obstacle on the road to universal service. Successive efforts to introduce new competition by doling out spectrum to new entrants, whether via comparative assessment or by auction, have failed to make a significant dent in the incumbents’ hold on this lucrative market. While traditional monopoly regulation, with its cumbersome requirement for across-the-board tariff approval, remains inappropriate, the trend toward outright forbearance of industry regulation has not “delivered the goods” in terms of ensuring universal access to modern telecommunications. Successful policy and regulation must confront this reality and adjust accordingly. Competition is a means to an end, and, if it is found to be lacking, concerted effort must be made either to shore it up or to explore alternative avenues to the same outcome. Confronting persistent problems of market power requires the state to play an ongoing role in the marketplace if social and economic policy goals are to be

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achieved. In Canada, this has taken the form of wholesale rate regulation and the establishment of standards for retail service terms. In other places, it has involved the establishment of wholesale-only networks accessible to competitors, as had been done in Mexico (see Chapter 5), and other options for distributing spectrum are being explored (see Doyle et al.’s discussion of MVNO options in Chapter 10). Each of these approaches involves, first a recognition of the threshold issue: incumbent control of mobile markets as a substantial barrier to entry and obstacle to policy success.

N otes   1 This chapter draws in part on the author’s thesis paper, submitted in partial fulfilment of the requirements of the Master of Arts program at the University of Manitoba in 2015 (Klass 2015).   2 Industry Canada was renamed Innovation, Science, and Economic Development by Prime Minister Trudeau in 2015.  3 I S E D also houses a small telecommunications policy branch, and has some oversight of the CRTC via the Telecommunications Act and the Competition Bureau via the Competition Act, among many other areas.  4 The C R T C is also responsible for regulating broadcasting, and in this capacity it is supervised by and reports to the Minister of Heritage. While the commission is typically referred to as an “arm’s-length regulator,” it often escapes mention that this arm occasionally touches matters involving analysis of both telecommunications and broadcasting policy. Those occasions are becoming increasingly frequent as the Internet blurs lines that had developed around separate purpose-built technologies for voice and audiovisual communication.   5 Mobile penetration is not an exact proxy for adoption, due to practices such as people who carry two mobiles, or in some cases MNOs reporting machine or business-to-business S I M connections together with retail ­subscribers in their financial reporting. These difficulties in comparison appear to be diminishing, however, as mobile broadband plans that include voice, text, and data are becoming the norm, and as nations in North America and Europe move to reduce or eliminate roaming fees. For more information, see International Telecommunication Union (2016) and Sutherland (2009).   6 The successful bidders were Shaw Communications (western Canada’s incumbent cable provider), Bragg Communications (operating as Eastlink,

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the Maritimes’ incumbent cable provider); Vidéotron (the telecom branch of media company Québecor Inc., operating in Quebec and the National Capital Region); Public Mobile (an independent operator); Globalive Wireless (operating as Wind Mobile, an independent with ties to Egyptian telecom provider Orascom); and Data and Audio-Visual Enterprises, or D A V E, operating as Mobilicity, another independent provider.   7 Shaw did eventually enter the market by acquiring Wind Mobile in 2016, which it subsequently rebranded Freedom Mobile.   8 For more information on Clement’s famous tweet, see Klass (2015).   9 On this point, see the record of the CRTC’s 2013 consultation to develop the Wireless Code of Conduct (CRTC 2012b). 10 It concerned the implementation of wireless number portability, which mandates that customers who switch providers can retain their existing wireless phone number (CRTC 2005). 11 The changes capped the wholesale roaming rates carriers charge one another at no greater than the average retail wireless rates they charge their own customers. The amendments also included provisions that encouraged the CRTC to establish its own regulatory framework, which would supersede the legislated rates once it came into effect. 12 Public Mobile was sold to Telus at the end of 2013, before the C R TC had begun its proceeding. At the time, Industry Canada and the federal Competition Bureau both blessed the deal, citing Public’s obvious limited potential for impact on the market. For more information, see Dobby (2013b).

r efer e nc e s Acharya-Tom Yew, Madhavi. 2013. “Telus-Mobilicity cellular deal blocked by Ottawa.” Toronto Star, 4 June. http://www.thestar.com/­ business/2013/06/04/mobility_cant_transfer_spectrum_to_telus_­ government_says.html. Bell Canada Enterprises. 2013. “Re: Request for information – Wireless roaming – Responses, pp. 2–6.” http://www.crtc.gc.ca/public/otf/2013/ 8620/c12-201312082/1981456.PDF. Bradshaw, James. 2016. “Shaw enters wireless market with closing of Wind Mobile deal.” Globe and Mail, 1 March, updated 16 May. http:// www.theglobeandmail.com/report-on-business/shaw-announces-closingof-wind-mobile-deal/article28983065. Canada. 1985. Radiocommunication Act, R.S.C., 1985, c. R-2. Ottawa: Minister of Justice.

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– 1993. Telecommunications Act, S.C. 1993, c. 38. Ottawa: Minister of Justice. – 2012. “Jobs, Growth and Long-term Prosperity – Economic Action Plan 2012.” http://www.budget.gc.ca/2012/plan/pdf/Plan2012-eng.pdf. – 2014. “Economic Action Plan 2014 Act, No. 1, SC 2014, c. 20 – An Act to implement certain provisions of the budget tabled in Parliament on February 11, 2014 and other measures.” Last modified 19 June 2014. http://www.parl.gc.ca/content/hoc/Bills/412/Government/C-31/C-31_4/ C-31_4.PDF. Canadian Spectrum Policy Research. 2014. “Canadian 700 MHz auction.” [Blog post.] http://canadianspectrumpolicyresearch.org/auctions/ canadian-700-mhz-auction. C B C News. 2013. “Wireless code gives customers new rights.” 2 December. http://www.cbc.ca/news/technology/wireless-code-givescustomers-newrights-1.2448037. C C T S (Commissioner for Complaints for Telecommunications Services). 2016. “Annual Report 2015–2016: Guidance in a Sea of Change.” Ottawa. – 2017. “Annual Report 2016-2017.” Ottawa. Chase, Steven, Boyd Erman, and Rita Trichur. 2013. “Verizon eyes wireless entry as Ottawa aims to salvage competition.” Globe and Mail, 17 June. http://www.theglobeandmail.com/report-on-business/verizon-eyes-­ wireless-entry-as-ottawa-aims-to-salvagecompetition/article12595163. Competition Bureau. 2017. “Competition Bureau statement regarding Bell’s acquisition of M TS .” Last modified 15 February. http://www.­ competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04200.html. C R T C (Canadian Radio-television and Telecommunications Commission). 2005. “Telecom Decision CRTC 2005-72: Implementation of wireless number portability.” http://www.crtc.gc.ca/eng/archive/2005/dt2005-72. htm. – 2007. “C RTC Telecommunications Monitoring Report: Status of Competition in Canadian Telecommunications Markets – Deployment/ Accessibility of Advanced Telecommunications Infrastructure and Services.” https://web.archive.org/web/20130601071516/https://crtc. gc.ca/eng/publications/reports/policymonitoring/2007/tmr2007.pdf – 2009. “Telecom Decision CRTC 2009-678: Review of Globalive Wireless Management Corp. under the Canadian ownership and control regime.” http://www.crtc.gc.ca/eng/archive/2009/2009-678.htm. – 2010. “Telecom Decision CRTC 2010-445: Modifications to forbearance framework for mobile wireless data services.” http://www.crtc. gc.ca/eng/archive/2010/2010-445.htm.

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– 2012a. “Telecom Decision CRTC 2012-556: Decision on whether the conditions in the mobile wireless market have changed sufficiently to warrant Commission intervention with respect to mobile wireless services.” http://www.crtc.gc.ca/eng/archive/2012/2012-556.htm. – 2012b. “ARCHI VED - Telecom Notice of Consultation C R TC 2012557.” 11 October. https://crtc.gc.ca/eng/archive/2012/2012-557.htm. – 2013a. “Letter: Request for information – Wireless roaming.” http:// www.crtc.gc.ca/eng/archive/2013/lt130830.htm#a1b. – 2013b. “Telecom Notice of Consultation C R TC 2013-685: Call for comments – Wholesale mobile wireless roaming in Canada – Unjust ­discrimination/undue preference.” http://crtc.gc.ca/eng/archive/2013/ 2013-685.htm. – 2013c. “Telecom Regulatory Policy CRTC 2013-271: The Wireless Code.” http://www.crtc.gc.ca/eng/archive/2013/2013-271.htm. – 2014a. “Telecom Decision CRTC 2014-398: Wholesale mobile wireless roaming in Canada – Unjust discrimination/undue preference.” http:// crtc.gc.ca/eng/archive/2014/2014-398.htm. – 2014b. “Telecom Notice of Consultation C R TC 2014-76: Review of wholesale mobile wireless services.” http://crtc.gc.ca/eng/archive/2014/ 2014-76.htm. – 2015. “Telecom Regulatory Policy CRTC 2015-177: Regulatory framework for wholesale mobile wireless services.” http://www.crtc.gc.ca/eng/ archive/2015/2015-177.htm. – 2017a. “Communications Monitoring Report.” Ottawa. – 2017b. “Telecom Regulatory Policy CR TC 2017-200: Review of the Wireless Code.” http://www.crtc.gc.ca/eng/archive/2017/2017-200.htm. – 2018. “Telecom Order CRTC 2018-99: Wholesale mobile wireless roaming service tariffs – Final rates.” https://crtc.gc.ca/eng/archive/ 2018/2018-99.htm. Dobby, Christine. 2013a. “James Moore to replace Christian Paradis as federal industry minister.” Financial Post. 15 July. http://business.­ financialpost.com/technology/james-moore-industry-minister. – 2013b. “Telus Corp’s takeover of Public Mobile cleared by competition bureau.” Financial Post. 29 November. http://business.financialpost.com/ fp-tech-desk/telus-corp-public-mobile-deal-approved. Elder, David. 2012. “Supreme Court puts to rest question of Wind Mobile’s Canadian ownership – just as feds poised to change the rules.” https://www.stikeman.com/en-ca/kh/competitor/supreme-court-puts-to-restquestion-of-wind-mobile-canadian-ownership-just-as-feds-poised-tochange-the-rules.

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Fan, Jeff. 2013. Presentation: “Facts and myths in Canada’s telecom sector.” 12th Annual Conference of the International Institute of Communications – Canada Chapter. Fekete, István. 2017. “SaskTel privatization bad for consumers: OpenMedia.” iPhone in Canada. 8 May. https://www.iphoneincanada. ca/carriers/sasktel-privatization-bad-for-consumers. Geist, Michael. 2013. “Getting signals straight in the great wireless war of 2013.” [Blog post.] 6 August. http://www.michaelgeist.ca/2013/08/ wireless-policy-column-post-2. Globalive Wireless Management Corp. 2009. “Globalive Wireless issued spectrum licenses from Industry Canada.” https://www.newswire.ca/ news-releases/globalive-wireless-issued-spectrum-licenses-from-industrycanada-537310741.html. Government of Canada. 2013. “Speech from the Throne to open the Second Session - Forty First Parliament of Canada.” Privy Council Office. 16 October. http://www.lop.parl.gc.ca/ParlInfo/Documents/ ThroneSpeech/41-2-e.html. – 2017. “Manitoba consumers get more choice with approval of Bell-MTS deal.” https://www.canada.ca/en/innovation-science-economic-­ development/news/2017/02/manitoba_consumersgetmorechoicewith approvalofbell-mtsdeal.html. Industry Canada. n.d. “Canada’s wireless policy.” http://www.ic.gc.ca/eic/ site/icgc.nsf/eng/07389.html. – 2007a. “Licensing Framework for the Auction for Spectrum Licences for Advanced Wireless Services and other Spectrum in the 2 GHz Range.” Ottawa: Industry Canada Spectrum Management and Telecommunications. – 2007b. “Spectrum Policy Framework for Canada.” http://www.ic.gc.ca/ eic/site/smt-gst.nsf/eng/sf08776.html. – 2008. “Auction of Spectrum Licences for Advanced Wireless Services (A WS -1) and Other Spectrum in the 2 GHz Range – Key information.” http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/h_sf08891.html. – 2013a. “Framework relating to transfers, divisions and subordinate licensing of spectrum licences for commercial mobile spectrum, Notice no. D GSO-003-13.” http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/sf10653. html. – 2013b. Licensing Framework for Mobile Broadband Services (MB S) – 700 MH z Band. Ottawa: Industry Canada Spectrum Management and Telecommunications. – 2014. “700 M Hz Spectrum Auction – Process and Results.” 19 February. http://news.gc.ca/web/article-en.do?nid=816869.

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International Telecommunication Union. 2016. Report: “Measuring the Information Society” Geneva. http://www.itu.int/en/ITU-D/Statistics/ Pages/publications/mis2016.aspx. Klass, Ben. 2013a. “I am Canadian, a reply to Bell’s open letter.” [Blog post.] 3August.https://benklass.wordpress.com/2013/08/03/i-am-canadiana-reply-to-bells-open-letter. – 2013b. “Sparkling lakes and spectrum auctions, part 1.” Huffington Post [Blog post.] 2 September. https://benklass.wordpress.com/2013/ 09/02/sparkling-lakessnow-capped-mountains-and-radio-waves-part-1. – 2015. “Mobile Wireless in Canada: Policy, Problems, and Progress.” MA thesis, Department of Political Studies, University of Manitoba. Klass, Benjamin, Dwayne Winseck, Marc Nanni, and Fenwick McKelvey. 2016. “There ain’t no such thing as a free lunch: Historical and international perspectives on why common carriage should be a cornerstone of communications policy in the Internet age.” Submitted before the Canadian Radio-television and Telecommunications Commission Telecom Notice of Consultation CRTC 2016-192, Examination of ­differential pricing practices related to Internet data plans. Lawford, John, and Geoffrey White. 2014. “’Front and Centre’: The Consumer Interest in Telecommunications and Broadcasting in Canada.” 17th Biennial National Conference – New Developments in Communications Law and Policy. Ljunggren, David. 2013. “Paradis signals unease with Shaw’s planned sale of wireless spectrum to Rogers.” Financial Post, 15 April. http://­ business.financialpost.com/technology/paradis-signals-unease-with-shawsplanned-sale-of-wireless-spectrum-to-rogers. Masse, Martin, and Paul Beaudry. 2017. “The State of Competition in Canada’s Telecommunications Industry – 2017.” Montreal: Montreal Economic Institute. Mobile Syrup. 2008. “Canadian wireless spectrum auction finally closed!” 21 July.https://mobilesyrup.com/2008/07/21/canadian-wireless-spectrumauction-finally-closed. Mosco, Vincent. 1988. “Toward a Theory of the State and Telecommunications Policy.” Journal of Communication 38(1): 107–124. Noam, Eli M. 2016. Who Owns the World’s Media? Media Concentration and Ownership around the World. Oxford: Oxford University Press. Nordicity. 2016. “2016 Price Comparison Study of Telecommunications Services in Canada and Select Foreign Jurisdictions.” Prepared for the CRTC. – 2017. “2017 Price Comparison Study of Telecommunications Services in Canada and Select Foreign Jurisdictions.” Prepared for Innovation, Sciencem and Economic Development Canada (ISED).

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O’Brien, Greg. 2010. “New act, new commission powers over spectrum required, says von Finckenstein.” https://cartt.ca/article/new-act-newcommission-powers-over-spectrum-required-says-von-finckenstein. O’Neil, Lauren. 2013. “Big 3 telecoms launch ‘fair for Canada’ campaign against Verizon.” CBC News, 8 August. http://www.cbc.ca/newsblogs/ yourcommunity/2013/08/big-3-telecoms-launch-fair-for-canada-­ campaign-against-verizon.html. OECD (Organisation for Economic Co-operation and Development). 2014. “Wireless Market Structures and Network Sharing.” OECD Digital Economy Papers, no. 243. Paris. – 2017. “OECD Mobile broadband subscriptions per 100 inhabitants, by technology, December 2016.” https://data.oecd.org/broadband/mobilebroadband-subscriptions.htm Paré, Daniel. 2012. “Telecommunications: Plus ça change, plus c’est la même chose?” In Cultural Industries.ca: Making Sense of Canadian Media in the Digital Age, ed. Ira Wagman and Peter Urquhart, 110-28. Toronto: James Lorimer. Prentice, Jim. 2007. “Government Opts for More Competition in the Wireless Sector.” http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/sf10021. html. Privy Council. 2006. “Order Issuing a Direction to the C R TC on Implementing the Canadian Telecommunications Policy Objectives.” 14 December. http://laws-lois.justice.gc.ca/eng/regulations/SOR-2006355/page-1.html. – 2009. “Order in Council 2009–2008.” https://web.archive.org/web/ 20091214064631/http://www.ic.gc.ca/eic/site/ic1.nsf/vwapj/PC20092008-eng.pdf/$file/PC2009-2008-eng.pdf. Salter, Liora, and Rick Salter. 1997. “The New Infrastructure.” Studies in Political Economy 53: 67–102. Shepherd, Tamara, and Catherine Middleton. 2013. “The Role of Regulation in the Market: Analyzing Canada’s Wireless Code of Conduct Hearings.” Telecommunications Policy Research Conference, Arlington. https://ssrn.com/abstract=2242082. Sturgeon, Jamie. 2012. “Ottawa opens door to foreign ownership in telecom industry.” Financial Post, 14 March. http://business.financialpost. com/technology/ottawa-opens-door-to-foreign-telecom-ownership. Sutherland, Ewan. 2009. “Counting customers, subscribers and mobile phone numbers.” info 11(2) :6–23. Taylor, Gregory. 2013. “Oil in the Ether: A Critical History of Spectrum Auctions in Canada.” Canadian Journal of Communication 38: 121–37.

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Telecommunications Policy Review Panel. 2006. “Final Report 2006.” Ottawa: Industry Canada. Trichur, Rita. 2012. “CRTC weighs national code for wireless firms.” Globe and Mail. 4 April. https://www.theglobeandmail.com/report-onbusiness/crtc-weighs-national-code-for-wireless-firms/article1371165. Waddell, Erik. 2013. “Panel: Regulatory – What’s cooking in Ottawa? If you can’t stand the heat …” [Youtube video file.] https://www.youtube. com/watch?v=RN_yB7HAAPg. Winseck, Dwayne. 2016. “Media and Internet Concentration in Canada Report, 1984-2015.” Ottawa: Canadian Media Concentration Report Project.

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5 The Case of the Wholesale Mobile Network in Mexico: Red Compartida Judith Mariscal

1   In t ro du c ti on As the world becomes increasingly digital, access to information technology is essential for development. Mobile broadband adoption is replicating at an even faster pace the trend that was observed during the dramatic expansion of mobile telephony around fifteen years ago. Over the past few years, governments around the world have embarked on the implementation of ambitious broadband programs that seek to accelerate the deployment of next-generation networks. The spread of connectivity, and especially access to the Internet through mobile phones, may enable many traditionally isolated people to communicate and participate in market processes as well as in the political and social arenas. Calculations suggest that if Mexico reaches 100 percent broadband penetration, US$125 million will be added to the country’s GDP by 2020 (PwC for GSMA 2016).1 But these benefits can only be gained if there is enough radio spectrum allocated in the market for broadband deployment. In Mexico, auctions for spectrum allocation2 have historically taken a slow pace. The first auction for spectrum allocation was in 1997; and it took more than seven years for the second auction to be held. Two others followed in 2009, tenders 20 and 21. The advanced wireless services (AWS) band was the most recent auction to take place, in 2015. Mexico has been the only country in Latin America not to auction the 700 M Hz band: the recent reform to the Constitution mandated that all of it be used in the creation of a wholesale mobile network, called Red Compartida.

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After a three-year delay, permission to build and operate Red Compartida was awarded in March 2017 (through an auction process in which there was only one bidder) to the group Altan Consortium. Red Compartida was initially expected to meet universal service targets while also optimizing the use of scarce national resources such as spectrum and rights of way. However, this objective was later modified given the uncertainty of the business model. The initial goal of covering 98 percent of Mexico’s population was reduced to 85 percent. Altan is obligated to invest US$7 billion, over a ten-year period, to offer 4G access to at least 85 percent of Mexicans. Of that 85 percent, 12.75 percent must include localities with fewer than 10,000 inhabitants; these localities account for less than half the Mexican population (MTC 2015). Red Compartida represents a unique approach to addressing coverage and competition. Unlike in previous allocations through auctions in Mexico and elsewhere, spectrum is assigned to the construction of a specific open access wholesale network. The open character of the network reflects an innovative model in line with the one suggested by Doyle, Cramton, and Forde in Chapter 10 of this book. Doyle and colleagues argue that highly fluid spectrum trading as a policy problem might be addressed by opening up access to spectrum from a marketbased angle; they suggest that capacity rather than naked spectrum be traded. However, in the case of Red Compartida, it is not possible to buy and sell capacity at a granular level. The Mexican Constitution mandates that because it is a wholesale network, it cannot sell capacity to other carriers; in fact, its only possible customers are mobile virtual network operators (M V N O s). Existing mobile operators in the Mexican market have invested in different spectrum bands and are unlikely to change their business models as carriers in order to participate as M V N O s. This may create a high opportunity cost for a valuable spectrum set-aside, given the increasing demand for additional bandwidth. The creation of a wholesale network that uses the entire digital dividend and is subsidized by the government, but that is not flexible enough to sell capacity, introduces several risks that may have unintended consequences for market efficiency. This lack of flexibility brings to mind Klass’s arguments in Chapter 4. In Canada, as in Mexico, increased competition in the national wireless market has not yet been achieved, and the state has redefined its approaches, though not in a way that is nimble enough to cope with the rapid pace

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of technological change. As Taylor notes, Canada has struggled to provide adequate service to sparsely populated regions. Moreover, in the Mexican case, the Constitution and the law emanating from its reform set out in great detail a number of strong restrictions that make further reform difficult. The assigned spectrum reflects in some ways the recommendation offered by Steve Song in Chapter 3 of this book – that regulators combine spectrum allocation auctions with other strategies such as unlicensed and traditional spectrum licensing. He suggests that auctions may result in a “winner’s curse” in that reserve prices are so high that investment in deployment is inhibited. However, in Mexico, reserve prices have not been high enough for this problem to develop. Auctions presume that spectrum resources will be allocated efficiently by the bidder that places the greatest value on this resource. What have caused problems in this sense in Mexico are the so-called rights of use, which amount to an annual tax on the use of spectrum that has been awarded after the auction has been won. The “winner’s curse” can be avoided, and an efficient mechanism for allocating spectrum can be maintained, by lowering the reserve price and (in the case of Mexico) by reducing or eliminating the tax on its use. This chapter describes the creation of the open access wholesale mobile network, Red Compartida, as well as the circumstances that led to the mandate to build the network and the conditions, rules, and process in place. It has four sections. The first discusses why Mexico is not a current champion in efficiency; the second compares spectrum allocation in Mexico to that in other Latin American countries; the third delves into the process that brought about Red Compartida as part of the wide-ranging telecommunications reform; the fourth analyzes this model’s possible risks to market efficiency – a discussion that may be useful for other countries that are currently examining this model as a way to address deficits in both coverage and competition in the mobile market.

2   S p e c t ru m A l l o c at i on i n Mexi co A digital ecosystem requires mobile network availability and efficient spectrum allocation for mobile services. Spectrum allocation can increase mobile broadband demand and improve efficiency. Several studies have analyzed the importance of spectrum allocation for markets and suggest that a larger portion of spectrum assigned for mobile

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use is associated with lower prices and less market concentration (Hazlett and Muñoz 2009). Access to mobile broadband in Mexico has been limited, to a significant degree, by the particularly slow process of spectrum allocation followed by C O F E T E L , the regulatory agency (now defunct) responsible for auctioning off spectrum frequency bands. The first radio spectrum auction was held in 1997 for 80 MHz in the 1.9 GHz band. This simultaneous ascending auction allowed Telefonica and Unefon to enter the mobile phone market. Auctions had always been the preferred mechanism for allocating spectrum, but C O F E T E L followed a very slow process that resulted in artificial scarcity of spectrum. From the moment spectrum allocation became a competitive process, decisions made by the regulatory agency were challenged in the courts. A series of appeals launched by private companies after auctions took place contributed to a chronic lack of spectrum in the market. So it was not until 2004 that the regulator conducted the second auction in the 1.9 G H z band, for four blocks of 10 M H z and two blocks of 30 M H z (Mariscal et al., 2014). Five years later, at the end of 2009, tenders 20 and 21 were auctioned. “Licitación 20” consisted of three blocks of 10 M H z in eight of the nine national regions, for a total 30 M H z in the 1.9 G H z band. “Licitación 21” consisted of two blocks of 30 M H z nationwide and three blocks of 10 M H z in the nine national regions, for a total of 90 MHz in the 1.7–2.1 GH z band. Tender 21 was managed by two agencies and two ministries3 that specified spectrum accumulation limits and established initial fees for bidders in order to protect the patrimonial interest of the state (MCT 2017a). Part of the total amount that participants had to pay would be deferred annually. The outcome of the process for tender 21 was as follows: the Televisa-Nextel consortium bought 30 M H z at national level, and Telcel and Telefonica bought the three blocks of 10 M H z. Note that the limit for spectrum accumulation implied that among operators in the Mexican market, only Nextel and Televisa were able to compete for a nationwide block. The second block of 30 MHz was reserved for new entrants to the market, but given their absence, this block of the auction was declared void at the end of the process of tender 21. At the time of the auction (without considering annual fees for rights of use), Telefonica and Telcel paid a total of 5.068 million pesos (US$398.2 million) on 13 August 2010. For the same amount of

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spectrum, Nextel-Televisa paid significantly less: 180 million pesos (US$14.1 million) on 13 August 2010. The caps established for the tender and the huge discrepancy in payments generated a huge controversy over tender 21. The process received heavy media coverage, given that by 2011, “Licitación 21” had accumulated ninety-seven applications for an injunction judiciary (amparos) to suspend the tender. The spectrum tenders of 2004 were suspended by court order, and the authorities were compelled to negotiate with private agents to conclude the process. This controversy may have contributed to the fact that for tender 21, the courts supported policy decisions regarding the auction taken by COFETEL. This was the first time the judiciary had supported a regulatory decision, and as a consequence, the 30 MH z block was awarded to the Nextel-Televisa consortium, as the regulator had initially decided. The amount that resulted from the auction was the equivalent of US$14.1 million. The judiciary’s support of the economic regulatory system created a prejudicial precedent and prevented the suspension of tender 21, which would have inflicted significant damage to the market (Mariscal et al. 2014). The most recent auction, in 2016, was for the 1.7/2.1 G H z band (AWS band). The current percentage of spectrum tender among mobile carriers in Mexico is shown in Figure 5.1.

3   M e x ic o L ag s B e h ind Regi onally In contrast to Mexico, in recent years, most of the countries in the region have assigned more spectrum using market mechanisms. For instance, in 2014 Argentina assigned 90 M H z in the 700 M H z band, 90 in the 1700 MHz band, 30 in the 1900 M H z band, and 8 in the 850 MHz band. In 2012, Brazil assigned 120 MHz in the 2.6 GHz band and 60 MHz in the 700 MH z band in 2014. Chile did the same, but assigned 70 MHz in the 700 MH z band. Colombia assigned 10 M H z in the 1900 MHz band in 2012 and 90 M H z in the 1700 M H z band and 100 in the 2.6 GHz band in 2013. Figure 5.2 presents spectrum assignments through auctions for mobile use up to 2016 by country (Renda and Mariscal 2015). Surprisingly, Mexico, one of the largest countries in the region, has deployed less spectrum for mobile services than other countries in the region. Figure 5.3 indicates the positive association between spectrum and G DP per capita in Latin American countries.

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15,17

32,03

22,26

29,72

Telcel

at &t

Altán

Movistar

sa i

Figure 5.1  Mexican companies’ spectrum shares for mobile services. Annual percentage Source: IFT 2017

Mexico is the country at the greatest distance (downward) from the trend line. Brazil has a GDP per capita very close to that of Mexico but has three times more spectrum than Mexico. Furthermore, there are many countries with lower GDP per capita than Mexico that have higher levels of spectrum. Figure 5.4 presents the relationship between spectrum deployment and prices of the cheapest plan with at least 100 M B, by country. Figure 5.5 indicates that countries with greater spectrum deployment tend to offer lower prices for their broadband plans, a pattern also observed in the Finnish case (see Chapter 2). In these countries, when spectrum is widely available, prices are low and penetration is high. Brazil and Mexico, the biggest countries in the region and with similar GDP per capita, appear again as the two extreme situations. In the same vein, Figure 5.5 shows that Mexico had the lowest rate of mobilephone subscriptions among the ten biggest countries in the region. However, the low level of mobile penetration may also be explained by other variables, such as market concentration. For example, as

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122

Judith Mariscal Brasil Chile Nicaragua Argentina Colombia Venezuela Promedio México

República Dominicana 0

100

200

300 MHz

400

500

600

Figure 5.2  Spectrum deployed for mobile use in Latin America – 2016 (M Hz) Source: IFT 2016

700

Brazil

600

Spectrum (mh z)

500

Chile

Colombia

400

Honduras Costa Rica

300

Uruguay 200 Mexico 100 0

0

2,000

4,000

6,000 8,000 10,000 12,000 14,000 16,000 gdp per capita (US$)

Figure 5.3  Spectrum and GDP per capita – 2015 Source: Author with data from GSMA and IMF

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Argentina

Mexico

Cheapest mobile broadband plan (US$)

10

8

6

4 Chile

2

0

150

200

250

300

350 400 450 Spectrum MHz

Brazil

500

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Figure 5.4  Spectrum and broadband prices – 2015 Source: Author with data from DIRSI and GS M A

Klass points out in Chapter 4, in Canada there is ample spectrum available on the market, yet there is also low penetration; there are also high prices, which can be explained by high market concentration, a factor that is also significant in the Mexican case. In any event, there is evidence that lack of spectrum influences welfare indicators in the market. As long as operators are constrained by the scarcity of spectrum, many of the benefits of mobile access will also be constrained. Also, we can observe some association between market performance and level of spectrum. Setting aside the difficulty of establishing causality, there is no doubt that an artificial lack of spectrum will negatively affect performance, with corresponding losses for consumers.

4  Con s t it u t io n a l R e f o r m and Red Comparti da On 14 July 2014, the Mexican legislature enacted the Ley Federal de Telecomunicaciones y Radiodifusión (LFTR), following a wide-ranging reform that made significant changes to the Constitution. The

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180 160 140 120 100 80 60 40 20 0

2005

2006

2007

2008

Argentina Brazil Chile Colombia Costa Rica

2009

2010

2011

2012

2013

Mexico Paraguay Peru Uruguay Venezuela

Figure 5.5  Mobile-phone subscriptions per capita. Selected countries Source: Author with data from ITU 2015

legislature emphasized the importance of ICTs as enablers of economic and social development in Mexico; broadband access was defined as a fundamental right and as essential to the public interest. This largely explains why government intervention was seen as essential to the Mexican people’s well-being. During 2013, the process of telecommunications reform (and of other structural reforms in Mexico) was driven by the opposition parties. The PRI, which had ruled the country for seventy years before losing two consecutive elections, had just been returned to power. During its twelve years in opposition, the P RI had been able to veto all structural reforms. Once back in power, it struck an agreement

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with the two other parties, the “Pacto por México,” that would carry through all of the reforms. The other two parties to this pact were on the left of the political spectrum. Ironically, actors with leftist perspectives represented the traditionally right-wing party, P A N . Only the PR D was a traditional left-wing party. This goes far to explain why the government moved to participate more strongly in the market. The PRI, a more centrist party, wanted to pass long-awaited reforms, but to do so, it needed the support of its rivals. The Mexican Telecommunications Reform had the double objective of increasing both competition and network deployment (Mariscal 2014). To that end, the former regulatory agency, C O F E T E L , was transformed into the Instituto Federal de Telecomunicaciones (I F T ). A significant barrier to competition and investment in Mexican telecommunications was that the oversight agency had been weak. The new regulatory agency would have a clear mandate, sufficient authority, greater judicial control, and constitutional autonomy. I F T became the regulator of the telecommunications and broadcasting sectors. It was also tasked with enforcing antitrust law in both sectors. I F T was now an independent agency, particularly from the Communications Ministry – the Secretaría de Comunicaciones y Transportes (S C T ) – which in the past had controlled most of C O F E T E E L ’s activities. I F T was granted budget autonomy as well as greater sanctioning powers to address the anticompetitive behaviours of firms. It was also granted greater powers to gather information from companies; this was expected to help reduce the traditional problem of asymmetric information between the regulator and the firms. Moreover, the process for designating commissioners was professionalized, with candidates now required to demonstrate specialized experience through examinations. The reform gave IFT the mandate to create two wholesale networks. The law established that these networks were to be created through a public/private partnership, with the stated objective to increase competition and to provide broadband access to currently unserved areas. The first of these networks was Red Troncal, which would utilize the fibre optic network that had formerly been owned by CF E , the public electric utility, which held 38,000 kilometres of fibre. The second of these networks was Red Compartida. The mandate set forth in Transitory Article 16 of the 2014 Federal Telecommunications Law assigned the spectrum from the “digital dividend” through a public/

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private partnership. The stated objective was to create an LTE wholesale network to expand investments to less dense areas and meet universal service targets while optimizing the use of scarce national resources such as spectrum and rights of way. An estimated US$7,500 million would be invested in this. It would utilize 90 MHz of the 700 MHz band and the CFE’s fibre optic backbone network, through a public/private partnership. Red Compartida is similar to BharatNet in India in that it plans to deploy scalable network infrastructure on a non-discriminatory basis. As with BharatNet, and RRBS in Canada, its initial objective was to provide telecom services in rural and remote areas. The mandate has also established rules to be implemented by the regulatory agency, I F T . Article 142 of the law prevents any operator from influencing the use of the network for particular gain. The network will have to share its infrastructure and sell its services in a disaggregated form. The government will guarantee access to the assets required for installation and operation of the network, as well as for compliance with its objectives and coverage obligations. It must provide services to telecommunications network providers and operators without discrimination and at competitive prices. On March 2015, a semi-autonomous body was created, Organismo Promotor de las Inversiones en Telecomunicaciones (PROMTEL), and tasked with overseeing the implementation of Red Compartida. It was expected to ensure the promotion of investment in telecommunications infrastructure and to help increase penetration levels. The non-­ governmental organization Transparencia Mexicana was appointed by the federal government to be the social witness4 to observe the legality and transparency of the public contest. The process was revised by Bank of America Merrill Lynch, which participated as a third party to help ensure that the process followed the law. The drawing up of auction rules included a public consultation. The result, which was revised twice, differed from the traditional practice: spectrum would be assigned through a first-price sealed-bid auction. The tender rules established rights and obligations for all involved parties as well as spectrum use conditions. The established price for the use of the spectrum was US$19.26 million per year. The winner of the bid, Altan, and P R OMT E L would manage the 703–748 M H z and 758–803 spectrum segments to provide wholesale telecommunications services, and they would only sell to MVNOs. An annual revision would be conducted over the following twenty years, determined according to the Ley Federal de Derechos (Federal Duties Law).

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Subleasing of spectrum capacity would not be allowed. The bidder would be obligated to share only 1 percent of the income generated by Red Compartida with the government. Companies would have to demonstrate $838.12 million in equity and be ready to pay a $55.8 million warrant: a total of $893.99 million. At least $558.74 million was to remain as fixed capital at all times. Red Compartida would have to be built with a 4 Mbps minimum speed. This minimum speed – a response to concerns among potential participants regarding the sustainability of the business model – was clearly insufficient to meet current demand, let alone future needs. The network would need to upgrade its quality, as other operators are already doing. The Red Compartida process underwent two public consultations (see Figure 5.6). The IFT received several reports, and by the time the bidding finally opened, the rules had been modified. The process encountered several delays. It began in 2015 and was completed in 2016 under a cloud of contention, with accusations of corruption launched by a company that had not been allowed to join in the bidding (see Figure 5.7). Even though numerous companies were informed about the bidding process and rules, only two actually entered the auction: Altan and Consorcio Rivada. Consorcio Rivada was disqualified because it could not cover the required $55.87 million warranty. Declan Ganley, the company’s CEO, accused the process of being biased in favour of Altan and sued the SC T . The lawsuit was still in the courts in 2017. Thus, Altan was the only bidder to qualify and was declared the winner. It is now committed to building a wholesale broadband network consisting of 15,000 radio bases in Mexico, upgradable to offer higher speeds as technology advances. It is permitted to lease capacity from other operators and to strike agreements with the government to connect radio bases with local nodes (Rojas Sifuentes 2016). Again, these low requirements reflect the need to meet minimum obligations in the context of uncertain demand. Although there are no set obligations to upgrade these radio bases, competitive pressure will require Altan to do so. According to its own timetable, by March 2018, at least 30 percent of the country, 25 percent of so-called Pueblos Mágicos (towns with a historical heritage that have been selected by the Ministry of Tourism to receive institutional and financial support to attract more tourism), and 40 million Mexicans should be covered by the network. The goal is to cover 50 percent of the population by

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Q2

Source: Telecom C ID E 2017

Q3

sct

1/18/2016 s c t grants Telecomm right to operate Red Compartida and three fiber optic “pairs”

Q3

i f t finishes clarification period for bid rules, announces final decision to occur on November 17th 7/15/2016

3/9/2016 i f t publishes an official calendar for the process

Q2

1/28/2016 Telecomm solicits inclusion as convening institution

Q1 2016

i f t issues competition recommendations to public bid rules 1/28/2016 Public bid rules publication 1/29/2016

12/15/2015 First planned date of bid rules (convocatoria) publication

Q4

Deadline to submit comments, observations to ToR 10/30/2015

s h c p approves social convenience, investment, economic and financial feasibility analyses required to invest public funds by l a a 1/6/2016

9/30/2015 and i f t publish preliminary terms of reference (prebases) for Red Compartida

8/7/2015 Final date to submit observations to preliminary rules

5/22/2015 s c t closes call for expressions of interest (delayed)

Figure 5.6  First phase.

Q1

calls for expressions of interest (first planned date) 3/11/2015

sct

and i f t publish technical preliminary rules (criterios generales) for Red Compartida public bid 7/17/2015

sct

i f t publishes compendium of observations to preliminary rules 8/10/2015

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Source: Telecom C ID E 2017

Figure 5.7  Second phase.

sct

reiterates public bid rules on 5 billion warranty 11/7/2016

11/17/2016 Second delay and final decision

Q4

Spectrum license and p pa contract (first date) 11/7/2016

evaluates technical proposals. Rivada Consortium disqualified 11/4/2016

sct

10/17/2016 i f t notification on opinion of competition and influence

First delay in final decision 9/28/2016

8/4/2016 i f t deadline to submit requests of opinion on competition influence (first date) 9/12/2016 i f t deadline to submit requests of opinion on competition and influence (first delay)

Q3

Opening for bids (first planned date) 8/8/2016

i f t finishes clarification period for convocatoria, announces a November 17th final decision 7/15/2016 Final decision (first planned date) 8/24/2016

Bids open; Altan and Rivada present proposals (delayed) 10/20/2016

12/18/2016 Corruption lawsuit by Rivada Networks

1/27/2017 Second delay in spectrum license and PPA contract signing

3/5/2017 Lawsuit against Rivada eliminated

Q1 2017

Red Compartida trust fund is created 3/30/2017

Moral hazard lawsuit by s c t 2/6/2017

Altan and Promtel sign p pa contract 1/24/2017

First delay in spectrum license and p pa contract signing 12/9/2016

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2021, 75 percent by 2022, 85 percent by 2023, and 92.2 percent by 2025. During the process, P R O MT E L should receive 1 percent of the network’s gross income for administration charges. Altan is a joint venture comprised of nine economic agents (see Table 5.1). On 31 March 2017, Altan Redes made public its decision to contract with Huawei to build the network’s backbone and with Nokia to provide the core. Ericsson was left out of the process. Another point of controversy is that according to Rivada Networks, declaring Altan the winner contradicted several constitutional norms and was illegal because it entailed foreign capital. According to Rivada Networks, the People’s Republic of China indirectly holds 23.6 percent of the equity in Altan, given that the China Mexico Fund L P (CM F ) is partly funded by banks controlled by the Chinese government – specifically, by the China Investment Corporation and China Development Bank Capital (Rivada Networks 2017). Altan includes firms from the United States, Canada (Quebec), Spain, and China. The International Finance Corporation (IFC) manages the China Mexico Fund and is part of China’s overall investment in Mexico. The IFC’s role as a World Bank international development organization is to establish strategic alliances with the private sector and to mobilize resources from diverse sources in developing countries. The I F C issues various types of bonds, including local-currency bonds to develop domestic capital markets and facilitate lending. According to IFC’s website, infrastructure projects are one of its main priorities, especially if these have a large potential impact and at the same time are financially complicated, face regulatory complexities, or lack personnel with the necessary skills. Entrepreneurs can apply directly for IFC funding. Altan would have to have submitted an investment proposal, and a feasibility study would have to have been performed before support for Red Compartida was forthcoming. Mexican companies Axtel and Megacable, local partners in the Altan consortium, were not granted the right to vote or to influence administrative decisions. Axtel is a Mexican carrier that offers voice, broadband, security, smart home, smart business, Cloud, and mobility services. As of the first quarter of 2017, it held 4 percent of the lines in the voice market and 3 percent of the fixed broadband market (FTI 2017a). Megacable is a voice and Internet service provider, but it specializes in cable television. It has become a competitor to Televisa in this market. It holds 7.2 percent of the total line number in the voice market, 0.2 percent of public phone lines, and 14 percent of all fixed

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Table 5.1 ALTAN stakeholders and shares Company or trust fund Morgan Stanley (it administers Marapendi Holding B.V., an indirect subsidiary of North Haven Infrastructure Partners II) Trust issuer of F/2292 Certificates Fund: FFLA T A M -15-2 held in Banco Invex, S.A. Caisse de dépôt et placement du Québec (CDP Q ). It groups four Mexican “afores” (pension fund administration companies). Hansam, S.A. de C.V. (it belongs to Miguel S. Escobedo) Eugenio Galdón through Isla Guadalupe Investment World Bank’s International Finance Corporation (I F C ) China Mexico Fund (CMF), administered by I F C Asset Management Company LLC (AMC). It belongs to IFC. Axtel (special share series without the right to vote or influence administrative decisions) Megacable (special share series without the right to vote or influence administrative decisions)

Share (%) 33.38 6.54 12.68 9.35 3.34 3.34 23.36 4.01 4.01

Source: Telecom-CIDE 2017.

broadband access points (FTI 2017a). Even though they are relatively small companies, the government decided that private players in the market, even if part of the consortium, would not be allowed to influence the direction of the wholesale network. Red Compartida’s original aim was to address unserved areas while strengthening competition. The original obligation stated in the Constitution was that the network would serve 98 percent of the population; however, given the uncertainty of the business model (see below), this obligation was reduced to 85 percent. Under the Constitution, a consortium that included public participation would not receive special benefits; that is, regulation would be neutral in terms of competition. Mexican government participation in the public/private partnership involved providing the 700 MHz band at a discounted price. However, it went further than that by granting a $681 million credit as well as a liquidity line of $249.12 million through the Mexican development bank (see Table 5.2).

5   R is k s a n d P o s si ble I mpacts Mexico has been the only country in Latin America not to auction the 700 MH z band. The L F T R declared that all of that band would be

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Table 5.2 ALTAN sources of funding for design, installation, operation, and maintenance of the wholesale network infrastructure “Red Compartida”

Partner

Millions

Private Mexican and interna- $14,586.26 tional investors, multilateral institutions, institutional investors, and local industrial partners Huawei and Nokia $16,206.95 (­technology suppliers)

Mexican development bank: Banobras, Nafin, and Bancomext Mexican development bank: Banobras, Nafin, and Bancomext TOTAL

Percentage (%) of total investment Type of investment 46

Guaranteed capital

51.1

Credit. Ten years (progressively to be substituted by commercial ­banking credit) Credit. Fourteen years

$681.81

2.1

$249.12

0.8

Liquidity line

$31,724.13

Note: Exchange rate $19.067 MXP/USD. Banxico 27 April 2017 Source: Telecom-CIDE 2017

used to create Red Compartida. Table 5.3 shows spectrum allocation to mobile operators since 2013 in the region. During consultations over the design of the LFTR, numerous voices (including this author’s) alerted Congress to the high opportunity cost of a spectrum set-aside given the high demand by existing networks for additional bandwidth. The wholesale network could have been constructed with 30 MH z of the 90 MH z band and the rest allocated to the market. Another battle lost in the public debate was the possibility of allowing the network to sublease capacity to other mobile carriers and thereby diminish the risks associated with low demand for wholesale services by M V N O s. During the public consultations, various parties suggested allowing the network operator to sublease part of its capacity to other existing carriers, given the great volume (90 MHz) it was leasing from P R OMT E L and the fact that, at least in the short term, it would only serve MV NO s. Moreover, existing carriers would have been able to expand their investments and services. The argument

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Table 5.3 700 MHz band assignments in LATAM 2013–15 Country

MH z

Bolivia

24

Jamaica

30

Argentina

90

Brazil

60

Chile

70

Panama

40

Paraguay

10

Source: GSMA

used by the government against this option was that subleasing capacity would run counter to what the Constitution had established in assigning the complete 700 MH z to the wholesale network for its operation. This is a good example of how the reform introduced inflexibility in regulatory policies and also impeded their functions. Generally, laws establish the nature and overall objectives of regulation; they do not determine specific regulatory instruments. From another perspective, one could argue that not opening this possibility would compel existing carriers to purchase last-mile services from Red Compartida. Concern was also expressed over the complexities of coordinating a nationwide public/private network utilizing a business model featuring many moving parts controlled by decentralized players. Altan today faces several challenges. One is the increasing costs associated with the rising exchange rate. Then, in terms of backbone, though it can use one pair of the optical fibre strands from the electric utility company (CFE), and even lease transport capacity to third parties, its use implies illuminating dark fibre at a rapid pace. The remaining 34 fibre strands that were originally owned by CFE are now going to be used to build the fixed broadband wholesale network, the socalled Red Troncal. Red Compartida must connect radio bases with local nodes, and for this, C F E fibre is insufficient. Although the government will be providing 13,000 public sites that could be included in infrastructure-sharing agreements, obtaining permits could slow the process, even with I F T issuing guidelines, given the overlaps and

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administrative complications of working with third parties, particularly with the different levels of government in Mexico. Keeping pace with operators currently performing 5G trials will also be a challenge for Altan (Rojas Sifuentes 2016). A central concern behind the Red Compartida model is the viability of its business model, as there may be little demand for its services, given the low demand from MV NO s. Some M VN O s have entered the Mexican market, but they are few and not large enough. A partial solution was included later in the process through a safeguard that stipulates that in those areas where demand from MVNOs was insufficient, the network would be able to offer services to final users and become a retailer. In this special circumstance, the network will need to request special permission for every community that fits this scenario. Red Compartida offers high-quality bandwidth on a low-frequency band. If current operators face a scarcity of low-frequency bands and demand for mobile broadband expands at a high rate, these carriers may become customers of the new network. The rules have determined that the network can freely set tariffs as long as they are not discriminatory, and this will allow it to respond to different characteristics of demand (Rojas 2016). The fundamental question regarding the viability of Red Compartida and its impact on the Mexican market is whether it will merely duplicate networks and cause inefficiencies or generate new business models given its wholesale open nature. One hopes the latter.

6   L e s s o n s f o r O t h er Countri es Red Compartida is a novel model that has attracted attention from countries around the world. The open nature of the network is appealing in the context of LTE technology, which has been suggested by the specialized literature as a best practice. As Cramton and Doyle (2016a) state: “The open access provision brings vibrant competition through low-cost, non-discriminatory entry into the wireless market.” It is a way to diminish market concentration and congestion problems faced by existing mobile carriers. Moreover, the original goal of serving as a mechanism for deploying broadband to remote and underserved areas has been elusive for many countries (see Canada in Taylor’s chapter), and the Red Compartida model considered it would be a central achievement. This model also

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Table 5.4 MVNOs in the Mexican market Mvno Cíerto Weex Virgin Mobile Gbocel Maz Tiempo Maxcom Total

Share (%) 0.016 0.107 1.066 0.158 0.070 0.007 1.424

Source: IFT 2017

fits a trend observed in many countries regarding the new nature of government intervention – “the state back in” – in the deployment of networks through national broadband plans (Mariscal, Galperin, and Viecens 2016). However, this original target has been diluted, for the business model of Red Compartida could not be sustained under the original obligation to serve 98 percent of the population. Thus, the specific design of Red Compartida serves as a cautionary tale for other countries that might be inclined to follow suit. A central point is that unlike the best practice suggested by Cramton and Doyle (2016b), the Mexican open network model is not allowed to sublease capacity. In their proposed model (outlined in chapter 10), Doyle, Cramton, and Forde include the flexibility of service providers to buy and sell the wholesale network’s capacity to serve their own users. This flexibility would allow other mobile operators to serve their customers during times of high demand while providing the wholesale network with additional sources of funding in the context of a low number of M V N O buyers. This funding is critical if the wholesale network is to maintain a frequent upgrade of its services. Given the large amount of spectrum assigned to Red Compartida, it would make economic sense to share this spectrum. In this vein, setting aside the totality of the 700 MH z to the network would generate a significant opportunity cost for the market. Open wholesale networks may be not only a novel concept but also one that could actually increase competition, make better use of scarce spectrum, and fulfill universal service targets. However, the design and implementation must be flexible enough to ensure that the business model is sustainable and does not crowd out other private investments.

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N otes   1 The increase in G DP is calculated for the period 2015–20.   2 Allocation as an intended pareto-efficient process to enter frequency bands in the National Table of Frequency Attribution for the purpose of its use by radiocommunication services under specified conditions.   3 The Federal Competition Commission, the Federal Telecommunications Commission (now the Federal Telecommunications Institute), the Ministry of State, and the Ministry of Communications and Transport.   4 To secure the constitutional principles of efficiency, efficacy, legality, and honesty as well as to fight corruption, social witnesses – that is, representatives of civil society – must participate as observers in public bidding processes. Social witnesses participate actively and at the end of the process produce a public report (Ministry of Public Service 2004).

r efer enc e s Altan Networks. 2017. “Altán Redes.” altanredes.com. Cramton, Peter, and Linda E. Doyle. (2016a). White Paper: “An Open Access Wireless Market: Supporting Competition, Public Safety, and Universal Service.” http://www.cramton.umd.edu/papers2015-2019/ cramton-doyle-open-access-wireless-market.pdf. – (2016b). “Country Overview: Mexico: Mobile Driving Growth, Innovation, and Opportunity.” https://www.gsma.com/latinamerica/wpcontent/uploads/2016/06/report-mexico2016-EN.pdf. – 2017a. “Primer reporte estadístico 2017” [First statistical quarterly report]. http://www.ift.org.mx/sites/default/files/contenidogeneral/ pagina-de-inicio/1ite2017acc.pdf. Hazlett, Thomas W, and Roberto E Muñoz. 2009. “A Welfare Analysis of Spectrum Allocation Policies.” The RAND Journal of Economics 40(3): 424–54. International Financial Corporation. 2017. “Acera de IFC .” http://www. ifc.org/wps/wcm/connect/corp_ext_content/ifc_external_corporate_site/ about+ifc_new/aboutifc-spanish. Mariscal, Judith. 2014. “Los retos que enfrenta la reforma en telecomunicaciones. Reforma de telecomunicaciones y competencia económica. México más productivo y más competitivo” [Challenges before the telecommunications reform]. Mexico City: Fundación Colosio. http://­ fundacioncolosio.mx/content/media/2015/02/3%20Reforma%20 en%20Telecomunicaciones.pdf.

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Mariscal, Judith, Alejandro Castañeda, Alexander Elbittar, César Hernández, and José Roldán. 2014. “Licitación 21. Lecciones de política pública en telecomunicaciones” [Licitación 21: Policy lessons in telecommunications]. Mexico City: CIDE. Mariscal, Judith, Hernan Galperin, and Fernanda Viecens. 2016. “The Second Era of Telecommunications Reform in LA TA M. Lessons from the Mexican Case.” Working Paper. MC T (Ministry of Communications and Transport). 2015. “Red Compartida. Criterios generales” [Red Compartida: General criteria]. http://www.sct.gob.mx/red-compartida/descargaPDF/Criterios_de_las_ pre-bases_de_la_licitacion.pdf. – 2017a. “La Licitación 21. Banda De 1.7 GHz” [Tender 21. The 1.7 GHz Band). http://www.sct.gob.mx/uploads/media/Licitacion21Actual.pdf. – 2017b. “Red Compartida. Bases del concurso internacional” [Red Compartida: Public bid rules]. http://www.sct.gob.mx/red-compartida/ bases-internacionales.html. Ministry of Public Service. 2004. “Acuerdo por el que se establecen los lineamientos Qque regulan la participación de los testigos sociales wn las contrataciones que realicen las dependencias y entidades de la administración pública federal” [Agreement establishing regulations to social witnesses participation in biddings promoted by dederal public administration]. http://www.funcionpublica.gob.mx/unaopspf/comunes/testigo. htm. PwC for GS M A. 2016. “Connecting the world: Ten mechanisms for global inclusion.” https://www.strategyand.pwc.com/media/file/Connecting-theworld.pdf. Renda, Andrea, and Judith Mariscal. 2015. “Telecommunications Reform in Mexico: Learning from International Best Practices.” Working Paper. Rivada Networks. 2017. “Mexican Sovereignty and National Security at Risk in the Award of Red Compartida to Altan Redes SA PI De C V .” https://www.rivada.com/mexican-sovereignty-national-security-riskaward-red-compartida-altan-redes-s-p-de-c-v. Rojas Sifuentes, Wilson. 2016. “Red Compartida en México: The Role of Government.” CPRLATAM Conference. https://web.archive.org/web/ 20170926124904/http://www.cprlatam.org/uploads/files/C PR 2016.pdf.

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6 The Growth of Broadband Mobile Communications in India: Trends, Policy Issues, and Challenges Rekha Jain and Prabir Neogi

1  In t ro du c t io n : T h e I ndi an Context This chapter focuses on the challenges arising from the widespread penetration and use of smartphones and other mobile devices in India, combined with the deployment and use of mobile broadband networks. It discusses issues such as the following: •

•

•

•

How can the stark urban/rural digital divide in telecommunications in India be narrowed significantly? How will the additional spectrum be found and allocated to facilitate the large-scale migration of mobile users from 2G narrowband to broadband networks? What may be possible migration paths from 2G mobile service to the emerging 5G standard? In addition to efficiently managing the use of the spectrum, what other roles can governments and regulators play in enabling the continued growth of mobile services? In a developing country like India, what role can mobile broadband play in the delivery and use of a wide variety of digital information and transactional services, including electronic payments?

India is a federal country with twenty-nine states and seven union territories and has a population of more than 1.3 billion (Worldometres

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The Growth of Broadband Mobile Communications in India 139

2018). About two thirds of Indians still live in more than 600,000 villages; these are grouped together for administrative purposes into some 250,000 gram panchayats or village administrative units (VAUs), 6,600 blocks (a block consists of a number of villages and functions as an economic development unit), and 640 districts.1 The urban population is growing rapidly, particularly in the metro, tier 1, and tier 2 cities, due to ongoing migration from rural areas to cities and towns, which are thought to offer greater economic opportunities. This trend is similar to the one seen earlier in China, where some 56 percent of the population now lives in urban areas. There is a major urban/rural infrastructure divide, one that relates to transportation, electricity, and communications, among other things.

2  T h e In d ia n T e l e c o m m uni cati ons Market – In d ic ato rs a n d C h aracteri sti cs 2.1  Telephone Service As in many other emerging economies, telecommunications growth in India has been driven almost entirely by mobile phones. India has become the second-largest mobile phone market in the world. The Telecom Regulatory Authority of India (TRAI) reported that as of 30 September 2018, 98 percent of the more than one billion telephone subscriptions in India were for mobile phones (TRAI 2019).2 There were more than 50 wireless subscriptions for every wireline subscription. 2.2 Internet Broadband Internet in India was accessed largely via smartphones, and it was estimated that some 450 million smartphones were in use by the end of 2018. Despite the increasing adoption of smartphones, nearly 60 percent of mobile users that year still had feature phones, which did not have operating systems that could run Internet applications; the percentage was even higher in rural areas. These mobile users were limited to 2G services (voice calling and text messaging) and some limited data exchange via unstructured supplementary service data (USSD –based) applications. Of India’s 560 million Internet subscribers, more than 65 percent lived in urban areas in 2018. Wireless Internet subscribers numbered close to 540 million that year, about one third of total wireless

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Table 6.1 Telephone subscribers – snapshot September 2018 Number of subscribers (millions) Total telephone subscribers Wireless subscribers Wireline subscribers Urban subscribers Rural subscribers

1191.40 1169.29 22.11 666.64 524.76

Tele-density 91.20 89.51 1.69 160.79 58.85

Source: TRAI (2019, 1)

telephone subscribers. About 85 percent of Internet subscribers (482 million) had a broadband service, an increase of almost 50 percent over 2017. The number of narrowband (2 G ) subscribers had declined to 78 million, about 14 percent of total Internet subscribers. The number of wireless broadband users far exceeded the number of wireline broadband users (down to 18 million), who were concentrated in the urban areas (T R A I 2019). 2.3  Mobile Network Operators Spectrum management was under the purview of the Wireless Planning and Coordination Committee of the Department of Telecommunications (D oT ) (D oT 2019). T R A I , established in 1997, had only an advisory role with respect to spectrum management. Spectrum licences were provided on the basis of “circles” or administrative units of the DoT. These were usually coterminous with state boundaries. There were four metro circles: Delhi, Mumbai, Chennai, and Kolkata. Some of the larger states such as Uttar Pradesh (U P ) were divided in two: UP (East) and UP (West), while smaller states such as Goa were merged with larger ones (in Goa’s case, Maharashtra). Many operators had pan-Indian licences, having acquired circle licences that covered the country. Bharti Airtel, Vodafone-Idea Cellular, and Reliance Jio were the large private mobile network operators (MNOs) that had licences in all or nearly all circles, acquired by them through an auction process separately for each circle. Collectively these companies held more than an 85 percent share of the wireless market (see Table 6.3). As of 31 December 2017, the government-owned public sector legacy telecommunications carriers Bharat Sanchar Nigam Ltd. (BSNL) and Mahanagar Telecom Nigam Ltd. (MTNL)3 accounted for the lion’s

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Table 6.2 Internet subscribers – snapshot September 2018

Total internet subscribers Narrowband subscribers Broadband subscribers Wired internet subscribers Wireless internet subscribers Urban internet subscribers Rural internet subscribers

Number of subscribers (millions)

Subscribers per 100 population

560.01 78.30 481.70 21.25 538.76 365.94 194.07

42.87

88.26 21.76

Source: TRAI (2019, 2)

Table 6.3 Telecom service providers – market and revenue share figures – September 2018 Name Bharti Airtel Vodafone-IDEA Reliance Jio BSNL MTNL Reliance Communications Others

% Market share

% Revenue share*

29.17 36.53 21.17 10.47 0.57 0.07 2.02

26.12 29.26 32.15 7.48 2.00 0.37 2.61

*Access Service – service provider wise adjusted gross revenue Sources: TRAI (2019), Tables 1.9, 3.4

share of the dwindling wireline market, but had only a 9.5 percent share of the wireless market. The government expected that the presence of public-sector mobile operators would help drive penetration in rural areas and also keep prices low, as these operators would not be driven as much by the profit motive. Among the private operators, Reliance Jio was a relatively new entrant. It acquired spectrum for 4G in 2010 but started its service rollouts only in late 2016. It disrupted the existing mobile services market with an extremely low-priced introductory data offer and free voice calls. Reliance Jio had started with a 4G/LTE mobile broadband network and could utilize the I P network for the cheaper-cost

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Voice-over-IP (VoIP). Its aggressive marketing had led to a significant rise in its market share within a short time, but profitability was a different matter. Licences had been allocated for mobile broadband networks offering 3G and 4G/LTE services in 2014. Although their deployment was limited, often to urban areas, it was growing. The limited deployments were due to lack of devices, and to ecosystem and financial constraints on operators. While 3G services had been licensed out since 2010 (Department of Telecommunications 2010), these were mostly limited to urban areas. Large parts of the mobile network were still 2G . The gaps in tele-density, 3G and 4G/LTE network deployments, and smartphone adoption indicated the magnitude of the urban/rural digital divide in India. 2.4  Fibre Backbone The long-haul core – that is, the backbone networks connecting the major cities – was almost entirely fibre-based. Also, there was a significant amount of fibre in the middle-mile networks to the smaller cities and towns, up to the district headquarters level and sometimes down to the sub-district and block headquarters levels. It was envisaged that the BharatNet initiative to build a national optical fibre network would extend such high-bandwidth links to the level of VAUs, and also provide backhaul for last-mile mobile broadband networks (BBNL 2017). The real gap was in the last-mile network infrastructure, especially in rural areas. It is here that broadband mobile networks needed to be deployed, to narrow the urban/rural digital divide. 2.5  Digital India It is useful to look at the Indian telecommunications market within the framework of the Digital India initiative. This flagship program, covering multiple government ministries and departments, had a vision “to transform India into a digitally empowered society and knowledge economy” (Digital India 2019a). It knitted together a large number of complex ideas into a single, comprehensive vision, so that each of them could be implemented as part of a larger goal. Each individual element stood on its own but was also part of the larger picture. The program was to be implemented by the entire government, with overall coordination being done by the Department of Electronics and Information Technology (DeitY). Digital India aimed to provide a

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much needed thrust to nine pillars of growth, namely: broadband highways; universal access to mobile connectivity; a public Internet access program; e-governance: reform of government through technology; e-Kranti – electronic delivery of services; information for all; electronics manufacturing; I T for jobs; and early harvest programs (Digital India 2019b).

3  P o l icy Is s u e s a n d Major Challenges 3.1  How Can the Stark Urban/Rural Digital Divide in Telecommunications in India Be Narrowed? Addressing the stark urban/rural digital divide in India was a highpriority challenge. Many policy issues revolved around how to promote and accelerate the deployment of mobile broadband networks in rural areas. As the chapters in this book by Taylor (Chapter 7) and Mariscal (Chapter 5) demonstrate, this is not a uniquely Indian challenge. However, there are specific aspects of the divide in India, such as the proliferation of 2 G networks, that make it clear that India cannot simply follow some other country’s policy template. For 2G networks, market forces were sufficient to ensure ubiquitous deployment, and the falling prices of feature phones led to their widespread adoption and use. However, the established mobile network operators had been slow to deploy mobile broadband networks in rural areas, because of concerns regarding viability, lack of demand and profitability. If market forces were insufficient, would subsidies be required, and if so, should they be provided through the Universal Service Obligation Fund (U S O F )4 or through other fiscal measures? More provocatively, could a portion of the revenues from future spectrum auctions be retained, and then dedicated to this purpose? Other policy issues and challenges related to managing the migration of a very large part (if not all) of the 2G user base to broadband networks. There was also the issue of the re-farming of the spectrum used for 2 G networks, as these were gradually phased out. Finally, what would happen to those residual mobile users, most of them in rural areas, who: • •

then used feature phones, connected to 2G networks; and for lack of digital literacy, or for affordability reasons, were unable or unwilling to upgrade to smartphones and broadband mobile networks?

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How could “demand pull” policies be used to complement “supply push” initiatives? Many governments have launched a range of supplyside policies to accelerate broadband deployment, increase availability, and reduce costs. In India, BharatNet is an excellent supply-side example (see below). Conversely, effective design of complementary demand-side policies remains uncertain, especially with regard to security policies for maintaining the integrity of transactional services against cyber-attacks and cyber-fraud. Policy-makers in both developed and developing countries need to identify the socio-economic impacts of large broadband deployment initiatives where major public funding is involved, especially impacts that result from new and innovative uses of the infrastructure. This is very difficult to do with conventional economic analysis (see ITU 2012 for a discussion of measuring broadband impacts). While it is possible to estimate the costs of a particular initiative, it is very difficult to quantify the long-term benefits, especially the indirect ones. Policy-makers also need to define the appropriate roles of governments, beyond the traditional regulatory and spectrum management roles, recognizing the need to tailor these roles to particular national circumstances. Furthermore, there is a need to identify the optimal institutional mechanisms that can be used in a particular national context to deliver broadband infrastructure and services.

4   In f r as t ru c t u r e I ni ti ati ves a n d D e p l oy m e nt I ssues At the policy level, India recognized the role of broadband in economic growth. In 2002, T R A I recommended steps to the government to increase Internet penetration in India. Subsequently, the D oT came out with policies for broadband in 2004, and again with the National Telecom Policy (NT P ) in 2012 (Government of India 2012). Some of the 36 objectives of NTP 2012 were still very relevant to this chapter. Two of them were: •

•

Provide high-speed and high-quality broadband access to all village panchayats, through a combination of technologies, by 2014, and progressively to all villages and habitations by 2020; Ensure adequate availability of spectrum and its allocation in a transparent manner through market-related processes. Make available an additional 300 MHz of spectrum for mobile services by 2017 and another 200 MH z by 2020.

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A mobile broadband strategy, with the objective of increasing Indians’ ability to participate in the Internet economy, was important to bring about socio-economic transformation and formed a significant pillar of the Digital India initiative. It needed to be dovetailed with the fixed broadband strategy to enable efficient backhaul and middle-mile connectivity. Since backhaul in many emerging economies has significant gaps, its absence may reduce the effectiveness of mobile broadband strategies. Fixed and mobile broadband strategies are discussed below. 4.1  Fixed Broadband Despite the policy statements in NTP 2012, few significant steps were taken to extend the broadband infrastructure beyond the urban areas, and few of the targets set out in NT P 2012 were met. As of 2016–17, the balance in the Universal Service Obligation Fund (U S O F ) was US$7.41 billion. Consequently, there was mounting pressure on the government to utilize the fund. It was in this context that the Indian National Broadband Plan (NB P ) was conceived, with deployment of the National Optical Fibre Network (N O F N ) as a core part of it (Chanduka 2017). The NO F N would connect sub-district and block level towns to 250,000 V A Us with a high-speed (100 Mbps) broadband network (B B NL 2013). It was envisaged that such a network would “transform governance, service delivery and unleash local innovation capacity through rural broadband” (National Innovation Council 2010). On the demand side, the focus would be on applications for skills development and education. With this in mind, the Ministries of Health, Rural Development, Panchayati Raj (responsible for V A Us), and Human Resource Development (H R D ), and the National Council on Skill Development, were viewed as anchor clients. The N O F N was to be implemented by a newly created Special Purpose Vehicle (SP V ) called Bharat Broadband Networks Limited (BBNL 2019), a wholly owned Government of India enterprise (BBNL 2013). BBNL was comprised of staff from existing government-owned organizations, largely from D oT . Its mandate was to implement the N OFN through the following three public sector units (P S U s): 1 Bharat Sanchar Nigam Limited (BS N L ), the public-sector telecommunications carrier; 2 RailTel Corporation of India Limited (RailTel), a wholly owned subsidiary under the Ministry of Railways; and

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3 Power Grid Corporation of India Limited (P G CI L ), the central transmission utility under the Ministry of Power (Jain 2014). B SN L, Railtel, and P GC I L all have their own rights of way (RO W ) and national long-haul network infrastructure. Specific states were assigned to each of the three P SUs. To leverage the existing wired infrastructure of the P S U s, it was planned that B B N L would lease bandwidth capacity from them. However, since these organizations may not have fibre to the VAU , B B N L would be responsible for laying the same incrementally. To facilitate the rights of way (ROW), it was envisaged that BBNL would have tripartite agreements with the state governments and the executing agencies (PSUs) for each state. However, due to the poor response from the executing agencies, coordination issues between all the concerned actors, slow progress in acquisition of fibre and the associated electronics, and lack of services at the VAU level, NOFN was slow to take off. A review committee, set up to examine the progress of NOFN in 2015, came out with a modified plan for the country called BharatNet, extending the scope to include “affordable broadband connectivity of 2–20 Mbps to all rural households and institutions” and a ring architecture for redundancy (Department of Telecommunications 2015). This redesign led to a near threefold increase in fibre length to be deployed. However, by using an appropriate mix of technologies, the cost of BharatNet would be almost twice the cost of NOFN, although its operating expenditure would be lower. This would lead to lower total project life cycle costs. Furthermore, states were given the choice between having BBNL drive the implementation or driving it themselves. The plan envisaged providing middle-mile connectivity and connections through fibre to the V A U office, a school, and a hospital within the V A U. It lacked any specific mechanism for connecting at the household level or providing retail services. This was left to be managed by the private sector. The “connectivity of 2–20 Mbps to all rural households and institutions” was used only to estimate the total bandwidth required at the VAU. According to an earlier schedule, the project was to be completed by December 2017; however, the deadline was extended to December 2018, and meanwhile, the estimated cost had risen to I NR 20,000 crores (US$12 billion). BharatNet forms the telecom backbone of the Modi government’s ambitious Digital India initiative (Digital India 2019c). It

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was envisaged that private service providers would be involved in the delivery of services via wireless local networks to the end user. Such service providers would be selected through a competitive auction route. They would bid for the terminating bandwidth made available from BharatNet. Regarding affordability, it was envisaged that the government would mandate free provision of some public interest content (e.g. information on health, education, and welfare schemes). BharatNet would provide non-discriminatory access to a shared backhaul option, thus helping to reduce deployment costs and increasing the viability of last-mile deployments – an important consideration both for the established mobile carriers and for new entrants. This would help reduce the network connectivity gap and narrow the urban/rural digital divide. 4 .1 .1   Cur r e nt Stat us As of May 2018, more than 110,000 VAU s had been provided with connectivity infrastructure (B B NL 2018), but the expected target of 250,000 VAUs connectivity was not achieved by 31 December 2018. The reasons for delay were similar to those cited for N O F N . While BharatNet had envisaged private-sector participation, this aspect was not developed or implemented adequately. BBNL was constrained by the fact that it operated within the framework of BharatNet as envisaged by the DoT. It had little operational autonomy and few processes for adopting a different approach. The design of appropriate institutions for broadband deployment is therefore an important challenge. Along with this, the instruments used for implementation and execution, appropriate levels of privateand public-sector participation, and availability of funds are critical for success. 4 .1 .2   T he R o l e of Wi r e l e ss in Bh arat N e t A shortcoming of the then current formulation of BharatNet was that it did not adequately address provision of last-mile connectivity to users through wireless, in rural areas where wired connections are prohibitively expensive. As Song observes regarding Africa in chapter 3 of this book, a wireless last mile offers a more financially viable method of connectivity for developing economies. A framework for facilitating Wi-Fi deployments from the V A U could be an option. To manage Wi-Fi over the distances required from the V A U to

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surrounding villages, existing deployments from companies that use Wi-Fi-like protocols in the unlicensed bands could be explored. Such existing solutions depend on off-the-shelf products in the unlicensed 2.4 G Hz and 5.8 GH z bands. But in India, this solution is limited to products in the 2.4 GHz band, as the 5.8 GHz band was not unlicensed for outdoor use. This reduced the scope of available devices and increased costs of deployment. 4.2  Mobile Broadband As part of various National Telecom Policies (Government of India 1994, 1999, 2012), mobile services through private and public operators (Mahanagar Telecom Nigam Ltd [MTNL] for Mumbai and Delhi, B SN L for the rest of the country) had been introduced. Until 2010, when 3G and 4G spectrum was auctioned in the 2100 M H z and 2300 M H z band respectively, mobile services were provided in the 800 MHz, 900 MH z, and 1800 MHz bands. The 2G allocations were initially made on the basis of auctions; later, during 2007–8, these were made on a first-come-first-serve (F CF S ) basis. The involvement of the private sector, the increasing adoption of mobile phones, and high valuations of existing operators led to several operators acquiring licences, especially during the F CF S process, as licences came with a fixed fee, pegged at 2001 prices. Various cases were filed in the courts in India regarding the validity of the F C F S process. Based on writ petitions filed in the Supreme Court (SC) against the conduct of the F C F S process during 2007–8, the Supreme Court cancelled the 122 licences granted during that period (Times of India 2012). Furthermore, the Supreme Court mandated that allocation of all natural resources be through an auction process. This order was later modified to incorporate existing laws regarding other natural resources. However, for spectrum, auction was mandated as the allocation process. Besides paying licence fees as the winning auction prices, operators paid spectrum usage charges that escalated with the amount of spectrum they held in each of the bands. Additionally, most operators also paid charges for backhaul microwave spectrum as only about 15 percent of the towers were connected by fibre. Each of the licences came with rollout obligations in terms of population and rural coverage. These varied across bands.

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Given the huge demand to participate in the booming telecom sector in India, and the uncertainty regarding the allocations, subsequent to the court cases and the media hype, bidding in 3G and 4G auctions in 2010 was very competitive. The older established players such as Bharti Airtel, Vodafone, Idea Cellular, and Reliance Communications participated in the 3G auction. These same companies, along with new entrant Infotel, participated in the 4G auction. Very soon after winning licences for 4G in all circles, Infotel was acquired by Reliance Jio. To allow the public-sector entities BSNL and MTNL to complement their existing wireline services with mobile services, they got the spectrum ahead of private operators without participating in auctions, but at auction-determined prices. The objective of this preferential treatment was to give a head start to B SNL and M T N L in deployment of new technology. The comptroller and auditor general used the high prices of the 3G and 4G auctions as a benchmark for the “presumptive loss” to the Indian exchequer in allocating 2G spectrum using FCFS. This and the Supreme Court (SC) judgment led to an increasing focus on transparency. This was formalized in the National Telecom Policy of 2012 (Government of India 2012). N TP 2012 highlighted the need to make more spectrum available for commercial use and identified liberalization, sharing, and trading as market-oriented instruments for spectrum management. For sectors such as defence and other government use, and backhaul and backbone, spectrum was allocated administratively (Jain and Dara 2017). Given the concerns regarding “presumptive loss” and the high bids in the 3G auctions, T R A I came out with a framework for determining the reserve prices for future auctions. The winning bid price in the last recently held auction (less than a year earlier) would become the reserve price for the subsequent auctions. In order to determine the reserve prices for those bands where recent auctions had not taken place, TRAI worked out multipliers with respect to those bands where recent auctions had taken place and also took into account propagation characteristics of different bands (T RAI 2012). Pursuant to the cancellation of licences by the Supreme Court, the DoT put spectrum that was freed up in the 800 M H z, 900 M H z, and 1800 MHz bands up for auction in several rounds during late 2012/13. Taking the 2010, 2100 MHz band winning bid price as the base, the 1800 MHz band price was fixed at the same price, while the 800 MHz

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band was fixed at 1.3 times, as that was the ratio of winning bids in some European countries. The 900 MHz band reserve price was double that of 1800 MHz, as it had better propagation characteristics than the 1800 M H z band. However, there was little participation, with operators citing high reserve price as a deterrent. In 2014, TRAI had recommended that operators who had been allocated spectrum in 1994 and 1995 in the 800 MHz, 900 MHz, and 1800 MHz bands and whose licences were expiring be able to continue their services only after winning the spectrum in an open auction. To set the reserve price for this auction, TRAI used a number of methodologies such as producer surplus, consumer surplus, network engineering production function, and forecasted growth of data and then calculated a simple average as the reserve price (TRAI 2012). By 2015, 5 MHz in the 2100 MHz band had also been made available by the defence ministry. Winning spectrum in this auction was important not only for existing operators but also for those who were seeking to provide LTE services, for which strong ecosystems had emerged in the 800 MHz and 1800 MHz bands. The bidding intensity of these 2015 auctions was high, especially in circles for which contiguous spectrum, especially in the 800 MHz band (a prerequisite for LTE), was made available. Besides conducting auctions, D oT undertook harmonization of spectrum through an administrative reworking of the assignments so that operators could acquire contiguous spectrum. To further enable the operators to leverage developments in technology, whereby they could provide 3G and 4G on existing bands, DoT came up with the concept of “liberalized” spectrum. By this was meant spectrum that had been obtained from auctions and that had not been administratively allocated. (Previous bidding requirements had not specified the maximum amount of spectrum available with each licence. Operators were given the minimum amount required to start services. For example, operators were given 4.4 MHz + 4.4 MHz in the 900 MHz band and 6.2 MHz + 6.2 MHz in the 1800 MHz band as “start-up” spectrum. They could seek “additional amounts” in tranches that varied from 0.8 MHz to 2.0 MHz by linking it to number of subscribers. There was no fee for this additional allocation, although operators paid spectrum usage charges on the total amount of spectrum). “Liberalized” spectrum did not come embedded with the obligation to use a particular technology such as 2G/3G/4G – it was technology neutral. Administratively allocated spectrum could be converted to liberalized spectrum by paying the differential of the auction price and the

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administrative allocation, prorated to the remaining life of the licence. This enabled the D oT to create a framework for trading spectrum, limited to the liberalized spectrum. Only intra-band trading was allowed, as different bands had specified differential units of trading. Subsequent to the trade, each party was required to fulfill the entire rollout obligation that existed prior to the trade, unless the entire amount of spectrum held by the operator was bought/sold. Given the spectrum available with the D oT and future growth in the sector, D oT considered a multi-band auction in the 700 M H z, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, and 2500 MHz bands in 2016. Given the propagation characteristics of the 700 MHz band and its cost-effectiveness for rural areas, T RAI placed far more stringent rollout conditions for this band than for others. Since no prior auctions for this band had been held, T R A I fixed the reserve price as four times the reserve price for the 1800 M H z band. T RAI based this on valuations in European countries including Germany, Italy, and Portugal (T R A I 2016). This auction saw no takers for the 700 MHz band. The high reserve price and the fact that the 1800 MHz band had emerged as a significant ecosystem for L T E and was more highly valued than the 700 MHz band, for which the ecosystem was poorly developed, were possible reasons for this unexpected outcome (Jain 2016; Kar 2016). The spectrum made available in the 800 MHz and 900 MHz bands was very limited. The 800 MHz saw limited uptake due to the relatively high reserve prices. There were no bids for the 900 M H z band. Only 62 percent of the spectrum was sold in the 2500 MHz band as the LTE ecosystem in this band in India was not well developed. Even so, for operators who did not have spectrum in other L T E bands, this appeared as a good option. Given that networks in China, Japan, and the Philippines, among others, were supporting L T E on this band, winning bidders could expect vendors to support development of the ecosystem on this band in India in the near future. The lower reserve price than for the 2100 MHz band, comparable to 800 M H z prices, may have been a consideration for the operators (Jain 2017).

5   A n a lys i s The above highlights the role played by institutions such as the D oT, TR A I, and the Supreme Court in implementing market mechanisms for spectrum. Sector-based institutions such as DoT and T RAI were

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unable to adopt market-based mechanisms; however, an intervention by the Supreme Court mandated them. This points to a possible gap in regulatory capacity. Furthermore, the diffused scope of management between DoT and TRAI regarding spectrum has led to delays in spectrum availability and its allocation. There is a need to make more spectrum available as per the framework of N T P 2012, but there is also an imperative to find ways to enhance spectrum on the unlicensed bands. The latter is more necessary for low-cost last-mile deployments – something that is especially relevant for rural areas. Spectrum that remains unutilized loses its economic and commercial value. TRAI and DoT’s auction design, especially in terms of fixing the reserve price and the amount of spectrum made available, led to spectrum not being sold and to repeated auctions. Even when spectrum had been sold, the resulting high prices had led to a significant financial drain on existing operators. This has raised concerns about financial viability (Jain 2015). This issue of financial viability must be approached in the context of the lower buying capacity of Indian subscribers and strong competition in the market. This showcased that adopting an approach based on experiences in Europe is not appropriate. In the Indian context, there is a need to balance the contribution of spectrum auctions to government revenues (usually the primary objective of the finance department) with the socio-economic benefits that result from deployment of wireless services. 5.1  The Way Forward – Supply Side After completing Phase II of the BharatNet project (Phase I was considered to be completed by 31 December 2018), the most important initiative is spectrum allocation. A spectrum roadmap covering the next five to ten years needs to be prepared; this will have to include identifying, allocating, and reallocating (where required) 500 MHz of new spectrum, to be auctioned as per the N T P 2012 (Government of India 2012). This spectrum will be used, especially in the urban areas, for increasing the capacities and capabilities of last-mile mobile broadband networks (typically 4G/LTE) to accommodate more broadband users and bandwidth-hungry applications. Another major priority is to encourage the development of an affordable, easy-to-use, entry-level smartphone, to promote the ubiquitous adoption and use of Internet-based applications and services.

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This could double (or even triple) the use of smartphones in India. Such an entry level device must: •

•

be able to run the most widely used applications over 3G /4G /L T E broadband mobile networks; and have a price point in the I NR 2000–3000 (US$60–$80) range (Firstpost 2017).

Resources for such an initiative could come partly from auction proceeds, which could be ring-fenced. Those funds could also be used to buy back spectrum from entities that have been allocated commercially valuable spectrum but are not using it. These users include various government departments such as defence and information and broadcasting. This would help make available additional spectrum to facilitate the spread of wireless services. Furthermore, easing constraints on spectrum bands used for wireless in the unlicensed bands, as has been done in several countries, would facilitate the spread of Wi-Fi, the rapid growth of Wi-Fi hotspots, and an increase in Internet access. In keeping with global trends, D oT has been considering the framework for 5G networks in India. The minister responsible for DoT has made statements about 5G trials in 2020. TRAI has floated a consultation paper on the auction of the 3.3–3.4 GHz and 3.5–3.6 GHz bands (TRAI 2017), which are relevant for 5G . However, most operators are not keen about spectrum auctions for 5G bands in the near future, citing financial distress. Even so, companies such as Bharti Airtel are planning to undertake pretrial 5G deployments (Raj 2017). In summary, a concerted push for spectrum management is required to enable the spread of mobile broadband. 5.2  The Way Forward – Demand Side Several studies (Lin and Wu 2013; Li and Shiu 2012; Kelly and Rossotto 2012; Falch and Henten 2010) have indicated that broadband proliferation also requires a strong demand-side pull, focusing on promoting and stimulating the adoption and use of mobile broadband networks, to complement the “supply-push” initiatives described above. The Digital India initiative (Digital India 2019c) is an important element of a “demand-pull” strategy. One aim of the Digital India

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initiative is to change the population’s mindset so as to encourage non-cash and electronic transactions, thus moving India from a “cash driven” to a “less cash” economy. User adoption continues to be a challenge. This is more true of the target socio-economic categories, especially in rural India. Poor rates of literacy (especially digital literacy), relatively high costs of smartphones, and often poor connectivity in rural areas are major contributors to poor adoption. Support for relevant content development and usage may have to be provided by the government, as was done in Brazil (Neogi and Jain 2015). Integration with a variety of service delivery departments in the government, to foster citizen-relevant content, could mitigate this initial lack of demand. Additionally, in the Indian context, a strategy to use Wi-Fi as lastmile connectivity for fixed broadband should complement the mobile broadband strategy. Like other good strategies, it needs to incorporate elements from successful strategies in other countries. For example, from the Korean and Japanese strategies (Neogi and Jain 2015), it is clear that a focus on demand can drive broadband deployment, rather than the other way around. The involvement of a number of user agencies, in a national broadband strategy that is a component of the larger Digital India initiative, could also help to drive demand. 5.3  Appropriate Roles for Governments There is a broad consensus about the need for governments to play certain roles in support of a digital economy strategy or a comprehensive national broadband strategy (O E C D 2017; Cisco and I T U 2013); in India this includes both fixed and mobile broadband communications as a part of the Digital India initiative. However, there is disagreement about other roles. The areas of broad consensus include the following: •

•

The traditional role of governments in setting the market framework rules needs to continue, with: – regulatory oversight, where required; – ensuring a competitive marketplace; and – consumer protection. Efficient spectrum management and allocation/reallocation of spectrum frequencies is a key government task.

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However, the consensus breaks down when it comes to the degree of direct support that governments should provide in areas such as infrastructure deployment and demand-side policies for promoting the adoption and effective use of I C Ts by businesses and individuals. Here one can consider various options, as set out below. Options for supporting infrastructure deployment include: • •

•

Targeted tax incentives for private sector network suppliers; “Pave the dirt roads,” that is, fund the deployment of broadband infrastructures in high-cost rural/remote areas; and “Help build a digital Interstate Highway system,” an example being the Australian National Broadband Network (N BN ) initiative, particularly as originally conceived.

Also worth considering are support programs, especially targeted demand-side measures to promote the adoption and effective use of smartphones and Internet-based mobile broadband services, especially among: •

• •

Small businesses, so that they fully reap productivity and competitiveness gains; Rural residents, to help narrow the digital divide; and Disadvantaged groups, to improve social inclusion.

6   C o n c l usi ons The most important lesson of general applicability is that “one size does not fit all.” What may have proven true in North America, Europe or even China may be inappropriate in the Indian context. Furthermore, due to low per capita G D P , Indians are less able to pay for services, and this reduces the financial viability of operators (though to some extent India’s huge population makes up for it). Therefor it is imperative that spectrum auctions not be seen merely as a means to fill government coffers. The socio-economic benefits to citizens, and the increasing competitiveness of the economy consequent to the adoption of mobile broadband, should be the drivers for Indian policy-makers to devise and deploy a mobile broadband strategy tailored to the Indian context.

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Proposed broadband strategies and the role of governments must be designed to fit particular national market and institutional structures, taking geography and demographics into account. For example, many national strategies in developed countries (e.g., Singapore, South Korea, Japan, Australia) focus mainly on the deployment of fibre optic broadband wireline networks, such as fibre-to-the-premises/home (FTTP/FTTH) or fibre-to-the-node (FTTN). However, in a country like India, where there are more than fifty times as many cellphone users as wireline phone ones, wireless technologies, both fixed and mobile, must play a crucially important role in universal broadband deployment and last-mile access. Unlike other telecom networks, mobile broadband deployment requires coordination across a variety of ecosystem partners such as device manufacturers, broadcasters, telecommunications carriers, cable operators, and content and application developers. Effective broadband deployment requires the design of institutions with adequate scope, as well as a delicate balancing of the roles of existing agencies. In developing countries, government funding is often necessary to kick-start broadband deployment, for it requires huge capital investment and short-term returns are uncertain due to demand risks. The business case for broadband deployment in rural areas is even more problematic. However, the availability of such infrastructure is the basic building block for leveraging the benefits of broadband services (Falch and Henten 2018; Jain 2014; Katz and Callorda 2018; Yamakawa, Cadillo, and Tornero 2012). Therefor it is imperative that governments of developing countries take up this issue on a priority basis. In general, it is appropriate for developing countries to consider mobile and wireless broadband as a means to address the urban/rural digital divide. There appears to be a continuous increase in wireless broadband services in such countries as a result of the deployment of mobile broadband networks and 3G or 4G/LTE enabled handsets and devices. In India the migration of the narrowband 2G network user base to broadband networks is an immediate priority; transition to 5G is also being planned by the government, although operators are not very enthusiastic (Parbat 2017). Based on the above discussion, an obvious conclusion is that governments need to take a broader perspective than infrastructure deployment alone, simultaneously focusing on the creation and nurturing of various elements in the Internet ecosystem.

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N otes  1 The gram panchayat (G P) or village administrative unit (V A U) is the lowest level of local government in the rural areas. GPs are grouped into blocks, which are the smallest economic development areas. Blocks in turn are grouped into sub-districts and districts. The district is the administrative unit below the state level. A district headquarters is usually a town or small city; it has a district magistrate, a public hospital, and secondary and post-secondary educational facilities.   2 Note that as individuals may subscribe to more than one service, subscription and subscriber numbers do not indicate how many unique individuals are using these services. The I TU reports that despite the large numbers of subscribers, as of 2016 more than 40 percent of the Indian population did not own a mobile phone and that about 20 percent didn’t use a mobile phone (International Telecommunication Union 2016).   3 Bharat Sanchar Nigam Ltd. (BS N L) and Mahanagar Telecom Nigam Ltd. (MT NL ) are government-owned telecommunications service providers in India. Like British Telecom in the U K, they have evolved from the old Department of Posts and Telegraphs (PTT), which was responsible for providing wireline public switched telephone services (PSTNs). B SNL operates throughout India except in metropolitan New Delhi and Mumbai, where the operations are managed by M TN L. Both public sector telcos are also licensed to provide mobile services.   4 The Department of Telecommunications set up the USOF in 2002 to provide support for infrastructure and services in rural areas. All telecom service companies contribute 5 percent of their aggregate gross revenue to the US O F . See Mohan (2016) for an overview of the fund.

r efer e nc e s B B NL (Bharat Broadband Network Limited). 2013. “1st Annual Report.” http://www.bbnl.nic.in//admnis/admin/showimg.aspx?ID=96. – 2017. “5th Annual Report 2016–2017.” http://www.bbnl.nic.in//­ admnis/admin/showimg.aspx?ID=1025. – 2018. “Status of Bharatnet as of September 24, 2018.” 24 September. http://www.bbnl.nic.in/index1.aspx?lsid=570&lev=2&lid=467&lan gid=1. – 2019. http://www.bbnl.nic.in, 11 April. Chanduka, Deepak. 2017. “National Broadband Plan: Strategies, Design, and Implementation.” http://trai.gov.in/sites/default/files/presentations_

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&_cv/Day-2_24Aug2017/Session2_Nnal%20Bband%20Plan/ N’nal%20B’band%20Plan_Deepak%20Chanduka.pdf. Cisco and International Telecommunication Union. 2013. “Planning for Progress: Why National Broadband Plans Matter.” http://www.­ broadbandcommission.org/documents/reportNBP2013.pdf. Department of Telecommunications. 2010. “Auction of 3G and B WA Spectrum – Notice Inviting Applications.” Government of India. http:// www.dot.gov.in/sites/default/files/3G%20%26%20BWA%20Auctions_ Notice%20Inviting%20Applications_0.pdf. – 2014. “Auction of Spectrum – February, 2014 (1800 Mhz and 900 Mhz Bands).” Government of India. February 2014. http://dot.gov.in/ spectrum-management/2462. – 2015. “Report of the Committee on National Optical Fibre Network (NO F N).” Government of India. http://www.dot.gov.in/sites/default/files/ Report%20of%20the%20Committee%20on%20NOFN.pdf. – 2019. “Spectrum Management.” Government of India, 25 April. http:// www.dot.gov.in/spectrum. Digital India. 2019a. “The Digital India programme is a flagship programme of the Government of India with a vision to transform India into a digitally empowered society and knowledge economy.” Version 1. Ministry of Electronics and Information Technology, 13 March. http://www.­ digitalindia.gov.in/content/about-programme. – 2019b. “How Digital India will be realized: Pillars of Digital India.” Ministry of Electronics and Information Technology, 13 March. https:// digitalindia.gov.in/content/programme-pillars. – 2019c. “The Digital India programme is a flagship programme of the Government of India with a vision to transform India into a digitally empowered society and knowledge economy.” Version 2. Ministry of Electronics and Information Technology, 13 March 13. http://digital​ india.gov.in/content/introduction. Falch, Morten, and Anders Henten. 2010. “Public Private Partnerships as a Tool for Stimulating Investments in Broadband.” Telecommunications Policy 34(9): 496–504. – 2018. “Dimensions of Broadband Policies and Developments.” Telecommunications Policy 42(9): 715–25. doi: https://doi.org/10.1016/ j.telpol.2017.11.004. Firstpost. 2017. “Google C E O Sundar Pichai Wants Entry Level Smartphone Prices to Come Down to R S 2000.” 5 January. https://www.firstpost.com/tech/news-analysis/google-ceo-sundar-pichai-wants-entry-levelsmartphone-prices-to-come-down-to-rs-2000-3695423.html.

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Government of India. 1994. “National Telecom Policy 1994.” Department of Telecommunications. http://www.dot.gov.in/national-telecom-policy1994. – 1999. “New Telecom Policy 1999.” Department of Telecommunications. http://www.dot.gov.in/new-telecom-policy-1999. – 2012. “National Telecom Policy 2012.” Ministry of Communications and I T, Department of Telecommunications. http://www.dot.gov.in/ relatedlinks/national-telecom-policy-2012. Hindu BusinessLine. 2018. “Bharat Net Phase-2 may be complete before schedule.” 8 January 2018. https://www.thehindubusinessline.com/infotech/bharat-net-phase2-may-be-complete-before-schedule/article 10019708.ece. I T U (International Telecommunication Union). 2012. “Impact of Broadband on the Economy: Research to Date and Policy Issues.” http:// www.itu.int/ITU-D/treg/broadband/ITU-BB-Reports_Impact-ofBroadband-on-the-Economy.pdf. – 2016. “Measuring the Information Society Report.” http://www.itu.int/ en/ITU-D/Statistics/Pages/publications/mis2016.aspx. Jain, Rekha. 2014. “The Indian Broadband Plan: A Review and Implications for Theory.” Telecommunications Policy 38(3): 278–90. – 2015. “Lessons from the spectrum auction.” LiveMint, 11 May. https:// www.livemint.com/Opinion/hFRtcvICDI3Ru21pM1H2UI/Lessonsfrom-the-spectrum-auction.html. – 2016. “TRAI ’s Approach to Valuing the ‘Digital Dividend’ Band.” LiveMint, 17 May. http://www.livemint.com/Industry/bPPKq6AkT8eVnf642nu3qI/Trais-approach-to-valuing-the-digital-dividend-band.html. – 2017. “The Devil Is in the Details: Lessons from the Indian Spectrum Auctions.” 45th Annual Telecommunications Policy Research Conference, Arlington, VA. http://dx.doi.org/10.2139/ssrn.2943904. Jain, Rekha, and Rishabh Dara. 2017. “Framework for Evolving Spectrum Management Regimes: Lessons from India.” Telecommunications Policy 41(5–6): 473–85. Kar, Parag. 2016. “Pricing Rationale of 700 MHz Band.” LinkedIn. https:// www.linkedin.com/pulse/pricing-rationale-700-mhz-band-parag-kar. Katz, Raul, and Fernando Callorda. 2018. “Accelerating the Development of Latin American Digital Ecosystem and Implications for Broadband Policy.” Telecommunications Policy 42(9): 661–81. doi: https://doi. org/10.1016/j.telpol.2017.11.002. Kelly, Tim, and Carlo Maria Rossotto. 2012. Broadband Strategies Handbook. Washington: International Bank for Reconstruction and

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Development/International Development Association or the World Bank. Li, Raymond, and Alice Shiu. 2012. “Internet Diffusion in China: A Dynamic Panel Data Analysis.” Telecommunications Policy 36(10–11): 872–87. Lin, Mao-Shong, and Feng-Shang Wu. 2013. “Identifying the Determinants of Broadband Adoption by Diffusion Stage in OEC D Countries.” Telecommunications Policy 37(4-5): 241–51. Mohan, Saurabh. 2016. “U S OF: Role and Responsibilities.” Department of Telecommunications, Ministry of Communication and Information Technology. http://www.usof.gov.in/usof-cms/miscellaneous/USOF_ brief.pdf. National Innovation Council. 2010. “National Optical Fibre Network (NO F N).” http://innovationcouncilarchive.nic.in/index. php?option=com_content&view=article&id=318&Itemid=101. Neogi, Prabir, and Rekha Jain. 2015. “Mobile Communications Policies and National Broadband Strategies in Developed and Developing Countries: Lessons, Policy Issues, and Challenges.” 43rd Annual Telecommunications Policy Research Conference, Arlington, V A . O E C D (Organisation for Economic Co-operation and Development). 2017. “Going Digital: Making the Transformation Work for Growth and Well-Being.” https://www.oecd.org/mcm/documents/C-MIN-20174%20EN.pdf. Parbat, Kalyan. 2017. “Trai seeks views on sale of 5G services spectrum, other bands.” The Economic Times, 29 August 2017. http://economic​ times.indiatimes.com/news/economy/policy/trai-issues-consultationpaper-on-spectrum-auctions/articleshow/60259001.cms. Raj, Amrit. 2017. “Move over 4G, India sets eyes on 5G launch by 2020.” LiveMint, 27 September. http://www.livemint.com/Industry/ icJdOdAaAclQMr2Er7kOsL/5G-services-Govt-sets-up-panel-eyesrollout-by-2020.html. Times of India. 2012. “2G scam: S C scraps 122 licences granted under Raja’s tenure, trial court to decide on Chidambaram’s role.” 2 February. http://timesofindia.indiatimes.com/india/2 G-scam-SC-scraps-122-­ licences-granted-under-Rajas-tenure-trial-court-to-decide-onChidambarams-role/articleshow/11725097.cms. T R A I (Telecom Regulatory Authority of India). 2012. “Recommendations on Auction of Spectrum.” http://www.trai.gov.in/sites/default/files/ Finally%20final%20recommendations230412.pdf.

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– 2016. “Recommendations on Valuation and Reserve Price of Spectrum in 700M Hz, 800M Hz, 900M Hz, 1800MHz, 2100MHz, 2300MHz, and 2500M Hz Bands.” http://www.trai.gov.in/sites/default/files/ Recc_27_1_2016.pdf. – 2017. “Consultation Paper on Auction of Spectrum in 700 MHz, 800 MHz, 900 MH z, 1800 M Hz, 2100 M Hz, 2300 MHz, 2500 MHz, 3300–3400 MH z and 3400–3600 M Hz Bands.” https://www.trai.gov.in/sites/default/ files/Spectrum_CP_28082017.pdf. – 2019. “Yearly Performance Indicators of Indian Telecom Sector, September 2018.” https://main.trai.gov.in/sites/default/files/PIR 08012019.pdf. Worldometres. 2018. “India Population (LIV E).” http://www.worldo­ meters.info/world-population/india-population. Accessed 15 March. Yamakawa, Peter, Gloria Cadillo, and Rubén Tornero. 2012. “Critical Factors for the Expansion of Broadband in Developing Countries: The Case of Peru.” Telecommunications Policy 36(7): 560–70.

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7 Bridging the Urban–Rural Digital Divide: The Case of Remote Rural Broadband Systems in Canada Gregory Taylor

1   In t ro du c ti on For much of the world, “Canada” conjures up notions of vast empty space. And as anyone who has driven across the expansive country or even flown over it on a clear day can tell you, the overwhelming majority of Canada is indeed sparsely inhabited. The national population of approximately 37 million people is scattered in pockets around the country: cities such as Toronto, Montreal, and Vancouver may achieve a higher degree of population density (3,009, 2,719, and 2,584 people per square kilometre respectively), but the national density for Canada is only 3.9 people per square kilometre (Statistics Canada 2017). Approximately 85 percent of Canadians live in cities, and that number is rising. In the second-largest country by land mass in the world, there is a lot of space between inhabitants. Despite the obvious challenges, the stated goal of equity of access to communications services in all regions is a regular refrain in Canadian communications policy. The discrepancies between Canada’s metropolitan centres and its rural hinterland has been a central feature of the history of Canadian communications, as outlined in the 1950s by Canadian scholar Harold Innis (Innis and Drache 1995). Broadband is the latest in a series of communications cleavages between urban and rural Canada, from the telephone to broadcasting, which have posed a challenge for national connectivity. Market failure is a consistent feature of communications in rural Canada, and this has prompted

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government to play an active role to entice development. The Telecommunications Policy Review Panel Final Report 2006 outlined efforts by the Canadian government to promote wired broadband access in underserved areas; such efforts included the Connecting Canadians program in the 1990s and the Broadband for Rural and Northern Development (B R A N D ) program that ran from 2002 to 2007 (Telecommunications Policy Review Panel 2006, 8–3). BRAND was in turn superseded by the 2009 announcement of the Broadband Canada: Connecting Rural Canadians program, which ran until 2012 (Industry Canada 2010). The most recent government program is called Connect to Innovate, a $500 million initiative to bring highspeed Internet to 300 rural and remote communities in Canada by 2021 (Innovation, Science and Economic Development 2018a). Rural broadband policy announcements have proven a popular pastime for Canadian politicians; however, broadband in rural areas remains stubbornly mired in lower speeds and higher prices. Data from the national communications regulator, the Canadian Radiotelevision and Telecommunications Commission (CRTC), demonstrate that basic broadband coverage (under 5 Mbps) in Canada is fairly uniform; however, rural areas quickly drop in comparison to their urban compatriots when higher broadband speeds are factored in (C R T C 2017, Figure 5.3.17). The following table includes various broadband services: D S L /fibre, cable modem, fixed wireless, and mobile (the H S P A + and L T E bars show the additional effect that inclusion of these technologies have on the respective categories). Low-level wireless packages are similarly priced in urban and rural Canada; however, advanced packages see a strong price differential. A 1G B data plan starts at $34 in urban Alberta and Ontario, but the same plan costs $43 in rural Alberta and Ontario (C R T C 2017, Figure 5.5.23). A 2 GB data plan that sells for $35 in urban Alberta and Ontario is priced at $65 in rural Alberta and Ontario (CRTC 2017, Figure 5.5.25). More detailed data on rural Canadian connectivity are frustratingly sparse. A 2014 Nordicity study commissioned by the Federation of Canadian Municipalities notes that impeding an assessment of the state of broadband in Canada is the lack of complete data. Anecdotally, we often hear messages regarding the poor state of Internet access in Canada, particularly in rural and remote areas, while simultaneously being told

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Availability (% of households)

100

80

60

40

20

0

1.5 - 4.9

5 - 9.9

10 -15.9

16 - 24.9

25 - 29.9

30 - 49.9

50 - 99.9

100 +

Download speed (Mbps)

Large population centres Rural areas

Medium population centres HSPA +

and LTE

Small population centres

Figure 7.1  Broadband service availability – urban vs. rural (% of households), 2016 Source: Canadian Radio-television and Telecommunications Commission (2017), Figure 5.3.17

that network operators are pouring billions of dollars into network improvements. Detailed information is a closely guarded secret and, the information that is publicly available is often not completely representative of the situation. (Federation of Canadian Municipalities 2014, 8) The demand for connectivity in rural Canada is clearly there, which is why politicians have spent a great deal of political and financial capital trying to bridge this element of the digital divide (Federation of Canadian Municipalities 2014). Politicians are aware that the advantage of broadband access in rural and remote Canada is strongly felt by residents. The Remote Rural Broadband Systems (RRBS) policy was another government effort to ease the isolation felt in rural and remote areas of the country by allowing use of the abundant local resource of vacant 600 M H z television spectrum for broadband deployment. This was a plan to further the national goal of rural digital development via new spectrum allocation and licensing

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procedures. As a case study, R R B S in Canada provides a useful template for countries struggling with their own digital divides. Over-the-air (O T A ) television broadcasting has few viewers in Canada, and after the digital television transition of 2011, many broadcasters, including the national public broadcaster, the Canadian Broadcasting Corporation (CBC), ceased OTA transmissions in all but the major urban centres of the country (Taylor 2013). R R B S is a Canadian wireless policy initiative that holds great promise: it encourages and supports new entrants into the wireless broadband sector; it makes use of spectrum that is by and large idle; it explicitly seeks to expand service into underserved areas; and the signal provided by these frequencies offers strong propagation qualities, with the ability to penetrate a common obstacle in rural Canada: trees. Despite early signs of promise, however, in 2018 RRBS is struggling in Canada and may soon find itself jettisoned to the dustbin of ambitious but under-realized communications policy. After an encouraging start, the overwhelming majority of Canadian R R B S providers have either folded their businesses or moved on to other, more established methods of delivering service, such as wired access or utilizing 3500 MHz spectrum, which may also face reassignment in the coming years (ISED 2018c). The problems encountered with RRBS were not due to a spectrum shortage. Television white space is abundant. This made-in-Canada approach to providing rural broadband access has largely been constrained by regulatory indecisiveness. It has never received the institutional support required to turn a bold initiative into lasting policy. RRBS is a policy approach with potential to reshape the market, albeit a limited section of the market in which large providers lack incentive to expand. It offers a case study of how regulatory uncertainty can prove an impediment to digital development. With RRBS, the Canadian regulator offered an innovative policy approach to address a stubborn problem. If it officially comes to an end, R R B S will be a victim of Canada’s subordinate telecommunications policy structure vis-à-vis its American neighbour, as well as a lack of commitment by Canada’s spectrum regulator to offer support for small-market entrepreneurs in the wireless sector. This chapter explores the history and development of RRBS policy in Canada as it moved from a secondary concept in a 2004 Industry Canada call for comments, to a bold communications policy initiative to use Canada’s vast space to its advantage. It chronicles the Gold

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Rush–like scene shortly after the policy launch, followed by a precipitous drop in licensed RRBS providers within two short years. The R R B S story is of value to spectrum regulators worldwide who are searching for innovative initiatives to address the stubborn problem of rural access. In their chapter on India, Jain and Neogi write that “the real gap is in the last-mile network infrastructure, especially in the rural areas. It is here that broadband mobile networks need to be deployed, to narrow the urban/rural digital divide” (Chapter 6). While R R B S is fixed, not mobile, it is designed to address similar concerns about quality of access in rural regions. This work is based on primary sources from Industry Canada (renamed Innovation, Science, and Economic Development, or ISED, in 2015). It also offers first-hand accounts from small wireless service providers, who saw so much promise in this new approach that they maintained R R B S services after most other licensed providers in the market had ceased operations. The views of these providers illuminate the impact of this policy on the ground, where entrepreneurs are trying to gain a foothold in the oligopolistic and capital-intensive wireless industry. RRBS service providers are usually small businesses offering fixed wireless in areas where major providers see little economic incentive to provide service. The remaining RRBS operators often survive via cooperative efforts that harken to an earlier western Canadian economic experience of assisting fellow small business people for mutual benefit. Their insights into the potentials and shortcomings of R R B S and why this policy was – and in the view of many service providers, remains – particularly suitable for the Canadian wireless market are discussed below.

2   D e f in in g RRBS “These systems, called R R B S, are unique to Canada and are established on a no-protection, no-interference basis with respect to all TV broadcast stations, including low-power and very low-power T V ” (Industry Canada 2011a). In her chapter on Mexico’s Red Compartida, Judith Mariscal writes “the original objective … being a mechanism to deploy broadband to remote and underserved areas is a target that has been elusive for many countries” (Chapter 5). This certainly describes the Canadian experience. RRBS was a policy initiative to provide fixed wireless broadband

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access to rural and remote areas via unutilized analog television waves in the 614–698 MHz frequency bands (or channels 21 to 51, except for channel 37, which is allocated for radio astronomy service). At 6 MHz per licence, this should mean potentially up to fourteen licences in areas that meet R R B S criteria, though this number rarely, if ever, materialized. Distinct from unlicensed, such as Wi-Fi, or shared infrastructure or wholesale access (Sims, Youell, and Womersley 2015), RRBS providers are largely independent operators licensed under strict conditions.1 RRBS service is fixed service offered on a subscriber basis. Under the R R B S policy, any broadcasting licensee in a given area has priority; however, the fixed wireless provider is licensed and allowed access on a non-interference basis. RRBS service providers use base stations and fixed customer premises equipment. Base stations operate at up to 500 watts and can provide service to a radius of 2 to 20 kilometres, depending on the equipment used and physical encumbrances (Industry Canada 2011a). As a secondary service, R R B S operators are not entitled to claim protection from broadcasting services and cannot cause interference to them. Frequencies for RRBS are assigned on a 6 MHz block basis, with upper and lower boundary frequencies identical to the 6 MHz broadcast channel plan. A maximum of two channels (12 MH z) can be assigned in the same market to the same licensee (Industry Canada 2007). The R R B S program accommodates required coordination with Canada’s American neighbours. In 2001, the United States and Canada codified spectrum use along the border (including the Alaskan border) to ensure there would be no interference to broadcasters in either country (Industry Canada 2001). This was updated in 2008 to formalize allotments and assignments within 360 kilometres of the borders (including Alaska) upon completion of the digital television transition, which in turn impacted R R B S regulations (Canada Gazette 2008). There are strict geographic parameters for this service. RRBS licence holders can only operate: 1 in rural remote communities where applied-for spectrum is not being used for broadcasting service; 2 in locations that are more than 121 kilometres from the Canada–US border; and 3 at a sufficient distance from major urban areas and broadcasting facilities (see Industry Canada maps discussed below).

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Furthermore, any R R B S service within 400 kilometres of the US border is subject to non-interference regulations with US signals – a major headache for R R B S providers, which is one reason many providers are much farther north than the required 121 kilometres (Industry Canada 2011b). RRBS offered a rare case in Canadian communications of the North being advantaged. This also eliminated a large portion of the marketplace, since nearly two thirds of Canadians live less than one hundred kilometres from the US border, a land mass that accounts for only approximately 4 percent of the total area of Canada (Statistics Canada 2006). The requirements of distance from the US border, coupled with strict non-interference regulations with urban broadcasters, means that R R B S is not an option in the most populous regions; however, large swaths of the country stand to benefit. The RRBS policy drew few objections during consultations, largely because the quality of service of incumbent broadcasters on this spectrum was never compromised. Broadcasters maintained priority. Smaller fixed-broadband providers make use of spectrum that would otherwise sit idle. Given the wide swaths of lightly populated areas of Canada with little broadcasting service, the RRBS geographical restrictions still leave much of the country viable for those who wish to offer wireless service on the sought-after television frequencies. RRBS is particularly well-designed for the northern and rural Canadian context. In an interview, Robert Wu of the Ottawa-based communications hardware manufacturer 6 Harmonics described RRBS as “something that’s really economic and well fit to our environment … This (RRBS) standard has a really Canadian flavour. So no other country has this similar standard” (Wu 2016). Wu had reason to support the initiative. The unique Canadian standard also allowed companies like 6 Harmonics and Vecima Networks of Saskatchewan to gain a foothold in the wireless hardware market, an industry that has often proven difficult for Canadian companies. Vested interest aside, Wu’s observation is correct that in the beginning RRBS seemed to have found the sweet spot for wireless policy suitable for Canada’s vast hinterland. Descriptors like “remote” and “rural” can prove relative in a country with the second-largest national land mass in the world but only the thirty-ninth largest population (Central Intelligence Agency 2017). For this reason the R R B S regulations are precise: “these communities are defined as areas that have fewer than 100,000 people living within a fifty kilometre radius, and are located at a sufficient

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distance from major population centres to avoid causing interference to local broadcasting facilities and their service contour” (Industry Canada 2011b). The maps included in Annex A of the Industry Canada 2011 report, “Licensing Procedure for Remote Rural Broadband Systems (Rrbs) Operating in the Band 512-698 MHz (TV Channels 21 to 51),” move from east to west across Canada along the US border and offer a clear glimpse of the geographic potentials of RRBS. Shaded areas are either too populous or too close to urban centres to qualify for RRBS service, or are too close to the US border and therefore ineligible. (Industry Canada 2011b, Appendix A).2 The vast white areas indicate large regions of the Canadian territory that are open to R R B S service, even if the majority of the population is excluded.

3   G l o ba l C o m pari sons R R B S may have a “made in Canada” stamp on the policy; however, it bears a strong resemblance to spectrum assignment methods outlined in other jurisdictions. RRBS utilizes what UK spectrum scholars Martin Cave and William Webb call “vertical sharing”; under this approach to spectrum allocation, “a licensee is identified which typically has a prior right of access, but others obeying certain rules requiring them not to interfere with that licensee or with one another can also be accommodated” (Cave and Webb 2015, 47). In the Canadian R R B S example, a television broadcaster still has right of access, and the R R B S provider has no protection and must not interfere with any nearby broadcasting signal. Many R R B S providers complain of having to change their transmission range if a television broadcaster decides to increase power from their transmitter. Under the policy, the R R B S provider has no recourse in this situation and must make adjustments. R R B S also largely echoes Europe’s Licensed Shared Access (L S A), also cited in Doyle and colleagues’ chapter on open access spectrum markets (Chapter 10). LSA is defined by Radio Spectrum Policy Group in Europe as a regulatory approach aiming to facilitate the introduction of radiocommunications systems operated by a limited number of licensees under an individual licensing regime in a frequency

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band already assigned or expected to be assigned to one or more incumbent users. Under the licensed shared access (L S A) approach, the additional users are authorized to use the spectrum (or part of the spectrum) in accordance with sharing rules included in their rights of use of spectrum, thereby allowing all the authorized users, including incumbents, to provide a certain quality of service” (Mazar 2016, 308). Unlike RRBS, LSA is not restricted to use by fixed wireless providers. It is open to a broader range of deployment. In the United States, the F C C has made efforts to encourage new wireless Internet service providers (WI S P s) on the 3650–3700 M H z band with the explicit goal of expanding service in rural America (FCC 2005). The program began in 2007 with licences granted on ten-year terms, subject to renewal. The program proved short-lived. Starting in April 2015, the F C C ceased to issue new licences for the 3650– 3700 MH z band for WI SP s. The 3650 M H z band would folded into the 3550–3700 MH z band in the Citizens Broadband Radio Service program, a spectrum sharing program adopted by the F C C (F C C 2015). Regulatory uncertainty regarding the future of rural programs in the United States, including white space (largely in the 600 M H z band and, like Canadian R R B S, impacted by the incentive auction) and educational broadband spectrum (2.5 GHz, allotted to educational institutions), was noted in a recent American study (Yankelevich, Shapiro, and Dutton 2017). Other countries may have similar approaches but none completely mirror the Canadian policy. R R B S had higher transmission power than TV W S devices, and as of 2018 there is no central database, as is the case in the US and the UK (Industry Canada 2012). The 600 MHz frequencies offer strong propagation characteristics; as a result, spectrum of this quality is often out of range of the budgets of small broadband providers. The important 700 M H z auction of 2014 and the A WS-3 auction of 2015 offered tier 2 service areas, which meant participants would have to bid on the entire province of Alberta – out of the question for smaller-service I S P s. Smaller tier 4 licences are rarely on offer at spectrum auctions – in recent years only in the Northwest Territories, Yukon, and Nunavut (Industry Canada 2014b). The government did not offer direct funding to potential RRBS providers, only affordable spectrum access, which was key for small wireless service operators.

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4   D e v e l o p m e n t : T h e Road to RRBS RRBS began inauspiciously enough: in 2004, it was the last item on a topic list for “SP-746 MHz Issue 1 – Mobile Service Allocation Decision and Designation of Spectrum for Public Safety in the Frequency Band 746–806 M H z” (Industry Canada 2004). The change in allotment at the 2000 World Radiocommunication Conference (International Telecommunication Union 2000) had freed up the potentials for this band, and Industry Canada opened the door to suggestions for potential uses, including “advanced communication services” and licensing options. While spectrum for public safety in Canada was the key focus of this announcement, under a section called “Further Consideration: Facilitating Advanced Communications in Remote Rural and Northern Communities,” Industry Canada was clear that connecting the hinterland was a central priority for the government and expressed particular concern with communication access in Canada’s expansive northern regions. “It has been the long-standing approach of the Department to facilitate advanced communications services in high cost serving areas such as remote rural and northern communities” (Industry Canada 2004). Industry Canada, the spectrum regulator, sought comments on its idea for the significant amount of television broadcasting spectrum (channels 2 to 59) neither used, nor allotted, in rural and remote communities to be used to extend access to advanced broadcasting and telecommunications services, including broadband Internet access and wireless broadcast distribution. The initial call for comments in 2004 was decidedly wide-ranging, asking for reactions to the following: 1 the potential uses of this spectrum to provide advanced communications including broadband Internet access and wireless broadcast distribution; and 2 whether temporary or permanent authorization should be granted and, if so, in either case under what conditions (Industry Canada 2004). Early reaction to this initiative was not overwhelming: only three groups responded to this particular call from the regulator. The Canadian Association of Broadcasters did not oppose the idea  but requested that any future proposals regarding authorizing non-broadcasting services on T V bands be limited to

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“individually-licensed services” rather than “licence-exempt facilities,” because the latter approach could not be policed as effectively for issues of interference with broadcasters (Canadian Association of Broadcasters 2005). The Canadian Cable Telecommunications Association (C C T A ) supported the idea of bringing advanced communications to the North but also advocated that coaxial cable operators be allowed to access spectrum to complement their television distribution networks. The C C T A also called for permanent authorization for its members to access this spectrum (Hennessy 2015). A third voice was provided by a small Manitoba Internet service provider, Rainy Day Software Corporation / Rainy Day Internet Service (now Voyageur Internet). Rainy Day was concerned about rampant unlicensed use causing interference in these limited frequencies and recommended that spectrum within the 700 M H z band be allocated for “professional wireless operators seeking to provide public or private broadband services” (Rainy Day Software Corp 2005). Rainy Day also suggested granting licences for pilot wireless projects in rural and remote areas. However limited, there was positive response (and little opposition) to the idea of using this high-quality spectrum for advanced communications in rural and northern communities. In 2006, Industry Canada issued the following statement concerning its call for comment on “Facilitating Advanced Communications in Remote Rural and Northern Communities”: “Respondents generally supported the use of this spectrum to promote advanced radio services in remote and rural communities. Comments from the broadcasting community sought further definition of the term ‘rural.’ In addition, it was felt that as long as the allocation remains exclusive to the broadcasting service, any licensing should be on a non-standard basis” (Industry Canada 2006). In short, broadcasters would not oppose provided they still had priority access to the spectrum should they choose to deploy on those frequencies. In this case, policy took the lead where private industry had hesitated: the impetus to make use of underused spectrum was coming from Ottawa, where Industry Canada demonstrated a disposition toward flexible regulation. The term “northern” was removed from future descriptions, for the department recognized that there were certain unserved and underserved regions that would benefit from this new policy that were rural and remote – however, northern is a relative concept in a country with as much Arctic geography as Canada. Still, later qualifications of distance from the US border ensured that the

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Canadian North would be a key beneficiary of the policy – a rare “win” for the Far North in terms of communication infrastructure. In March 2007, Industry Canada released the licensing procedure for this new initiative (Industry Canada 2007). This was when Industry Canada began using the term “Remote Rural Broadband Systems” to refer to this effort to extend broadband access to sparsely populated areas of Canada. This document formalized the rules for obtaining a licence and the technical requirements for operating a fixed wireless system on this band. This licensing procedure was replaced in 2011; the updated version offers the following concise definition of RRBS : “Remote Rural Broadband System means a fixed station that offers a fixed service and operates in the 512–608 M H z and 614–698 M H z frequency bands” (Industry Canada 2011b). Industry Canada also threw cold water on cable television companies that were looking to expand their footprint: “only subscriberbased broadband Internet applications will be allowed for licensing at this time” (Industry Canada 2007). Certainly the price was right for upstart service operators. Until 2011, licences had been awarded for a flat fee of $242 per 6 M H z channel. That changed with Industry Canada’s 2011 update of the licensing procedure for RRBS. After that, the cost to the licensed provider was based on a sliding scale, with the cost reflecting the size and speed of the operation, and with a sample licence fee costing $84 (Industry Canada 2011b). Shortly after the initial 2007 licensing procedure was released, wireless broadband providers across the country began organizing to access these available and affordable frequencies. In an era of overvalued spectrum auctions, access to high-quality spectrum licences at a low price, even in remote areas of the country, seemed like too good a deal to pass up. Industry Canada announced that licences would be reviewed on a first-come-first-served basis and that “the Department will permit as many applicants as the spectrum availability permits within a particular geographical area” (Industry Canada 2007). A wireless Gold Rush was on.

5   R e s ults 5.1  New Market Players (in Primarily One Province) Initial interest in offering R R B S services was strong. By the spring of 2011, Industry Canada had issued 555 licences for RRBS operations

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in Canada to a total of fourteen licensees (Industry Canada 2011a). The vast majority of the licensees were new players in the wireless market. This was welcome news in a sector that had struggled to find alternatives to the concentrated power of the big three wireless providers: Rogers, Telus, and Bell. In 2011, the big three accounted for 91 percent of wireless subscriber market share and 93 percent of the revenue market share in Canada (C R TC 2012). This growth of new players in the sector was most pronounced in one province. The overwhelming majority of the licences issued, 80 percent, were for the western province of Alberta. In 2011, Industry Canada announced that geographic distribution of RRBS licences was: • • • • • •

7 in British Columbia; 450 in Alberta; 56 in Saskatchewan; 36 in Ontario; 5 in Quebec; and 1 in Nunavut (Industry Canada 2011b)

What was it about Alberta that made it the overwhelming leader in RRBS adoption in Canada? Alberta’s culture of entrepreneurship has been described as the strongest in the country (Toneguzzi 2015). But that province’s overwhelming dominance in this new area of Canadian wireless was not all attributable to individual drive – some of the RRBS providers received government funding from various federal broadband initiatives. Government submissions and interviews with RRBS providers3 in 2016 pointed to a few different reasons for the strong R R B S/Alberta connection. Geography and population densities certainly played a factor. Much of Alberta is prairie dotted with large farm properties and so is ideally suited to RRBS. As described by Brenda Bouchette of ABC Communications: “You put up a decent tower in Alberta or Saskatchewan … and you can cover a huge range. And the population patterns in Alberta and Saskatchewan are … sparsely distributed to evenly distributed. So, there’s the large farms and … a pretty even, yet low, distribution of households that you could sell to.” Because 600 M H z signals have strong propagation qualities, fewer towers are required to reach a widely dispersed audience, although the low spectrum was not a panacea for all problems. Physical barriers such as trees and, beyond the prairies, hills remained problematic even with this prime spectrum and continued to pose a challenge to providers.

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Despite the obstacles, small R R B S providers found they could ­ rovide a product to compete with or even better the speeds offered p by major companies. Interviews with RRBS providers offered a range of performance evaluations, from a lower-end download speed of 10 Mbps, to higher-end reports of 27–30 Mbps. These offerings more than met the C R T C ’s aspirational goal of 5 Mbps for all Canadians established in 2011 (C R T C 2011). All providers claimed that even higher speeds were possible, but only if they were able to acquire contiguous 6 MH z blocks – something that often proved elusive. A key infrastructure element in the growth of R R B S in Alberta is access to the government-built Alberta SuperNet, a fibre backbone network launched in 2001, extending across much of the province. The province owns this backbone, and Axia NetMedia operated and provided access to the SuperNet until 2018 (Service Alberta 2018). In a 2011 submission to Industry Canada on the future of unlicensed services below 698 MHz, Axia noted that the substantial RRBS deployments in Alberta reflected the competitive backhaul facilities available in the province, which linked the wireless system to the core network: “This is strong evidence that where there is affordable and accessible access to competitive broadband backhaul services, such as that available in rural Alberta through the Alberta SuperNet, RRBS provides a valuable resource in delivering high-quality Internet services to rural Canadians” (Hoffman 2011). Many of the providers agreed. A small RRBS provider who wished to remain anonymous noted that SuperNet was “getting an awful lot of Internet access to a lot of small hamlets throughout the province.” Not all R R B S providers used the SuperNet for backhaul; some had agreements to access fibre lines from major broadband companies. Still, there is little doubt that the accessibility of publicly built SuperNet as a wireless backhaul was a factor in the initial proliferation of RRBS in Alberta. Alberta is known for its conservative politics and culture of individualism, and in that context, interviews with R R B S providers there revealed an unexpected element to the early years of this new policy: small businesses were assisting one another. This was most clearly articulated by Andrew van Dirstein of Harewaves Wireless in Eckville, Alberta (pop. 1,125): “Around Alberta, you know, if somebody needs something we try to work together. And it works in our favour if we get enough people using RRBS so that there’s more equipment out there and easier sourcing. We try to work together to buy … in bulk or whatever so that we can meet the quotas of the manufacturing facility’s need.”

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There are clear economic advantages in working together, and there is certainly precedent for it in the province. The history of cooperative movements in Alberta is deep and well-documented (Rennie 2000). The Canadian West is the home of the United Farmers of Alberta (once a provincial political party, now an agricultural supply store), wheat pools, and, more recently, collectively run train lines (Barney 2011), all of which challenge the dominant market-based political culture of the last decades. The significance of supporting fellow RRBS providers was emphasized by Robert Pennington from Guerrilla Wireless of Lacombe, Alberta (pop. 13,057), who heaped praise on fellow RRBS provider Harewaves, 60 kilometres away: “We help each other … If it wasn’t for their help, I could have never survived really … I always call them the gurus.” VM Systems of Vegreville, Alberta (pop. 5,500) noted that Harewaves had helped them with their application process for RRBS. A spirit of economic cooperation was clearly a factor in the growth of this policy in Alberta. The Canadian government took notice. R R B S providers received a sign of encouragement from the federal regulator in 2013 in a decision on the development of television white space devices. Industry Canada had been considering phasing out R R B S but noted: “Many respondents to the consultation do not agree with this conclusion and argue persuasively regarding the continued importance of RRBS.” In a rare demonstration of recognition and support from the federal regulator, it was determined that “incumbent licensees of R R B S will be protected from harmful interference caused by T V W S devices” (Industry Canada 2013). In short, in the formative early years, the RRBS system worked. For smaller companies unable to afford to enter the capital-intensive world of wired service and without reasonable expectations of gaining spectrum via auction, using R R B S for fixed wireless offered a viable alternative. The R R B S policy offered access to quality spectrum for smaller players that market mechanisms simply could not offer. In the R R B S case study, creative policy gave shape to small-market actors that benefited the underserved regions of Canada. The small providers interviewed believed overwhelmingly in the potential of this approach. “R R B S will give a lot more rural people, up here especially, Internet capability than fibre will … If I could, I would expand the [R R B S ] system … Way, way, way cheaper than running fibre” (Byron Garnish, Crossover Communications, 26 July

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2016). Another Alberta-based provider, who chose to remain anonymous, noted the policy’s specific applicability to the sparsely populated and heavily forested regions of Canada: “In the rural areas it is difficult to find spectrum that propagates as well as the RRBS frequencies. It gives us the range and tree penetration to make it a viable service.” Through a combination of geography, demographics, an accessible public/private backbone, and cooperative business practices, this creative policy brought some new players into the wireless market and introduced greater competition into a traditionally closed sector. With RRBS, many small entrepreneurs found they could offer robust service at a reasonable price. Or, as one R R BS provider put it: “[it gave] us a chance to use licensed spectrum like the big boys” (Anonymous, 2016). 5.2  Results: A Rapid Decline It wasn’t long before the bloom started to fade on this new policy. The seemingly explosive growth of licences in the early years of RRBS was misleading – the vast majority of these licences were never deployed. The R R B S licence conditions included only a vaguely worded statement that required licence holders “to demonstrate that their spectrum is being put to use at a level acceptable to the Department. Failure to do so may result in cancellation of associated RRBS licences” (Industry Canada 2011b, Annex B). Many wireless companies hedged their bets that they would be able to generate the capital to launch on these frequencies, or they tried to acquire as many licences as possible to keep them away from competitors. Arthur Beaudette of VM Systems reflected on the initial RRBS rollout: “In the beginning there was a land grab … [Businesses] were going to sit on it and see what happens … We saw a lot of [companies] buying up spectrum.” Another key barrier to growth was the expense of the hardware required. Canada has always suffered from poor economies of scale in electronics. Robert Pennington of Guerrilla Networks in Lacombe, Alberta, noted the difficulties of finding equipment. “RRBS equipment is very, very expensive … You’re talking $600, $700 per customer, per household. It’s pricey.” The same point was made by Brenda Bouchette of A B C Communications who noted an inescapable problem with made-in-Canada initiatives: “Because this is a band that is only available in Canada … there’s no economies of scale in producing equipment.”

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But the greatest hindrance to the continued development of RRBS services came from the government. The boost from the regulator in the 2013 TVWS announcement proved to be short-lived. The 600 MHz band faced an uncertain future after the United States announced plans to embark upon an unprecedented incentive auction. The required Canadian coordination with American spectrum plans put unique policies such as RRBS in jeopardy. In 2014, Industry Canada announced a review of 600 MHz frequencies that included the following: “Effective immediately, the Department will no longer accept the following types of applications: • •

new applications for licensing of R RBS stations; applications for modification of an existing RRBS station which would increase the coverage in any direction or change operating frequencies” (Industry Canada 2014a).

While this announcement did not explicitly end R R B S in Canada, it certainly slowed any momentum that had been building to a crawl. R R B S providers found themselves stuck, unable to expand service in an era of exponentially increasing data demands. One of the largest R R B S providers argued against the moratorium to the Canadian government: “When the moratorium was put on, [our company] said, well, let’s make sure the moratorium is not on beyond the 250 miles or 400 kilometres (of the US border). But that didn’t fly.” As this provider, who wished to remain anonymous, argued, if the 600 M H z was about coordinating with US signals, why couldn’t RRBS remain since there was a sufficient distance from the US border that there would be no interference? This appeal failed, and the moratorium remained. After this announcement, small R R B S entrepreneurs found themselves facing an uncertain future. Glen Moore of I Want Wireless in Debolt, Alberta (pop. 121) lamented: “The biggest problem with RRBS is they keep screwing around with trying to figure out what they’re doing and then they cancel it and change it and move things around. And nobody builds equipment for something that has no stability.” The same providers who had entered this market with enthusiasm now found themselves economically restricted. This was followed by a decision on the future of the Canadian 600 MHz band the following year. It pointed to a murky future for RRBS:

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For R R B S operating in the repurposed 600 M H z spectrum, a displacement notification period of two years will apply. Following the incentive auction in the United States and the development of the joint implementation plan for broadcast transmitters in both Canada and the United States, Industry Canada will work with R R B S operators to clarify their options for continued operation. Additional frequencies in the range 470–512 M H z may be made available if required to accommodate existing RRBS operations following the finalization of the new D T V allotment plan. (Industry Canada 2015) While operators would be allowed to continue service, they realized they would face relocation when the 600 M H z band was auctioned for mobile service. Beaudette of V M Systems knew he was facing an uncertain future: “We’re limited – we’re stuck now. We can’t add customers … Right now we’re kind of in this purgatory. We don’t know what’s happening.” Harewaves “guru” Andrew Van Dirstein agreed: “It’s pretty hard to make a forward plan.” In March 2018, the Canadian government announced the “Technical, Policy and Licensing Framework for Spectrum in the 600 MH z Band.” The 97-page document contained exactly one sentence regarding the future of RRBS: “RRBS operating in the 600 MHz band are afforded a minimum displacement notification period of two years” (I SE D 2018b, 62). Speculative licence holders, poor economies of scale, and, most importantly, faint government support have restricted development of this burgeoning new area of Canadian wireless. The result has been a dramatic decline. In 2011, there were 450 RRBS licences in the province of Alberta alone; in 2014, there were 83 remaining RRBS stations operating in British Columbia, Alberta, Saskatchewan, Ontario, and Quebec. By 2015, there were 52 RRBS stations operating in Canada. A national policy that had begun with so much optimism now faces an abrupt descent and a limited future.

6   C o n c l u s i on The RRBS example offers a clear case study of a bold policy initiative to bring service to difficult regions and introduce new, smaller players into concentrated wireless markets. It was largely the product of

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forward-thinking policy-makers – the initial call for comments generated very limited response from the public or industry, yet regulators at Industry Canada recognized RRBS’s early potential. What is not so apparent is whether the current problems faced by RRBS are due to inherent limitations of the policy itself or a result of the Canadian government choosing to allow R R B S providers to wither on the vine while plans are made for yet another spectrum auction. The Canadian government seems to have reverted to the same path most national governments have taken since the 1990s: sell spectrum licences to major providers and reap the financial rewards. Modern, forwardthinking spectrum policy has to think beyond such short-term economic models and consider broader social benefits, including improved accessibility, new services, and market competition. Doyle and colleagues’ chapter on open access markets describes a system in which spectrum in low demand areas could potentially have an access price of zero. This type of forward policy thinking could have strong implications for rural development. Governments today are besotted with talk about the importance of entrepreneurialism. RRBS offers a clear case study of real-world startups looking to crack the challenge of launching wireless broadband service. The stories of R R B S providers are replete with tales of being “self-taught,” “hard work,” “sheer necessity,” and “mom-and-pop operations.” These entrepreneurs asked for access to spectrum that few companies wanted, and for some certainty from the regulator that they would be able to offer services in the long term. The limited success they briefly enjoyed was often the product of government support, individual ambition, and mutual assistance. R R B S providers are a unique entrepreneurial mix of capitalist drive coupled with a decidedly cooperative sensibility. As one R R B S provider noted: “[The Canadian government] had something going which was quite unique worldwide. And for a while they were quite enlightened and then, you know, you get a change of a minister or a deputy minister and a couple of others and frankly, you get a change in attitude and all of a sudden there’s not the same interest.” As the international spectrum policy experts in this book have demonstrated, issues such as ownership concentration and service provision for sparsely populated areas are by no means unique to Canada. In their 2016 study, “Exploring the Predictors of the International Digital Divide,” Skaletsky and colleagues conclude that among both

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less developed and more highly developed nations, “the quality of regulation is most important for highly digitalized countries (Skaletsky et al. 2016, 47). Regulation and national institutions are essential elements in fostering the trust necessary to expand and develop new initiatives such as RRBS. After a strong start, the prospect of an uncertain future – clearly manifested in Industry Canada’s decision to place a moratorium on new licences in 2014 – precipitated a prompt decline in a budding new element of Canada’s digital infrastructure. In June 2018, I SE D released its Spectrum Outlook 2018-2022. In it, the Canadian government congratulated itself on “various measures to encourage wireless coverage to rural and remote regions” (I S E D 2018). However, the report, which sets priorities for the coming years, was frustratingly short on details. In December 2017, a study prepared by various rural advocacy groups titled Broadband Connectivity In Rural Canada was presented to the Standing Committee on Industry, Science, and Technology (Canadian Rural Revitalization Foundation, Rural Development Institute, and Rural Policy Learning Commons 2017). The report outlined the many shortcomings of rural broadband access in Canada. Where it fell short is that its solution to Canada’s rural broadband troubles will not be completely solved by physical wires; wireless broadband will play a key role in connecting rural regions in countries around the world (Middleton and Given 2011). Wireless last miles in rural regions make economic sense; however, it will take innovative policy to help span the urban/rural gap in digital communication. There is no panacea for digital connectivity. Bridging the broadband access divide will require a range of initiatives. The Canadian RRBS policy is not ideal for all countries, but it offers a unique take on rural access and the licensed/unlicensed debate that has been going on for some time (Calabrese 2008; Noam 1997; Benkler and Lessig 1998). RRBS service is licensed but utilizes advantages inherent in empty spaces and dispersed populations. It recognizes the continued place of broadcasting while noting that place is not nearly as prevalent as it once was. If major private companies had truly wanted to deploy broadband in rural Canada, the government would have had no need to unveil a series of federal programs over the past decades. The small wireless service providers interviewed for this study did not speak of dreams of great wealth; their primary concern was economic survival. If successful, they could fill in the patches in Canada where major Internet providers often are reluctant to deploy, and

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provide a significant service alternative in an industry that struggles to offer competition.

N otes

Sections of this chapter were published in the journal Telecommunications Policy (Taylor 2018).   1 A notable exception to the independent RRB S operators is Bell Aliant, a division of Canada’s largest communications company, Bell Canada. Bell Aliant is listed in Industry Canada’s 2015 list of R R B S licensees (Industry Canada 2015, Annex B). Bell Aliant did not respond to requests to participate in this study.   2 These maps can be found on pages 10 to 14 of Industry Canada’s 2011 Client Procedures Circular, titled “Licensing Procedure for Remote Rural Broadband Systems (Rrbs) Operating in the Band 512-698 MHz (TV Channels 21 to 51).” The online PDF exists at the following address: https://www.ic.gc.ca/eic/site/smt-gst.nsf/vwapj/cpc2124e-issue2.pdf/$FILE/ cpc2124e-issue2.pdf .   3 Quotes in the following paragraphs are from interviews with Alberta R R B S operators.

r efer enc e s Barney, Darin. 2011. “To Hear the Whistle Blow: Technology and Politics on the Battle River Branch Line.” Topia: Canadian Journal of Cultural Studies 25 (Spring): 5–28. Benkler, Yochai, and Lawrence Lessig. 1998. “Net Gains.” The New Republic, 14 December: 12–14. Calabrese, Michael. 2008. “Broadcast to Broadband: Unlicensed Access to Unused TV Channels?” Internet Computing, IEEE 12(2): 71–75. Canada Gazette. 2008. “Notice No. S M BR -005-08 – Interim Agreement between Canada and the United States Concerning Digital Television (D T V ).” http://www.gazette.gc.ca/rp-pr/p1/2008/2008-12-20/pdf/ g1-14251.pdf. Canadian Association of Broadcasters. 2005. “Re: Comments on Canada Gazette Notice DG TP-002-04: ‘Mobile Service Allocation Decision and Designation of Spectrum for Public Safety in the Frequency Band 746806 MH z (S P-746 M Hz). Canadian Association of Broadcasters.” https://www.ic.gc.ca/eic/site/smt-gst.nsf/vwapj/dgtp-002-04-cab. pdf/$FILE/dgtp-002-04-cab.pdf.

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Canadian Rural Revitalization Foundation, Rural Development Institute, and Rural Policy Learning Commons. 2017. “Broadband Connectivity in Rural Canada – Submission to the House of Commons Standing Committee on Industry, Science, and Technology.” https://www.our​ commons.ca/Content/HOC/Committee/421/INDU/Brief/BR9335285/brexternal/RuralDevelopmentInstitute-e.pdf. Cave, Martin, and William Webb. 2015. Spectrum Management: Using the Airwaves for Maximum Social and Economic Benefit. Cambridge: Cambridge University Press. Central Intelligence Agency. 2017. “The World Factbook: Population.” https://www.cia.gov/library/publications/the-world-factbook/ rankorder/2119rank.html. C R T C (Canadian Radio-television and Telecommunications Commission). 2011. “Telecom Regulatory Policy CRTC 2011-291.” http://www.crtc. gc.ca/eng/archive/2011/2011-291.htm. – 2012. Communications Monitoring Report. Ottawa. – 2017. Communications Monitoring Report. Ottawa. http://www.crtc. gc.ca/eng/publications/reports/policymonitoring/2017/index.htm. F C C (Federal Communications Commission). 2005. “FC C 05-56 – Report and Order and Memorandum Opinion and Order.” https://apps.fcc.gov/ edocs_public/attachmatch/FCC-05-56A1.pdf. – 2015. “FCC 15-47 – Report and Order and Second Further Notice of Proposed Rulemaking.” https://apps.fcc.gov/edocs_public/attachmatch/ FCC-15-47A1.pdf. Federation of Canadian Municipalities. 2014. “Broadband Access in Rural Canada: The Role of Connectivity in Building Vibrant Communities.” https://www.fcm.ca/Documents/reports/FCM/Broadband_Access_in_ Rural_Canada_The_role_of_connectivity_in_building_vibrant_­ communities_EN.pdf. Hennessy, Michael. 2015. “Re: Canada Gazette, Part I, September 23, 2004, Notice No. DG TP-002-04: Mobile Service Allocation Decision and Designation of Spectrum for Public Safety Frequency Band 746– 806 (S P-746 M Hz). Canadian Cable Telecommunications Association.” https://www.ic.gc.ca/eic/site/smt-gst.nsf/vwapj/dgtp-002-04-ccta.pdf/ $FILE/dgtp-002-04-ccta.pdf. Hoffman, Perry. 2011. “Spectrum: Make TV White Spaces Spectrum Available on an Unlicensed Basis, Say Network Operators.” Cartt.ca, 10 November. https://cartt.ca/article/spectrum-make-tv-white-spacesspectrum-available-unlicensed-basis-say-network-operators. Industry Canada. 2001. “Letter of Understanding between the Federal Communications Commission of the United States of America and

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Industry Canada Related to the Use of the 54–72 MHz, 76–88 MHz, 174–216 M Hz, and 470–806 M Hz Bands for the Digital Television Broadcasting Service along the Common Border.” http://www.ic.gc.ca/ eic/site/smt-gst.nsf/vwapj/dtv2001e.pdf/$FILE/dtv2001e.pdf. – 2004. “S P-746 M Hz Issue 1 – Mobile Service Allocation Decision and Designation of Spectrum for Public Safety in the Frequency Band 746– 806 MH z.” https://www.ic.gc.ca/eic/site/smt-gst.nsf/vwapj/sp746e. pdf/$FILE/sp746e.pdf. – 2006. “RP-06 Issue 1 – Policy for the Use of 700 MHz Systems for Public Safety Applications and Other Limited Use of Broadcasting Spectrum.” https://www.ic.gc.ca/eic/site/smt-gst.nsf/vwapj/rp06-e. pdf/$FILE/rp06-e.pdf. – 2007. “CPC-2-1-24 Licensing Procedure for Remote Rural Broadband Systems (Rrbs) Operating in the Band 512–698 MHz (TV Channels 21 to 51).” https://www.ic.gc.ca/eic/site/smt-gst.nsf/vwapj/cpc2124e. pdf/$file/cpc2124e.pdf. – 2010. “Broadband Canada: Connecting Rural Canadians.” http://www. ic.gc.ca/eic/site/719.nsf/eng/home. Accessed 31 October. – 2011a. “Consultation on a Policy and Technical Framework for the Use of Non-Broadcasting Applications in the Television Broadcasting Bands Below 698 M Hz.” https://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/sf10058. html – 2011b. “Licensing Procedure for Remote Rural Broadband Systems (Rrbs) Operating in the Band 512-698 MHz (TV Channels 21 to 51).” https://www.ic.gc.ca/eic/site/smt-gst.nsf/vwapj/cpc2124e-issue2. pdf/$FILE/cpc2124e-issue2.pdf. – 2012. “S M S E-012-12 Framework for the Use of Certain NonBroadcasting Applications in the Television Broadcasting Bands Below 698 MH z.” https://www.ic.gc.ca/eic/site/smt-gst.nsf/vwapj/TVWhite Space-October2012.pdf/$file/TVWhiteSpace-October2012.pdf. – 2013. Framework for the Use of Certain Non-Broadcasting Applications in the Television Broadcasting Bands Below 698 MHz. – 2014a. “Consultation on Repurposing the 600 MHz Band.” http://www. ic.gc.ca/eic/site/smt-gst.nsf/eng/sf10891.html#s12. – 2014b. “Licensing Framework for Broadband Radio Service (B R S) – 2500 MHz Band.” http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/sf10726. html#p3.6. – 2015. “Decision on Repurposing the 600 MHz Band.” https://www.ic.gc. ca/eic/site/smt-gst.nsf/vwapj/600MHz-repurposing-consultation-decision2015.pdf/$file/600MHz-repurposing-consultation-decision-2015.pdf.

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Innis, Harold Adams, and Daniel Drache. 1995. Staples, Markets, and Cultural Change: Selected Essays of Harold A. Innis. Montreal and Kingston: McGill–Queen’s University Press. I S E D (Innovation, Science, and Economic Development Canada). 2018a. “Connect to Innovate.” https://www.canada.ca/en/innovation-scienceeconomic-development/programs/computer-internet-access/connect-toinnovate.html. – 2018b. “Technical, Policy and Licensing Framework for Spectrum in the 600 MH z Band.” https://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/sf11374. html#s6.2. – 2018c. “Revisions to the 3500 M Hz Band to Accommodate Flexible Use and Preliminary Consultation on Changes to the 3800 MHz Band.” Ottawa. https://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/sf11401.html. International Telecommunication Union. 2000. “World Radiocommunication Conference 2000 (WR C -2000).” https://www.itu. int/net/ITU-R/index.asp?category=conferences&rlink=wrc-00&lang=en. Mazar, Haim. 2016. Radio Spectrum Management: Policies, Regulations and Techniques. West Sussex: Wiley. Middleton, Catherine, and Jock Given. 2011. “The Next Broadband Challenge: Wireless.” Journal of Information Policy 1(1): 36–56. Noam, Eli. 1997. “Beyond Spectrum Auctions. Taking the Next Step to Open Spectrum Access.” Telecommunications policy 21(5): 461. Rainy Day Software Corp. 2005. “Comments on SP-746 MHz: Mobile Service Allocation Decision and Designation of Spectrum for Public Safety in the Frequency Band 746–806 MHz.” https://www.ic.gc.ca/eic/ site/smt-gst.nsf/vwapj/dgtp-002-04-rainyday.pdf/$FILE/dgtp-002-04rainyday.pdf. Rennie, Bradford James. 2000. The Rise of Agrarian Democracy: The United Farmers and Farm Women of Alberta, 1909–1921. Toronto: University of Toronto Press. Service Alberta. 2018. “Government confirms SuperNet service continuity.” Government of Alberta, 29 June. https://www.alberta.ca/release. cfm?xID=56235051FC723-0C66-4D0A-6BCF2FC755C16013. Sims, Martin, Toby Youell, and Richard Womersley. 2015. Understanding Spectrum Liberalization. Boca Raton: C R C Press. Skaletsky, Maria, Robert D. Galliers, Dominique Haughton, and Olumayokun Soremekun. 2016. “Exploring the Predictors of the International Digital Divide.” Journal of Global Information Technology Management 19(1): 44–67. doi: 10.1080/1097198X. 2016.1134171.

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Statistics Canada. 2006. “Where We Live? Canada.” http://www12.statcan.gc.ca/census-recensement/2006/as-sa/97-550/vignettes/a1-eng.cfm. – 2017. “Population and Dwelling Count Highlight Tables, 2016.” Ottawa. Taylor, Gregory. 2013. Shut Off: The Canadian Digital Television Transition. Montreal and Kingston: McGill–Queen’s University Press. – 2018. “Remote Rural Broadband Systems in Canada.” Telecommunications Policy 42(9): 744–56. Telecommunications Policy Review Panel. 2006. “Telecommunications Policy Review Panel – Final Report 2006.” Ottawa: Industry Canada. http://dsp-psd.pwgsc.gc.ca/Collection/Iu4-77-2005E.pdf. Toneguzzi, Mario. 2015. “Alberta’s Rate of Entrepreneurship Best in Canada.” Calgary Herald, 29 May. http://calgaryherald.com/business/ local-business/alberta-rate-of-entrepreneurship-best-in-canada. Yankelevich, Aleksandr, Mitchell Shapiro, and William H. Dutton. 2017. “Reaching beyond the Wire: Challenges Facing Wireless for the Last Mile.” Digital Policy, Regulation and Governance 19(3): 210–24. doi: doi:10.1108/DPRG-01-2017-0002

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8 Spectrum Sharing Michael J. Marcus

1   In t ro ducti on When Marconi built his first two radios in the late 1890s, spectrum sharing was not an issue. These early radios were very wide-band, and they simply alternated in time, talking to each other in a primitive “listen-before-talk” (L B T ) arrangement. Much has changed since then. Marconi’s early spark-gap radios occupied all of the usable spectrum at the time, and technology advances have increased the range of usable spectrum and allowed it to be partitioned on a frequency division multiple access (F D M A ) basis between parallel users at different frequencies. But not all frequencies are fungible, and for many applications there is prime “beachfront spectrum” that is suited for a specific application and that uses only a modest fraction of all the spectrum available for commercial use. It should be noted that the definition of “beachfront spectrum” changes over time as technology advances. Thus, in the early 1980s it was widely assumed that frequencies above 1 GHz were not practical for land mobile radio use, and up until about 2010 it was assumed that frequencies above 5 GHz were not practical for this use either. Now mobile uses are being developed at frequencies as high as 70 G H z, and catalogues for radio components go up to hundreds of G Hz. That said, in a given time period there are limits as to where on the spectrum a given application can be placed, so from the users’ point of view the spectrum of prime interest may be crowded even though other spectrum isn’t. Sharing is useful, then, when the applications using a block of spectrum do not completely fill it in terms of bandwidth, area, and time utilization. Sharing may then be used to fill

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the unused capacity in these three dimensions so as to increase overall spectrum utilization and its contribution to national goals. Sharing is generally advantageous in that it increases the potential of spectrum utilization by using spectrum that would otherwise be underutilized in a given location at a given time. In effect, it creates an apparent increase in the amount of usable spectrum and thus increases the amount of information that can be transmitted and the number of users served. In the “beachfront spectrum” for specific applications such as land mobile communications, there is still a mismatch between supply and demand if traditional spectrum policy practices are used for determining spectrum access. Thus, in heavily populated areas such as major cities there may appear to be little or no spectrum available for new uses or for new entrants in ongoing uses. Yet when one tries to make measurements of actual spectrum use in such areas, one typically finds that the spectrum is not consistently used heavily. This finding is based on actual third-party observations of spectrum use.1 There are many reasons for this discrepancy between nominal assignments of spectrum access and actual spectrum utilization. The situation would be much easier if several conditions could actually be met in practice: 1 Demand for spectrum was uniform in space and time; 2 Radio propagation was deterministic, only depended on distance, and was monotonic with distance (signal strength always decreasing as distance increases); and 3 There was a consensus on operational details of how to actually measure spectrum use. But demand for spectrum is not uniform in space and time. Population is certainly not uniform. For example, most Canadians lives near the southern border of the country; in the United States, much of the population is “bicoastal” and the central portion of the country has a large geographic variability in population density. Thus, in countries larger than Vatican City or Monaco, and with marked variations in population density, spectrum will inevitably be underused in low-density areas and heavily used in denser areas. Dense areas can “borrow” some spectrum that is lightly used in neighbouring lowdensity areas, but only to a small degree. In most countries, military use of spectrum is both significant and a high priority for governments. Today’s militaries around the world

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depend greatly on timely transmission of large amounts of information up and down the chain of command; they also rely on spectrum intensive sensor systems (e.g., imaging satellites and drones). These military uses of spectrum are often, but not always, appropriate for bands that are interchangeable for civil uses. Military spectrum is in highest demand in areas where there are military operations or training facilities, yet there are valid reasons to expect that military units should have immediate access to spectrum anywhere in the country in times of emergency. In the United States, the only major city with a major military base within it is San Diego, California, which sees regular high utilization of military spectrum. Most other major American cities see only intermittent use in their area. In many countries, military spectrum access and national government spectrum access are handled through procedures that differ from those for private sector spectrum. In the US and the UK, military spectrum and national spectrum are handled by separate agencies (in the US, the Federal Communications Commission [F C C ] governs national spectrum and the National Telecommunications and Information Administration regulates federal-use spectrum such as military; in the UK, the respective regulators are Ofcom and the Ministry of Defence). In France the two are handled by the same agency, but that agency has significant military staffing and is traditionally headed by a military officer. In such countries, it is difficult to undertake an objective review of the potential for sharing military spectrum or the detailed technical criteria needed to both maximize the sharing potential and minimize the risk of adverse impact on the military or government spectrum use. Public safety use of spectrum is also regulated and of high social value. Unlike military spectrum, public safety spectrum is highly spatially correlated with population; it is also is very time variable, with modest need for continual spectrum access during routine operations and a need for capacity surges during public safety emergencies and training exercises. Traditionally such spectrum needs were met by sizing spectrum access for public safety entities to their expected peak demands. When overall spectrum demand was less than spectrum availability, this did not create any problems. But in the current increased spectrum demand situation in most countries, sizing public safety access solely on peak demand lowers overall spectrum utilization. Yet any sharing schemes must be carefully considered in view of the critical importance of public safety operations. Spectrum policy governance issues complicate the objective national consideration of spectrum sharing options since public safety groups usually have great

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influence on national spectrum regulators and little incentive to consider sharing options based on their merits. Demand inevitably has diurnal variability depending on the category of usage. Peaks for different classes of users may be correlated in time, or not. While some safety-related users can reasonably be expected to have highly correlated time demand peaks (e.g. police and fire departments), other categories (e.g., taxis and public utility dispatch) may have diurnal peaks, with low time correlation. Since the spectrum made available is sized for peak demands and the peaks are not simultaneous, there is usually idle spectrum even in safety-related spectrum. Traditional spectrum technology cannot quickly, reliably, and credibly allow spectrum to move back and forth between safety-related uses and other applications. But after many years of controversy, the US FirstNet system (FirstNet 2019) now being implemented may be able to perform this function of moving some spectrum back and forth between safety and non-safety uses to a limited degree. This type of system makes it possible for private-sector users with dynamic spectrum access (DSA) technology to move spectrum resources in real time to uses that need them in a given area. This D S A technology allows civil communications users such as cellular carriers to use some of the spectrum earmarked for public safety during periods when public safety use is low; but it also allows public safety use to enter the whole block as demand surges from time to time. The non-public-safety users are then displaced to other bands, where they may encounter dropped connections, poorer technical quality due to lower data rates, or no impairment at all in places where there is adequate purely private spectrum availability at that moment. While traditional radio equipment had very limited frequency agility, today’s mobile devices already have capabilities on many bands, and new technology makes frequency agility (which allows this movement across spectrum bands) more versatile and less costly than it once was. 1.1  General Technical Issues In many of the cases of sharing discussed below, questions arise about how effective the sharing terms are and whether the sharing achieved is close to the theoretical interference-free sharing potential. Both technical issues and governance issues are involved. On the technical side, the usual goal of national regulators and the International Telecommunications Union (ITU) in sharing is to avoid

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“harmful interference,” a term defined in the I T U Radio Regulations as “interference which endangers the functioning of a radionavigation service or of other safety services, or seriously degrades, obstructs, or repeatedly interrupts a radiocommunication service operating in accordance with [the I T U] Radio Regulations” (Marcus 2014). Like beauty, harmful interference may be mostly in the eye of the beholder. If one is an incumbent, the slightest impact may be seen as harmful even if that impact is small compared to inevitable degradations for that system that result from movement, propagation changes, and presently permitted users in nearby bands. And incumbent users may object to sharing that has no valid impact on present use if the incumbent feels the proposed sharing sets a questionable precedent, if the proposed user is a competitor, or if the proposed sharing might impact future flexibility, real or imagined. My earlier paper on harmful interference (Marcus 2014) discussed six technical issues that have to be addressed in harmful interference determinations that lack a present consensus: •

• •

• •

Required ratio of interference signal strength to desired signal strength (I /S) protection at the receiver antenna and at the receiver input Propagation models Minimum coupling loss (theoretical free space propagation loss) vs. stochastic modeling Minimum protection distance Acceptable interference statistics

These issues can greatly affect the question of where sharing is acceptable, and there is no broadly accepted approach to resolving them. While Europe has accepted statistical measures of possible interference as a key part of policy deliberations on multiple occasions, the use of such statistical measures in US practice has been very limited to date and is still very controversial among both public- and privatesector spectrum incumbents.2 1.2  Regulatory Influence Sharing scenarios ultimately need regulatory approval to be implemented. A key factor in such considerations in practice is the amount of influence held by the spectrum incumbent compared to that of the

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proposed new entrant. In an ideal world, all parties would be equal and the regulator would evaluate sharing issues, balancing the risk of harmful interference against the benefits of increased spectrum use through sharing. However, real governmental institutions do not always achieve this objective balance. Absent such consensus, parties with greater influence – either governmental entities (as in the 3.5 and 5 G H z cases below) or privatesector spectrum incumbents with long and close ties to regulators – can exert unreasonable influence in regulatory environments that do not focus strongly on technical neutrality and the public interest. In Europe, regional spectrum deliberations have long a major impact on national spectrum policy decisions even if ITU rules permit national flexibility. (When frequencies in use were lower those of many of the bands now utilized, the large number of neighbouring states was a factor for most European countries, necessitating such an approach more so than in North America.) There are basically two independent multinational groups involved in European spectrum policy: the Conference of Postal and Telecommunications Administrations (CEPT), which is the union of the traditional national spectrum regulatory agencies; and the European Union (note that the CEPT and EU national memberships are heavily overlapping but, even absent Brexit, different). As a general trend, CEPT is friendlier to spectrum incumbents because for decades it has worked with them in both national and international deliberations. E U staff have not worked as closely with spectrum incumbents and generally tend to focus more on EU economic and social goals than on the rights and interests of incumbents. Spectrum sharing decisions really need a Solomonic decision-maker who can weigh all the technical, economic, and societal factors objectively. This is hard to achieve in practice, and in the US case has been particularly lacking when it comes to issues between private-sector spectrum users and federal spectrum users because of the bifurcation of spectrum regulatory power in the United States.

2   T r a d it io n a l S p e ctrum s hari ng The traditional ways of sharing spectrum are frequency division, time division, code division, and polarization division. These are static approaches that allow multiple users to share a common band. All of these approaches depend on making the signal orthogonal – that is, they can overlap but still be separated due to the nature of the signal.

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The earliest radio systems used very wideband spark-gap transmitters, and early receivers had little tuning ability. However, with the development of transmitters and receivers with narrower tuning ranges, it became possible to have transmissions separated in frequency that could be received simply by tuning to different frequencies. As long as the spectrum available was greater than the demand for independent transmissions or the number of transmissions that had regulatory approval, this was adequate. Time division multiple access (TDMA) involves signals that overlap in frequency but are separated in time, either in fixed time periods or in time periods that are adjusted dynamically. In the commercial radio communications world, global-system-for-mobile communications (G S M ), a second-generation mobile technology developed in Europe but used in many countries, is the best-known example of T D M A . Code division multiple access (C D M A ), or spread spectrum, is based on technology first used by the military in which signals overlap in time and frequency but are spread to much greater than their original bandwidth by a random-like numerical code known to the transmitter and the receiver. As long as the overlapping signals do not vary in power at the receiver by an amount limited by the system design, the receiver can successfully separate the overlapping signals. (While this implies that C D M A signals have a quirky dynamic-range limitation related to the range of received signal strengths, in reality all radio receivers have practical limitations regarding the ranges of signal strengths they can handle successfully at the same time. The presence of very strong signals near any receiver trying to receive weak signals on a nearby frequency often causes problems with real radio equipment of various types. This is often referred to as the “near/far problem.”) In traditional cellular systems each carrier has a fixed band in a given location or possibly for the whole country. But peak demands for capacity can be random in both time and space so that one carrier may have saturated all of its capacity both in a given cell site and in neighbouring cells that could serve part of the same cell while another carrier with overlapping cell areas may have unused capacity. Depending on regulatory arrangements and agreements between carriers, carriers could share unused spectrum under such arrangements when the physical layers of the radio link are compatible, as they generally are at present.

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3  C l as s ic a l S tat ic In t e rservi ce S hari ng Sharing between different radio services is possible but is more complex. Classic interservice sharing involved multiple services whose access to one another’s spectrums was determined a priori by rules and was deterministic. Such sharing was independent of ongoing usage by any of the parties and was effectively determined by worst-case conditions. The different services involved may not be familiar with one another. They may have vastly different reliability and coverage expectations. In some cases they may actually be competitors and thus have negative interest in cooperation. When one class of users is a governmental entity and the other class seeking sharing is a private-sector entity determining, what is in the “public interest” becomes even more complex. Is the national decision-making body (“administration” in I T U jargon) capable of looking at the questions objectively, or is it intrinsically biased in favour of a fellow public entity? Is the administration independent of government spectrum users, or is it controlled by one or more major government spectrum users? Indeed, in seeking to be objective, how should the administration weigh technical and nontechnical factors in deciding the feasibility of sharing? 3.1  Point-to-Point Microwave/g s a Satellite Sharing The advent of geostationary orbit (GSO) commercial satellite systems created new challenges for spectrum sharing in the 1970s. There was not enough vacant spectrum for the new satellite systems for intercontinental use, but there was potentially shareable 4/6 G H z C band spectrum, which at the time was used in United States predominantly by A T& T carriers, which had adequate bandwidth for the new satellites – bandwidth that could be used with reasonable technology at that time. Sharing of this band created both technical problems and competitive problems that have lessons for other sharing situations. Sharing between terrestrial point-to-point microwave and GSO satellites could create possible interference between one class of users and the other and result in over-restrictive limits on each set of users that limited their own spectrum access. For example, a point-to-point link might pass near a satellite earth station: if it was too close and sidelobes3 illuminated the earth station’s receiving antenna’s sidelobes, then the earth station might receive interference. Conversely, if the sharing rules

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were too conservative, point-to-point links anywhere near an earth station might be forbidden, significantly limiting terrestrial use of the band. So the goal in spectrum policy formulation was to pick a careful balance that protected users adequately from interference; this would allow for investment in and use of both radio services without overly restricting either. While in some cases of sharing the potential sharing partners are not direct competitors (e.g., cellular carriers and T V broadcasters), this was not true in the case of C band sharing, since the AT&T of that era was the dominant terrestrial point-to-point licensee as well as the near-monopoly communications carrier. Commercial satellite service, once it came, would be competing with some of AT&T’s long-distance broadband services and might even enable competition with its longdistance service – although experience later showed that satellite transmission delays limited its potential for telephony. The competitive relationship between A T & T and the nascent satellite carriers greatly complicated the F C C ’s deliberations regarding technical sharing criteria, which remained unchanged for decades in the FCC’s rules after first being adopted in the 1970s.4 3.2  TV /Private Land Mobile Sharing In the United States, TV channels 14 to 20 became shared with private land mobile users (e.g., police, taxis, and public utility trucks) in the 1970s. Ten cities were identified where there were at least two T V channels available and where two of those channels could be used for private land mobile use with acceptably low mutual interference. The development of technical rules was complicated because private land mobile and TV broadcasting had very different technical vulnerabilities to co-channel signals, different expectations of reliability, and different types of locations (e.g., generally moving versus static location). But with great difficulty, an arrangement was developed for such technical sharing. However, an attempt to increase this sharing in the 1980s generated major opposition from broadcast interests; that opposition was what finally led to the development of today’s D T V technology (Brinkley 1997). T V broadcasters wanted to secure their place on the spectrum. There is a long history of inefficient use of spectrum in the broadcasting industry. In 1952, the F C C ’s projections of the technical capability of future-production colour T V sets to receive a signal in

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the presence of other strong signals on nearby channels resulted in rules mandating sparse use of T V spectrum to prevent interference between T V stations in the same area on nearby channels. A set of rules known at “UHF taboos” was crafted to limit the spacing of UHF TV transmitters in both space and frequency; those rules had the net effect of limiting full-power TV channel use in a given city to one out of every six channels. Thus, there was much idle analog TV spectrum available for low-power uses without impacting TV reception, but the political power of T V broadcast interests in the United States limited this use to a few special cases such as short-range medical telemetry for ambulatory post-cardiac patients in hospitals. When D T V was finally resolved as a replacement for analog T V , the new digital physical layer – like most digital physical layers – had much greater tolerance of co-channel and nearby channel signals than the original analog T V and thus could allow much more intense use of the T V spectrum for additional stations or much denser packing of existing stations, clearing spectrum for other services, which is what was done in many countries.

4   C o g n it iv e Radi o Cognitive radio is the enabling technology for dynamic spectrum access. The essential components in a cognitive radio system include spectrum sensing, cognitive medium access control, and cognitive networking (Liang et al. 2008). The invention of this concept is generally credited to Joseph Mitola III in 1998. The original concept was a generalization of L B T (listen-before-talk), using transceiver-based sensing of channel activity, but recent usage has generalized it to include any near-real-time information that indicates what spectrum is being used in a given area regardless of whether it is passive (e.g., sensor based) or involves more active interaction with other spectrum users (e.g., checks a data base containing information provided by other spectrum users). A recurring issue with an L B T -based cognitive radio system is the “hidden node problem.” This refers to situations where transmitter locations are readily detected by the signals they transmit but locations with only receivers cannot be detected since they have no emissions.5 This problem can be solved in theory if the signal in question is much more sensitive than any intended receiver is. In such cases, if there is no signal in an area that can be detected by a very-low-threshold

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detector, then a less sensitive receiver cannot receive and demodulate properly the signal either, even if the signal is somewhat stronger at the receiver location due to terrain or to propagation quirks arising from multipath propagation.6 The 2002 F C C Spectrum Policy Task Force took a great interest in cognitive radio as a way to enhance spectrum use, observing that in most places at most times there was idle spectrum because of mismatches between supply and demand. As a first test of this concept the task force looked for “low-lying fruit.” It chose T V spectrum as a test case. 4.1  TV White Space TV spectrum was sparsely used during the analog era due to the previously mentioned “UHF taboos,” but even in the D T V era there are areas with no usable T V signals due to terrain blockage issues and uneven population densities. TV transmitters are not mobile and usually have high antennas. The 6 MHz bandwidth for each channel and the detailed prescribed nature of parts of both analog and DTV signals, combined with very accurate timing and frequency control of T V signals, allow detection of such signals with modest equipment using cyclostationary algorithms (Kahn et al. 2016) that are little-known in the commercial electronics sector but have been studied in national security applications. In particular, cyclostationary detectors can detect, but not receive, signals 30–40 dB (a factor of 1,000–10,000) weaker in power than signals that can be received by consumer-grade equipment. On paper it looked like a good plan. Although the decision-maker for this issue was the nominally neutral F C C , the T V broadcasters clearly had the “inside track” at the F C C after decades of prior interactions and strong political friends compared to the firms that were developing hardware to perform this function. Also, the F C C ’s technical resources to analyze this complex question had atrophied after decades of underfunding, and the F C C ’s top managers and decision-makers almost all had non-technical backgrounds. The FCC launched an intensive testing program using its internal resources; but only two of the test systems submitted were fully capable of both detecting an idle channel and tuning to it for transmissions in a fully automatic mode. These two systems were never tested in that mode to see if they would actually choose a frequency that would cause

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interference. The reasons for not doing this part of the test was unclear, but undue influence by the TV broadcasters is a possibility. The LBT option became extremely controversial based on allegations by broadcasters of hidden node problems and lack of analysis regarding the sensitivity of cyclostationary detectors in practical use. So the FCC chose the less controversial geolocation/database option; it then further favoured broadcasters’ interests by basing its predictions of T V signal strengths on its venerable R-6602 propagation model, the first two digits of which are a reminder that it dates from an F C C report done in 1966, before the widespread availability of computers. R-6602 was used to determine spacing between T V stations, even though it was well-known that it was not a reliable predictor of signals at a specific location, and even though the F CC was already using more complex models in other contexts where localized predictions were needed. Indeed, the F CC-developed content on the commission’s own website contained maps of station coverage that clearly showed that in mountainous terrain there sometimes was no coverage for certain T V stations within the coverage contours predicted by R-6602 (K WGN-T V 2019). The net result was that while the FCC’s TV white space rules allowed non-licensed use of T V spectrum, the specific content mandated for the databases to determine access was too conservative because it was based on an old computer model that took only limited account of terrain details because when it was developed in the 1960s there was no practical way to use such terrain details for practical calculations. One somewhat saving grace was that since the consumer equipment that implements T V white space takes orders from F CC-authorized databases, a change in FCC policy for such databases could be implemented without impacting the design of user equipment. A more accurate database using more recent computer models (OET 2002, 2004, 2010, 2015) would be more intensive than the R-6602 model. The cost of computation is decreasing with Moore’s Law, which states that digital electronics cost decreases greatly over time due to technical advances (Friedman 2015). The F CC could make use of a more accurate and complex model optional for database providers and thus let market forces decide whether it is practical to implement in this application. The U K and Canada have implemented T V white space policies similar to that of the United States. While there are indications that the propagation model used in those two countries is are more

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reliable than the R-6602 model, I am not aware of a published comparison in 2017. 4.2 5 GH z Dynamic Frequency Selection The next example of the use of cognitive radio to detect idle spectrum was the 2003 F C C effort to make 5.470–5.725 G H z available for unlicensed systems. Previously, the F C C had allowed access to the 5.150–5.250 GHz, 5.250–5.350 GH z, and 5.725–5.825 G H z bands, so this contiguous band was very attractive. In the past, however, the presence of federal government civil and military radars had precluded sharing. Cognitive radio technology, called “dynamic frequency sharing” (DF S) in this context, was seen as the answer. As with T V white space, the basic concept was to use an L BT system to avoid interference. Unlike TV white space, for which TV signals’ modulation details were well defined and widely known, some of the military radars in the band had classified modulation details and reportedly also had special modulation modes that were rarely if ever used in peacetime operations. Thus an effective cyclostationary detector that took advantage of detailed signal knowledge would of necessity expose sensitive military information about the performance and possible jamming vulnerabilities of certain radar systems. The NTIA (National Telecommunications and Information Administration) released nominal signal details of radars in the band in order to help developers explore DFS development, making it clear, however, that these details were not typical of all signals in the band. Prior to the World Radiocommunication Conference in 2003, where an analogous international issue was to be deliberated, an agreement on D F S technical details was reached involving industry, the F CC, the N T I A, and the US Department of Defense (US Department of Commerce and N TIA 2003). In the end, the F C C adopted the proposals agreed upon with the other governmental entities. The new rules required that a frequency be observed for at least sixty seconds before any transmissions on it were to be allowed; furthermore, if a signal on the radar frequency was detected for at least one microsecond, then use of that frequency would not be permitted for at least the next 30 minutes.7 The basic problem with these rules is related to the problem with the previously discussed T V white space rules: unequal influence and differing goals of the parties involved. In theory, F CC spectrum

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decisions are made in the “public interest”; in practice, some parties are “more equal” than others. When it came to the T V white space issue, the broadcasters clearly had the inside track on F CC decisionmaking, and they managed to drive the L BT option off the table as well as force the selection of a dated radio propagation model that gave broadcasters excessive protection in some terrain conditions. The basic technical flaw in the rules that were adopted was overconservatism: the probability of detection of a radar signal whose details were not known was maximized, with little or no concern for the resulting false alarm rate. If the D F S detector saw a weak signal for a duration of only one microsecond, it had to cease use of that frequency and could not even consider using it again for at least 30 minutes. No checks were permitted to see whether this might be a false alarm due to local noise or even to see if the signal was recurring, which would be expected if it was an actual radar signal. This type of outcome almost certainly resulted from the unequal status of the parties negotiating and the lack of a neutral, objective, and technically competent arbitrator or even facilitator in these deliberations. 4.3 3.5 g h z Band – Part 96 of f c c Rules The most recent approach to spectrum sharing had an unusual start. The US President’s Council of Advisors on Science and Technology (PCAST) was asked in 2011 to investigate new approaches to federal spectrum management that would facilitate private-sector access to spectrum while allowing vital federal government operations to proceed. P C A S T found that “the essential element of this new federal spectrum architecture is that the norm for spectrum use should be sharing, not exclusivity” (President’s Council of Advisors on Science and Technology 2012, vi). Prior to this report, the main mechanism for making more spectrum available for growing civil uses such as broadband cellular systems was to identify a federal band to be transferred, order relocation of federal users to other bands, auction rights to the spectrum to private users, and use some of the auction proceeds to pay the relocation costs for the original federal users. Such transfers were always highly controversial, for the private-sector users always wanted more spectrum and the federal users would always cite the huge costs and terrible mission impacts of such changes. The FCC and the N TIA had the basic legal authority to make these transfers, but they were so controversial that as a matter of practice, congressional legislation was needed. Indeed, P C A S T found “that clearing and

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reallocation of Federal spectrum is not a sustainable basis for spectrum policy due to the high cost, lengthy time to implement, and disruption to the Federal mission” (President’s Council 2012). The FCC Spectrum Policy Task Force had viewed T V white space as the “low lying fruit” test case for L BT technology. Now, P CAS T recommended the 3550–3650 MH z Navy radar bands as a first case for a new sharing concept, the “spectrum access system” (S AS ). S AS would be a next-generation approach after LBT in that it would have knowledge of the locations of military users and hence actual spectrum use in an area, would predict where there would be idle spectrum that could be used without interference to the primary military user, and would then assign that spectrum in real time and withdraw it in real time as the situation changed. The 3550–3650 MHz band was chosen because the NTIA had identified it as a candidate for relocation of federal users. Only a modest number of Navy vessels used radars in that band; however, when they were close to coastal areas, sharing with civil users would not be possible. While at a given time only modest parts of the country would not be available, traditional worst-case analysis yielded vast exclusion areas. In the United States, most of the population lives near the coast, so the worst-case assumptions would have denied access to this spectrum in every major city except Chicago. By contrast, the dynamic SA S approach would allow access to most of the spectrum in most places most of the time while still protecting military operations and avoiding military interference vis-à-vis civil systems. But as is often said, the “devil is in the details.” As far back as Coase’s (1960) paper it has been recognized that federal users in the United States are generally in the “driver’s seat” on spectrum policy that affects them and that such users don’t answer to a third-party objective regulator.8 The F C C decision on the 3.5 G H z band had to deal with the fact that the military users and the NTIA could not agree on the details of the SA S, especially the new “environmental sensing capability” (E SC ), which provides key inputs for S AS actions and is rarely mentioned.9 So the FCC used a bureaucratic trick and adopted rules requiring an SAS, placing some restrictions on what an SAS could so but never spelling out its performance requirement. The net effect was to delay implementation of 3.5 GHz for several more years while details were worked out in non-transparent ways. It is interesting to compare one key aspect of the 5 GHz DFS system with the 3.5 GHz SAS/ESC system. In the DFS case the threshold for signal detection in both time and duration is clearly given in the FCC

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rules. The author may disagree with them and question their probability of detection and false alarm rates, but the basic parameters are there. By comparison, in the 3.5 GHz case these parameters are nowhere to be seen in the FCC Rules. Indeed, discussion with FCC staff confirms that key technical parameters such as required detection receiver sensitivity and required accuracy of ship location determination are still under discussion between the military and the N T I A even though applications to be ESC operators have already been submitted (FCC 2015). The current FCC rules lack these performance figures, nor do they even hint that they will be provided at a later point – a possible indication that this is a sensitive issue in FCC/NTIA relations. 4.4  Cooperation versus Confrontation in Sharing In traditional cognitive radio/DSA approaches, the new user passively monitors the incumbent spectrum users’ transmissions and makes a decision on whether to use a frequency based on such observations. These observations are never perfect. Even in the case of cyclostationary detectors with extreme sensitivity, a detector must be “realizable” – that is, it must make decisions only on past observations and thus has a finite response time to changes in spectrum use. If the incumbent and the new spectrum sharer had incentives to cooperate then the spectrum-use decisions could be much better and the sharing much more effective. In the simple case the incumbent could share the locations, directionality, and power of its transmitters and locations of receivers in real time. It could also share information about frequency use changes before they go into effect. For example, if the cellular system is only using some channels at a particular cell site due to limited traffic there and traffic starts increasing, then the cell site operator could signal that it is about to use certain additional channels before they are actually used. This cooperative approach would dramatically reduce the possibility of interference due to sharing as well as make more spectrum available. However, it would require policy approaches that motivate both parties to share. At present, parties usually have no such incentives. Explicitly permitted exchanges of money between parties might be one way of encouraging this type of exchange. A recent joint proposal by Intel and Intelsat to permit cellular use of 3.7–4.3 GHz fixed satellite spectrum in the United States subject to mutual agreement between the parties involved is a step in this direction (Intel and Intelsat 2017).

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5   C o n c l usi ons Spectrum sharing has a long history from the earliest days of radio. Sharing is important because even today there is much idle spectrum even in areas where there is an unmet demand for spectrum for certain services. New technology has created new dynamic options for spectrum sharing. Effective sharing requires attention to technical issues such as how to prevent harmful interference and what protection level from interference for incumbents is adequate. Adjudicating technical specifics of sharing requires careful attention to defined national regulatory goals and objective analysis of the technical implications of sharing. Objective adjudication is very challenging if the parties involved in the sharing have different degrees of influence in the national spectrum regulator, such as in the case of major private-sector spectrum incumbents or public-sector spectrum users.

N otes   1 Spectrum observations for a variety of locales in several countries are available on Shared Spectrum’s website (2019). Note that such measurements involve a variety of assumptions – for example, antenna height for observations – so measurements by different parties can differ somewhat due to the assumptions used. But at the macroscopic level they consistently show low utilization even in populated areas.   2 The Spectrum Engineering Advanced Monte Carlo Analysis Tool (S E A MC A T) software is a simulation tool developed at the European Communications Office (ECO) within the frame of the European Conference of Postal and Telecommunication administrations (C EPT). It uses a Monte Carlo stochastic technique to evaluate interference between radio systems that operate in common or between nearby bands and geographic areas (ECPTA 2019). The U K’s Ofcom has used SEA MC A T on many occasions as part of its deliberations – see, for example, Ofcom (2015).   3 Sidelobes are emissions from the transmitting antenna in directions other than the intended direction. While these are undesirable, they are inevitable with antennas of finite size, although antenna design choices can control their direction to a limited degree. Similarly, receive antennas will have sensitivities in undesired directions due to the same phenomenon.

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 4 The F C C ’s rules for coordination between terrestrial fixed service stations and fixed satellite earth stations are given at 47 C FR §25.203 and 47 C FR §101.103.   5 In reality, consumer electronics equipment usually has emissions. In FC C jargon, such equipment is referred to as “unintentional emitters” and is subject to a limit on such emissions, See 47 C FR . §§15.101,117. However, in practice this is not a reliable way to detect receivers at the distance needed to prevent interference. However, this is used in countries where there are TV receiver taxes to detect receivers not paying such taxes. In such cases working range is not as important.   6 Although it may seem counter-intuitive that a detection receiver of modest complexity might be much more sensitive than the normal receiver, this is possible because the normal receiver must make thousands or millions of decisions a second regarding whether a zero or a one was transmitted while the detector knows the technical details of the signal and must only answer the question of whether that type of signal is present and may take a reasonable period of time to make that decision. “Cyclostationary detectors” are an example of such a detector. See Huang and Tugnait (2013).  7 47 C F R §15.407(h)   8 At the time of Coase’s (1960) paper, N TI A was not yet formed and the president’s power to regulate spectrum was delegated to a little-known White House office that generally deferred on spectrum policy to the federal agencies that used spectrum. A decade later, this office was renamed and had much greater power. But in 1978 the function was transferred out of the White House and the present N TIA was created.  9 The E S C is defined in 47 CFR §96.67 (Legal Information Institute 2019).

r efer enc e s Brinkley, Joel. 1997. Defining Vision: How Broadcasters Lured the Government into Inciting a Revolution in Television. New York: Harcourt Brace. Coase, Ronald H. 1960. “The Problem of Social Cost.” Journal of Law & Economics 3 (October): 1–44. E C P T A (European Conference of Postal and Telecommunication Administrations). 2019. “S EAM CAT - Spectrum Engineering Advanced Monte Carlo Analysis Tool.” 20 March. http://www.seamcat.org. F C C (Federal Communications Commission). 2015. F C C Public Notice: “Wireless Telecommunications Bureau and Office of Engineering and Technology Establish Procedure and Deadline for Filing Spectrum

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Access System (S A S ) Administrator(s) and Environmental Sensing Capability (E S C ) Operator(s) Applications.” Da 15-1426, 16 December. https://apps.fcc.gov/edocs_public/attachmatch/DA-15-1426A1_Rcd. pdf. FirstNet. 2019. “First Responders Network Authority: The Network.” US Department of Commerce, 25 April. https://www.firstnet.gov/network. Friedman, Thomas L. 2015. “Moore’s Law Turns 50.” New York Times, 13 May. https://www.nytimes.com/2015/05/13/opinion/thomas-friedman-moores-law-turns-50.html. Huang, Guangjie, and Jitendra K Tugnait. 2013. “On Cyclostationarity Based Spectrum Sensing under Uncertain Gaussian Noise.” IEEE Transactions on Signal Processing 61(8): 2042–54. Intel and Intelsat. 2017. “Joint Comments of Intel and Intelsat, FC C Docket 17-183.” 2 October. https://ecfsapi.fcc.gov/file/1002726526846/ Joint%20Comments%20of%20Intelsat%20License%20LLC%20 and%20Intel%20Corporation.pdf. Khan, Risala Tasin, Md Imdadul Islam, Shakila Zaman, and M.R. Amin. 2016. “Comparison of Cyclostationary and Energy Detection in Cognitive Radio Network.” International Workshop on Computational Intelligence (I W CI ), 165–68. K WGN-T V. 2019. “Station KW G N -TV – Analog Channel 2 – DTV Channel 34, Denver, CO: KW G N -TV Digital Appendix B.” FC C , 25 April. http:// transition.fcc.gov/mb/engineering/maps/images/callsigns/KWGN.gif. Legal Information Institute. 2019. “47 C FR § 96.67 – Environmental sensing capability.” Cornell Law School, 25 April. https://www.law.cornell. edu/cfr/text/47/96.67. Liang, Ying-Chang, Hsiao-Hwa Chen, Joseph Mitola, Petri Mahonen, Ryuji Kohno, Jeffrey Reed, and Larry Milstein. 2008. “Guest Editorial – Cognitive Radio: Theory and Application.” IEEE Journal on Selected Areas in Communications 26(1): 1–4. Marcus, Michael J. 2014. “Harmful Interference and Its Role in Spectrum Policy.” Proceedings of the IEEE 102(3): 265–69. Ofcom. 2015. “Implementing TV White Spaces,” 12 February. https:// www.ofcom.org.uk/__data/assets/pdf_file/0025/58921/annexes.pdf. O E T (Office of Engineering and Technology). 2002. “OET Bulletin Number 72: The I LLR Computer Program.” FC C , 2 July. https://www. fcc.gov/bureaus/oet/info/documents/bulletins/oet72/oet72.pdf. – 2004. “OET Bulletin No. 69: Longley-Rice Methodology for Evaluating T V Coverage and Interference.” FCC, 6 February. https://www.fcc.gov/ bureaus/oet/info/documents/bulletins/oet69/oet69.pdf.

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– 2010. “OET Bulletin Number 73: The ILLR Computer Program for Predicting Digital Television Signal Strengths at Individual Locations.” F C C , 23 November. https://www.fcc.gov/bureaus/oet/info/documents/ bulletins/oet73/oet73.pdf. – 2015. “OET Bulletin Number 74: Longley-Rice Methodology for Predicting Inter-Service Interference to Broadcast Television from Mobile Wireless Broadband Services in the UHF Band.” FCC, 26 October. https:// www.fcc.gov/bureaus/oet/info/documents/bulletins/oet74/OET74.pdf. President’s Council of Advisors on Science and Technology. 2012. “Report to the President: Realizing the Full Potential of Government-Held Spectrum to Spur Economic Growth.” https://obamawhitehouse. archives.gov/sites/default/files/microsites/ostp/pcast_spectrum_report_ final_july_20_2012.pdf. Shared Spectrum Company. 2019. “Spectrum Reports,” 25 April. http:// www.sharedspectrum.com/papers/spectrum-reports. US Department of Commerce and National Telecommunications and Information Administration. 2003. “Agreement Reached Regarding US Position on 5 G Hz Wireless Access Devices,” 31 January. http://www. ntia.doc.gov/ntiahome/press/2003/5ghzagreement.htm.

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9 Polycentric Governance for Spectrum Sharing Martin B.H. Weiss and Marcela Gomez

1   In t ro ducti on Merging polycentric governance with spectrum management means relying on multiple nested governance entities. Some of these entities can take advantage of their local knowledge to develop spectrum usage plans and guidelines, as well as deal with potential harmful uses. This process shifts the locus of spectrum regulation away from a centralized entity, which may speed up negotiation processes;1 it also avoids having a single point of failure in the system and allows solutions specific to the local environment. Adopting this type of governance system requires a deeper understanding of how multiple entities can collaborate with one another, how their usage patterns affect the operations of others, and, in general terms, how negotiations among participating entities can be implemented to achieve a common goal. Thus, the implementation of decentralized governance systems goes beyond the technical aspects of spectrum use. It deals with how sharing groups are formed, how hierarchies are established, and how users respond to conflict. Our governance approach can be well paired with the underlying market mechanisms chosen for resource assignment. Whether these are open access markets like those described by Doyle, Cramton, and Forde (Chapter 10), or online spectrum auctions as in the case of New Zealand detailed by Joyce (Chapter 1), the objective of polycentric governance is to adapt to local conditions so as to serve the needs and purposes of the interacting entities, just as market mechanisms do with the players and conditions of local markets.

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In this chapter, our goal is to describe the main characteristics of polycentric governance that would apply to spectrum sharing scenarios; where this type of governance is applicable; and how it should be shaped so as to serve spectrum-related purposes. Thus, it aims to provide additional alternatives for spectrum governance, which may point to a technology-transparent mechanism, one that can adapt better to the fast-changing and challenging spectrum environment we are currently witnessing.

2   C o m m o n P o o l Res ources a n d   P o lyc e n t r ic  Governance The literature that supports this work is drawn mainly from the extensive research led by Professor Elinor Ostrom. As a starting point, we present two key concepts surrounding this line of research: common-pool resources (C P R ) and polycentric governance. In her work, Ostrom defined common-pool resources as “systems that generate finite quantities of resource units so that one person’s use does subtract from the quantity of resource units available to others.” Common-pool resources are generally large enough to be accessed by multiple actors simultaneously, which makes it costly to exclude potential beneficiaries (Ostrom 2008a). This leads to two important characteristics of C P R : high subtractability of use (or rivalry, in economics language), and the difficulty of excluding potential beneficiaries. Systems in which common-pool resources are at the core generate scenarios where outputs stem from inputs, interactions, and efforts of multiple individuals. In other words, joint outcomes result from individual actions and interests. These settings may lead to collective action problems and, in the worst case, to the “tragedy of the commons” (Hardin 1968). According to Ostrom (2008b), “the ‘tragedy of the commons’ arises when it is difficult and costly to exclude potential users from common-pool resources that yield finite flows of benefits, as a result of which those resources will be exhausted by rational, utility-maximizing individuals rather than conserved for the benefit of all.” The literature on C P R has extensively explored sustainable C P R systems or sustainable commons. In this context, sustainability refers to the “durability of institutions that frame the governance of common-pool resources” (Agrawal 2002). The CP R literature points to

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how collective action problems are addressed and what is required to put them in place. This literature has found that polycentric governance systems are at the core of the long-running and stable operation of common-pool resource systems. Polycentric governance systems are defined as “the organization of small-, medium-, and large-scale democratic units that each may exercise considerable independence to make and enforce rules within a circumscribed scope of authority for a specified geographical area” (Ostrom 2001). These units may differ in scope, levels of specialization, and affiliation, and according to Ostrom (2001), their strength stems from multiple factors: •

•

• •

Autonomy to experiment with rules that apply to resource systems. Local knowledge and access to rapid feedback from policy changes. Ability to learn from the experience of parallel units. The building of redundancy into the system, which makes it possible to: • Keep the system “running in the presence of external shocks or internal malfunctions”; and • Avoid a single point of failure (i.e., so that the failure of one governance unit may cause a small-scale incident instead of a system-wide disaster).

In this light, polycentric governance may help solve collective-action problems through the development of systems of governmental and non-governmental organizations at multiple scales (Ostrom 2008a). In the United States, current spectrum-management settings do not necessarily rely on polycentric governance. There are rules that adapt power levels to local conditions, specifically in the 3.5 GHz band (FCC 2016a); but this is still done under a very generic approach. We find particular incentives to suggest polycentric governance for spectrum sharing schemes, as local conditions may differ from one another, thus providing with varying opportunities for sharing that should be taken into account. The guidelines for creating polycentric governance institutions have been well defined so as to permit their application to different types of resources and research areas. In what follows, we explore and explain these guidelines in the electromagnetic spectrum context as a

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means to devise what would be necessary in order to incorporate polycentric governance in spectrum sharing systems.

3  P o lyc e n t r ic G ov e r n ance i n Spectrum 3.1  Requirements and System Operation In the body of her work, Elinor Ostrom studied frameworks for the governance of common-pool resource systems (Ostrom 2010). Several researchers have argued that spectrum meets the definition of common-pool resource systems under our current technological endowment (Herter 1985; Weiss et al. 2015). Ostrom developed the list of attributes for the governance of long-surviving common-pool resource (C PR ) systems contained in Table 9.1. Ostrom and her collaborators studied resource systems such as fisheries, forests, and irrigation systems. Unlike these systems, spectrum is a constructed resource that does not exist apart from radio technology (Shelanski and Huber 1998; Weiss et al. 2015).2 Thus, it is necessary to construct a technological foundation for a decentralized governance system for spectrum. Boundaries: In Ostrom’s description, two types of boundaries are relevant: those that define the user community, and those that define the resource. Resource boundaries are often physical delimitations of what is included in the governance system and what is excluded. For spectrum, the physical delimitation is largely determined by the electrospace of the transmission system. From a system design perspective, this is determined by technical parameters such as transmission power, frequency band, antenna height, antenna type, and so on. User boundaries are more challenging. Here, the rights structure and governance systems come into play. To address this, Schlager and Ostrom (1992) developed the rights typology defined in Table 9.2 (adapted here for application to radio spectrum). “Access” and “Withdrawal” (i.e., “reception” and “transmission”) rights are referred to as usage rights; the remainder are referred to as collective action rights. In this context, collective action rights are implemented in the SA S,3 and these, in turn, govern the usage rights. Locally determined spectrum policy, then, means a (hyper)local SAS. The user community, then, is determined by the local SAS, which must

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Table 9.1 Critical attributes of long surviving CPR systems 1 2 3 4

Boundaries Appropriateness to local conditions Collective choice arrangements Monitoring

5 6 7 8

Graduated sanctions Conflict resolution mechanisms Minimal recognition of rights Nested enterprises

Table 9.2 Distribution of rights by user type

Reception Transmission Management Exclusion Alienation

Full owner

Proprietor

X X X X X

X X X X

Authorized claimant

Authorized transmitter

Authorized receiver

X X X

X X

X

coordinate with adjacent (and nearby) local S A S s or, possibly, a regional SA S. Appropriateness to Local Conditions: This item refers to (a) “rules restricting time, place, technology, and/or quantity of resource units … related to local conditions,” and (b) “the benefits obtained by users from a C P R , as determined by appropriation rules … proportional to the amount of inputs required in the form of labour, material, or money, as determined by provision rules” (Cox, Arnold, and Villamayor 2010). This is perhaps the attribute of most interest here. “Appropriateness to local conditions” means that the economic and management relationships are appropriate for the local conditions and the people affected. Collective Choice Arrangements: Refers to the extent to which participants in the CPR system have a say in its management – that is, are endowed with and able to execute their collective choice rights. In spectrum sharing, collective choice is embodied in local S AS s as well as in the protocol that implements inter-S AS coordination (Weiss et al. 2015).

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The next three items address the enforcement of CP R governance relationships. We have addressed enforcement in more depth elsewhere (see, for example, Weiss et al. 2012); in brief, it is necessary to enforce both usage rights and collective action rights. Usage rights in spectrum as a common-pool resource are typically expressed in the form of interference protection. Enforceable interference events might be subdivided into four distinct types, as outlined in Table 9.3. Type 1 interference events might occur due to aggregation of similar devices, propagation anomalies, location errors, or the like. In these kinds of events, we expect the radios to be compliant with applicable technical and operational regulations, and users to be cooperative in the sense that they will respect and comply with enforcement actions. We cannot say the same about type 2 interferers, which might be software radios that have temporarily been programmed to operate in a band and may not try to be at compliance with the appropriate technical and operational requirements. These may or may not have typical physical characteristics that would allow them to be automatically identified. Type 3 events are due to leaky cables, poor filters, and so on. We would expect these to be licensed devices that fit no pattern or lack a particular physical characteristic. Type 4 events occur when regulations or licences are incomplete and/or poorly written or assigned. For the purpose of this work, we consider only type 1 events, which are also generally the focus of the CPR literature. Other types of interference events are also of substantial importance, but that is outside the scope of this chapter. Weiss and colleagues (2015) have made a case for the need to enforce collective action rights as well as interference rights in spectrum sharing systems. To date, in the United States, collective action rights have been exerted through the Commerce Spectrum Management Advisory Committee (CSMAC) of the National Telecommunications and Information Administration (NTIA),4 as well as through the F C C under the Administrative Procedures Act (A P A ). As Cox and colleagues (2010) point out, transparency is important for sustainable CPR management; in spectrum systems, these collective action rights are codified in software-based SAS systems, which will require transparency as well. Monitoring: This refers to the ability to observe and audit the use and governance of the CPR system. It also refers to the ability to monitor

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Table 9.3 A typology of interference events Type 1 Type 2 Type 3 Type 4

Events due to the routine operation of a sharing ecosystem Events due to “rogue” or malicious users Events due to faulty equipment of authorized spectrum users Events when all users are in compliance with regulations

the overall “health” of the system. The accountability of monitors to the members of the benefactors of the CPR system is important as well. For spectrum, this can imply the need to monitor spectrum use or to be able to detect interference that rises above a “harm-claim threshold” (de Vries 2013). As for the second component, the “health” of the ecosystem can perhaps best be measured by the noise floor (FCC 2016b). Graduated Sanctions: When violations of the operational rules occur, sustainable CPRs allow for sanctions that are scaled to the seriousness and context of the offence. A typical example of a violation is that of interference caused by one entity to others accessing the shared spectrum. Sanctions may be assessed by other benefactors and/or by officials who are accountable to them. Some research on appropriate and effective sanctions has been conducted by Woyach and Sahai (Woyach and Sahai 2011; Woyach et al. 2008). In their work, the authors focus on non-monetary “spectrum jails” that penalize misappropriators, following an enforcement mechanism “inspired in the human criminal justice system.” Alternatively, Malki and Weiss (2014) consider penalties in the context of the law and economics literature. In both cases, the penalties and sanctions have focused on interference events. Work remains to be performed on how sanctions might be applied when collective action rights are violated. Conflict Resolution Mechanism: Also of importance is rapid access to low-cost local arenas for resolving conflicts among benefactors or between benefactors and officials. Benefactors include all entities accessing the common resources (individuals, companies, M N O s, MV N Os, etc.); officials may include regulatory entities and spectrum users with higher hierarchy levels that fulfill monitoring and supervisory duties. The centralized enforcement system currently in place in the United States – the FCC’s Enforcement Bureau – does not meet this criterion.

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It is neither local nor low-cost. Thus, a local system must include a mechanism for automated or semi-automated negotiations among systems to coordinate their use of spectrum. The remaining factors refer to the broad institutional context in which the C P R exists. On the one hand, there is a question of legal context; on the other, there is one of broader operational context. Minimal Recognition of Rights: This refers to a formal (or informal) recognition by central authorities of the self-governance of local authorities. The F C C already delegates spectrum management functions to organizations such as the American Radio Relay League (A R R L ) (Cui, Gomez, and Weiss 2014). As well, the databases for television white space (T V WS) and citizens’ broadband radio service (CBRS) are effectively managing spectrum on behalf of the FCC, so it seems that this recognition would, in principle, be possible. Nested Enterprises: In many sustainable CPR systems, the use, provision, monitoring, enforcement, conflict resolution, and governance activities are organized into multiple layers of nested enterprises. This is helpful because (a) CPR systems exist in a broader environment that may require external coordination; (b) not all conflicts and disputes can be resolved locally, so it might be necessary to appeal to an independent authority; and (c) it may be more cost-effective to use a superlocal or regional entity to coordinate usage than to resolve usage or governance conflicts locally.

4  Cas e S t u d ie s in P o lyc e ntri c Governance o f   S p e c t rum In this section, we provide a set of examples of spectrum commons management. These cases were presented in Cui, Gomez, and Weiss (2014), in which the authors examined the bundles of rights that would best adapt to the sharing scenarios in question. In that work, the definition of rights is explored from a Coasian perspective in which sharing requires a total or partial exchange of spectrum rights. As a consequence, the final value of the shared resources is a function of the value of the rights exchanged during the sharing process (Demsetz 1967). In this work, we revisit some spectrum sharing scenarios and analyze them from a polycentric governance perspective. In each scenario, we aim at ascertaining whether and how the governance

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system requirements have been implemented and how they affect the sharing process. 4.1  Amateur Radio Services This type of service represents a private commons – that is, membership in the commons is granted when a user earns an amateur radio licence. Such users must pass a test to prove their eligibility before being granted an amateur radio service (ARS) licence. Note that these licences are not assigned to any A R S station on an exclusive basis. Once they are operational, A R S users need to coordinate their spectrum use with others by selecting the appropriate transmission channels. This coordination process seeks to avoid interference and to achieve efficient spectrum use. Given that ARS users do not possess exclusive licences, they are not entitled to interference protection; at the same time, though, they are not allowed to interfere with adjacent licensed bands. Indeed, when interference with licensed bands is detected and cannot be prevented, ARS transmissions are restricted to specific time slots, thus ensuring minimal harm. In this example, we show the presence of nested enterprises. Indeed, there is a hierarchy in the management of interference as well as in the provision of general operational guidelines. The regulator, the FCC, is in charge of providing access to the service (i.e., membership), thus ensuring participants’ eligibility. Additionally, it is in charge of limiting A R S transmissions when interference affects other licensed users. Appropriateness to local conditions refers to the coordination process that leads to choosing an appropriate channel for transmission. This will depend on other existing users, their current status, and how the addition of a new user may affect not only adjacent transmissions but also overall efficiency in spectrum use. Boundaries for these transmissions are given by adjacent licensed users. In other words, transmissions and services are bounded by their requirement to not interfere with licensed operations. These may be particular to the location and time of transmissions as well as to the sensitivity of the adjacent devices, services, and operations. Conflict resolution is left to A R S users when it involves only other ARS members; however, when interference involves licensed users, the FC C may intervene in order to limit harm and adjust transmissions. In the United States, the FCC has delegated responsibility for management of the amateur bands to the American Radio Relay League

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(A R R L ), which manages amateur spectrum through its National Frequency Coordinator’s Council (N F C C ). The N F C C coordinates regional frequency coordinators. Thus, this is a good example of nested governance. 4.2  Personal Radio Services The FCC authorizes various personal radio services (PRSs). Normally, PR Ss match licences with appropriate equipment that complies with existing technical regulations. Users are prompted to solve interference issues among themselves; however, if disputes arise, the F CC is the final arbiter. In this example, nested enterprises are again seen, mainly in the conflict resolution context. The FCC performs service and equipment authorization and works toward settling disputes among users. Nevertheless, in a local, perhaps less conflicting situation, the users are expected to resolve interference incidences among themselves. Local identification of interference events is also an example of the appropriateness to local conditions. 4.3  Wi-Fi services In this section, we present two examples that involve the deployment and utilization of wireless Internet services via I S M bands.5 4 .3 .1   U n i v e rsi t y C a mp use s In the case of university campuses, there are two main applications: (1) provision of wireless Internet within the university buildings, and (2) provision of Internet services in university housing premises. In the first case, it is the policy of several institutions to establish their own internal regulation and thus manage provision of and access to the Internet within their premises. This means that users are not allowed to operate their own equipment (e.g., access points), for this may cause interference with the internal network. In the second case, when universities act as landlords, the story is quite different. In this case, apartment tenants are leasing space owned by the university. According to the F C C Over-the-Air Reception Devices O T ARD rules (FC C 2004), it is unlawful to restrict the tenants’ use of wireless services, including the use and installation of access points. In the case of university campuses, we see two different governance methods, each applied to the circumstances in which they are deployed

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(appropriateness to local conditions). Note that in this case, local conditions do not refer to a geographical area; rather, they represent rulings that apply to different areas of an institution. In the case of university buildings, the goal is to maximize the quality of service provided to students, faculty, staff, and visitors. Here, the centralized approach avoids an alternative conflict resolution method that may be too costly (e.g., adjacent university departments negotiating for Internet access). In the case of university apartments, a centralized approach may ensure Internet access to all tenants; however, landownership (or lease) rules prevail. These operational guidelines also differentiate the governance boundaries in each of these cases. Boundaries in these contexts dictate the types of devices that may be installed and utilized. Finally, the governance hierarchy (nested enterprises) dictates whose rules prevail; for instance, a university has the final say on the management of its wireless network within the campus; however, FCC OTARD rules prevail when it comes to leased spaces. 4 .3 .2   W i r e l e ss I nt e r ne t Se rvi ce P rovi d e rs In Cui, Gomez, and Weiss (2014), the authors explore a case study conducted in Sandvig (2010). This scenario relates to the operations of two wireless Internet service providers (W I S P s) in sparsely populated rural areas that are outside the coverage areas of large telecommunications carriers. In these areas, the service providers rely on ISM bands to provide their subscribers with Internet access. As a consequence, firms are expected to negotiate which channels to utilize to avoid interference. In the specific example presented in Sandvig (2010), the WISPs in question did not always respect their agreement. It is unknown what mechanisms were utilized by one service provider to cause interference, but the result was that the subscribers to the competing WISP had no Internet access at all. The two WISPs were unable to settle the dispute by themselves, so the municipal government and other external entities intervened. In the end, the interferer was asked to modify its transmission parameters. Interference finally ended, but not because the interferer’s network was reconfigured. Rather, both W I S P s were penalized for utilizing uncertified equipment that was causing interference to an adjacent licensed band. This example shows how conflict resolution mechanisms respond to local conditions. When conflict cannot be resolved between the affected parties, external entities may intervene to settle the dispute. In this case, nested enterprises were more evident. The W I S P s first

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attempted to resolve the interference situation themselves. When they failed, local authorities intervened to help settle the dispute. A final point: the upper layer in this hierarchy was provided by a regulator that enforced the rights of licensed users. Interference monitoring is performed mainly by the service providers, but adjacent (licensed) users also take part. Graduated sanctions might have applied the above case. Here, local coordination might have solved interference problems; when they weren’t, network reconfiguration was required. Finally, when the scope of interference is more serious and involves other types of participants, a change of devices may be in order.

5  Wh at M ig h t a n A u to m ated, Polycentri cG ove rn a n c e - F r ie n d ly R a d io Sys tem Look Li ke? The current trend toward database-oriented spectrum sharing systems allows for the implementation of decentralized spectrum policy. We envision a system based on a geo-located and networked “radio appliance” (R A ) that controls the protocols and transmission parameters of the radios associated with it. It is effectively a small-scale spectrum access system (SAS). This appliance (and the associated radios) might be owned and operated by, for example, a landlord, a farmer, or an Internet service provider. When an R A is installed and powered up, it locates itself, registers itself, and obtains an operating licence and learns about neighbouring RAs. If there are no nearby RAs, the operating parameters of the radios, such as power, bandwidth, and protocols (e.g., waiting times in Wi-Fi), will gradually become more permissive until (a) they can meet the requirements of the application in question or (b) an enforceable event occurs. If (a) occurs, the system will maintain a steady state, making small adjustments to account for environmental variations (e.g., weather). If instead (b) occurs, the R A will automatically cause the parameters to become more restrictive before gradually increasing again to find the maximum possible performance.6 As additional RAs come on line, the RAs begin to negotiate with one another, coordinating frequency usage, time of use, transmission protocol, and so on, to minimize the occurrence of type 1 interference events. If the time required to compute an acceptable allocation becomes too great, the affected RAs defer to a super-local RA. This may be a separate, specialized entity or a software process within each RA that can be invoked.

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If, upon power up, the RA learns that other RAs are nearby (as might be the case in a suburban or urban area), the R A first determines whether coordination will be required (based on the distance to other R A s). If none is required, it proceeds as described above. If it is required, the R A requests an electrospace allocation for its operation either through negotiation with neighbouring RAs or from the superlocal R A . In Table 9.4, we show how this approach could implement a decentralized spectrum policy regime in the context of sustainable C P R systems. 5.1  Setting the Stage for Polycentric Governance To study this, we begin with a rural situation: a ranch in central Wyoming, where the owner is interested in utilizing the 3.5 GHz band (C B R S ). This region is outside the incumbent’s exclusion zone, so sensing naval radars is not a concern. Suppose the rancher wishes to monitor the location and health of her cattle and acquires the proposed radio system. The R A is installed centrally with a tower and an antenna. The radio-based cattle monitors are strapped to the animals. The R A begins by registering itself over the Internet and acquiring information about neighbouring RAs and the governance structure in place. In our example, we assume no nearby RAs, so the radios and R A begin by operating with “stock” radio parameters as specified by the FC C for the 3.5 GH z band. The R A begins permitting the associated radio devices to gradually increase their power until adequate performance is achieved over the entire ranch. Let us now assume that a nearby ranch acquires a similar system. When its R A (RA 2) is powered on, it learns of the presence and location of RA 1. It also learns that a fully decentralized governance system is in place and that it is outside the incumbent exclusion zone. If the two RAs are sufficiently far apart to not interfere with each other under the “stock” transmission parameters, then like RA 1, RA 2 will choose the best modulation scheme, and as much channel bandwidth and channel time as needed for the application, and gradually increase transmission power until adequate performance is achieved over the entire ranch. This might continue unabated if the two ranches are geographically separate. If they are adjacent, it is likely that transmissions associated with RA 1 will eventually interfere with the transmissions of RA 2 (or

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Table 9.4 Architecture requirements Requirement

System feature

Boundaries

Operating boundaries determined by transmit power and antenna Locally determined spectrum assignment and usage Open source software for radio appliance Identifying users and documenting transmission and spectrum sensing Backoff protocol and explicit coordination Protocols for negotiating interference protection Delegation of spectrum control by F C C , NT I A and SAS operators Ability to self-organize and delegate spectrum control

Congruence with local conditions Collective choice arrangements Monitoring users and resource Graduated sanctions Conflict resolution mechanisms Minimal recognition of rights Nested enterprises

vice versa). If interference reaches a level where performance is sufficiently impaired, RA 1 or RA 2 (whichever first detects the problem) will initiate a negotiation with the other. The RAs can coordinate on transmit power, frequency, time, or modulation scheme to mitigate the interference: transmit power will affect reach, frequency band will affect bandwidth, time will affect latency (as well as bandwidth), and modulation may strike a different balance between the three. Each RA will prefer to minimize the consequences of the negotiation on the performance of the application. In the case of the cattle-monitoring application, the RAs may prefer to maintain higher power levels at the cost of decreased throughput or increased latency so that the entire ranch can be covered. If these radio systems become popular in the area, then bilateral coordination will no longer function efficiently. In this situation, one of the radios will be declared the spectrum coordinator, SC (this could potentially rotate among the RAs in the region). The SC’s function will be to allocate regional spectrum resources among the associated RAs to optimize its use. The SC will need to be aware of other S Cs in the region and to coordinate with super-regional SASs (i.e., participate in a nested governance system). An enforceable event occurs when the transmission of a radio device associated with one appliance diminishes the operation of a radio

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associated with a different appliance to the point that the function of the radio application is measurably impaired (e.g., latency, throughput). An enforceable event will trigger an automated negotiation protocol whose goal is to modify the radio parameters to minimize the consequences of sharing. The outcome of the negotiation may be decreased transmission power, coordination of the frequency bands used, time-sharing of the transmissions, or the like. The radio appliances will then gradually increase power until another enforceable event occurs. The solution may also involve fusing authenticated data regarding the enforceable event. If the frequency of enforceable events increases above a threshold, a super-local (or regional) coordinating device will be invoked to optimize use of the spectrum. In this way, spectrum governance is nested (Agrawal 2003), so as to provide resilience against a single point of failure in the governance process. This represents a means to learn from local knowledge as well as policy changes. The result is a system that is more responsive to environment threats at multiple scales. In the end, this system can compensate for the failure of some units with the successful response of others (Agrawal and Ostrom 2001). This can be an advantage with respect to global policy mechanisms. Thus, spectrum management would be best modelled as an emergent phenomenon rather than a top-down system. We have considered two simulation environments to test our model. The first scenario focused on a cattle-monitoring system implemented in a rural area. In the second case, we move our scenario to a semi-urban area where wireless systems may be deployed in closer proximity. The goal here to twofold: to explore the incidence of interference events, and to ascertain the effect of implementing local negotiation mechanisms. 5.2  Proof of Concept: a Simple Simulation We developed an agent-based model in NetLogo 5.2.17 to test the aforementioned scenario. This simulation tool permits us to utilize three types of agents: patches, turtles and links.8 In our model, we utilize these agents to define ranches, base-stations or RAs, cattle, and the communication process between the RA and cattle. Our model supports the creation of up to four ranches where the communications system of this case study has been deployed. In this

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way, we envision an environment where an RA periodically monitors the cattle by pinging them to determine their location. Additionally, the sensors attached to the cattle can transmit information about the nutrition and hydration levels of each cow. When these levels fall below a critical threshold, the sensor is expected to send an emergency message that will alert the rancher to the situation. Given that the cows represent the system’s mobile agents, they have been modelled as moving agents. In an attempt to portray the level of activity of real cows, we have set our cow agents to move only 30 percent of the time. 5 .2 .1   M o de l P a r a me t e rs For this communication system to operate, we need to define the appropriate transmission, reception, coverage, and propagation parameters. Figure 9.1 shows the location of one ranch in terms of its x- and y-coordinates and the maximum radius that needs to be covered. Considering this maximum coverage distance, we rely on the Extended Hata model9 as an empirical propagation model to determine the applicable path loss and thus define the power that would be required by an R A to provide coverage for the entire ranch. 5 .2 .2   Fi nd i ng C o or d i nat i o n E ve n t s The coexistence of multiple ranches in close proximity may result in mobile devices (i.e., cow sensors) suffering interference. According to the governance model we study, interference would call for coordination among the interfering entities. Applying this to our model, when we consider more than one ranch, the coverage area of each RA may interfere with the coverage area of the other RAs. In Figure 9.2 we illustrate this interference situation for an area with four adjacent ranches. The circles surrounding each ranch represent the coverage area for the R A at the centre of each ranch. As can be observed, the coverage areas overlap, thus creating interference-prone zones, which may call for coordination events among RAs. For interference assessment, we consider there to be harmful interference when there are cows (i.e., mobile devices) in the interference area and when the power level in the interference zone is above the noise threshold of these devices. Consequently, when these two conditions are met, we consider that a coordination process needs to take place among the interfering parties.

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Figure 9.1  Graphic representation of one ranch in the simulation environment

The aforementioned conditions are a consequence of the transmit power chosen by each RA and the noise tolerance of the mobile devices attached to the cattle. To illustrate these factors in our model, each RA responds to a specific profile that determines the transmission power level to utilize. The profiles have been defined as follows: •

•

•

Profile 0: The transmission power of RA x is the minimum power it requires to cover the entire area of the ranch where it operates. Profile 1: The transmission power of RA x is the maximum allowed by the F C C , i.e., 47 dBm. Profile 2: The transmission power of RA x is higher than the maximum allowed by the F C C , i.e., 57 dBm.

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Figure 9.2  Interference zones

In the case of the mobile devices, three interference tolerance levels are also defined. Note that all the mobile devices belonging to a particular ranch will be assigned the same level. 5 .2 .3   Si mul at i on R e sult s In this section, we present the evaluation of three simulation scenarios, which aim at assessing the interference events that would take place and thus require coordination among R As. The three simulation scenarios attend to the following characteristics: 1 Every R A transmits at the power level allowed by the F CC (i.e., 47 dB), and the mobile devices on each ranch have the highest tolerance to noise.

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2 Every R A transmits at the minimum power it requires to cover the entire ranch where it operates (i.e., approximately 52 dB), and the mobile devices on each ranch have the lowest interference tolerance. 3 Each R A and group of mobile devices on every ranch choose independently10 their transmit power profile and interference tolerance level, respectively. In each of the aforementioned scenarios we also explore how the number of mobile devices (i.e., groups of cattle) affect the number of interference events. In this manner, we simulate scenarios where the group of cattle varies from three to eight. The results presented in what follows correspond to those obtained while exploring the model behaviour in 2,000 simulation time units or “ticks” and calculating the average over ten replications. Scenario 1: Our simulation results show zero interference events, which means that when the R A s limit their transmission power to the maximum established by the F C C , there is no need for negotiation among them. However, it should be noted that this power level does not allow the R A s to fully cover the areas of the respective ranches. Indeed, for the minimum received power we consider in our model, this power level provides a coverage radius of approximately 900 metres. It follows that, when compared to the required coverage radius of 1130 metres, approximately 20 percent of the area is left uncovered. In this scenario, we are presented with a trade-off between avoiding inter-ranch interference (and thus negotiations among RAs) and reaching the required coverage. Scenario 2: In the second scenario we find a significant number of interference incidences throughout our simulation. Given that all RAs operate under similar configurations, in Figure 9.3 we present the results obtained with RA 1, which show the number of interference events when there are eight groups of cattle on the ranch. As can be observed, on average there are one to two interference events per time instance. Thus, coordination among Ras will be required. Scenario 3: This scenario aims at capturing the varying behaviour of the R A s and the sensitivity levels of the mobile devices. This could represent what might happen in a real-world scenario, as the owners

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Figure 9.3  Aggregate interference incidents for RA 1 with 8 groups of cattle (mobile devices) in a worst-case scenario

of the equipment may be able to change the operational parameters of their devices or choose those that best adapt to the environment. Figure 9.4 shows the results obtained for RA 1 in this scenario, when there are eight groups of mobile devices operating on the ranch. 5.3  A Simulation Environment with Increased Density We modified the first simulation environment in order to consider a geographical area where R A s are in closer proximity. This allows us to account for additional, non-rural, settings where we deal with more crowded spaces. Transmissions are no longer associated with cattle monitoring; instead, this setting suggests other network deployments such as those required for the Internet of Things (IoT) and for smart cities. In such cases, we may have multiple R A s forming small-cell networks, hence covering reduced areas of a city. For this purpose, we now model a nine-cell grid in which each R A operates and serves groups of users. The actual configuration of this scenario is shown in Figure 9.5. Note that the goal of this scenario is to determine whether and how the number of interference events changes. The model parameters and the method for identifying interference events are the same as those utilized for the first simulation

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Figure 9.4  Interference events when the RA’s transmit power and mobile device sensitivity are particular to each ranch

environment and presented in subsections 5.1.1 and 5.1.2. We ran our simulation considering the scenario in which each R A chooses independently its transmission power according to the three profiles detailed in subsection 5.1.2. 5 .3 .1   S i mul at i on R e sult s In this section, we include the results for the most critical case. This corresponds to the interference events generated and perceived by the R A and users belonging to the cell (or ranch) located at the centre of the grid. Figure 9.6 shows the interference incidences for RA 5 (i.e., the central cell in the 9-cell grid configuration) during the first 200 simulation time ticks.11 In our simulation results we find that as the number of users in a cell increases, so do the number of interference events. Note that the total number of interference events is lower than that of the first case. This is due to the lower transmission power required for coverage of the entire cell area as the latter is significantly smaller than in the case of four, bigger, ranches. From these results, we can infer that a negotiation mechanism that involves reduction of transmission power may effectively reduce the number of interference events in the environment of interest.12

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Figure 9.5  Configuration of second simulation environment

5.4  Implementing Negotiations After analyzing the interference events and their patterns in the previous subsections, we study how the incorporation of a negotiation mechanism impacts the number of interference events and thus the performance of each R A . The negotiation process operates as follows: Let R A x be the R A causing interference and R A y the “interference victim”: 1 If the transmit power of RA x is higher than the minimum required to cover its ranch area, RA x should reduce its transmit power (preferably to the minimum)

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Figure 9.6  Interference events for the central cell in a 9-cell grid

2 If the transmit power RA x is already at the minimum (or below), RA x switches to a different frequency band (within the 3500 to 3700 MH z range). We tested this negotiation mechanism in the four-ranch scenario, with each R A choosing its power and device interference tolerance independently of the others. When we compare the average number of interference events that occur in the first 200 time ticks, we see a clear change between the number of average events recorded without negotiation and the number of events recorded with negotiation. Without negotiation, the number of interference events ranges from 0.8 to 1.5 at any given time tick, with the majority of these registering above 1.0. With negotiation, we see this number drop to zero, except for one singular time tick along this line registering a 0.1 average interference events. We chose this period as a sample of what occurs throughout the entire simulation, as there is not a significant change in the results obtained as time progresses. In these data, the reduction of the interference events is evident when implementing a simple negotiation mechanism. It is also important to note that the power adjustment is done in terms of the power required for ranch coverage instead of what is allowed by regulation. In this manner, some RAs may be transmitting at a power

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higher than the limit established by the F CC and still avoid causing interference to the neighbouring R A s.

6   D is c u s s i on The objective of this analysis is to introduce the concept of polycentric governance in a spectrum sharing setting. Our goal is to explore the potential of this approach for providing a more flexible solution for governance and thus show that one-size-fits all protection limits are insufficient. In Section 3.1 we presented the requirements of a polycentric governance system. In what follows, we show how some of these requirements have been addressed in our model. •

•

•

•

Boundaries: Correspond to the geographical, technical, and regulatory limits associated with our model. These are expressed through the layout and size of the ranches, the disposition of the mobile devices, the maximum allowed transmission power as well as the required transmission power, and propagation models that permit us to identify coverage and the sensitivity of the receivers. Appropriateness to Local Conditions: We explore this condition by analyzing two different settings, where the main difference lies in the proximity of adjacent ranches and, in consequence, of the possible interference events. Additionally, in our simulations we allow users to go beyond the allowed and required transmission powers, when this action does not result in harmful interference events. When negotiations are implemented, users can establish solutions that are appropriate to the band that is being utilized and to their own coverage requirements. Collective Choice Arrangements: The negotiation mechanism is implemented based on the interactions of the interfering parties. In this way, the solution to interference problems is provided through user coordination and their ability to manage their common resources. Monitoring: This feature is expressed by tracking the number of interference events and thus the need for negotiation. Monitoring attends to rules, incorporated in the model, that permit an S C to determine when to signal these interference events. Even after negotiation is implemented, we still need monitoring to assess whether the negotiation process has been effective.

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Conflict Resolution Mechanism: This is observed through the negotiation mechanism we have put in place. In our models, conflict resolution is prompted by the party first detecting interference and the negotiation process is carried out in terms of transmission power and/or band utilized.

These characteristics are evident in the model design and in the results we have obtained. Our model has remained rather simple, given that our objective has been to explore how likely it is for polycentric governance to be implemented. This has led us to ignore, for the time being, important technical details regarding wireless communications, for these would represent a distraction from our main goal. Nevertheless, we have still been able to represent a wireless setting that is perceived as a plausible and useful application of IoT. The creation and study of this model has permitted us to compare a regulatory model, based on establishing maximum required transmission power levels, to a regulatory setting where these levels are adjusted according to the local environment and where the solution to interference problems is addressed via collective action. From a broad perspective, scenarios that can be adapted to the system requirements outlined in Section 0 would be candidates for polycentric governance. How different environments adapt to those guidelines may not be so evident; indeed, this process may require a deep understanding of the players involved in each scenario in terms of their resource needs, usage patterns, and the technology utilized. For instance, if we refer to the open access model explored in Linda Doyle’s work, we would expect governance rules to reflect, among other factors, local demand and supply conditions as well as market participation guidelines. This is to say that in the broad spectrum of governance options, we can find arrangements that fit the particular requirements of the underlying institutions and participants. It is important to point out that, as in any governance system, there are trade-offs to analyze. For instance, a national regulatory model may succeed at avoiding interference, but it may fail at providing users with the coverage they require in areas where higher powers can be afforded. This has been the driver for adjustments in transmission power in the citizens’ broadband radio service (C B R S ) band, made by the FCC (FCC 2016a), which have sought to address the concerns

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and comments of interested commercial providers (e.g., Nokia, Verizon, WinnForum, C T I A ). Requests for power increase come not only from rural areas but also from non-rural environments where higher powers may be needed. Most entities link higher powers to added flexibility in service provision, which has been the underlying goal of the C B R S band initiative. Additionally, these would permit existing commercial providers to extend their services to the 3.5 GHz band without deploying new network arrangements (e.g., low-power, small-cell networks).

7   C o n c l u si on Spectrum policy has historically been taken as one of the resource allocation functions under the purview of centralized regulatory agencies. With some exceptions, the pattern of these agencies has been to write one set of rules and policies that apply across the geographic area of the country. Many countries, however are quite diverse in geography, population density, economic activity, and so on, so it is reasonable to assume that spectrum management needs are deeply local. In this chapter, we apply Ostrom’s principles of common pool resource governance to propose a more synthetic model of spectrum policy – one that is locally determined where possible. We contend that such an approach may be possible using the same technologies that are designed for central control of spectrum sharing – that is, spectrum access systems (S A S s). Our simulation shows significant gains in cooperation when negotiation between adjacent parties is possible. This leads us to remain positive as to the impact that polycentric governance may have in terms of enabling and enforcing spectrum sharing.

N otes   1 Negotiation process in this context refers to the steps that two entities may follow in order to avoid conflicting with each other (e.g., causing harmful interference). By negotiating, spectrum users may reach agreements, on their own, that would otherwise be attained only after the intervention of regulatory entities. We further elaborate on negotiation opportunities, steps, and consequences throughout the rest of the chapter.

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  2 Prior to Marconi, there was no discussion of spectrum rights. The need for spectrum coordination and the emergence of rights associated with spectrum grew with radio technology and its use (Hazlett 1990).   3 Since we are envisioning an environment of nested rights, this may refer to the system of S AS s.  4 The N T I A is an executive branch agency, responsible for advising the US president on issues regarding telecommunications and information policy. The N T I A is also responsible for the management of spectrum dedicated to federal use. The C S M A C is in charge of advising the Assistant Secretary for Communications and Information at the N T I A on spectrum policy issues. The members of this committee are experts from outside the federal government, and they offer advice on reforms to enable new technologies and services, including those dealing with broadband access, public safety, and spectrum planning (National Telecommunications and Information Administration 2019).  5 The IS M bands were initially reserved for industrial, scientific, and medical uses.   6 This is generally similar to the “slow start” mechanism of the internet’s transmission control protocol, TC P (Stevens 1997).   7 Information on this programming tool can be found in the NetLogo User Manual (Wilensky 2017).   8 “Turtles are agents that move around in the world. The world is two dimensional and is divided up into a grid of patches. Each patch is a square piece of “ground” over which turtles can move. Links are agents that connect two turtles” (Wilensky 2017).   9 The Extended Hata model for sub-urban environments has been used by the N TI A for calculating exclusion zones in the 3.5 GHz band (Drocella, Jr., et al. 2015). 10 To simulate the independence of each R A and group of mobile devices, their profiles and interference tolerance levels have been assigned as a uniformly distributed random number from zero to two. Subsequently, the transmit power and tolerance values have been assigned as defined in Subsection 5.1.2. 11 The aggregate interference events correspond to the average number of events across ten simulation runs, each lasting 2,000 time ticks. 12 This situation would hold as long as a lower transmit power still permits fulfillment of the coverage requirements.

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r efer enc e s Agrawal, Arun. 2002. “Common Resources and Institutional Sustainability.” In The Drama of the Commons, edited by Elinor Ostrom, Thomas Dietz, Nives Dolsak, Paul C. Stern, and Elke U. Weber, 41–85. Washington, D.C.: National Academy Press. – 2003. “Sustainable Governance of Common-Pool Resources: Context, Methods, and Politics.” Annual Review of Anthropology 32(1): 243–62. doi: 10.1146/annurev.anthro.32.061002.093112. Agrawal, Arun, and Elinor Ostrom. 2001. “Collective Action, Property Rights, and Decentralization in Resource Use in India and Nepal.” Politics and Society 29(4): 485–514. doi: 10.1177/0032329201029004002. Cox, Michael, Gwen Arnold, and Sergio Villamayor. 2010. “A Review of Design Principles for Community-Based Natural Resource Management.” In Elinor Ostrom and the Bloomington School of Political Economy: Resource Governance, vol. 2. Lanham: Lexington Books. Cui, Liu, Marcela M. Gomez, and Martin B.H. Weiss. 2014. “Dimensions of Cooperative Spectrum Sharing: Rights and Enforcement.” New Frontiers in Dynamic Spectrum Access Networks (DySPAN ), McLean, VA. de Vries, J. Pierre. 2013. “Optimizing Receiver Performance Using Harm Claim Thresholds.” Telecommunications Policy 37(9): 757–71. doi: 10.1016/j.telpol.2013.04.008. Demsetz, Harold. 1967. “Toward a Theory of Property Rights.” American Economic Review 57, no. 2: 347–59. Drocella Jr., Edward F, James C. Richards, Robert L. Sole, Fred Najmy, April Lundy, and Paul M. McKenna. 2015. 3.5 GH z Exclusion Zone Analyses and Methodology. Washington, D.C.: NTIA ; and Boulder: ITS. F C C (Federal Communications Commission). 2016a. Amendment of the Commission’s Rules with Regard to Commercial Operations in the 3550 - 3650 MH z Band, vol. 81. Washington, D.C. – 2016b. “Office of Engineering and Technology Announces Technological Advisory Council (TAC) Noise Floor Technical Inquiry.” Da-16-676. Washington, D.C. Federal Communications Commission. 2004. Commission Staff Clarifies FCC ’s Role Regarding Radio Interference Matters and Its Rules Governing Customer Antennas and Other Unlicensed Equipment. Hardin, Garrett. 1968. “The Tragedy of the Commons.” Science 162(3859): 1243–48.

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Hazlett, Thomas W. 1990. “The Rationality of U.S. Regulation of the Broadcast Spectrum.” Journal of Law and Economics 33(1): 133–75. doi: 10.1086/467202. Herter, Christian A. 1985. “Electromagnetic Spectrum: A Critical Natural Resource.” Natural Resources Journal 25(3): 651–63. Malki, Amer, and Martin B.H. Weiss. 2014. “Ex-Post Enforcement in Spectrum Sharing.” Telecommunications Policy Research Conference, Arlington. http://dx.doi.org/10.2139/ssrn.2417006. National Telecommunications and Information Administration. 2019. “C S MAC.” https://www.ntia.doc.gov/category/csmac. Ostrom, Elinor. 2001. “Vulnerability and Polycentric Governance Systems.” IHDP Update 3(1): 1–4. – 2008a. “Polycentric Systems as One Approach for Solving CollectiveAction Problems.” Research Paper 2–2 (2008–11). Bloomington: Indiana University School of Public and Environmental Affairs. – 2008b. “Tragedy of the Commons.” In The New Palgrave Dictionary of Economics, edited by Palgrave Macmillan. London. https://link. springer.com/referenceworkentry/10.1057/978-1-349-95121-5_ 2047-1 – 2010. “Beyond Markets and States: Polycentric Governance of Complex Economic Systems.” American Economic Review 100: 1–33. doi: 10.1257/aer.100.3.1. Sandvig, Christian. 2010. “Spectrum Miscreants, Vigilantes, and Kangaroo Courts: The Return of the Wireless Wars.” Federal Communications Law Journal 63: 481–506. Schlager, Edella, and Elinor Ostrom. 1992. “Property-Rights Regimes and Natural Resources: A Conceptual Analysis.” Land Economics 68(3): 249–49. doi: 10.2307/3146375. Shelanski, Howard A., and Peter W Huber. 1998. “Administrative Creation of Property Rights to Radio Spectrum.” Journal of Law and Economics 41(S2): 581–609. doi: 10.1086/467404. Stevens, W. Richard. 1997. “TCP Slow Start, Congestion Avoidance, Fast Retransmit, and Fast Recovery Algorithms.” National Optical Astronomy Observatory. January. https://web.stanford.edu/class/cs244e/ papers/rfc2001.pdf. Weiss, Martin B.H., William Lehr, Amelia Acker, and Marcela M. Gomez. 2015. “Socio-Technical Considerations for Spectrum Access System (S A S ) Design.” I EEE International Symposium on Dynamic Spectrum Access Networks (DyS PAN ), Stockholm.

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Weiss, Martin B.H., William Lehr, Mohammed Altamaimi, and Liu Cui. 2012. “Enforcement in Dynamic Spectrum Access Systems.” SSRN Electronic Journal. doi: 10.2139/ssrn.2032242. Wilensky, Uri. 2017. “NetLogo User Manual.” https://ccl.northwestern. edu/netlogo/docs. Woyach, Kristen, and Anant Sahai. 2011. “Why the Caged Cognitive Radio Sings.” I EEE International Symposium on Dynamic Spectrum Access Networks (DyS PAN ), 3-6 May, Aachen. Woyach, Kristen Ann, Anant Sahai, George Atia, and Venkatesh Saligrama. 2008. “Crime and Punishment for Cognitive Radios.” 46th Annual Allerton Conference on Communication, Control, and Computing, 23–26 September, Urbana-Champaign.

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10 Open Access Markets for Capacity and the Inseparability of Spectrum and Infrastructure Linda Doyle, Peter Cramton, and Tim Forde

1   In t ro ducti on The chapter sits within this book in a number of contexts. It is about opening up competition for current and future mobile virtual network operators (M V N O s) and can therefore potentially be seen as a response to a number of network consolidation issues raised by Klass in Chapter 4. It is also about providing existing mobile network operators (MNO s) with alternative ways of managing supply and demand. It provides an example of a wholesale approach that is compatible with the Red Compartida requirements described in Chapter 5 by Mariscal. In addition, this chapter touches on the theme of alternative governances that are present in the chapters by Joyce (Chapter 1), Marcus (Chapter 8), and Weiss and Gomez (Chapter 9). Here the dedicated wholesale network is seen as an opportunity to reformulate the relationships between MV NO s and mobile network operators. The chapter is organized as follows. Section 2 provides the main motivation for the dedicated wholesale network and open access market approach, from the MVNO perspective. While this book is not just focused on spectrum, but rather on how we use technology to further the public good, it is nonetheless important to include the spectrum perspective. Hence Section 3 briefly looks at the concept of fluid spectrum trading, which, as will become apparent, acts as a further means of motivating the work presented here. Section 4 moves on to describing the open access capacity market that is at the heart

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of the chapter, and Section 5 furnishes some further details of the market structure. Section 6 returns to the spectrum perspective and looks at future spectrum demands to show how the open access market can play a role in meeting those, and Section 7 concludes.

2   M o t ivati on A key motivation for the work presented comes from observing the M V N O markets. An M V N O typically does not own network infrastructure or spectrum, and accesses these resources through some kind of wholesale network. However, in most examples around the world the wholesale network is not a dedicated wholesale network.1 More often than not, the owner of the wholesale network, the MNO, shares that network between its own retail customers, any MVNO entities it owns, and third-party MV NOs. The problem that arises with this scenario is that it is not always within the interest of the operator of the network, the MNO, to allow third-party M V N O s to expand and grow beyond certain limits. Figure 10.1 attempts to capture this case. So, in Figure 10.1, though MVNO 1 has the potential to expand its business substantially, this expansion is capped by the MNO controlling the wholesale network. The access of the MVNO to the MNO network is completely controlled by the MNO. There are additional problems with the situation. Simple mechanisms are often used to estimate spare capacity on the MNO network, usually based on average demands. The number of MVNOs that can be supported by the spare capacity is then in turn based on the predicted average demands of the MVNOs. There is no sense that the optimal number of MVNOs, whatever that may be, has been accommodated. In addition, the MNO–MVNO relationship is not designed for access to capacity for new and various different types of emerging service providers such as those which might result from different sectors such as health, transport, agriculture, and so on becoming increasingly digitized and calling for new types of operator. The relationship is not designed to support access to capacity in given locations only; to support access to capacity on an as needed basis; to dynamically target underused capacity; or any mix of the above. In an attempt to illustrate these issues, we present three different types of virtual network operators (V N O s), all requiring different capacity for different durations: The “Plain Old Coverage Operator”

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Mobile network operator

Figure 10.1  MvNO 1 desires to expand but any expansion is blocked by the M NO

requires capacity right across the network all of the time, like very many M V N O s in operation today. However, the “Connected Cow Operator” requires rural area capacity only, and then only once a day. The “Remote Surgery Operator” requires extensive capacity in discrete locations for a given duration. Each of these three examples is of course simplified, but the different flavours of operator nonetheless illustrate the point that as Internet of Things (IoT) and machine-tomachine (M2 M) services grow, the virtual network operator of the future may be very different from that which we understand today (see Doyle et al. 2014) and will have very different spatial and temporal demands for capacity than is the case for M VN O s today.

3   T h e S p e c t ru m Pers pecti ve The purist approach to the challenge outlined in Section 2 would focus on the problem from a spectrum sharing perspective, that is, give the different virtual operators the spectrum they need, where and when it is needed, to provide the service. Indeed, a number of chapters in this book focus on spectrum-sharing. Marcus, in Chapter 8, provides an historic perspective on spectrum-sharing, detailing many different approaches, and Weiss and Gomez, in Chapter 9, look at polycentric forms of governance and in doing so showcase an approach to spectrum-sharing that allows service providers to be matched with the spectrum they need for the service they offer, through local negotiations.

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The spectrum sharing perspective is one that applies a highly dynamic mindset to resource usage. To illustrate this we draw on a 2007 paper, titled “Towards a Fluid Spectrum Market for Exclusive Usage Rights,” that focused on a very fluid and dynamic approach to spectrum trading (Doyle and Ford 2007). We reproduce some the material from that paper as a means of further setting the scene for this chapter. In the 2007 paper we built on work that conceptualized what we call the radio spectrum rights continuum as a three-dimensional model: space, time, and frequency. Space, a broader term than “area,” captures the three-dimensional notion of electromagnetic radiation. We proposed that such a continuum should be quantized into discrete blocks. Each block represents a unique assignment of spectrum rights at a particular place, for a particular frequency and at a fixed time. The purpose of quantizing the spectrum continuum on the time-axis is to allow each block assignment to be recycled and reassigned at each time interval through some kind of trading process. While the paper did not specify the dimensions of a block, the idea was that the block would be at some level of granularity, so that smaller and bigger players could trade in the market. The paper visualized the process involved through a set of Rubik’s Cube–like representations. Each block in each Rubik’s Cube–like figure represents a unique spectrum assignment, and each colour represents a unique spectrum consumer. We chose the term spectrum consumer to convey the point that we wanted to represent a more general case rather than tie the process to any traditional form of mobile operator. In one of these cubes, we showed two licences granted to mobile network operators in Ireland. The allocations consisted of spatially and temporally contiguous blocks of spectrum for a single frequency range that aggregated to form conventional licences, thus reflecting traditional business plans. It is worth noting that the allocations for the Republic of Ireland extend to the entire jurisdiction of the state, and that while these licences are given for a specific time frame, they tend to go on in perpetuity. Hence the RF spectrum rights continuum model emphasizes this general long-lived-ness of the licences. Also of note is that spectrum has to be bought well in advance of the market for the services emerging. Another of our cubes showed another option: a very fluid and flexible market in which spectrum consumers can freely buy and sell exclusive rights to the cubes of spectrum. The services that owners of the usage rights deliver and the technologies used to deliver those

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services are not proscribed – that is, there is total liberalization of the spectrum. The spectrum goes to those who need (value) it, when they need it. There are no limits or rules as to what blocks can be neighbours and what services can be delivered by neighbouring blocks. The blocks are of dimensions that make it possible for smaller players to participate. In such a very fluid system, the individual blocks of course may be aggregated to form larger assignments. Aggregations in this situation occur because of market drivers and not because of the straightjacket of a specific licence framework. We acknowledge the possibility of market failure, of course, and that interference is a challenge in this very open, liberalized system. The paper “Towards a Fluid Spectrum Market for Exclusive Usage Rights” discusses interference in detail, describing issues around cochannel interference and adjacent channel interference, and issues around the fact that different topological deployments of dense and sparse networks side-by-side can cause issues, as well as discussing the general meaning of interference. Potential approaches to managing interference are presented. In the main they all focus on giving choice to the spectrum consumer. Choices on how the spectrum consumer might meet boundary conditions range from self-imposing guard bands (from within its own block), to using sophisticated cognitive techniques to sense its footprint and adjust to sculpt its profile in accordance with neighbours. In essence the paper presented an idealist vision that would draw on future technological advances to deliver. The vision of totally liberalized spectrum trading, which sees spectrum going to those who need it when they need it, big players or small, calls for much complexity in the use of technology and for consumers to dynamically adapt to changing contexts (new and different neighbours); it also raises issues around investment. And while technology has moved on in the ten years since the paper was written, the challenges remain similar. The paper embodies a sense of freedom and openness that is lacking in spectrum management today, as well as a sense of freedom and openness that could well serve the current and future MV NO world.

4  M a k in g T h in g s R e a l – the Open Acces s C a pac it y M arket What we see in the world of the M V N O is capacity trading rather than the trading of naked spectrum as has just been described. The term “naked spectrum” was coined by Hazlett (2011) and refers to

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frequency bands only. The spectrum auctions run by many regulators in different jurisdictions around the world trade in spectrum only, though of course these auctions are examples of trading that is highly static and slow in nature (i.e., licences are awarded for long periods of time on the basis of the auctions). The examples discussed in the previous section depicted more dynamic (naked) spectrum trading: the traded commodity is again spectrum, though there are no practical examples of such dynamic systems in operation. Capacity, on the other hand, is something that exists on a network. In other words, it is the result of coupling the spectrum with infrastructure. Capacity trading lacks the purist attraction of spectrum trading because the network technology plays a role in the solution, whereas spectrum trading is technology neutral in principle. The key challenges with spectrum trading, however, are those related to interference. This inability to easily and effectively manage interference is the main reason why highly dynamic spectrum trading has not been implemented. While capacity trading, on the face of it, lacks the full dynamism and technology neutrality of the vision that emerges from the spectrum-trading world, it does offer the attraction of being tractable and implementable, and there are possibilities for implementing capacity trading in a much more dynamic manner. Hence the capacity trading solution presented in this chapter is an attempt to embody that dynamism, as well as the freedom of choice and the opportunity for big or small players envisaged in the fluid spectrum trading scenario depicted in the previous section. The solution described here is drawn from two major sources, namely the Cramton and Doyle 2016 white paper and the associated Telecommunications Policy journal publication. Details from both papers are reproduced in this chapter. In addition, the open access market for wholesale capacity is one that is under development by a company called Rivada Networks, which further illustrates the practical and feasible nature of the system. The fundamental idea of an open access market is that anyone with a need for capacity can gain access to mobile communications at competitive rates. An open access market for mobile network capacity is a market that is open to all. Indeed, the cornerstone to open access is that use of the network cannot be withheld. Just like the Internet, anyone can use it on a non-discriminatory basis. Of course, the capacity of the network is scarce, so prices are required to assign network resources to users. Hence an open access network

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adopts efficient pricing. Supply is not withheld. Price is set at the value of the marginal demand.2 Figure 10.2 is a very high-level graphic of the open access market in play. There are a number of different components to the market; there are also core ideas on which it is based. The remaining paragraphs in this section of the chapter detail these in turn. There are two distinct markets on which capacity can be bought and sold. The first is a wholesale market, in which resources are offered to service providers, and the second is a retail market, in which service providers offer services to retail users. Here we concentrate on a wholesale open access market. We therefore use the term wholesale network to describe the network on which the wireless capacity is available. The wholesale network will cover a specific geographical area. The wholesale network can be owned by single or multiple entities. One network does not need to equate with one owner. However, what is key is that this is a dedicated wholesale market. For the purposes of this chapter we consider an LTE network. LTE is deployed extensively around the world and therefore cannot be seen as a limiting factor. The solution presented here can, of course, also be applied to any other cellular-like network, and therefore remains valid as new 5G cellular technologies emerge. The purpose of focusing on LTE here is to ground the description of the system in real terms and to discuss limitations. The service providers buy and sell capacity on the wholesale network to service their own users. The service provider can be any entity wishing to provide some kind of mobile/wireless service and does not need to do so universally across the geographical jurisdiction of the wholesale network. Two service providers are shown for illustrative purposes in Figure 10.2: service provider A and service provider B. Service provider A has bought capacity over the entire network while service provider B has bought capacity in a localized area. Service provider A might therefore equate with the “Plain Old Coverage Operator” as discussed in Section 2 (or indeed to a spectrum consumer wanting spectrum across the entire region as discussed in Section 3). Whereas service provider B might better equate from a spatial perspective with the “Connected Cow Operator” (or indeed with a spectrum consumer wanting one block of spectrum). Note that the service providers illustrated in Figure 10.2 need not be pure virtual network operators. For example, the service provider could be a traditional mobile network operator and use the wholesale network to supplement its capacity. Most network operators today

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Figure 10.2  A high level view of the open access capacity market

overprovision their networks to accommodate periods of high activity.3 It should instead be possible to resort to the wholesale network for this “top-up” capacity, thereby reducing the need for every individual operator to overprovision. Top-ups can be bought in specific areas or across the network. While time dimension cannot be drawn in Figure 10.2, both service provider A and service provider B will have differing capacity demands over time, and hence the scenario in Figure 10.2 should be seen as illustrating one moment in time. Depending on the type of service provider, the demand might vary significantly in space and time. There are of course, service providers for which the demand profile can be engineered to fit specific spatial or temporal profiles. The latter tend to be demand profiles associated with machines as distinct from those associated with humans and may increasingly arise as M 2M and I oT services grow. To respond to different service providers we therefore define capacity on a spatiotemporal basis and think in terms of both the demand side and the supply side. The demand profile of each service provider will vary over time and space. We therefore need to think of capacity demand as being some measure of required throughput (e.g., G B/s) for a specific duration at a location. The wholesale network provides the supply. The supply can also have a spatial and temporal variation. The spatial variation of supply will be due to the varying capacity of the physical network as most networks are dimensioned differently

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in different geographical areas. For example, in most network designs, the capacity in urban areas tends to be higher than in rural areas. In most cases the temporal variation will be slow and reflect, for example, upgrades to the network. However, it is possible that additional spectral resources could be added to the network. This can happen as the wholesale network gets additional spectrum over its lifetime through traditional auctions that are held by national regulatory authorities. But it can also happen by gaining access to shared spectrum, through new spectrum-sharing schemes. Consider the Licensed Shared Access (L S A ) framework defined in Electronic Communications Committee Report 205 (2014) as one potential example. LSA was conceived as a means of providing access to licensed bands that otherwise would not be possible in some European countries because of existing incumbents. An L S A licensee is granted exclusive use of the spectrum at a given time and location while protection is provided to the incumbent. It is similar to the licensing of RrBSs in Canada, as described by Taylor in this collection. With LSA , the aim is for the licensee to get long-term access to the spectrum. Much of the work on LSA has focused on the 2.3 GHz band, where LS A can be used to create sufficient scale for the deployment of mobile services on the band across Europe. However, the approach is a general one and can be applied to many bands. Testing of LSA has taken place in Spain, France, Italy, Finland, and the Netherlands. If LSA were to become widely adopted, the wholesale network operator would be able to add spectrum from this sharing scheme to its network (provided of course the network was suitably dimensioned for the frequency bands in question). This spectrum could be used to offer additional capacity on the market over the lifetime of the LSA licence. Hence LSA or any other spectrum sharing scheme could provide a means of adding to the capacity on the network. If demand profiles of different service providers are correlated in space and time, then congestion may occur, and this is where the open access market comes in to play. As shown in Figure 10.1, the independent system operator (ISO) manages the auctions (step 1). This term is borrowed from the electricity markets. Independent means that the ISO has no ownership interest in the market participants and does not take a position in the market. The I S O qualifies market participants and establishes any limits on each participant’s bidding activities, reveals supply curves for the open access network, conducts the forward and real-time auctions, operates the open access market, settles

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all transactions in a timely manner consistent with market rules and supply and demand realizations, provides information on market performance to market participants and the market monitor (defined below), and improves the market as problems are identified. There are two market mechanisms depicted in Figure 10.2, namely a forward market and a real-time market. A real-time market is a market that is conducted “on the fly,” based on up-to-date events, and is about allowing the service providers to access the capacity they want “now.” Real-time evokes the idea of a “near instantaneous response” (RealWireless 2019). In the open access capacity market, this instantaneous way of doing things means that up-to-the-instant knowledge about demand profiles is to hand. If the area over which the demands are being made are also “small,” the services providers can, in principle, make very accurate bids. For the moment let us define the space dimension to be the smallest location that can be independently controlled by the network. In Figure 10.2 we have depicted this to be at the cell level. There is of course the question around what real-time means. In reality, real-time is as fast as it takes to trade and for capacity to be directed/redirected to the users of the service providers who successfully bought the capacity and away from those who sold it. In an LTE network, information must be sent to the edge of the network (i.e., to the base station, or enodeB, as it is termed) to effect the change in resource distribution. This is shown as steps 2 and 3, following the auction in Figure 10.2. A highly conservative estimate of time to trade and effect change in the L T E network is one hour. In the current network management regimes, changing spectrum ownership on a onehour basis would be considered exceptionally dynamic. The purpose of using a real-time market is, in principle, to ensure that the supplier can exactly match the type of spatiotemporal demand profile of the service provider. This benefits both the service provider seeking the capacity and the wholesale network operator supplying the capacity. The service provider is better able to bid for the exact resources needed, for the resolution (in space and time) at which the real-time market operates makes it easier for the service providers to estimate the demands of their users. The service provider thus pays only for the resources needed and does not have to buy extra resources just in case. The wholesale network operator is able to support many more service providers, because each service provider will not need to build overprovisioning into its demand bids and in principle, this means accommodating more demands.

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One characteristic of real-time markets is that they may involve increased risk. Prices become more volatile closer to real-time (shorter time intervals) as market participants have fewer and fewer options; this makes supply and demand curves steeper and prices thus more sensitive to even modest quantity changes. Therefore, to allow the service providers to make plans and better manage risk, the real-time market can be complemented with a forward market. A forward market is a market dealing in commodities for future (forward) delivery at prices agreed upon today (date of making the contract). These markets can be used to hedge against sharp fluctuations in prices. In our case this means that service providers can hedge their bets by acquiring capacity in advance of the real-time market. It does not make sense for the forward market to operate at the granularity of the real-time market because when looking ahead at expected demand, a service provider will not be able to predict the demand at the fine-grained level of the real-time market. The service provider will however be able to estimate expected demand over a larger area and for a longer interval. In addition, the auction process would be very onerous if this were the case. Hence the forward market, which deals in G B /timeslot/location, operates at much longer time scales and over locations covering a greater area. It is also important to note that there can be more than one forward market. The position taken by the service provider can be successively refined over each forward market. Each successive forward market will cover a smaller geographical area and shorter time interval than the previous to facilitate this fine-tuning. In general, current mobile service providers think about longer-term usage trends on a yearly basis. It therefore makes sense to offer forward products on the open access market that allow the purchase of capacity for year-long periods. A second level of refinement can happen through medium-term products. There are seasonal variations in demand that manifest themselves on a monthly basis, for example. Growth/decline in customer bases may also be evident at the monthly level. Therefore, the ability to buy or sell for the month ahead makes for a reasonable medium-term product. It may be the case that a forward market for a week ahead or a day ahead will make more sense as service providers evolve in a future world of the Internet of Things, for example, and as demand profiles change, but for the moment the yearly and monthly options seem sensible, and hence we select two forward markets. Figure 10.2 captures the larger geographical areas associated with the forward markets – in this case the

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forward market is conducted over the area much greater than the cell-level area of the real-time market.4 In summary, step 1 sees the auctions conducted by the I S O . Once the results are known, they are communicated to the LTE network in step 2, which then manages the access each service provider gets, step 3, on the basis of market share. This last step is carried out using techniques that are possible with an L T E network and that do not break LTE standards. These techniques, however, are beyond the scope of this chapter.

5   S o m e M a r k e t Detai ls Given that the open access market is at the heart of this chapter, it is important to furnish some additional details about the market. The forward and real-time markets can be structured as two-sided auctions in which capacity is traded. The wholesaler provides a supply curve indicating the quantity it would like to sell, at each geographical area, at various prices (more at higher prices); the service providers buying network resources, at each given location, provide a demand curve indicating the quantity they would like to buy at various prices (more at lower prices). The supply and demand curves are aggregated across all market participants for each location, and the winning bids are determined. The intersection of the aggregate supply and demand curves determines the clearing price (P*) and the quantity traded (Q*), at the given location, as shown in Figure 10.3. There is a clearing price per geographical area. Just as in the case of locational marginal pricing for electricity markets, in locations where there is congestion, clearing prices will be high. In locations in which there is no congestion, the clearing price will be zero (or some low price floor). The price floor is meant to ensure that some usagebased revenue accrues in areas with surplus capacity. This strengthens incentives for network investment in low-demand areas. Consistent with the open access principle, the price floor ideally is a nominal amount at or near zero. The forward markets are financial markets (cash settled) and allow participants to take positions well in advance of real-time. Financial markets allow the goods to be traded back and forth without ever being accessed/consumed/depleted. The real-time market is physical; that is, it involves the physical delivery of wireless capacity. It is at this stage that the capacity is actually consumed by the end users of the

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Figure 10.3  Market clearing at a particular time and location

service providers as they run their devices on the network. Deviations from forward positions are settled at real-time prices. Yearly and monthly auctions involve greater volume. In electricity markets, 80 to 90 percent of volume transacts in forward markets. We anticipate a similar split in mobile communications markets. When auctioning many related products in infrequently conducted forward auctions, bidders find it helpful to learn about market prices and likely winnings during the auction, while they can still adjust their bids. This learning about prices and winnings is called outcome discovery. To allow outcome discovery in these auctions, the ISO collects bids with a simultaneous ascending clock auction. Details of this type of auction can be found in Milgrom (2004). In each round the auctioneer asks bidders to express a piecewise-linear demand curve for a range of prices. The real-time auction is conducted in a single round (sealed bid). This is because outcome discovery is less important in real-time and the auctions must occur quickly. The number of products that are placed on the market needs to also be selected. This again is an economic choice that involves trading off the simplicity of fewer products with the flexibility of more products.

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Currently there is clear difference in demand between peak and nonpeak hours. It therefore makes sense that service providers be able to take different forward positions on peak and non-peak hours, resulting in two different hourly products. There are 1 + 12 = 13 forward auctions each year and 365 × 24 hourly auctions. Of course the service provider may still not get the demand right. One important point to note here is that the real-time market is settled on the basis of actual usage during the real-time interval. In the types of systems we are looking at, the usage of the network is scheduled. If a service provider buys capacity in a specific location for a specific time period, it is because the service provider expects its users to require capacity in that location over that time period. That service provider’s users will be scheduled on the network as they make demands in that location. If the service provider has got its predictions wrong, and no users materialize in that location, then users from other service providers can be scheduled on the network. The real-time market should however provide incentives that motivate service providers to estimate as best they can their real-time demand at the location and then bid that quantity as a function of price in the real-time market. A system of penalties for deviations from real-time plans is a common method for inducing bidders to balance supply and demand in real time. There are many ways to do this. We propose a tolerance model and provided the hourly usage of the service provider is no greater than this, no penalty applies; the service provider pays the clearing prices times the number of GB/hr used. A second cost is added however if the deviation is greater than the tolerance. In our case this is equal to the price times the penalty factor times the squared deviation. This can be fine-tuned to get desired behaviour. More details of the open access market approach, including finer details of the auction processes, can be found in Cramton and Doyle (2016).

6   B ac k to S p ectrum This book is very much about spectrum and how we use spectrum for the public good. Hence it is important to return again to spectrum and attempt to understand the value of the open access capacity market in this respect. It is widely accepted that spectrum is a highly valuable resource and that the demand for spectrum will continue to rise, as shown by

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predictions such as that of Cisco (2016). It is useful to look at this in some detail. To do this we draw on a 2016 study (Tech4i2, Real Wireless, Trinity College Dublin C O N N E CT , and InterDigital 2016), commissioned by the EU, titled “Identification and Quantification of Key Socio-Economic Data to Support Strategic Planning for the Introduction of 5G in Europe,” in which a chapter was devoted to the study of spectrum requirements needed to deliver future 5G services. The study examined different use cases for the year 2025 to develop an understanding of the expected spectrum demand. Of the uses studied, the one we will discuss here is “the motorway use case.” This is relevant here because it draws heavily on mobile communications. The motorway use case involved the study of a typical motorway junction to understand at a high level what spectrum would be required in 2025. The expected total number of devices per square kilometre at the junction, the operating data rate/ usage rate of the devices, and spectral efficiency were taken into account. Based on the services envisaged in various E U 5G research projects rather than on speculation by the authors of the report – with added input from open workshops – vehicle-based smart hubs, augmented reality glasses, tablets, and on-board video systems were among the types of devices considered for the motorway use case, as well as the myriad communication systems that are (or will be) part of the typical car. The devices were densely deployed geographically and proportionally assigned to three frequency sub-ranges (Sub-1 G H z, 1–6 G H z, and above 6 G H z). The spectrum estimates within each sub-range were calculated by multiplying the number of devices by their respective occupancy of the spectrum in bits per second according to the scenario and divided by the assumed spectral efficiency of the technology used for each device type. The spectrum demand was added across all device types to yield a total spectrum estimate for the use case. Most importantly for this chapter, the spectrum requirements were estimated based on different network operator scenarios. These scenarios assumed four operators,5 as well as five different sharing arrangements spanning from the case in which the four operators operate independently, to the case in which there is 100 percent spectrum sharing between operators. The scenarios that involve 20, 50, or 75 percent sharing are ones in which different densities of incumbents exist in the bands, therefore limiting the potential for full sharing to different degrees.

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Figure 10.4, reproduced from the socio-economic study, summarizes the spectrum needs for the motorway use case, derived from analysis of what might happen at an actual motorway junction across all network operator arrangements. In an exclusive licensing environment in which the operators function completely independently, the spectrum needed is equal to the total-use-case–driven demand estimate multiplied by the number of operators in the environment. This is of course an extreme scenario as in reality operators tend to serve a percentage of the market rather than each operator having an expectation that it should be capable of supporting 100 percent of the market. In a fully shared environment, the spectrum needed is equal to the total-use-case–driven demand estimate. Obviously one message from Figure 10.4 is that the spectrum demand for 2025 is extremely large, even when sharing is taken into account. The need for more spectrum is well established of course, but these results become more startling when placed side by side with Figure 10.5, generated by RealWireless (2019), which summarizes the maximum amount of spectrum available within in the three spectrum sub-ranges. For the sub-1 GHz range and the 1–6 GHz range, not enough spectrum physically exists to respond to the demand unless full sharing is possible, and even then, it means that mobile communications will completely dominate spectrum usage in these ranges. In the range above 6 G H z there is enough spectrum. It remains to be seen how much of this will be set aside for international mobile telecommunications (IMT), which is the collective term for 3G, 4G, and 5G. Currently there is no spectrum in this range allocated to IMT, though a number of bands are under consideration. The socio-economic study does not specify how the sharing scenarios might be implemented, though the study lists different potential sharing approaches. However, if we accept that this level of demand will emerge,6 we need to return to the focus of the chapter to ask what 100 percent sharing looks like. One answer is that the open access capacity approach is an example of how 100 percent sharing could be achieved, especially for the sub-1 G H z and 1–6 G H z bands. It is not the only way, of course, but importantly it is a way that can start today based on current technologies. There are many options for customizing L T E network parameters, which can be used to direct capacity based on market share. The technical details are beyond the scope of this chapter, but an

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Figure 10.4  Spectrum demand for the 2025 motorway use case, for different sharing conditions

Spectrum in GHz

Source: Reproduced from Smart 2014/0008

90 80 70 60 50 40 30 20 10 0

< 1 GHz

1-6 GHz Spectrum ranges

> 6 GHz

Figure 10.5  The maximum amount of spectrum (total spectrum) available in each sub-range Source: Real Wireless

examination of sections of the LTE specifications will reveal the many options for this, as can be seen, for example, in the 3rd Generation Partnership Project document T R 22.852 V13.1.0 (3G P P 2014). It is worth noting that L T E is so widely deployed that opportunities for significant benefit from the solution presented here exist today (e.g.,

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companies such as Rivada Networks already have working solutions) and well into the future, and that those opportunities can evolve with the network as the principles and framework remain the same, even as the technology advances. The motorway scenario is for 2025 and so is some way off. But if we work through the motorway scenario, and possibly consider future trends, we can see how the open access capacity might work. A wholesale network could comprise any infrastructure covering the location. In the future this infrastructure would comprise traditional cells as well as communications infrastructure that comprises road-side furniture and other elements. A set of service providers might exist supporting various motorway services ranging from entertainment, to connected car, to those related to maintenance and safety. It is entirely feasible that different traffic profiles might exist among those service providers and that capacity demands could vary temporarily and spatially. At 100 percent sharing, the capacity would be optimally divided among service providers.

7   C o n c l u s i on At the centre of this chapter is an open access market for capacity, which we have presented to show that it is possible to design a very flexible system for accessing capacity that might suit large and small players and that works on large and small scales. It was presented as a means to take aspects of the ideology of highly fluid spectrum trading and make it real and feasible, by focusing on both spectrum and infrastructure and by using current technologies. It was also presented as means of driving sharing to the level that is needed to fulfill future demands for wireless and mobile applications. And it was presented as part of the journey toward a world in which we think much creatively about ownership and control of spectrum and infrastructure. The wholesale network at the heart of this chapter is a neutral or dedicated wholesale network. It provides access to additional capacity for MNOs (so that they need not fall back on overprovisioning of their own networks) at as spatial and temporal granularity that can match demands. It provides a way of supporting existing M VN O s without conflict of interest. The fact that the wholesale network is neutral and the fact that any interested party can participate in the market removes the hold the MNO wholesaler has on deciding who has access to the wholesale network. It also facilitates the emergence of new types of

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MVNOs, especially those that provide IoT or M2M services and therefore have very different demand patterns than are typical today. The granularity of spatial and temporal access that is possible means that a heterogeneous range of existing or future services and service providers can be accommodated, and in a manner that ensures capacity it used in an optimal fashion. The system described here can be implemented with current technology, and companies such as Rivada Networks are in the process of rolling out such a system. The system can also be implemented within many regulatory frameworks. So, for example, though not adopted by the Mexican government, this approach is highly compatible with the Red Compartida approach as described in Chapter 5. The system can also be implemented at any scale. While there may be economic constraints related to the scale of deployment needed to provide economic returns, it is currently possible to convert any one mobile network into a neutral wholesale network that operates an open access market. Finally, it is possible to evolve the system as technology changes. There are many different ways in which technology might change. The approach described here can be generalized to any cellular network that allows for spatial and temporal access to capacity. Though of course the idea of an open access market itself is more generally and widely applicable. Advances within cellular networks can easily be accommodated and may in fact contribute to the attractiveness of the solution. One example that bears this out is network slicing. Network slicing allows multiple virtual networks to be created on top of a common shared physical infrastructure. The virtual networks are then customized to meet the specific needs of applications, services, devices, customers, or operators. So for example, a slice that suits low-latency or low-powered applications can be created. While early forms of network slicing are quite static, the open access market structure could potentially be used to bid for different slices on a per cell basis. This means it could be an open access market for more than capacity and support the type of competition discussed by Cave and Webb in Chapter 11. Spectrum is the lifeblood of wireless and mobile communication applications. Access to spectrum can be a roadblock to or an enabler of new services and encourage innovation. The world of dynamic spectrum access sought to facilitate access to spectrum for small and large players, for short- to long-time durations, and over areas of different sizes. The full vision of the world of dynamic spectrum access

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remains unrealized. This chapter has aimed to reawaken that vision in a different guise, namely in the guise of highly dynamic access to capacity, through an open access market.

A c k n ow l e d g ment This material is partly based upon works supported by the Science Foundation Ireland under Grant No 13/RC/2077.

N otes   1 One exception is the Red Compartida network in Mexico, as described by Mariscal (Chapter 5).   2 The open access market model is not new. Open access is the foundation of today’s restructured electricity markets. Many modern wholesale electricity markets, such as those in the United States, operate on this open access principle and price energy at every time and location. Pricing energy at every time and location is called locational marginal pricing (LMP) in the real-time market. Locational marginal pricing is a way for wholesale electric energy prices to reflect the value of electric energy at different locations, accounting for the patterns of load, generation, and the physical limits of the transmission system. LM P is a mechanism for using marketbased prices to manage transmission congestion. Prices are determined by the bids/offers submitted by market participants. The charge for transmission usage is the incremental cost of the redispatch required to accommodate that transmission usage. Locational marginal prices differ by location when transmission congestion occurs – areas that have more congestion will have higher prices. If there is no transmission congestion, the charge for transmission usage is zero (except for other charges to recover portions of the embedded cost of the transmission grid, etc.). Open access markets in the electricity sector work extremely well. The high level of price transparency not only leads to efficient short-run decisions but also provides a wealth of market information for longer-term planning, including future network investments. Open access is the key force that has led to competitive wholesale electricity markets that have provided reliable electricity supply while saving consumers many tens of billions of dollars from an efficient and competitive market for electricity, as described by O’Connor, Philip, and O’Connell-Diaz (2015).

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  3 Real Wireless has carried out an analysis for the UK , based on data supplied by different operators (4G.co.uk 2017).   4 Note that the wholesaler does not need to release all capacity on the forward market. The wholesaler can decide to release only a certain percentage. However, all capacity will of course be available in the real-time market.   5 Four is the number typically considered as offering competition in EU states.   6 It is worth commenting on any bias that may exist in the spectrum demand example chosen. The study on the “Identification and quantification of key socio-economic data to support strategic planning for the introduction of 5G in Europe” does provide a justification for the results, and some sensitivity analyses are included. It also includes other use cases, in the areas of health and utilities, that will make lower demands on spectrum, though those demands will still be high. The use case most needy of spectrum was described here, because it is the most relevant in a mobile communications world. However, even if a different use case were selected, the total demand would be the sum of all of the demands (those considered in the report and others) as 5G is very much about digitalization of all verticals. It is also worth noting that historically, spectrum demand has been significantly underestimated.

r efer e nc e s 3GP P (3rd Generation Partnership Project). 2014. “TR 22.852 – study on Radio Access Network (Ran) Sharing Enhancements.” http://www.techinvite.com/3m22/tinv-3gpp-22-852.html. 4G .co.uk. 2017. “4G frequency bands – Which UK networks will my phone work on?” January 2017. https://www.4g.co.uk/4g-frequenciesuk-need-know. Cisco. 2016. “Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2015–2020.” http://www.cisco.com/c/en/us/solutions/ collateral/service-provider/visual-networking-index-vni/mobile-whitepaper-c11-520862.pdf. Cramton, Peter, and Linda E. Doyle. 2016. “An Open Access Wireless Market Supporting Competition, Public Safety, and Universal Service.” White Paper. http://www.cramton.umd.edu/papers2015-2019/cramtondoyle-open-access-wireless-market.pdf. Doyle, Linda E., and Tim Forde. 2007. “Towards a Fluid Spectrum Market for Exclusive Usage Rights.” 2nd I EEE International Symposium on

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New Frontiers in Dynamic Spectrum Access Networks (DySPA N ‘07), Dublin, 620–32. Doyle, Linda E., Jacek Kibiłda, Timothy K. Forde, and Luiz DaSilva. 2014. “Spectrum without Bounds, Networks without Borders.” Proceedings of the IEEE 102(3): 351–65. Electronic Communications Committee. 2014. EC C Report 205 – Licensed Shared Access. https://www.ecodocdb.dk/download/baa4087d-e404/ ECCREP205.PDF. Hazlett, Thomas. 2011. “Creating Efficient Spectrum Property.” Spectrum Markets: Challenges Ahead Workshop, Evanston. Milgrom, Paul Robert. 2004. Putting Auction Theory to Work. Cambridge: Cambridge University Press. O’Connor, Philip R., and Erin M. O’Connell-Diaz. 2015. “Evolution of the Revolution: The Sustained Success of Retail Electricity Competition.” COM PETE Discussion Paper. https://sites.hks.harvard. edu/hepg/Papers/2015/Massey_Evolution%20of%20Revolution.pdf. RealWireless. 2019. “Real Wireless: Independent Wireless Experts.” http:// www.realwireless.biz. Tech4i2, Real Wireless, Trinity College Dublin CONNECT, and InterDigital. 2016. “Identification and Quantification of Key Socio-Economic Data to Support Strategic Planning for the Introduction of 5G in Europe.” S MA R T Number: 2014/0008 https://connectcentre.ie/wp-content/ uploads/2016/10/EC-Study_5G-in-Europe.pdf.

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11 How Disruptive Is 5G ? Martin Cave and William Webb

1   In t ro ducti on It’s now a conventional starting point that mobile communications are part of a truly transformational technological change – a key component of information and communications technology, which is now recognized as a “general purpose” technology that has left few acts of consumption or production untouched. Having started out with mobile voice, it now incorporates data. Moreover, it is a technology that has enjoyed unprecedentedly fast diffusion: after 30 or so years, more than 7 billion people (95 percent of the world’s population) now have access to mobile telephony, and 45 percent of them are mobile Internet users (World Bank 2016, 201). Yet the commercial and regulatory modus operandi of mobile communications has been relatively unchanged over its lifetime. It continues to have a “small numbers” market structure – the exact number of operators in each jurisdiction has waxed and (in recent years) waned.1 Firms have generally persisted in the market, subject to acts of merger and acquisition, and have seamlessly adapted to the successive generations of technology for voice-to-voice and data services. New network entry has proved difficult in increasingly saturated markets, although some services (such as S M S /messaging) are now contested between mobile network operators (M N O s) and over-thetops (O T T s). Mobile operators are much less regulated than fixed operators, despite concerns about explicit and tacit collusion; but exclusive spectrum licensing is universal and sometimes used to promote entry. With the exception of international roaming, retail price

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control is rarely employed, and wholesale price controls are largely confined to mobile voice termination. The extension over the past fifteen years, fuelled by smartphones, of the value chain into much heavier reliance on external rather than homemade content – video, social media, search, and so on – has made a big difference, as has the presence in the marketplace of powerful new over-the-top (OTT) players, often in the form of multisided platforms like Facebook and Google. These both complement and compete with mobile network operators (MNOs). When they compete, pressure mounts on the regulator to level the playing field. And the competing claims of participants in the Net neutrality debate, which pits MNOs against OTTs, are another source of conflict (see Cave and Vogelsang 2015). So will 5G upset the remaining stable features of industry development to date? This chapter examines several aspects of this question: •

•

• •

Which aspects of 5G are most relevant to the discussion of its disruptive effect? (Section 2) What structural implications are likely to flow from 5G , and what are their regulatory consequences? (Section 3) How will spectrum management be affected by 5G ? (Section 4) An assessment. (Section 5)

2   R e l e va n t as p e cts of 5G Pinning down what 5G really is is far more difficult than was the case with earlier generations. In those cases, the new generation could be defined in terms of a new technology set out in one or more standards and embodied in distinct hardware. There was some elasticity in claims about intermediate technologies such as 3.5G, but these did not muddy the waters excessively. As we shall see, the potential for ambiguity is at present greater for 5G , which is less sharply defined than its predecessors. However, this uncertainty will gradually abate as new standards arrive. In a speech in February 2017, Adrian Scrase, the CTO of ETSI, the European Telecommunications Standards Institute, said that 5G would be completed in two stages. The first phase would come with Release 15 of the 3GP P 2 standards; the second would follow with Release 16, which would be complete by 2018.3 He also said that the initial focus would be on enhanced mobile broadband (probably relying

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on sub-6 GHz spectrum and technology), with the two other key elements of 5G – ultra-reliable low latency and massive machine-type communications – coming along later, perhaps in the mid-2020s. The current flexibility of 5G opens up space for policy or commercial interests to reverse-engineer a definition in conformity with their goals. There is accordingly no complete consensus as to what 5G will involve. This section describes (1) common elements, and (2) differences in emphasis in Asia, Europe, and North America. 1.1  Common Elements in 5G (a)  Characteristics of the Communications Service The key changes with 5G are increases in speed and decreases in latency. According to the European Commission, 4G data rates (which are typically shared across multiple users in the same cell) are about 500 Mbps, with evolution scenarios for going up to 3 Gbps. Target applications for enhanced mobile broadband go up to aggregated speeds of 10 Gbps – the 5G target set by the I T U . These developments will require fibre-like radio access, using higherfrequency bands than the sub-6 GH z in current use, as well as beamforming technologies.4 It may be necessary to accommodate many simultaneous communications by densely packed users or devices (up to 1 million per square kilometre) engaged in what has been christened massive machine-type communications, with large numbers of connected devices used in professional (e.g., health) or industrial applications or in smart cities involving large populations of sensors. A second requirement for some uses is instant response time. Core 5G applications require latency of the order of 1 ms, compared to the 10 to 20 ms provided by 4G . It is claimed that these are needed for such purposes as health care, connected cars, and detection of faults in energy systems. These uses will combine 5G with mobile cloud technology to meet the end-to-end response times.5 An illustration of the ambition of 5G proponents is the following set of operational capabilities, established by the 5G Infrastructure Association (cited in Lemstra, Cave, and Bourreau 2017): • • • •

Connectivity for 20 billion human-oriented terminals Connectivity for 1 trillion IoT terminals Guaranteed user rates of >50 Mbps Aggregate service reliability of better than 99.999 percent

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Communication for ground transport at speeds up to 500 kilometres per hour Outdoor terminal location less than one metre

(b)  Requirements of the Radio Access Network (RAN) Two major consequences follow from the above-noted characteristics. The first is the need for more and different spectrum. Existing mobile spectrum lies uniformly below 6 GHz, and mostly below 3 GHz. Many (but not all) commentators believe it is running out. Second, higher bands are more suited for high-speed communications (but with the corollary, noted below, that such communication is short-range). If 5G were simply to replicate 4G , but at somewhat higher volumes, higher speeds, and better spectrum and cost efficiency, moving to higher bands would not be necessary or even desirable. But if the step change in capability is sought, this is likely to entail use of the higher bands. In practice, a single jurisdiction is likely to contain densely populated areas where demand for advanced services is high, and other areas where it is not, with the balance between the two areas changing over time. But the existence of high demand areas is likely to require spectrum regulators everywhere to make the necessary assignments, as well as to make the appropriate adjustments to innovations in spectrum management practices that are discussed below. Critically, higher frequencies increase the speed of transmissions but also reduce their range. And this presents a major commercial problem, because it makes necessary many more base stations – a process that has been christened “densification.” A comparison of numbers of base stations in different countries shows the large difference between actual and projected cell sites per 1,000 population. The higher numbers in Asia than in Europe and the United States are also demonstrated by absolute numbers and by Asia’s even greater superiority in small cell sites. One explanation of these data is that it costs between 10 and 20 times more to operate a site in the United States and Europe than in Asia (New Street Research 2016). Thus the incremental costs of densification vary around the world, and this will affect mobile players’ ability to compete in 5G . (c )  C hange s i n C or e Ne t wor k s : S o f t ware D e f i n e d N etwork i ng a nd Ne t wo r k F un ct i o n Vi rt ual i zat i o n These two linked technical developments have implications that go much wider than mobile networks. They have been trialled on 4G but are available for implementing on 5G from the start.

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The first is software defined networking (S D N ). This transfers the functionality required in the core network such as switching and handover from hardware to software, enabling variation in services and functionality to be made more readily. The second is network function virtualization (N F V ). This involves implementing the functions of the communications infrastructure in software running on standard computing equipment, following the precedent of data centres, which have long been going through a similar transformation. This reduces costs and simplifies the addition of new services. The framework for these developments has been standardised by bodies such as ETSI. The thrust of this development in the mobile sector is to strengthen the trend toward the heterogeneity of network provision, the implications of which are discussed below. These two advances in combination allow network resources to be decentrally controlled by third parties, which manage their own physical or virtual resources individually as needed to meet their own requirements.6 This is sometimes described as network slicing. There is some debate about the significance of these developments. Thus for Webb (2016, 45), the fundamental constraint is the R A N , so that changes to the core network are secondary, while for Lemstra, Cave, and Bourreau (2017, 28–31), virtualization is a key differentiator. It can be seen from this brief account that N F V and S D N may well alter the traditional relations among equipment suppliers, network operators, content and application providers, and downstream users or intermediaries. By 2020, Verizon in the United States intends to “virtualize” 75 percent of its network, saving considerably on network costs (European Commission 2016b, 5). A T & T , in an influential White Paper on virtualization cited in Feasey (2016), noted that currently, the company sources critical technology from one of two key vendors who work closely to help configure and optimally deploy that technology. In this model, core technologies, which are often proprietary to suppliers, become critical to our business … this practice is different from that of successful web-based businesses … A T & T expects to develop key software resources in a way in which they can be openly used … This pivot will enable A T& T to do business with start-ups and small businesses that we might have deemed too risky in the past.

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(d)  Dem a nd Si de I ssue s It is apposite to ask how the demand side will affect the development of 5G in different conditions. New Street Research considers this question by considering the balance between supply and demand for wireless services in different geographies. Examining short- to mediumterm projections of network spare capacity, they conclude that there will not be a “widespread need for 5G in Europe in 2020.” Taking into account also the cost-reducing effect of Asia’s endowment of base stations, they identify “a clearer and easier path to early 5G deployment in China, Japan and South Korea than in Europe and the US” (New Street Research 2016, 3–4). Given our interest in structural disruptions, a more important factor is the nature of the demand. This takes us into the territory of “verticals” – a term used in discussions of 5G to describe the emergence, as the economy becomes further digitized, of tailored services relying on mobile (or fixed) connectivity and offered by private- or public-sector providers. Firms operating in a particular vertical can be seen as entering into a contract to become a virtual mobile network operator: they rent space on an M N O and, on that footing, control both the service itself and its delivery to the customers, with whom they interact directly. A precursor to this is the arrangement whereby communications services (known as P P D R s, for public protection and disaster relief) are provided to emergency services by renting space on a mobile operator (as is intended on a UK mobile operator’s 4G service). It may not be too much of a stretch to view zero-rating deals entered into by M N O s and O T T s7 as having in common with this arrangement the feature that the MNO replaces its retail-charging mechanism with the customer with a wholesale pricing contract (with respect to zero-rated services) with an O T T such as Facebook. In other words, the mobile network now provides an intermediate rather than a final output. In this possible world, MNOs sell connectivity not to end users but to an intermediary. The demand for the wholesale mobile input will be derived from the demand for the intermediary’s service from its customers. In some cases, it may be a relatively small component of the intermediary’s total costs, benefiting from an economic principle called the “importance of being unimportant,” which attributes to an input accounting for a small proportion of the final output’s total cost the potential, in the right competitive conditions, to extract an abovecost price (Peirson 1988). More importantly, in order to recruit more

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higher-paying customers, an intermediary may be more prepared than individual end users to pay more for superior mobile services. Several sets of verticals have been identified. In its 5G White Paper, the organization N G M N (Next Generation Mobile Network) identified 25 different use cases, grouped into eight families (cited in Webb 2016, 85): • • • • • • • •

Broadband access in dense areas Broadband access everywhere Higher-speed user mobility such as high-speed trains Massive Internet of Things Tactile Internet where low latency allows remote control Natural disaster Ultra-reliable communications Broadcast services 2.2  Alternatives or Rivals to 5G

The only serious alternative to delivering wireless connectivity is via Wi-Fi. This is a short-range technology, with the result that it can only be used economically in urban areas, indoors and on certain types of transportation (e.g., trains). Wi-Fi currently carries about 60 percent of the traffic from a cellphone, and that is expected to grow to somewhere in the region of 70 to 80 percent in five to ten years. It also carries nearly all the traffic from tablets, laptops, and similar devices. Hence, it is already a critical part of the wireless connectivity landscape. Wi-Fi deployments come in many forms. The largest by volume are individuals’ deployments, typically in their homes. These are sometimes accessible to others for free under reciprocal shared arrangements. The next largest is businesses deploying Wi-Fi for their own use, which they often allow visitors to access, or (in cases such as hotels) which they consider to be part of the service package provided to customers. Finally, there is Wi-Fi provided by operators, either cellular operators or other types such as cable operators, which is available either for a fee or as part of a larger service package such as a home broadband subscription. Here, we do not distinguish between these, and in any case we expect these categories to blur and develop further in future. Compared to cellular, Wi-Fi costs are small – routers cost about $100 (£50), power requirements are minimal, and the key cost is

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backhaul (typically home or business broadband), but this is generally already available. Critically, these costs fall to the individuals or businesses and not operators. The net effect is that many perceive Wi-Fi as free or as having a de minimis cost. It is hard for cellular to replicate this model, and attempts to do so using initiatives such as femtocells have broadly failed. Because of the use of millions of small cells in most countries, Wi-Fi has a huge capacity and so can generally capture excess traffic that falls within its coverage.8 If MNOs put up prices for larger data bundles there is an incentive for users on limited plans to stay at the current price level and shift more traffic to Wi-Fi by:9 • • •

Making the effort to sign into more hotspots. Changing app preferences to download when Wi-Fi is connected. Thinking ahead and downloading video content when Wi-Fi is connected for consumption later when mobile.

A good example of the art of the possible is Google’s Project-Fi. This allows users to sign up to Google as their connectivity provider instead of to an MNO. Google, using Android on Pixel phones, then attempts to connect users via partner Wi-Fi hotspots, falling back to mobile operators where Wi-Fi is not available. In the United States, Google’s mobile partners include Sprint and T-Mobile. This is, to some degree, a rival to mobile connectivity, changing the model from one of a subscription to a mobile operator with off-loading to Wi-Fi to the converse. 2.3  Regional and National Developments Conditions for the development of 5G in certain Asian countries, notably China, Korea, and Japan, are propitious – according to New Street Research (2016) – because of a range of factors including their endowment of dense networks and a strong early demand case. In the United States, according to a speech delivered in early 2017 by the newly appointed chair of the FCC, the focus is on a laissez-faire approach, with early unrestricted spectrum awards (Pai 2017). In Europe, a much more dirigiste approach is being followed, with a 5G action plan heavily linked to the Digital Single Market (European Commission 2016a and b). These endowment- and ideology-based differences are quite marked. But there are common features as well. The “connectivity everywhere”

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version of 5G requires very substantial investments. It is widely recognized that these are justifiable in densely populated areas. But the meaning of that term can range from large cities, through city centres, to limited areas such as airports, malls, and large stadiums. We can expect a gradual expansion of coverage, but one that may not reach everywhere. This has consequences for certain “verticals.” To take a probably extreme and unrealistic case, a mobility plan based exclusively on autonomous vehicles requiring low-latency vehicleto-environment communications could fall down if 5G were not universally available. It is noteworthy that the E U ’s 5G plan (European Commission 2016a), which does have coverage targets, makes provision for public subsidy – as does the equivalent target for ubiquitous superfast fixed connectivity, which is also required to connect the much larger number of base stations. But it is not yet certain where these funds will be coming from.

3   S t ru c t u r a l Im p l i cati ons of 5G a n d   T h e ir   R e g u l ato ry Cons equences The above account shows that there is no consensus regarding the nature and geographical extent of the operation of 5G. For the purposes of the discussion that follows, in order to evaluate the full disruptive potential of 5G, an expansive view will be taken as to the scope of the changes. Given the inevitable gradual extension of the increment in connectivity achievable by 5G, one way of looking at this is to say that we are focusing on the end state. We begin with the changes associated with virtualization and software-defined networking. In keeping with our goal of choosing more radical assumptions, we adopt the position that their implications for the organization of the sector are substantial. Thus we suppose that without this development, a network will be constrained by the inflexible nature of its hardware to provide a single (or more accurately, a fairly homogeneous) service to all its users. With the innovation, the network can be divided into separate slices, each providing a different service. Thus suppose three services are required: (1) a low-speed, poor-latency service associated, for example, with the IoT (e.g., periodic delivery of data on domestic energy consumption by a smart meter); (2) the delivery of video content to a user’s tablet (higher speed, but no extreme latency requirement); and (3) a very low-latency service (e.g., associated

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with connected cars where an instant response is needed to avert a collision). Under current technological conditions, three separate networks, each with its own hardware, would likely be required to fulfill these three requirements.10 But the consequence of NFV and SDN is that a single network can be configured, or sliced, to provide all three services. This change has significant consequences by itself. This can be seen in relation to the so-called net neutrality (NN) debate, which revolves around a range of issues, including the legitimacy of allowing a fixed or mobile network to offer content and application providers a choice of tiered levels of service, instead of, as proposed by advocates of NN, there being a single uniform level of service in the interests of preserving the open and non-discriminatory nature of the Internet. The debate is based upon the currently accurate factual predicate that there is a nearly universal standard form of data delivery – “best efforts” – that provides a baseline for quality of service. Different operators may have different baselines (perhaps subject to some form of quality regulation), but for each operator there is a standard modus operandi, departures from which can be detected and prohibited either in the form of deliberate blocking and throttling or in the form of offering a higher tier of service for an additional payment.11 But with the new network design, the baseline of “best effort” disappears: there is no natural default, as the characteristics of every class of data carriage are consciously determined by operators. As Alexiadis and Shortall (2016) have written: “As such, the approach towards Net Neutrality [in Europe] sits very uncomfortably with a next generation of 5G technology which facilitates the provision of such differentiated services. European policymakers may come to regret what appears to be their current failure to interpret and apply Net Neutrality policy in a manner which takes due account of the technological benefits capable of being delivered by 5G technology.” In short, it is hard to see how the NN objective of, with rare exceptions, prohibiting tiered levels of service provision would work in the long term, if both technological developments permit extensive differentiation of services, and if the mobile communications marketplace demands an increasing array of different services, each requiring different speeds, latency, and other characteristics. It is notable that the guidelines on net neutrality produced by BE RE C (the college of E U regulators of electronic communications services regulators) expressly point out that “network-slicing in 5G networks may be used to deliver

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specialised services” where specialized services are those subject to an exemption from NN rules (B E R E C 2016, 25n26). However, we assume that these developments also permit another more momentous change, captured in the expression “multi-tenancy.” A network can provide a bespoke service to an intermediary offering a particular set of services related, for example, to the automotive or health sector. Following Lemstra, Cave, and Bourrreau (2017), the term virtual MNO is used to describe such provision.12 As noted above, a UK precursor of this kind is that country’s emergency services’ “taking space” on a commercial MNO. Generalizing this example, the MNO becomes not a “dumb” pipe, but a series of discrete “made to order” pipes, possibly sitting alongside a service for domestic customers that would be more recognizably what we observe today.13 The introduction of the new intermediaries can prefigure a shake-up of economic actors in the triad – MNO, vertical/virtual, and end users. It may also introduce a struggle for rents between the former two bodies, just as has occurred in domestic retail markets between the Internet service providers (I SP s) and O T T s. For the purposes of the discussion we split the value chain into three components: the RAN , the core network, and content and applications. At present, under 4G, the division of responsibility is generally as follows. The core network is run by the MNO – not necessarily in the sense that it provides all the assets (since fibre connections to base stations are often leased from or outsourced to other – usually fixed – operators, and there is a growing element of network sharing among MNOs), but in the sense that the relevant assets are under the control and at the disposal of the MNO . As far as the R A N is concerned, towers may be owned or rented (often on a shared basis) by the MNO s. The M N O also brings to the process the requisite spectrum licence; in rare cases spectrum may be shared with another MNO . Provision of services is split between the M N O , which provides certain retail voice, S M S , and data services, and other content and application providers (including O T T s), which sit on the M N O and provide additional or competitive services. Thus certain U K M N O s stream proprietary data (including, for example, football highlights) to their customers, as well as delivering other companies’ content to their subscribers. How might this change under our expansive definition of 5G? The requirements on the radio access network increase significantly: more

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bandwidth and more towers are required. As 5G extends to areas that are sparser in users, the economics of the extension get worse and worse, and cost reduction may be needed to make them viable. At present many jurisdictions have either three or four M N O s – although smaller countries may have fewer and some, such as India, have far more. As part of the extension to 4G, a significant number of merger proposals were put to the competition authorities, including several that reduced the number of operators from four to three. The debate about these proposals typically went as follows. The impact of a four-to-three merger on prices is estimated on the basis of the resulting “upward pricing pressure” – a simple projection of how much prices might rise. This depends on a cost variable and also on the degree to which pre-merger customers leaving each of the merging parties would move to the other. The greater this “diversion ratio” the more prices would be projected to go up. It is in the nature of a fourfirm market selling a fairly homogeneous product that diversion ratios, and hence projected upward pricing pressure, will be quite high. But, it is argued, the projected price rise ignores the improvement in quality that a later generation of technology will generate. What is required is a quality-adjusted figure for upward pricing pressure. And, crucially, it is argued that having fewer operators in the market will encourage investment. On this footing, the merger may be justified. As an empirical matter, does greater concentration increase or reduce investment in the mobile sector? According to an influential study of this question in the E U (Genakos, Valletti, and Verboven 2015), the answer is open to interpretation. It appears that a movement from four to three may increase the investment made by each surviving firm, but reduce total investment, since there are now three rather than four operators. If we took the view that replication by a fourth operator of the investment of the other three had a limited effect on customer well-being, we would not worry. But if, for example, it limited innovation, there would be a problem. In the recent past, some mobile mergers have been allowed and some prohibited or withdrawn. Given the nature of the incremental investment required by 5G, it is likely that such arguments over proposed concentrations will be repeated, perhaps with more vigour. But there is another aspect to the debate, associated with network sharing. Suppose you could keep four operators, but allow them to share inputs, such as towers, antennae, power supplies, backhaul, and even spectrum. On the face of it, this might make more investment and

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wider enhanced 5G coverage viable. This would be promoted if a deepening of sharing were permitted in order to cover more of the active components of the RAN and/or of spectrum – although a duopoly of this nature would probably create concerns about coordination. There might also be concerns if each of the RAN s were configured to provide a particular type of services, as such differentiation would enhance unilateral market power. In summary, it is not clear how efficiency and competition arguments over combining RANs for 5G purposes would work out, although they would be affected by what happens elsewhere in the value chain. We now turn to the core network. At present these are provided by M N O s, possibly using leased or shared assets. The proliferation of (possibly shared) base stations associated with higher speeds and volumes and the use of mm wave technology exacerbates the backhaul problem, and this may find different and more concentrated solutions than the transport of data deeper in the core. The number of M N O core networks is effectively determined indirectly by the number of spectrum licensees. But if that link were dissolved, entry into the core services market might come from fixed networks. Alternatively, under the expansive view of 5G adopted in this discussion, where new core virtualization technologies allow a greater degree of control by organizations that take on the status of virtual M NO s, it might come from individual verticals that currently make extensive use of such networks. The virtual MNO solution, which involves the owner of a core network leasing slices of it to third parties, depends on a willing seller. The parallel with access granted to date by MNOs to current MVNOs is illuminating. In many jurisdictions, MVNOs have negotiated agreements on commercial terms, normally to supply segments of the market not chosen for exploitation in a major way by the host MNO. Alternatively, the accusation has been levelled that in some jurisdictions MN O s jointly refuse to supply M VN O s, in support of their collusively determined retail prices.14 It may be the case with 5G that some verticals deliver new services not currently carried by M N O s, but carried by discrete providers. An example is provided with many IoT connections. Other services, particularly “general purpose” connectivity, may already be a core business of the M N O s. Competition and regulatory authorities will have to be vigilant in identifying anti-competitive conduct by M N O s in tying access to R A N services with use of their own core networks

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that goes beyond what is necessary to accomplish an efficient handover to the R A N . Determining the degree of competition in content and applications presents complex and variegated problems. Thus in broadcasting, the manner in which exclusive rights to high-value content are assigned has been the subject of competition investigations; so have the activities of certain platforms that may derive substantial market power from the operation of “network effects.” These issues are unlikely to go away. But 5G may coincide with, or even provoke, the emergence of many more types of content and application providers, including of public services, and transport and mobility services. Having made observations about competitive conditions individually regarding the three components of the RAN, the core network, and content and application providers, we now turn to questions of vertical integration within the developed 5G universe. As noted, the 4G starting point is one of vertically integrated control by each MNO of a core network, a R A N , and some content services, facing competition in certain content or electronic communications services from OTTs. The greatest threat to the arguably strong position of each M N O appears to come from the expansion of content and applications providers such as OT T s into self-provision of core network capacity, which they may build themselves or lease from one of the small number of asset owners. If this came about, M N O s could be reduced to a transport layer in the value chain. They might respond by refusing to supply, or by linking access to the R A N with access to their core network. In several jurisdictions this might come under the scrutiny of competition and regulatory authorities, with the outcome in many jurisdictions likely to hinge on the presence or otherwise of single or joint dominance.15 Where the MNO market initially contains a mixture of larger and smaller networks, the latter in particular may have an incentive to supply virtual MNO services to the verticals.16 The collocation in the cloud of the virtualized network element and the relevant content and applications (for connected cars, e-health, etc.) may encourage their integration (Webb 2016, 47–48). The impact of this change would be to convert the MNO essentially into an owner (or sharer) of a R A N , a provider of wholesale core services, and a retailer of services that had not been bundled within a “vertical.” The VMNO would seek to appropriate as much as it could of the rents in the value chain.

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A vivid example of these conflicts is currently on show in relation to connected cars, part of the “automotive” vertical noted (Ramberg 2017; Fildes and Campbell 2017). Connected cars (to be distinguished from autonomous – “driverless” – cars) are those that have access to the Internet and a variety of sensors and are thus able to send and receive signals, sense the physical environment around them, and interact with other vehicles or entities. In 2017, the forms of connectivity at issue include limited real-time car-to-car communications services (e.g., to avoid collisions by coordinating braking). In this regard the carmakers favour a shortrange Wi-Fi vehicle-to-vehicle (V2V) technology requiring a dedicated spectrum band and a bespoke and comparatively readily constructed network. The telecoms companies’ alternative is a long-range cellular network, the availability of which is dependent on the wider rollout of 5G networks. But 5G may be a longer-lasting technology, capable of adapting to subsequent higher levels of automation. There are also solutions that involve interoperability between the two technologies. The latter was not yet revolved in mid-2019. This is in addition to non–time-sensitive applications ranging from performance updates and alerts on wear and tear of components, through advice on where to park or how to avoid congestion, to usagebased insurance charging. The connected car market is being fought over by automotive manufacturers, original equipment manufacturers (OEMs), tech companies, and mobile operators, all acting in a combination of competitive modes. A key issue is whether the O E M has the car-owner interface and organizes connectivity, or whether the M N O takes the initiative of selling a monthly subscription service that gives the owner an interface with an aggregated set of connected car service providers (Ramberg 2017). It is foreseeable that the next stage – autonomous vehicles – will involve a much wider range of connectivity, including vehicle-to-vehicle and vehicle-to-environment. Given that autonomous vehicles are likely to come into operation in due course, and given the “path dependence” of digitization within a sector, there is a lot to play for. 3.1 Summary The above discussion has unearthed a series of possible technical and commercial changes that might be inflicted by 5G and associated

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technological developments on the past rather stable structure of the mobile sector. These are: At the horizontal level: 1 R A N s: fewer operators or more sharing, especially in the large number of commercially marginal areas. 2 Core networks: (a) more concentration of backhaul; (b) entry by fixed networks and “verticals” via wholesale access (virtual MN Os). 3 Content and applications: (a) the proliferation of additional services in which the weight of communications services in value added is limited; (b) increasing competition between MN Os and verticals in this activity. At the vertical level: 4 R A N and core networks: untying the current combined provision of the two functions by M N O s. 5 Content and services: vertical integration by virtual M N O s into core services. What is the role of spectrum regulation in this? First of all, regulation should not try to usurp the role of policy, nor should it be used chiefly as a means of policy implementation: going down that route risks embroiling the normally non-discriminatory regulator in a series of partial decisions – for example, favouring particular business models or picking winners. But given the dynamic and unpredictable nature of developments, 5G looks to be an area that governments might want to stimulate by, for example, investing in testbeds and enabling industry interaction. Any intervention should be done in ways that do not damage the dynamic and competitive nature of the sector. Second, it was noted above that in most countries regulation of the mobile sector has “settled down” to the use of two principal tools: spectrum management, which in many jurisdictions pursues competition objectives, and merger policy, which seeks to prevent the loss of existing competitive pressures. The list of possible structural changes identified above includes further pressures for concentration in the RAN and in backhaul. These must be assessed carefully against normal competition criteria and

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responded to appropriately. The remaining horizontal changes represent an enhancement of competitive pressures. The expected changes in vertical structure do not look inherently threatening. There appears to be an opportunity for new business models and new players to emerge in the sector; this will enhance competitive pressure and innovation without necessarily producing the same outcome in relation to all sectors of the increasingly digitized economy. MNOs may seek to leverage their control of a RAN to better their own position in the core network and content markets. Competition authorities and regulators will need adequate tools to investigate and where necessary deal with such behaviour. Whether they have those tools in the case of “tight oligopolies” in the sector is a topic of current debate, particularly in Europe.

4   H ow W il l S p e c t ru m Management b e A f f e c t e d by 5G? The spectrum world is now focused on 5G, which is requiring more imaginative thought than its predecessor generations. We set out earlier two options – an evolutionary and a revolutionary one – for the development of 5G. Clearly, which of these broad options eventuates (or whether what we see is a combination of them in different regions) will have a profound impact on the need for spectrum. We use the term “5G” here to include both evolutionary and revolutionary approaches since the need for spectrum is likely to be similar regardless. Given these uncertainties, it is more fruitful to discuss the types of innovation in spectrum management that are likely to be required to meet the expected demand for spectrum, rather than discuss particular bands – although these more granular decisions are being widely debated within the 5G community and individual firms, verticals and countries are vigorously expressing and promoting their own preferences. Regarding 5G , W R C 15 agreed to study eleven bands for possible identification. There are eight bands with an existing mobile allocation: • • • •

24.25 GHz–27.5 GH z 37–40.5 GH z three bands in 40 GH z 50.4–52.6 GH z

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66–76 GHz 81–86 GHz

and three bands with no existing mobile allocation: • • •

31.8–33.4 GH z 40.5–42.5 GH z 47–47.2 GH z

The results of these studies will be discussed at W R C -19 (International Telecommunications Union 2019). In addition, the US regulator, the F CC, has stated an intention to open up additional frequency in the 28 GHz band, at 27.5–28.35 GHz, and in certain other unlicensed bands. This and other announcements and interventions may be part of strategies pursued by individual firms (equipment manufacturers and operators), verticals, and countries jockeying for position in the development of 5G (See Standeford, Sims, and Watson 2016). The choice of high-frequency bands is an interesting development. So-called millimetre wave spectrum has the characteristic that the range of any base station using it is small – which makes the construction of the network expensive, and possibly beyond the capacity of less sparsely populated areas to support commercial operations. It is also the case that 5G differs from previous cellular generations in both its breadth and its uncertainty. In the past each new generation has broadly been faster than the previous one, with specific frequency bands designated near-globally to support it. Some have noted (see Webb 2016) that with mobile network operators (M N O s) seeing declining profitability and end users generally not paying more for faster services, the business case for many of these investments is unclear and it is possible that 5G may end up being merely the continued evolution of 4G . Many regulators view robust competition between MNOs as a way to ensure rapid deployment of 5G services, but the costs of delivering multiple 5G networks are driving operators to consider cooperative models. Achieving all of these aims will require a range of different bands of spectrum, but the uncertainty means that timing and modes of access need to be flexible. At a high level, the modes of spectrum access for 5G currently being discussed include the following:

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“Classic” access to harmonized bands agreed worldwide. The preferred approach is for regulators to clear the bands and then auction them with exclusive licences to the mobile operators. The key focus of the 5G community is the 700 MH z and 3.4–4.2 G H z bands, but others are also being discussed. However, these bands are not available worldwide – for example, the United States has already auctioned 700 MHz and is enabling unlicensed access to 3.5 G H z. Access to bands below 6 GH z on a licence-shared basis.17 Operators consider that they will need substantial spectrum below 6 GHz in order to provide capacity and relatively high data rates. Attention has focused on the 4 GHz band, but this is being used globally by a range of other services such as air traffic control and fixed links. It seems unlikely that it can be cleared and auctioned within the timescales desired in all countries, so approaches to sharing with incumbents, with an agreed priority of access, are being investigated. Use of unlicensed spectrum as an additional resource. Even with all these bands, some fear that there will be insufficient spectrum and that making use of the unlicensed bands at 5 G H z may be necessary. Whether these fears are warranted depends on whether mobile data usage continues to grow indefinitely or reaches a plateau – the latter seems more likely at present. These bands are widely used for Wi-Fi, which raises fears of interference if they were also used by mobile operators. Various approaches have been proposed in which the MNOs might opportunistically use the bands for additional downloading. Access to high-frequency bands for new business cases. The ultrafast solutions will require use of very-high-frequency bands – likely above 20 G H z. With their short-range propagation, and with the uncertainty of the timing and success of 5G solutions, shared access may be suitable. 4.1 5G and Shared Access From the discussion above it is clear that only a small part of 5G spectrum will be found through classical “clear and auction.” Much of the rest will come from some form of shared access. Here we provide an overview of sharing, show which elements are relevant to 5G , and consider whether sharing can foster competition. Primitive forms of spectrum sharing among alternative uses or users have been in place from the beginning of spectrum use. For example,

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spectrum can be shared temporally or geographically via a conventional licensing process. So-called spectrum commons have also existed for a long period. Here users of very-low-powered devices (which are unlikely to interfere with one another) can transmit without a licence provided that they obey specified power limits. However, it is now apparent that a more efficient way of sharing the spectrum in a wider class of environments is via “dynamic” spectrum sharing, which allows one user opportunistic access to spectrum not being used by another user. The structure we follow in this section is set out in table 11.1, which has two dimensions – whether access is restricted, and whether interference is controlled in any way once access has been granted.18 We can see how these apply to 5G in Table 11.2. We discuss each of these below. Case (1) – access to 5 GH z bands. The 5 G H z band is classic “spectrum commons,” with no licences granted19 and access allowed to technologies that meet general rules for power levels and politeness. In principle, as long as the variant of 5G proposed for this band meets such requirements there should be little debate as to whether to allow it. However, a case of “too big to fail” has developed that causes regulators and others to pause for thought. The band is currently almost exclusively used by Wi-Fi. If the 5 G H z band were to become congested due to 5G using the band, this might cause significant consumer detriment. This issue raises interesting questions as to whether regulators should recognize unlicensed applications that have become successful and offer them some degree of protection. It would intuitively appear that this is both appropriate and hard to avoid, but it sets precedents that may lead to mismatched expectations in the future. It also shows that the value derived from unlicensed bands is substantial – perhaps greater than that derived from licensed bands on a per M H z basis (Revolution Wi-Fi 2014). This implies a much greater focus on regulation of unlicensed spectrum moving forward, including more efforts to identify additional bands for unlicensed usage and to monitor and manage existing bands. Such efforts would be most effective on a global basis. Case (2) – sharing with incumbents in high frequency bands. In these bands the existing licence holders are often satellite users and fixed links. Both are static, with directional antennae, and in many cases tend to be outside of urban areas. Given that the best bands for 5G

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Table 11.1 Dynamic spectrum sharing

No interference control Controlled interference

Unrestricted access

Restricted access

Commons Database-controlled access

Classical sharing Collaborative working with incumbent

Table 11.2 Dynamic spectrum sharing in 5G

No interference control Controlled interference

Unrestricted access

Restricted access

(1) Cellular use of unlicensed bands at 5 GHz (3) Not used (but some non5G projects still active in places)

(2) Sharing with incumbents in high-frequency bands (4) Working with air traffic control and others at 4 GHz

have yet to be determined, and given that the business model for and the extent of deployment of 5G ultra-fast solutions are both very unclear, then clearing these users seems premature. Instead, 5G could work around them. Where sharing has been proposed, regulators tend toward geographical exclusion zones around existing users. The biggest challenge with this approach relates to the tendency for exclusion zones to become excessively large once a worst-case modelling exercise is performed. This can be resolved by making greater use of measurements to determine interference rather than predictions and adding some incentive for the incumbents to share as widely as possible. Case (3) – TV white space and similar. In this case, unlicensed access is allowed to licensed bands when interference can be carefully controlled, typically through the use of a database that unlicensed devices are required to query prior to transmission. This was the concept behind T V white space, which garnered much interest around 2010. However, interest has faded, partly because it has proven hard to get regulatory approval in all but a handful of countries, partly because the TV spectrum has progressively shrunk as bands have been identified at 800 MHz then 700 MHz for cellular, and partly because alternative approaches have been found for applications such as IoT that were proposed for T V white space.

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Case (4) – Collaborative access in 4 GH z bands. Collaborative access has been proposed where (1) clearance of bands looks problematic and likely to take overly long, and (2) the incumbents do not have uses that can be readily geographically ring-fenced. In these situations, operators see collaborative access as a “next best” approach where they negotiate with the licence holder(s) as to how they can best gain access. There is still much to be worked out with collaborative access, especially where it is the regulator that assigns the shared rights, as might be the case where the incumbent is a governmental user such as defence. Here the form of the licence, the number of licences granted, and the auction approach adopted still require attention. It may be that 5G will be a valuable first deployment that will pave the way for more widespread usage. Incumbents may prefer to share with only one other player, or with a subset of M N O s. This could reduce competition, but the grounds for regulatory intervention in such cases appear weak.

5   C o n c l u si ons The discussions to date suggest the following lessons from the embryonic process of spectrum management for 5G : 1.  It would be helpful to move to a position where (almost) all licences are shared. The case of 5G has shown that much of its access will be shared. Sharing has been assisted by the development of new real-time technologies for dynamic spectrum sharing that allow multiple users to coexist. It is time for these possibilities to be reflected more fully in rights of access to spectrum through the replacement of exclusive licences by arrangements that allow access to multiple users, possibly on a hierarchical basis that gives some users priority over others. The result to be expected is much greater flexibility in use of spectrum and lower prices for access to it. This could be accomplished through a process of progressively replacing exclusive licences with less restrictive alternatives, introduced in ways that manage the associated risks. We recommend a brisk increase in the number of licences recast in this way, even if in practice some of these will continue to be exclusive. 2.  We should reconsider ways to derive technical sharing criteria. History has shown that sharing calculations are almost always excessively cautious, leading to much spectrum being unused. Changing licence conditions toward the amount of interference that a user is

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allowed to generate, measuring actual interference rather than modelling it, specifying the minimum performance levels expected of receivers, and utilizing real-time databases to modify transmitter powers when interference does occur will allow for very substantial improvements in efficiency; it will also provide the tools for a range of novel approaches to sharing.

6   A s s e s s m ent The goal of this chapter has been to assess the disruptive potential of 5G in terms of its impact on the structure and regulation of mobile markets and on methods of spectrum management. We have noted that the precise nature of “5G” is not yet fixed; nor is the speed of its diffusion known. But for the purposes of this chapter we have adopted a very expansive view of its nature and consequences. This can be captured in the expression (nearly) ubiquitous gigabit communications, which support a step change in the digitization of production and consumption in all aspects of the economy and society, both public and private. In terms of the structure, we note that the mobile sector has exhibited a substantial degree of stability in its comparatively short life, both through successive generations of technology and through the fundamental change associated with the addition of data. The industry structure can be summarized as a natural oligopoly in which mobile network operators provide core network radio access and retailing functions in an integrated form. This is qualified by the relatively small participation in retail markets by MVNOs as well as by a significant dependence on fixed networks for backhaul and peering functions. Regulators have intervened in the structure with pro-competitive spectrum award policies, and competition authorities have adopted a time-varying approach to consolidation by merger and acquisition. In the case of 5G, however, a different organization has been mooted. This has come about as a result of the much deeper than expected penetration of digitization in the economy, which goes beyond the provision of communications to change the mode of supply of major services such as transport and mobility, public services, industrial processes, and machine-to-machine communications. The new structural possibility is that suppliers in these areas or “verticals” will themselves assume the role of controlling the communications

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component of their value chains, probably by renting capacity on a small number of RANs; in the case of the core network they may buy wholesale from a communications supplier, or may self-supply. In this world, the mobile operator loses direct contact with the ultimate customer with respect to many digital services, although it may retain it in the supply of the general-purpose communications services that it currently provides. This may lead to the bifurcation of today’s mobile sector into a set of core networks and a smaller number of possibly shared R A N s, which may require more regulatory oversight. The introduction of the “vertical” players opens up a potentially more complex struggle for rents in which direct access to the end user is likely to be a major element. The beginnings of this process can be observed in the jockeying for position in relation to “connected cars” among MNOs, automobile manufacturers, and tech companies. We can see no obvious reason for economic regulators to interfere with this process, for a combination of competition authority oversight and regulation relating to safety and so on should suffice. In relation to spectrum management, an expansive implementation of 5G will impose disruptive change in two related aspects in particular: •

•

It will switch attention away from lower frequencies toward higher bands that have so far received little attention because of their relatively low commercial potential. The growing demand on bandwidth from all quarters will necessitate a much higher level of spectrum sharing at all levels.

In addition, now familiar issues will be revived concerning the permitted degree of flexibility in spectrum use and the appropriate arenas for harmonization and the operation of uncoordinated spectrum markets. The need for sharing should trigger a complete reassessment of the desirability of and need for exclusive licences. Various sharing approaches based on dynamic access, with prioritization based on a hierarchy of property rights, are already available and are likely to become the norm. If they work efficiently, a much higher level of efficiency in spectrum utilization should lower prices and generate a feedback mechanism that promotes the overall process of digitization.

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N otes   1 For an account of attempts made in Canada to change the structure and behaviour of the mobile sector, see Ben Klass’s contribution to this volume (Chapter 4).   2 The 3rd Generation Policy Project – a collection of key standards bodies around the world that produce the standards for mobile communications.   3 As reported in Policy Tracker, 21 February 2017.   4 Beam-forming is already used in TD-LTE systems, which are seen as a stepping stone to 5G.   5 This view is strongly asserted in Weldon (2016), at page 21.   6 It has features in common with the polycentric governance described by Martin Weiss and Marcela Gomez in Chapter 9.   7 Under such deals, an OTT (for example, Facebook) pays a mobile operator not to count time spent by a customer on Facebook against that customer’s download allowance. This practice is banned by regulators in some countries.   8 There are a few exceptions, such as in stadium and conference centres, but these are relatively rare.   9 These effects may not be universal, as Chapter 2 on Finland by Marko Ala-Fossi demonstrates. 10 In practice, the first two requirements are met today, normally using separate networks, while the third is not generally available. 11 This description glosses over possible problems in distinguishing benign and malign forms of network management. 12 This term is used to make a distinction between this forthcoming development and “traditional” or current-generation MV NOs (mobile virtual network operators). 13 A much more thorough-going approach to sharing and trading wireless capacity is proposed in Chapter 10 by Linda Doyle, Peter Cramton, and Tim Forde. 14 As recounted in Ben Klass’s contribution to this volume (Chapter 4). 15 It should be borne in mind that the unregulated and separate supply of R A N and core network services in circumstances where each of the two markets exhibits market power abuses might lead, as a result of so-called double marginalization, to prices to end users that are even higher than in the case of integrated supply. 16 It is noteworthy that when Google embarked upon project Fi (see Section 2 above), the two weaker operators in the United States offered to supply V MNO services.

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17 Licence shared access (LS A) involves maintaining the primary radio link to the mobile in licensed spectrum but opportunistically using shared spectrum for additional downlink bandwidth, enabling faster download and more capacity. Sharing is normally limited to a small number of users who reach appropriate agreement with the licence holder and may require database access. 18 See also Chapter 8 by Michael Marcus and Chapter 9 by Martin Weiss and Marcela Gomez. 19 With the exception of some radar use in some countries, which unlicensed users have to detect and work around.

r efer enc e s Alexiadis, Peter, and Tony Shortall. 2016. “The Advent of 5G: Should Technological Evolution Lead to Regulatory Revolution?” Anti-Trust Bulletin, November. B E R E C . 2016. “Guidelines on the Implementation by National Regulators of European Net Neutrality Rules BoR (16) 127.” http://berec.europa. eu/eng/document_register/subject_matter/berec/download/0/6160-berecguidelines-on-the-implementation-b_0.pdf. Cave, Martin, and Ingo Vogelsang. 2015. “Net Neutrality: An EU/US Comparison.” CPI 11(1): 85–95. European Commission. 2016a. “5G for Europe: An Action Plan.” http:// ec.europa.eu/newsroom/dae/document.cfm?doc_id=17131. – 2016b. “5G for Europe: An Action Plan – Staff Working Document.” http://ec.europa.eu/newsroom/dae/document.cfm?doc_id=17132. Feasey, Richard. 2016. “The Future of (Virtual) Networks.” https://docs. google.com/viewer?a=v&pid=sites&srcid=ZGVmYXVsdGRvbWFpbnx mZWFzZXl3YWxlc3xneDoyMWYwYzVjMGZjZGZlYWM3. Fildes, Nic, and Peter Campbell. 2017. “Telecoms Versus Car Makers in the Race to Get Connected.” Financial Times, 13 November. https:// www.ft.com/content/6c1b7f60-a9d3-11e7-93c5-648314d2c72c. Genakos, Christos, Tommaso Valletti, and Frank Verboven. 2015. Evaluating Market Consolidation in Mobile Communications. Brussels: C E R R E . http://cerre.eu/sites/cerre/files/150915_CERRE_Mobile_ Consolidation_Report_Final.pdf. International Telecommunications Union. 2019. “World Radiocommunication Conference 2019 (W RC-19), Sharm el-Sheikh, Egypt, 28 October to 22 November 2019.” https://www.itu.int/en/ITU-R/conferences/ wrc/2019/Pages/default.aspx.

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Lemstra, Wolter, Martin Cave, and Marc Bourreau. 2017. Towards the Successful Deployment of 5G in Europe: What Are the Necessary Policy and Regulatory Conditions? Brussels: C ER R E. http://www.cerre.eu/sites/ cerre/files/170330_CERRE_5GReport_Final.pdf. New Street Research. 2016. “5G Global Roadmaps.” London. Pai, Ajit. 2017. “Speech to the World Mobile Congress.” https://www. mobileworldlive.com/mwc17-videos/keynote-6-building-the-5geconomy-ajit-pai. Peirson, John. 1988. “The Importance of Being Unimportant.” Scottish Journal of Political Economy 35(2): 105–14. Ramberg, Erik. 2017. “The Complex-Free Route for Operators to the Rewarding Connected Car Business.” http://www.iot-now.com/ 2017/02/02/58025-complex-free-route-operators-rewarding-connectedcar-business. Revolution Wi-Fi. 2014. “The Economic Value of Unlicensed Spectrum $228 Billion Annually in the U.S.” 11 April 2014. http://www.revolution wifi.net/revolutionwifi/2014/04/the-economic-value-of-unlicensed.html. Standeford, Dugie, Martin Sims, and Jonathan Watson. 2016. “The 4G and 5G Spectrum Guide.” PolicyTracker. Webb, William. 2016. The 5G Myth. London: DEG Press. Weldon, Marcus. 2016. The Future X Network: A Bell Labs Perspective. Boca Raton: CRC Press.

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C o n c l u s ion

Frequencies: International Spectrum Policy Gregory Taylor and Catherine Middleton

The ways in which we will get there may vary, but global broadband communication will be increasingly mobile in the decades to come. It simply makes economic and technological sense. Smartphones, tablets, and laptops are how most of us stay connected, and fewer and fewer of these devices require a wired connection. The impact of mobile demand is being felt at the highest levels of technology industries. In 2016, Google quietly scaled back its Google Fiber connectivity project and announced its new Webpass company, which advertises “blazing fast” Internet speeds via fixed wireless (webpass.net). While a solid fibre backbone must be part of all national strategies (see Song’s description of fibre growth in Africa, Jain and Neogi’s discussion of the importance of India’s national fibre optic backbone, and Ala-Fossi’s critique that the Finnish model requires more fibre), mobile access via radio frequencies is an essential and growing branch of the modern communication ecosystem. This book is written in an era in which decisions concerning the spectrum resource – the essential foundation of all mobile technology – will soon echo across a range of future media, expanding – or limiting, if mismanaged – our ability to access and transmit information from wherever we choose. This development will pose much more than a technological dilemma. Who will be able to access information, at what cost, and in what capacity? These are the key public issues in the current global debate over best practices for spectrum policy. This book has shed light on the ways in which various parts of the globe are grappling with best practices to address their particular spectrum requirements. We hope we have illuminated the striking similarities between the problems faced and offered a glimpse into potential future

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scenarios that today are shaping how our spectrum policy structure must evolve. We hope that Frequencies will spark a necessary conversation among academics, industry leaders, and policy-makers. The human consequences of today’s spectrum policy debates are immense. The management of this intangible public resource affects financial traders in Manhattan as well as farmers in remote villages in India. Distance education, weather updates, health information, government services, and, yes, Netflix and YouTube, will increasingly be available to those with reliable, high-quality wireless access. The “anytime, anywhere” ethos that drives media access today is a reflection of our wireless world. The wire kept us tethered in place, and we are increasingly reluctant to accept such restrictions. Marketers have latched onto this feeling as a way to sell service – indeed, the newest upstart in the Canadian mobile industry is called Freedom Mobile. The paths taken by countries around the world to reach the current levels of digital connectivity have varied. New Zealand launched the first spectrum auctions in the early 1990s, and these have been by and large emulated by national governments eager to cash in; however, the global perspective of this book reveals some fundamental differences around the world. The ITU has divided the planet into three regions to coordinate spectrum policies among nations, but at the local level, the political and economic realities of spectrum governance have led to systems that greatly diverge from the ITU’s tripartite approach. The examples presented in this book by Mariscal (Mexico) and Ala-Fossi (Finland) reveal that countries can take spectrum initiatives very ­different from those of their geographic neighbours. The polycentric governance model for spectrum sharing presented by Weiss and Gomez goes considerably further, incorporating “hyper-local” spectrum access systems that may require regional authority as opposed to more traditional nation-based regulation. Clearly there are global trends, but as Neogi and Jain observe, there will be no one size fits all solution to the spectrum policy puzzle. This is why a book like Frequencies is so necessary and why the editors are so very pleased to present contributions from spectrum experts from around the world.

A u c t io n s A r e O n ly One Method f o r A s s ig n in g S pectrum The chapters in this book offer rare global insights into the impact of 20 years of spectrum liberalization on national market structures. Zita

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Joyce’s chapter was presented first in recognition of the international ripple effects of the pioneering spectrum auctions in New Zealand (Chapter 1). Auctions for assigning spectrum are ubiquitous, but their use has by no means been uniform and they have not enjoyed consistent success. As Ala-Fossi notes, Finland, a world leader in mobile communications, was the last country in the EU to resort to auctions as an assignment method (Chapter 2). Song’s chapter shows that several regions of Africa have by and large resisted open auctions and that the countries that have used auctions have often not enjoyed the financial windfalls they had anticipated (Chapter 3). Song poses a key question: whether auctions should be viewed “a source of direct revenue as opposed to simply an effective means to fairly allocate resources.” Though governments worldwide will be hesitant to admit it, the opportunity to fill the public coffers through spectrum auctions is a key factor here. That temptation is understandable; however, succumbing to it may not always be in a nation’s best long-term interest. Even after 20 years of market-based policies, competitive markets often remain elusive under the current policy paradigm. As Klass points out, the Canadian market remains oligopolistic despite tools such as spectrum caps and set-asides that were designed to increase the number of actors involved (Chapter 4). Taylor, for his part, notes that the current policy structure in Canada has proven a hindrance to smaller players who are seeking to provide service in regions that are not as economically attractive to major service providers. Smaller providers cannot afford to participate in open auctions (Chapter 7). In a country like India, as Jain and Neogi observe, auctions may have limited attraction for service providers since the financial returns are relatively small (Chapter 6). Spectrum auctions can be appealing for governments but they cannot be the sole method of assigning spectrum. Those who oppose auctions as the means of making spectrum available to service providers need to recognize some of the shortcomings of alternative approaches as well. Joyce notes that New Zealand, despite being a pioneer in spectrum auctions, today employs a combination of market-based auctions and traditional administrative approaches for its spectrum. Administrative methods have faced criticism in the past for being too opaque and for being open to political interference. Ala-Fossi uses the term “oligopolistic” in describing the Finnish wireless market even though that country took a very different national approach to spectrum policy that arrived late to the auction

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party. Mariscal argues that Mexico’s Red Compartida, a public wholesale wireless system, could have been accomplished with less than the 90 MHz of the 700 MHz band set aside for the project; she thus questions whether the spectrum resource was used efficiently under this unique, publicly focused approach (Chapter 5). Did the public receive maximum value for its resource? Auctions are generally designed for exclusive private use, and this often leads to inefficiencies in spectrum use in the licensed area. As Marcus points out in his chapter, “spectrum will inevitably be underused in low-density areas and highly used in denser areas.” He illuminates how current approaches to spectrum deployment leave great swaths of frequencies idle and points out that technology has offered up more possibilities for spectrum sharing, yet current policy structures do little to encourage their uptake (Chapter 8). Taylor’s chapter describes an innovative approach to spectrum sharing in Canada that was curtailed to accommodate further expansion of licences for exclusive access (Chapter 7). As Linda Doyle and colleagues note, “the straightjacket of a specific licence framework” can prove a hindrance to regulatory adaptability. Lengthy licence terms offered via licence (often 20 years) only compound the policy restrictions (Chapter 10). Perhaps the markets themselves are signalling the decline of the auction method for spectrum. Major wireless service providers such as Bell in Canada and Verizon in the United States have been relatively quiet in recent national auctions for valuable low-band spectrum. Around the world, prices for spectrum have been dropping steadily over the last few years. The legacy of 20 years of spectrum auctions has shown mixed results.

T h e R u r a l Di vi de As Taylor, Mariscal, and Jain and Neogi emphasize in their respective chapters on Canada, Mexico, and India, wireless access in rural areas around the globe remains a persistent problem despite years of government discussion, reports, and announcements. As noted by Ala-Fossi, even Finland, with its high national rates of mobile data consumption, has struggled with the urban/rural divide. There is nothing unusual about this; for rural regions, market failure is often the default position. Newly liberalized markets in developing nations, as well as the neoliberal principles that have guided industrialized economies since the Reagan/Thatcher era, have relied upon market forces that have

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steadfastly refused to deliver equitable service between urban and rural regions. In Mexico, where Mariscal describes one of the boldest national policies for addressing this divide, the political pressure to alter the marketplace and increase service to rural areas came in the form of a change in the national constitution, not the market. As this book was being finalized, much of the attention in spectrum policy turned toward higher frequencies as the next areas to be further developed for new technologies. This may leave some rural areas even further behind, for this spectrum is particularly well-suited to the urban environment. Rural access is not going to improve with new technology. Cave and Webb note that the economic case for 5G development “gets worse and worse” as you move into sparsely populated regions (Chapter 11). The best spectrum for urban data service is in the higher bands, which do not reach as far but carry more information and propagate better within buildings. The best spectrum for rural coverage is in the lower bands, below 3 GHz, which have longer propagation qualities and therefore require fewer towers to be constructed. However, for many countries, those frequencies have already been auctioned and are locked into long-term licences that may not serve the future national interest. Rural wireless broadband access is a shining example of policy-makers repeatedly demonstrating a lack of the vision necessary for robust long-term spectrum policy.

L o o k in g A h ead Much of this book was written in 2018, at a time when the hype machine was in full force to promote the next wave of wireless advancement: fifth generation (5G) technology that promised extreme speed, low latency, and a wider range of devices to be connected. As Cave and Webb point out, essential questions regarding the definition of 5G technology remain unanswered. Despite this, governments across the industrialized world are setting aside spectrum in order to accommodate this purportedly cutting-edge technology and ensure that they remain competitive in the mobile sector. Forward-looking policy-makers around the world must be wary of hype that may seek to secure exclusive spectrum access for private use, while making sure their respective countries are prepared for new technologies. Doyle and colleagues note that the mobile network of the very near future may bear little resemblance to what we understand today. Regulatory flexibility is paramount.

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Spectrum sharing is key for a new policy paradigm. A report prepared for President Obama in 2012 titled “Realizing the Full Potential of Government-Held Spectrum to Spur Economic Growth” made it clear that the future of wireless broadband should be based upon shared spectrum access principles (President’s Council of Advisors on Science and Technology 2012), and the contributors to Frequencies support this approach. Michael Marcus offers a strong argument for shared spectrum, noting that this is not necessarily a new concept and that potential uses can take a range of forms. This concept is supported by Weiss and Gomez, who explore what a bold new governance model might look like for shared spectrum (Chapter 9). To achieve maximum efficiencies in spectrum use, national regulators must study new potential business models and technologies that offer more resourceful use of spectrum and challenge entrenched oligopoly structures. Industry claims that new spectrum access is desperately required must always be viewed with caution. Ala-Fossi points out that Finland has not joined in the global demands that additional spectrum be released. Finland finds itself in a more flexible position than the countries that sought the quick returns provided by spectrum auctions at the turn of the century; those countries now find that too much spectrum has been tied to increasingly dated 3G technology. Some contend that “spectrum shortage” is largely a political construct, a consequence of lobbying efforts and past policy decisions (Taylor, Middleton, and Fernando 2017). Marcus points out in his chapter that “demand for spectrum is not uniform in space and time. Population is certainly not uniform.” Clearly, exclusive contracts for large geographic regions do not encourage efficient use of the spectrum resource. Despite the reliance on market forces for most of the last two decades, the state continues to play a central role. The editors of this book disagree with prominent voices such as Lawrence Lessig, who advocates “liberating spectrum from the control of government” (Lessig 2002, 84), and Thomas Hazlett, who asks that the “controllers” of spectrum policy “step aside and competitive rivalry will take things from there” (Hazlett 2017, 311). The wide-ranging examples in Frequencies demonstrate that the place of the state may vary depending on the case, but the central role of governments in spectrum policy continues. Moreover, competitive markets have proven elusive in many regions, despite years of increased reliance on market forces (see Klass). As Mariscal writes in Chapter 5, communication infrastructure investment in Mexico was historically hindered by a weak government agency. Even in a polycentric governance model, as proposed by Weiss

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and Gomez, there is still a central role for state actors, albeit in a different capacity. Notwithstanding conservative calls to “remove red tape,” a strong regulatory presence can be a boon to industry and citizens alike. Marcus notes that new initiatives such as spectrum sharing require a “Solomonic” regulator to evaluate issues that will inevitably arise. In their view of the 5G future, Cave and Webb advise that regulators exercise caution when it comes to “picking winners” in the burgeoning industry; but they also suggest that the state may have a role to play in areas such as providing funding for testing to encourage innovation. In future spectrum policy, the role of the regulator will inevitably shift, but it will not go away. We have no foolproof method for predicting the future of spectrum; however, this book has revealed trends that policy-makers would be wise to consider as they strategize for the deployment of spectrum that best suits people’s needs. Among the key points for regulators to consider: •

• •

•

Market forces alone will not deliver advanced services in rural areas. Spectrum scarcity is a contested theory. Spectrum regulation must be flexible enough to accommodate shifting technologies. The future must include increased space for shared spectrum access.

Spectrum policy is about more than technical accommodation of smartphones – it is also about social priorities and cultural considerations. It is about keeping an eye to the future and constructing policy in ways that avoid being locked in when change shakes the wireless world again, which it inevitably will. In a 2017 journal article, Jock Given and Martin Cave write that “policy and regulatory tools need to be constantly adapted to ensure the uses of radiofrequency spectrum are constantly optimised” (Given and Cave 2017). Frequencies reaches a similar conclusion. This book contains both technical and social elements because we believe that any academic effort to maintain divisions between these zones is doomed to provide an inadequate view of the debates in spectrum policy. For instance, Cave and Webb note that the potentials of 5G technology may irrevocably challenge the concept of net neutrality – long a pillar for advocates of online social justice. Sound public policy regarding spectrum must reflect social values in addition to recognizing economic and technical realities.

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Frequencies presents conversations among nations, among academic disciplines, and among regulatory methods regarding the essential question of how best to approach the governance of airwaves in the 21st century. The disciplinary backgrounds of the authors are varied enough to ensure a multitude of viewpoints. Do not look for consensus in this book. It makes no claims about the best method forward for international spectrum policy. Instead, it offers a unique window into how diverse nations around the world are grappling with common problems in the governance of mobile communications. It also offers bold new suggestions for utilizing new technologies so as to allow for localized and spatialized opportunities (Weiss and Gomez; Doyle et al.) – suggestions that defy the conventional approaches of the last two decades. If history is a teacher in this field, then spectrum governance will be slow to change; after all, the previous administrative governance model was common for roughly 70 years before auctions upended that paradigm. The 5G technology looming on the near horizon may require greater policy agility on the part of national regulators. There is no fail-safe spectrum policy; there are only options that may or may not be suitable for a particular national context. As Joyce notes, for the Māori people of New Zealand, spectrum was a treasure – an underpinning of language and culture and a “conduit for transferring knowledge from the gods.” Global culture is now supported through wireless broadband just as it was through broadcasting in the last century. Our interactions with one another and our engagement with society take place online. Our video, our music, our news, our games are increasingly delivered via wireless broadband. While the economic impact is enormous, spectrum is clearly more than simply a product to be bought and sold.

r efer e nc e s Given, Jock, and Martin Cave. 2017. “Optimising Spectrum Use.” Telecommunications Policy 41(5): iii–vi. Hazlett, Thomas W. 2017. The Political Spectrum: The Tumultuous Liberation of Wireless Technology, from Herbert Hoover to the Smartphone.: New Haven: Yale University Press. Lessig, Lawrence. 2002. The Future of Ideas: The Fate of the Commons in a Connected World. New York: Vintage Books. President’s Council of Advisors on Science and Technology. 2012. “Report to the President: Realizing the Full Potential of Government-Held

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Spectrum to Spur Economic Growth.” https://obamawhitehouse. archives.gov/sites/default/files/microsites/ostp/pcast_spectrum_report_ final_july_20_2012.pdf. Taylor, Gregory, Catherine Middleton, and Xavier Fernando. 2017. “A Question of Scarcity: Spectrum and Canada’s Urban Core.” Journal of Information Policy 7: 120–63.

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Contributors

Ma r ko A l a - F o ssi is an adjunct professor and researcher at the University of Tampere, Finland in the department of Communication Sciences where his research interests include broadcasting, local radio, commercial radio, digital radio, and media policy. Martin Cave is a regulatory economist specialising in competition law and in the network industries, including broadcasting and telecommunications. He is currently a visiting professor at the London School of Economics in the Department of Law. P e t e r C r a m to n is professor of economics at the University of Cologne and the University of Maryland, whose research focuses on the design of auction-based markets. Lin da Doy l e is currently the dean of research at Trinity College Dublin where she is a Professor of Engineering and the Arts. Her research interests include cognitive radio, cognitive networks, spectrum management, wireless communications, and spectrum policy. Tim Forde is the executive director of CONNECT, a research centre for future networks and communications, funded by Science Foundation Ireland at Trinity College Dublin. His research interests include ad hoc networks, distributed systems, dynamic spectrum access networks, spectrum trading, telecommunication engineering, and radio technology.

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Ma rc ela Gome z is a visiting research assistant professor at the University of Pittsburgh’s School of Computing and Information. Her research interests include dynamic spectrum access, spectrum sharing and trading, matching markets, agent-based modeling and governance of common pool resources. Rekha Jain is a professor at the Indian Institute of Management in Ahmedabad, India where she is also the executive chair of the I I M AIDEA Telecom Centre of Excellence. Her research interests include telecom policy, telecom regulation, and information systems. Zita Joyce is a senior lecturer in Media and Communication at the University of Canterbury, New Zealand. Her research interests include media art and memory, broadcast radio and television, spectrum policy, and media during and after disaster. Benjamin Klass is currently a PhD student at Carleton University’s School of Journalism and Communication in Ottawa, and a research associate with the Canadian Media Concentration Research project. His research focuses on communications policy, industry, history, and economics, with particular regard for telecommunications and broadcasting in Canada. Mic ha el Ma rc us is a former Federal Communications Commission engineer, and foundational researcher for the development of Wi-Fi spectrum. He was also an adjunct professor at Virginia Tech’s Department of Electrical and Computer Engineering, as well as acting as an independent spectrum technology and policy consultant. Ju dith Ma r i sc a l is a professor of public administration at the Centro de Investigacion y Docencia Economicas (CI D E ) in Mexico City. Her research interests include information communication technologies in education, public policy, development research, and media communications. C a t h e r i n e M i d d l e t o n is a professor at Ryerson University’s Ted Rogers School of Information Technology Management where she held the Canada Research Chair in Communication Technologies in the Information Society from 2007-17. Her research focuses on the development and use of new communication

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technologies, with specific interests in mobile devices and fixed and wireless broadband networks. P r a b i r N e o g i is a retired Senior Policy Analyst with the Government of Canada’s Spectrum, Information Technologies and Telecommunications sector, now associated with Carleton University. His areas of interest include communications infrastructure deployment, e-business adoption, digital divide issues and the implications of the widespread adoption and use of information and communications technologies. S t e v e S o n g is a research associate with the Network Startup Resource Center (N S R C ) at the University of Oregon. He is also a Fellow in Residence at the Mozilla Foundation. G r e g o ry T ay l o r is an assistant professor at the University of Calgary’s Department of Communication, Media, and Film. His first book, Shut Off: the Canadian Digital Television Transition (McGillQueen’s, 2013), was short listed for the 2014 Donner Prize for Best Public Policy Book by a Canadian. William Webb is a visiting professor at multiple universities including Surrey University, Southampton University, Trinity College Dublin. He was head of research and development at U K regulator Ofcom, where he led their Spectrum Framework Review. Martin B.H. Weiss is a Professor at the School of Computing and Information at the University of Pittsburgh. His research focuses on dynamic spectrum assignment, policy and industry implications of new technologies, secondary use of spectrum, spectrum trading, cost modeling of telecommunications technologies, as well as technical standards and their impact on industry.

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Index

Page numbers in italics refer to figures and tables. 6 Harmonics (Canada), 168 A B C Communications (Alberta, Canada), 174, 177 Administrative Procedures Act (A P A [United States]), 212 advanced wireless services (AW S ) auctions: policy, 96–7, 100, 105, 116, 170; prices, 12, 94; spectrum shares, 120 Africa, 68–83; auctions, 68–74, 75, 81–3, 288; digital switchover, 69–70; dynamic spectrum, 77–9, 83n5; fibre optic networks, 80; gross domestic product, 74, 75; internet prices, 81; mobile access statistics, 68; mobile network operators, 79; open access backhaul, 80–1, 83, 84n7; over-thetop (O TT) video distribution, 70; rural global systems (G S M networks), 79–80; satellite technology, 70, 81; spectrum analysis, 81–3; spectrum roadblocks,

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69–70; terrestrial television broadcasting, 69, 70, 72, 75; Wi-Fi networks, 76–7 Airtel (Kenya), 73 Airways Corporation (New Zealand), 21 Ala-Fossi, Marko, 287, 288, 289, 291 Alberta (remote rural broadband): backhaul, 175; cooperation, 175–6, 180; deployment decline, 177–9, 181; displacement notification period, 179; equipment, 177; infrastructure, 175; licence procedures, 174–7; moratorium, 178–9; wireless operators, 174– 9, 180 Alberta SuperNet, 175 Alexiadis, Peter, 268 Altan Consortium (Mexico), 117, 126, 127, 128–9, 130–1, 132–4. See also Red Compartida wholesale network Altan Redes (Mexico), 130

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amateur radio services (ARS ), 215–16 American Radio Relay League (A R R L [United States]), 214, 215–16 analogue broadcasting: cellular systems, 53; digital switchover, 31, 34, 51, 52, 69; HDTV project, 56–7; licences, 28, 50; unutilized, 50, 167, 196, 197. See also terrestrial communications antenna sidelobe interference, 194– 5, 203n3 Aotearoa Māori Radio Trust, 23 appropriateness of local conditions, 211, 215, 216, 217, 230 Argentina, 120, 122, 123, 124, 133 Ashton, Kevin, 13 Asia, 58, 262, 264, 266 AT&T (United States), 194–5, 263 auctions. See spectrum auctions Austria, 47, 57 autonomous vehicles, 267, 273 Axia NetMedia (Alberta, Canada), 175 Axtel (Mexico), 130, 131 backhaul services, 80–1, 83, 84n7, 148, 175 Bains, Navdeep, 106 beachfront spectrum, 187, 188 Beaudette, Arthur, 177, 179 Beaudry, Paul, 93 beauty contests (administrative selection), 6, 53–5, 63n4 Bell Aliant (Canada), 182n1 Bell Canada Enterprises (BCE), 95, 105, 174, 182n1, 289 Bernier, Maxime, 92, 96–7 “Bernier Directive,” 92, 93

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Bharat Broadband Networks Limited (B B NL [India]), 145–6, 147 BharatNet (India), 126, 142, 144, 146, 147–8 Bharat Sanchar Nigam Ltd. (B SNL [India]), 140, 145–6, 149, 157n3 Bharti Airtel (India), 140, 149, 153 Bitflux (Nigeria), 71, 74, 82 Blais, Jean-Pierre, 101 Body of European Regulators for Electronic Communications (B ER EC ), 268–9 Bolivia, 133 Bouchette, Brenda, 174, 177 boundaries, 210–11, 215, 217, 230 Bourreau, Marc, 263, 269 Bragg Communications (Eastlink [Canada]), 105, 108n6 Brazil, 120, 121, 122–4, 133 Broadband Canada, Connecting Rural Canadians program, 163 Broadband for Rural and Northern Development (B R A ND [Canada]), 163 Broadcasting Authority (New Zealand), 21–2 Broadcasting Corporation of New Zealand (B C NZ ), 21–3 Broadcasting Tribunal (New Zealand), 21–2 Caisse de dépôt et placement du Québec (C DPQ), 131 Canada: advanced wireless auctions, 96–7, 100, 105; data caps, 98; digital transition, 165; foreign ownership, 97–8, 100; government programs, 163; legislation, 97, 103; licence statistics, 173–4,

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Index 301

179; market share, 105, 174; mobile network operators, 94–8, 104–8, 108n6, 109n7, 109n12, 166; non-interference regulations (geographic parameters), 167–8, 178, 179; over-the-air (OTA) television, 165; policy, 90–4, 99–101, 104–8, 162–6, 171, 179–82; population density, 162, 168; public interest, 101–2, 106; regulatory authority, 91, 101–2, 108nn2–4, 109n10; roaming rate regulations, 102–4, 108, 109n11; urban density, 168–9; urban/ rural digital divide, 162–82. See also Remote Rural Broadband Systems (RRBS [Canada]) Canadian Association of Broadcasters, 171–2 Canadian Broadcasting Corporation (CBC), 165 Canadian Cable Telecommunications Association (C C T A ), 172 Canadian Network Operators Consortium (CN OC), 103 Canadian Radio-television and Telecommunications Commission (C RTC): about, 91, 108n4; broadband coverage, 163; code of conduct, 101–2, 109n9; foreign ownership, 97–8; regulatory authority, 93, 101–2, 104–6, 108n4, 109n10; wholesale roaming rate regulations, 102–4, 108, 109n11 capacity trading: about, 241–8; clearing prices, 248, 249; demand vs. supply, 244, 248, 249; naked spectrum, 117,

31487_Taylor-Middleton.indd 301

241–2; retail vs. wholesale market, 243; service providers, 243–8; space capacity, 238; vs. spectrum trading, 242; top-ups, 244; two-sided auctions (realtime vs. forward), 246–8, 248– 50, 257n4 car-to-car communications services, 273 cattle monitoring (rural simulation scenarios), 221–7, 228, 229–230, 233n8, 233nn10–12 Cave, Martin, 169, 263, 269, 290, 292 cellular telephones: access, 152–3, 155, 259; analogue, 53; data divide, 61; expansion, 28, 30; manufacturers, 48, 53, 56–8, 60; spectrum allocation, 37; subscriptions, 121, 124, 140; usage statistics, 3, 46–8 Chile, 120, 122, 123, 124, 133 China Mexico Fund LP (C MF), 130, 131 citizens’ broadband radio service (C B R S), 214, 231–2 classic interservice sharing, 194–6 Clement, Tony, 98, 99 clock auctions, 249 Coase, Ronald, 201, 204n8 code division multiple access (C DMA ), 193 cognitive radio, 196–202; cooperation vs. confrontation, 202; detection receivers, 196–7, 204nn5–6; dynamic frequency sharing, 199–200; hidden node problem, 196, 204n5; listenbefore-talk, 196; technical issues, 196, 197, 200, 204n5

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302 Index

collective action rights, 210, 212, 233n3 collective choice, 211, 230 Colombia, 120, 122, 124 Comisión Federal de Telecomunicaciones (C OFETEL [Mexico]), 119–20, 125 Commerce Spectrum Management Advisory Committee (CS M AC [United States]), 212, 233n4 common-pool resources (CPR): analysis, 232; appropriateness to local conditions, 211; attributes, 210, 211–212, 213–214; boundaries, 210–11; characteristics, 208; collective-action, 209; collective choice, 211; conflict resolution, 213–14; definition, 209; democratic units factors, 209; governance enforcement, 212– 14; interference events typology, 212, 213; minimal recognition of rights (self-governance), 214; monitoring, 212–13; nested enterprises, 214; polycentric governance, 208–10, 211; resource systems, 210; sanctions, 213; spectrum rights, 210, 211, 233n2; “tragedy of the commons,” 208 communications. See mobile communications Competition Bureau (Canada), 103, 105, 109n12 Conference of Postal and Telecommunication administrations (C EPT), 192, 203n2 conflict resolution, 215–16, 217– 18, 228, 229–30, 231 connected cars, 273

31487_Taylor-Middleton.indd 302

Connecting Canadians program, 163 Connect to Innovate program (Canada), 163 Consorcio Rivada (Mexico), 127, 129 core networks, 263, 269, 271–2, 281–2, 283n15 Costa Rica, 122, 124 Cramton, Peter, 134–5, 242 Crandall, Robert, 33 Crawford, Susan, 13 cyclostationary detectors, 197–8, 199 Czech Telecommunications Office, 12 Data and Audio-Visual Enterprises (DA V E) (Mobilicity [Canada]), 97, 99, 104, 108n6 deletion of modalities, 9 demand: fifth-generation (5G ) cellular technology, 264–5; future, 153–4, 251–3, 254, 257nn5–6, 286; service providers, 245–8; vs. supply, 144, 244, 248, 249; uniformity, 188–90, 291 Department of Posts and Telegraphs (PTT), 157n3 Department of Telecommunications (DOT [India]), 140, 144, 149–52, 157n4 developing countries, 70–4, 130, 138, 156 digital audio broadcasting (DA B ), 50–1, 57 Digital India initiative, 142–3, 144, 146–7, 153–4 digital literacy, 143, 154 Digital Single Market, 266

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Index 303

digital switchover (DS O), 51–2, 62, 63n2, 69–70 digital television broadcasting, 51–2, 56–7, 62, 63n2, 195–6 digital video broadcasting (DVB), 51–2, 57, 63n2 digital video broadcasting-­handheld (D V B - H), 57–8, 60 D NA (Finland), 47–8, 51, 55–6, 63n2, 63n5 Doyle, Linda: access prices, 180; capacity trading, 117, 242; competition, 134; regulatory frameworks, 231, 289, 290 dynamic frequency selection (DFS ), 199–200, 201 dynamic spectrum access (DS A), 190, 196, 202, 255 dynamic spectrum regulations, 77–9, 83n5 dynamic spectrum sharing, 242, 278, 279, 280 Eastlink (Bragg Communications [Canada]), 105, 108n6 Egypt, 73, 74, 75, 82–3 electric utility companies, 133, 249, 256n2 Electronic Communications Committee Report 205 (2014), 245 Elisa (Finland), 47–8, 55–6, 62, 63n5 emergency services, 264, 269 enforceable events, 212, 218, 220–1 environmental sensing capability (E S C ), 201–2, 204n9 Ericsson (Sweden), 53, 54, 130 Etisalat (Egypt), 73

31487_Taylor-Middleton.indd 303

European Communications Office (EC O), 203n2 European Free Trade Association (EFTA ), 56 European Space Agency (ESA ), 56 European Telecommunications Standards Institute (ETSI), 260, 263 European Union (EU): data divide, 61; fifth-generation (5G ) cellular technology, 266–7, 270; vs. Finnish spectrum policy, 46–63; net neutrality, 268–9; open access capacity (motorway case study), 251–3, 254, 257nn5–6; spectrum sharing regulations, 192 Everton, Graeme, 27, 28, 30, 38 Extended Hata model, 222, 233n9 Facebook, 77, 260, 264, 283n7 Federal Communication Commission (FC C ): amateur radio, 215; cognitive radio, 197; detector testing program, 197–8; Enforcement Bureau, 213–14; frequency regulations, 199–200, 276; incentive auctions, 5; military spectrum, 189; spectrum deficit forecast, 9; spectrum sharing, 195, 201–2, 204n4; television interference regulations, 195–6; Wi-Fi regulations, 216– 17; wireless service provider licences, 170 Federal Electricity Commission (C FE [Mexico]), 125, 133 fibre optics: network infrastructure, 68, 80, 125–6, 142, 146–7, 156; open access backhaul, 80, 83

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304 Index

fibre-to-the-home (FTTH)/fibre-tothe-node (FTTN )/fibre-to-thepremises (FTTP), 156 fifth-generation (5G ) cellular technology, 259–82; access, 276–80, 284n17, 284n19; alternatives, 265–6; analysis, 273–5, 280–2; aspects, 260–7; bands, 275–6, 277; capabilities, 261–2; car-tocar communications, 273; characteristics, 261–2, 283n4; classic access, 277, 278, 284n19; collaborative access, 280; core networks and base stations, 262, 271–2; coverage targets, 266–7; demand, 257n6, 264–5; densification, 262; developments, 274– 5; dynamic spectrum, 278, 279; elements, 261–5, 283n4; future, 13, 15; high-frequency bands, 277; horizontal level, 274; incumbent sharing, 278–9; licence shared access, 277, 284n17; mobile network operators, 270; net neutrality, 268; network slicing, 267–8, 271; radio access networks, 269–70, 271; regulation, 274–5; release stages, 260–1; requirements, 262, 267–8, 283n10; spectrum management, 275–82; spectrum sharing, 270–1, 277–80, 284n17; standards, 260–1, 283n2; structural implications, 267–75; technology definition, 290; trials, 153; unlicensed access, 277, 278–9, 284n19; upward pricing pressure, 270; vertical level, 264– 5, 267, 271–2, 274–5, 281, 283nn15–16

31487_Taylor-Middleton.indd 304

Finland, 46–63; analogue systems, 50–3, 56–7; auctions, 47–8, 52–6, 63n5; beauty contest method, 53–5, 63n4; broadcast history, 49–52, 53; digital audio broadcasting, 50–1; digital switchover, 51–2, 60, 63n2; digital video broadcasting-handheld, 57–8, 60; fourth-generation spectrum licences, 55; experimental auctions, 55; government subsidies, 54; gross domestic product, 48; institutionalism vs. historical analysis, 48–9; manufacturers, 53, 57–8, 60; market penetration, 47, 48; military spectrum, 50, 51; mobile data usage, 46–7; mobile network operators, 54–5; public interest, 60–3; radio broadcasting, 50–2; rural broadband, 47; spectrum capacity, 50–2, 58, 62, 291; spectrum policy and analysis, 48–9, 52–6, 59–63; spectrum policy objectives, 56–9; spectrum policy vs. European Union, 46, 48, 57, 58, 61; third-generation spectrum licences, 53–5, 63n4; trade economy, 56; ultra-high frequency, 46, 50–2, 58, 62. See also Nokia (Finland) Finnish Broadcasting Company (Yleisradio [Yle]), 49–51, 60, 63n2 first-come-first-serve (FC FS), 35, 148, 149, 173 fixed broadband networks: auction subsidies, 55, 61; data caps, 98; market share, 47–8, 130; policy

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Index 305

initiatives, 145–8. See also remote rural broadband Forde, Tim, 135 foreign ownership, 93, 97–8, 100, 130–1 forward vs. real-time markets, 246– 50, 257n4 fourth-generation (4G ) cellular technology: auctions, 12, 55, 149; data divide, 61; standards, 269; upgrades, 94; vertical integration, 272. See also long-term evolution (LTE) networks France, 189 Freedom Mobile (Canada), 108n7, 287 frequency division multiple access (F D MA), 187, 192 gatekeeper theory, 4 geostationary orbit (G S O) commercial satellite systems, 194–5 Ghana, 69, 72, 75, 82 Given, Jock, 292 Globalive Wireless (Wind Mobile [Canada]), 97–8, 100, 104, 108n6, 109n7 Global System for Mobile Communications (G S M ), 53, 57, 60, 79–80, 193 Global System for Mobile Communications Association (GS MA ), 3, 58, 78, 82 Gomez, Marcela, 214, 217, 287, 291, 292 Google, 260, 266, 283n16, 286 governance systems. See polycentric governance government role (spectrum management), 10–12, 200–2, 291–2

31487_Taylor-Middleton.indd 305

gram panchayats (village administrative units [V A U]), 139, 159n1 gross domestic product (GDP): mobile connectivity, 3, 116, 136n1; spectrum levels, 121, 122; spectrum pricing, 74, 75; telecom manufacturing, 48 Groupe Spécial Mobile. See Global System for Mobile Communications (GSM) Guerrilla Wireless (Alberta, Canada), 176, 177 Harewaves Wireless (Alberta, Canada), 175, 176, 179 harmful interference, 176, 191, 213, 215, 222 Hazlett, Thomas, 4, 241, 291 H DTV . See digital television broadcasting high-frequency bands, 276–7, 278– 9. See also ultra-high frequency (UHF); very high frequency (V HF) high-throughput satellites (HTSs), 81 Honduras, 122 Huawei (China), 48, 130, 132 Idea Cellular (India), 149 independent system operator (ISO), 245–6 India, 138–56; about, 138–9; analysis, 151–6; auctions, 148–51; backhaul, 142, 145, 147, 148; demand vs. supply, 144, 152–4; digital economy, 142–3, 154–5; digital literacy, 143, 154; fibre infrastructure, 142; fifth-­ generation (5G), 153, 156;

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306 Index

first-come-first-serve, 148; fixed broadband, 145–8; fourth-­ generation (4G), 141–2, 149, 150; future, 152–4; government (broadband role), 154–5; infrastructure and deployment, 142, 144–51, 153–6; Internet penetration and subscriptions, 139–40, 141, 144, 155; liberalized spectrum, 150–1; licence fees, 148– 51; mobile network operators, 140–2, 143, 152, 153, 155, 157n4; mobile phone subscriptions, 139, 157n2; population, 139; private sector, 140, 141, 146, 147, 148, 155; public sector, 140, 141, 145–6, 148–9, 157n3; rights of way, 146; second-­ generation (2G), 138, 139–40, 142, 143–4, 148–9; smartphone availability, 152–3, 155; spectrum allocation, 152–4; spectrum management, 140, 151–6; spectrum policy, 143–4, 148–56; Supreme Court, 148–9, 151–2; telecommunications market, 139–43; telephone subscriptions, 139, 140, 157n2; third-­ generation (3G), 142, 148, 149– 50, 156; urban/rural digital divide, 142–8, 154, 157n4; village administrative units (gram panchayats), 139, 159n1; Wi-Fi, 147–8, 153, 154 individually licensed vs. licenseexempt, 172 industrial, scientific, and medical (I S M) bands, 76, 216–17, 233n5 Industry Canada: about, 91, 92, 108n2; licence moratorium,

31487_Taylor-Middleton.indd 306

178–9, 181; licence statistics, 173–4, 179; mobile network operators, 109n12; remote rural broadband, 171–3, 176, 178–9; spectrum policy, 8, 96–101. See also Innovation, Science and Economic Development (ISED Canada) Infotel (India), 149 Innovation, Science and Economic Development (ISED Canada), 91, 92–3, 105, 108nn2–3, 181. See also Industry Canada Instituto Federal de Telecomunicaciones (IFT [Mexico]), 79–80, 125–7, 128–9 Intel/Intelsat, 202 interference: amateur radio, 215; antenna sidelobes, 194–5, 203n3; emissions, 196, 204n5; events analysis (density/proximity), 226, 227–9, 230, 233nn11–12; events typology, 212, 213; harmful, 176, 191, 213, 215, 222; radio appliances, 219–21, 222–4, 226– 7, 233nn10–11; regulations, 195–6; report, 241; sanctions, 213, 218; simulation software, 203n2; spectrum sharing and cooperation, 191, 194–5, 202, 203n2, 217–18; tolerance (zones), 222–4, 226, 227, 233n10; wireless Internet service providers, 217–18 International Conference on Wireless Telegraphy, 7 International Finance Corporation (IFC ), 130, 131 international mobile telecommunications (IMT), 252

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Index 307

International Radio Convention, 7 international spectrum policy, 7, 286–93 International Telecommunications Society, 7 International Telecommunications Union (ITU): conferences, 7, 63n1; dynamic spectrum regulations, 77–9, 83n5; harmful interference, 190–1; mobile phone subscription statistics, 157n2; spectrum definition, 5; spectrum policy, 7, 287. See also World Radiocommunication Conference Internet: access, 81, 159; autonomous vehicles, 273; coverage, 163, 173; net neutrality, 260, 268, 292; promotion, 155; rural broadband, 163–4; subscription statistics, 139–40, 141 Internet of Things (IoT), 13, 239, 255, 279 Internet service providers (I S Ps), 98, 103, 170, 269 iPhone, 3–4, 70 Ireland, 240 I Want Wireless (Alberta, Canada), 178

Latvia, 47 Lemstra, Wolter, 263, 269 Lessig, Lawrence, 291 Ley Federal de Derechos (Federal Duties Law [Mexico]), 126–7 Ley Federal de Telecomunicaciones y Radiodifusión (LFTR [Mexico]), 123, 131–2 licensed shared access (LSA ), 169– 70, 245, 277, 284n17 Licitación 20/21 (Mexico), 119–20 listen-before-talk (LB T): cognitive radio, 196; detection receivers, 196–7, 204nn5–6; dynamic frequency sharing (DFS), 199; hidden node problem, 196, 204n5; historical, 187; technical issues, 196, 204n5; television broadcasting, 198, 200, 201 locational marginal pricing (LMP), 248, 256n2 long-term evolution (LTE) networks: auctions, 71, 73, 82, 150–1, 248; open access capacity, 252–3; wholesale networks, 126, 134, 243, 246. See also fourth-generation (4G ) cellular technology Lui Cui, 214, 217

Jain, Rekha, 166, 286, 287, 288, 289 Jamaica, 133 Japan, 47, 151, 156, 264, 266 Joyce, Zita, 288, 293

machine-to-machine (M2M ) services, 239, 255 Mahanagar Telecom Nigam Ltd. (MTNL [India]), 140, 148, 149, 157n3 Malki, Amer, 213 Manitoba Telecom Services (MTS [Canada]), 105 Māori people and language: broadcast funding, 27, 30–1; macrons, 40n11; radio and television

Kenya, 72–3, 75, 77, 82 Key, Prime Minister John, 31 Klass, Benjamin, 12, 117, 123, 237, 288 Klemperer, Paul, 33–4

31487_Taylor-Middleton.indd 307

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308 Index

services, 22–3, 27, 40n15; radio property rights claims, 20, 23, 25–31, 37, 39n6, 39n9, 40n12, 40n14; spectrum as culture, 293; traditional knowledge, 29–31; treaty language, 25–7, 39n9. See also New Zealand; Treaty of Waitangi; Waitangi Tribunal Māori Television Service (M T S ), 30 Marconi, Guglielmo, 4, 187 Marcus, Michael, 289, 291, 292 Mariscal, Judith, 166, 289, 290, 291 Masse, Martin, 93 medium-wave (M W ) spectrum, 51 Megacable (Mexico), 130–1 Melody, William, 8 Mexico, 116–35; advanced wireless services, 116; allocation/assignment auctions, 116, 118–23, 126–7, 128–9, 130–4, 136n2; capacity trading, 117; consortiums, 119–20; constitution, 117–18, 123–31; coverage, 117; electric utility companies, 133; foreign ownership, 130–1; gross domestic product, 116, 122, 136n1; market penetration, 116, 121; mobile network operators, 119–20, 121; mobile subscription rates, 121, 124; mobile virtual network operators, 117, 126, 132, 134, 135; policy, 117, 120; political parties, 124–5; public interest, 124; public/private partnerships, 125–7, 128–9, 130–1; regulatory agency, 79–80, 84n6, 119–20, 125, 126, 130, 132; spectrum shares, 120, 121;

31487_Taylor-Middleton.indd 308

wholesale networks, 125–7, 128–9, 130–1, 132–5 Middleton, Catherine, 102 military spectrum, 188–9, 193, 199, 201–2 Ministry for Business, Innovation, and Employment (MB IE New Zealand), 35, 41n21 Ministry of Defence (UK ), 189 Mitola III, Joseph, 196 mobile communications: about, 259–60; access, 259; analysis, 286–93; data divide, 61; emergency services, 264, 269; future, 12–15, 151–4; motorway use case study (future demand), 251–3, 254, 257nn5–6. See also cellular telephones; spectrum management mobile network operators (MNOs): capacity trading, 243–4; code of conduct regulations, 101–2, 109n10; competition, 90, 95–6, 271–2, 276; consortiums, 119– 20; cooperation, 175–6, 180; core networks and base stations, 271–2; data caps, 98; emergency services, 264, 269; financial viability, 152, 153, 155; foreign ownership, 93, 97–8, 100, 130– 1; funding, 143, 145, 157n4; intermediaries, 264–5, 269; market forces, 91–4, 96–101, 104, 105–6, 245–8; market share and revenue, 105, 140–1, 142, 174; mobile penetration, 94–5, 108n5; mobile virtual network operators, 238–9, 271; moratorium reaction, 178–9; net neutrality, 260, 268, 283n11, 292; network

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Index 309

function virtualization, 263, 268; new entrants, 97–8, 104–8, 108n6, 109n7, 109n12; oligopolies, 11, 90, 96, 99, 100, 107–8; over-the-tops, 259–60, 264, 272, 283n7; public interest, 60–3, 101–2, 106, 124; radio access network, 262, 269–72; real-time vs. forward market, 246–8, 257n4; roaming rate regulations, 102–4, 108, 109n11; rural broadband, 166, 172–9, 180; sanctions, 213, 218; shortcomings, 95–6, 99, 102, 105; software defined networking, 263, 268; spare capacity, 238–9; spectrum shares, 120, 121; split services, 269; subscription rates, 94–5, 124; supply and demand curves, 248, 249; third parties, 126, 133, 188, 238, 263, 271; verticals, 264–5, 267, 271–2, 274, 281. See also mobile virtual network operators (M VN Os); spectrum auctions; spectrum sharing; virtual network operators (V N Os) mobile telephones. See cellular telephones mobile virtual network operators (MV NOs): analysis, 106, 254; capacity trading vs. naked spectrum, 117, 241–2; mobile network operators, 271; network access, 238–9, 256n1; resale model, 103; spare capacity, 238– 9; wholesale networks, 117, 126, 132, 134, 135. See also mobile network operators (M N Os); virtual network operators (VN Os)

31487_Taylor-Middleton.indd 309

Mobilicity (Data and Audio-Visual Enterprises [DA V E] Canada), 97, 99, 104, 108n6 monitoring, 212–13, 218, 230 Moore, Glen, 178 Moore, James, 100 Moore’s Law, 198 Morgan Stanley, 131 motorway use case study (future demand), 251–3, 254, 257nn5–6 Mozambique, 71, 75, 82 MTN (Ghana/Nigeria), 71, 72, 75, 82 naked spectrum, 117, 241–2 National Broadband Plan (NB P [India]), 145 National Economic Research Associates (NER A [New Zealand]), 23–5, 33, 36, 37 National Frequency Coordinator’s Council (NFC C [United States]), 216 National Optical Fibre Network (NOFN [India]), 145, 146, 147 National Table of Frequency Attribution (Mexico), 136n2 National Telecommunications and Information Administration (NTIA [United States]): about, 204n8, 233n4; collective action rights, 212, 233n4; dynamic frequency selection, 199; federal vs. private users, 200–1; military spectrum, 189; model parameters, 233n9 National Telecom Policy (NTP [India]), 144, 145, 148, 149, 152 near/far problem, 193 Neogi, Prabir, 166, 287, 288, 289

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310 Index

nested enterprises, 214, 215, 216, 217–18 Netflix, 70, 287 net neutrality (N N ), 260, 268, 283n11, 292 network function virtualization (NF V ), 263, 268 network infrastructure: delays and shortcomings, 147; deployment, 144–51, 155–6; fibre optics, 68, 80, 125–6, 142, 146–7, 156; remote rural broadband, 175; rights of way, 146; wholesale networks, 254 network slicing, 255, 263, 267–9, 271 New Street Research, 264, 266 New Zealand, 19–38; allocation terminology, 39n4; auction methods, 5, 25, 28, 33–7; broadcast history, 20–3; broadcast legislation, 21, 22, 24, 34–8, 41nn21– 2; cellular expansion, 28, 30; competition, 36; currency, 40n16; deregulation, 23–7; development funds, 30–1; economic policy, 20–1; future spectrum, 36–7; language legislation, 23; oral outcry auctions, 34; radio spectrum allocation, 19, 20–3, 39n4; regulations, 21–2, 34–6, 41nn21–2; satellite television, 28; sequential auctions, 34; spectrum management, 20–4, 34–8, 39n7, 41n22; spectrum management report, 23–5, 33; spectrum property legal claims, 25–31, 39n9, 40n12, 40n14; spectrum property rights, 24, 39n7; warrants, 21–2. See also

31487_Taylor-Middleton.indd 310

Māori people and language; Treaty of Waitangi; Waitangi Tribunal New Zealand Broadcasting Corporation (NZ B C ), 21–2, 28 New Zealand Post Office (NZ PO), 20–1, 28, 39n5 New Zealand Telecom, 21, 27, 28, 39n5 Nextel (Mexico), 119–20 Next Generation Mobile Network (NGMN), 265 next-generation network (NGN), 94, 116, 201, 268 Nga Kaiwhakapumau i te Reo (Wellington Māori Language Board), 22–3, 25–31, 39n9, 40n12, 40n14 Nicaragua, 122 Nigeria, 69, 70, 71, 74, 75, 82 Noam, Eli, 10 Nokia (Finland): about, 48; digital audio broadcasting, 57; digital video broadcasting-handheld, 51, 57–8, 60; economic importance, 62; equipment manufacturer, 56–7, 60; government relations, 53–4, 61; HDTV project, 56–7; spectrum lobbying, 53–4; spectrum policy interests, 56–9; supplier, 130, 132. See also Finland non-governmental organizations (NGOs), 79–80, 126, 209 Nordic Mobile Telephony (NMT), 53 northern (terminology), 172–3 Ofcom (UK ), 4, 189, 203n2 open access backhaul, 80–1, 83, 84n7

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Index 311

open access capacity market, 237– 56; about, 241–4, 245–8, 256n2; forward vs. real-time markets, 246–50, 257n4; future demand, 250–3, 254, 257nn5– 6; independent system operators, 245–6; locational marginal pricing, 243, 256n2; network slicing, 255; spectrum sharing future, 250–4; spectrum trading, 15, 240, 241, 242, 254; supply and demand curves, 248, 249; wholesale networks and analysis, 254–6 Orange (Egypt), 73 Orange (France), 103 Organisation for Economic Co-operation and Development (O E C D), 95, 103 Organismo Promotor de las Inversiones en Telecomunicaciones (PROM TEL [Mexico]), 126, 130, 132 original equipment manufacturers (O E Ms), 273 Ostrom, Professor Elinor, 208–14 outcome discovery, 249 Over-the-Air Reception Devices (O T A R D), 216–17 over-the-air (OTA) television broadcasting, 165 over-the-top (OTT), 70, 259–60, 264, 272, 283n7 Panama, 133 Paradis, Christian, 99 Paraguay, 124, 133 Pennington, Robert, 176, 177 personal radio services (PRS ), 216 Peru, 124

31487_Taylor-Middleton.indd 311

point-to-point microwave links, 194–5, 203n3 polycentric governance, 207–32; amateur radio services, 215–16; analysis, 230–2; appropriateness of local conditions, 211, 215, 216, 217, 230; automation, 218– 19, 220, 233n6; case studies, 214–18; common-pool resources, 208–10, 211; enforceable events, 212, 218, 220–1; guidelines, 209; objectives, 207; personal radio services, 216; radio appliances (cattle monitoring), 218–20, 221–4, 225, 226–9; rural simulation scenarios, 221–4, 225, 226– 9; spectrum requirements, 210–14, 230–1; Wi-Fi services, 216–18 Power Grid Corporation of India Limited (PGC IL), 146 Prentice, Jim, 96–7 President’s Council of Advisors on Science and Technology (PC A ST [US]), 200–1, 291 private land mobile use, 195–6 private-sector service providers: allocation appeals, 119–20; licences, 60, 140, 142, 148–9; public/private partnerships, 125– 6, 131–3, 177; resources, 130, 155; rural connectivity, 146–7, 172, 177, 181; spectrum transfers, 200–1. See also individual names of private-sector service providers Public Mobile (Canada), 97, 108n6, 109n12 public protection and disaster relief (PPDR S), 264

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312 Index

public safety spectrum, 171, 189– 90, 264 public sector unit (PS U [India]), 145–6, 147, 149 public switched telephone services (P S T N), 157n3 radio access network (RAN ), 262, 269–72 Radio Aotearoa (New Zealand), 23 radio appliance (RA): about, 218– 19, 233n6; agent-based model (patches, turtles, and links), 221, 233n8; architecture requirements, 220; density/proximity, 226, 227–9, 230, 233nn11–12; enforceable events, 220–1; interference events, 219–21, 222–4, 226–7, 233nn10–11; model parameters, 222, 223, 233n9; negotiation mechanisms, 228, 229–30; rural simulation scenarios (cattle monitoring), 221–7, 228, 229–230, 233n8, 233nn10– 12; spectrum coordinator, 220; tolerance (zones), 222–4, 226, 227, 233n10 radio broadcasting: beginnings, 4, 7, 20–3, 187; management, 4–5; policy, 4–7; property rights, 20, 23, 25–31, 37, 39n6, 39n9, 40, 40n12; as public resource, 5–6; regulations (historical), 20–3. See also cognitive radio Radiocommunication Act (Canada 1985), 91 Radiocommunications Act (New Zealand 1989), 24, 26, 34–6 Radio New Zealand, 22 Radio Nova (Finland), 50

31487_Taylor-Middleton.indd 312

Radio Spectrum Management (R SM Group New Zealand), 21, 24, 34–8, 39n4, 39n7, 41n22 Radio Spectrum Policy Group (Europe), 169–70 RailTel Corporation of India Limited (RailTel), 145–6 Rainy Day Software Corporation / Rainy Day Internet Service ([Canada] Voyageur Internet), 172 real-time vs. forward market, 246– 50, 257n4 Real Wireless (UK ), 252, 257n3 Red Compartida wholesale network, 116–35; about, 116–17; analysis, 134–5, 289; infrastructure funding, 132; process, 125– 7, 128–9, 130–1. See also Altan Consortium (Mexico) Red Troncal, 125 Reliance Communications (India), 149 Reliance Jio (India), 140, 141–2, 149 Remote Rural Broadband Systems (R R B S [Canada]): about, 166–9; analysis, 179–82; definition, 173; deployment and licensing procedures, 173–7; development, 171– 3; displacement notification period, 179; equipment, 177; funding and affordable access, 170; geographic distribution, 174; growth barriers and decline, 177–9, 181; licensees, 167, 182n1; licence statistics, 173–4, 179; moratorium, 178–9, 181; non-interference regulations (geographic parameters), 167–8,

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Index 313

178, 179; policy, 163–6, 171–3, 179–82; vertical sharing, 169. See also rural broadband Rhizomatica, 79–80 rights of way (R O W ), 117, 126, 146 Rivada Consortium (Mexico), 127, 129 Rivada Networks (Mexico), 130, 242, 254, 255 Rogers Communications (Canada), 95, 99, 174 rural broadband, 162–82; backhaul, 175; cooperation, 175–6, 180; government programs, 163; GS M platforms, 79–80; individually licensed vs. licence-exempt, 172; infrastructure, 175; Internet service, 163–4; mobile network operators, 166, 172–9, 180; northern (as terminology), 172– 3; report (shortcomings), 181; spectrum sharing, 170; subsidies, 47, 143, 157n4; vs. urban coverage statistics, 163–4. See also Remote Rural Broadband Systems (RRBS [Canada]) rural/urban digital divide. See urban/rural digital divide Russia, 49, 50, 51 Safaricom (Kenya), 72–3 Sahai, Anant, 213 Salter, Liora and Rick, 93 sanctions, 213, 218 Sandvig, Christian, 6, 217 Sasktel (Canada), 105 satellite systems: backhaul, 81, 83; geostationary orbit, 194–5; highthroughput, 81; spectrum

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sharing, 194–5, 202, 204n4; ­television services, 28, 70 Scancom (MTN), 72, 82 Schlager, Edella, 210 Scrase, Adrian, 260 second-generation (2G) cellular technology: applications, 139; first-come-first-serve, 148, 149; licences, 53; migration from, 138, 143–4, 156; subscriptions, 140 Secretaría de Comunicaciones y Transportes (SC T [Mexico]), 125, 127, 128–9 Senegal, 73, 75 set-asides, 79, 82, 96–7, 106–7, 117, 132 Shared Spectrum website, 203n1 Shaw Communications (Canada), 97, 99, 105, 108n6, 109n7 Shepherd, Tamara, 102 Shortall, Tony, 268 sidelobe interference, 194–5, 203n3 Sims, Martin, 11 Skaletsky, Maria, 180–1 smartphones. See cellular telephones software defined networking (SDN), 263, 268 Sonatel (Senegal), 73 Sonera (Telecom Finland), 54–5 Song, Steve, 118, 147, 288 South Africa, 71–2 spare capacity, 238 Special Purpose Vehicle (SPV ), 145 spectrum access system (SA S), 201, 210–11, 212, 218, 232, 233n3 spectrum allocation: first-comefirst-serve, 35, 148, 149, 173; future supply, 152–3; history

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314 Index

and terminology, 20–3, 39n4, 116, 136n2; process, 118–20; risks and impacts, 131–4; vertical sharing, 169. See also spectrum auctions; spectrum management spectrum assignment: analysis, 287–9; as beauty contest (administrative selection), 6, 53–5, 63n4; exchange, 82; levels, 120– 3. See also spectrum auctions; spectrum management spectrum auctions: advanced wireless services, 96–7, 105; analysis, 10–12, 287–9; clock auctions, 249; emerging markets, 68–9; experimental, 55; flaws, 11–12; foreign ownership, 100; gross domestic product, 74, 75; injunctions, 120; lack of participation, 81–2; liberalized spectrum, 150– 1; methods, 25, 33–7; oral outcry method, 34; outcome discovery, 249; presumptive loss, 149; prices, 12, 75, 94, 118–20, 126– 7, 148–51; process, 128–9; public consultations, 126–7, 132; public vs. private operators, 149; regulations, 126–7; revenue, 55–6, 63n5; sequential, 34; setasides, 79, 82, 96–7, 106–7, 117, 132; social witnesses, 126, 136n4. See also mobile network operators (M N Os); spectrum allocation; spectrum assignment; spectrum licences; spectrum management Spectrum Engineering Advanced Monte Carlo Analysis Tool (S E A MCAT), 203n2

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spectrum frequency division multiple access (FDMA ), 187 Spectrum Licence Transfer Framework (Canada), 99 spectrum licences: administrative units, 140; beauty contests (administrative selection), 6, 53–5, 63n4; developing countries, 70–4; first-come-first-serve, 35, 148, 149, 173; transfer, 99. See also spectrum auctions spectrum management: about, 4–9; agreements, 7; alternative models, 75–80, 83n3; analysis, 10–12, 151–6, 280–2, 286–93; band allocation, 275–6; conferences, 7; deregulation report, 23–5; developing countries, 70–4, 130, 138, 156; fifth-­ generation (5G ) cellular technology, 275–80; future, 36–7, 152–4, 292; global trends, 287; government role, 154–5, 291–2; infrastructure and deployment, 144–51, 155–6; liberalized spectrum, 150–1; non-governmental organizations (NGOs), 79–80, 126, 209; open access backhaul, 80–1, 83, 84n7; property rights, 24, 39n7; public safety, 171, 189–90, 264; spectrum trading, 15, 240, 241, 242, 254; terminology, 39n4. See also spectrum allocation; spectrum assignment; spectrum auctions; spectrum sharing Spectrum Outlook (2018–2022 Canada), 181 spectrum policy: about, 5–9; academic research, 7–8; analysis,

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Index 315

59–63, 106–8, 151–6, 232, 286– 93; challenges, 143–4; competition, 90, 96–7, 99–108; data caps, 98; deficit vs. surplus forecast, 9, 291; demand vs. supply, 144; foreign ownership, 97–8, 100; forward-looking, 290–3; future, 14–15, 286–93; goals, 96; government role, 154–5, 291–2; institutionalism vs. historical context, 48–9; light touch approach, 98–9; market forces, 91–4, 96–101, 104, 105–6, 245– 8; public interest, 60–3, 101–2, 106, 124; regulatory directives, 91–4, 108nn2–4; report, 291; roaming rate regulations, 102–4, 108, 109n11; rural broadband, 177–82; shortcomings, 106–8, 165; technical and social elements, 292–3; themes, 8–9; urban/rural digital divide, 289–90 Spectrum Policy Task Force (US), 197, 201 spectrum rights: collective action rights, 210, 212, 233n3; commonpool resources systems, 210, 211, 233n2; self-governance, 214; spectrum consumer, 240–1, 243; three-dimensional model, 240; usage rights, 210–11, 212, 240–1 spectrum sharing, 187–203, 207– 32; about, 187–90; access vs. utilization, 188, 203n1; advantages, 188; analysis, 203, 230–2, 280– 2; automation, 218–19, 220, 233n6; beachfront, 187, 188; case studies, 214–18; classic access, 277, 278, 284n19; classic

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static interservice, 194–6; code division multiple access, 193; cognitive radio, 196–202; collaborative access, 280; commonpool resources, 210–14; cooperation vs. confrontation, 202; demand uniformity, 188; demand vs. availability, 189–90; dynamic frequency selection, 199– 200; dynamic spectrum, 77–9, 83n5, 176, 197–9, 279; dynamic spectrum access technology, 190; federal users, 200–2; fifth-­ generation (5G) cellular technology, 277–81; frequency division, 187, 192; future demand, 251–3, 254, 257nn5–6; harmful interference, 191, 213, 215, 222; highfrequency bands, 276–7, 278–9; interference, 194–5, 203nn2–3; levels, 187; licensed shared access, 169–70, 245, 277, 284n17; military spectrum, 188–9, 193, 199, 201–2; near/far problem, 193; negotiation processes, 207, 232n1; open access capacity market, 252–4; perspectives, 239–41; point-to-point microwave systems, 194–5; polycentric governance, 207–32; population uniformity, 188, 291; private land mobile, 195–6; radio appliances, 220–1; regulatory influences, 191–2, 199–200; report, 291; requirements, 210–14, 251–3, 254, 257nn5–6; satellite systems, 194– 5, 202, 202n4; self-governance, 214; simulation software, 203n2; spectrum access system, 201, 210–11, 212, 218, 232, 233n3;

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316 Index

spectrum coordinator, 220; technical issues, 190–2, 194–5, 197, 200; television broadcasting, 195–6; television white space, 197–9, 279; time division multiple access, 193; traditional methods, 192–3; unlicensed access, 277, 278–9, 284n19; website, 203n1; Wi-Fi services, 216–18. See also mobile network operators (MNO s); spectrum management Sprint (United States), 266 Star, Susan Leigh, 9 Starling, Len, 24, 34–5, 36, 41n20 State Owned Enterprise (S OE) Act (1986), 21 Supercell (Finland), 62 Supreme Court (S C [India]), 148–9, 151–2 Taylor, Gregory, 96, 118, 288, 289 Technical, Policy and Licensing Framework for Spectrum (Canada), 179 Telcel (Mexico), 119 Telecom Egypt, 73 Telecom Finland (Sonera), 54–5 telecommunications. See mobile communications; radio broadcasting; television broadcasting Telecommunications Act (Canada 1993), 91, 92, 97 Telecommunications Act (Canada 1994), 103 Telecommunications Policy Review Panel (T PRP), 91, 92, 163 Telecom Regulatory Authority of India (T R AI ), 139, 140, 144, 149–52 Telecom Sweden (Telia), 54–5

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Telefonica (Mexico), 119 Televisa-Nextel consortium (Mexico), 119–20 television broadcasting: analogue vs. digital, 51–2, 56–7, 62, 63n2, 195–6, 197; cyclostationary detectors, 197–8; interference regulations, 195–6; signal coverage, 198; spectrum sharing, 195– 6, 197–9; white space, 77–9, 83n5, 176, 197–9 television white space (TV WS [dynamic spectrum]), 77–9, 83n5, 176, 197–9, 279 Telia (Finland), 47–8, 54–6, 63n5 Telia (Telecom Sweden), 54–5 Telkom Kenya, 73 Telus (Canada), 95, 99, 109n12, 174 Te Māngai Paho (New Zealand), 27, 30 terrestrial communications: fibre optics, 80, 83; television, 51–2, 58, 69, 70, 72, 75. See also analogue broadcasting third-generation (3G ) cellular technology, 12, 28–31, 53–5, 63n4, 94, 149 time division multiple access (TDMA ), 193 T-Mobile (United States), 266 Transparencia Mexicana, 126 Treaty of Waitangi: about, 19–20, 38n1; breaches, 25–7, 29, 38, 39n9; language, 25–7, 39n9; principles, 26, 40n10; traditional knowledge (spectrum as taonga), 29–31. See also Māori people and language; New Zealand; Waitangi Tribunal

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Index 317

ultra-high frequency (U HF): allocation, 46, 50–2, 58, 60–2, 77; digital dividend, 51; taboos, 196, 197; television broadcasting, 28, 30, 50–2; television to mobile use, 46. See also high-frequency bands; very high frequency (V H F ) Unefon (Mexico), 119 United Kingdom: auctions, 12, 54, 61; database, 170; data divide, 61; emergency services, 264, 269; military spectrum, 189; simulation software, 203n2; split services, 269; white space policy, 198 United Nations, 7 United States: auctions, 5, 10–12, 178, 179; collective action rights, 212; coverage targets, 266; enforcement system, 213; federal spectrum vs. private users, 192, 200–1, 204n8; interference, 167– 8, 178, 179, 195–6; military spectrum, 189, 201–2; polycentric governance, 209; rural programs, 170; spectrum sharing policy, 192, 195–6; wireless Internet service providers, 170 Universal Mobile Telecommunications System (UMT S ), 53 Universal Service Obligation Fund (US O F [India]), 143, 145, 157n4 university campuses (Wi-Fi), 216–17 unlicensed spectrum: dynamic, 77–8, 199; fifth-generation (5G) cellular technology, 277, 278–9, 284n19; future, 175; last-mile, 76, 77, 151; licences, 118; TV

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white space, 279; Wi-Fi, 76, 77, 148, 153 unstructured supplementary service data (USSD), 139 urban/rural digital divide, 162–82; analysis, 289–90; broadband infrastructure, 142, 143–4, 145– 8, 156; digital literacy, 143, 154 Uruguay, 122, 124 usage rights, 210–11, 212, 240–1 van Dirstein, Andrew, 175, 176, 179 Vecima Networks (Canada), 168 vehicle-to-vehicle (V2V ) technology, 273 Venezuela, 122, 124 Verizon (United States), 100, 232, 263, 289 verticals, 264–5, 267, 271–2, 274, 281 vertical sharing, 169 very high frequency (V HF), 49, 50–2. See also high-frequency bands; ultra-high frequency (UHF) Vidéotron (Canada), 97, 105, 108n6 village administrative units (V A U [India] gram panchayats), 139, 146–8, 159n1 virtual network operators (V NOs), 238–9, 269, 271, 283n12, 283n16. See also mobile network operators (MNOs); mobile virtual network operators (MV NOs) VM Systems (Alberta, Canada), 176, 177, 179 Vodafone (Egypt), 73 Vodafone (India), 149

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318 Index

Vodafone-Idea Cellular (India), 140 voice over Internet protocol (VOIP), 142 von Finckenstein, Konrad, 98 Voyageur Internet (Rainy Day Software Corporation / Rainy Day Internet Service [Canada]), 172 Waddell, Erik, 99 Waitangi Tribunal: about, 20; radio spectrum claims, 23, 25–31, 37–8, 39n6, 40n12, 40n14; traditional knowledge (radio spectrum as taonga), 23, 31–3; treaty principles, 26, 40n10. See also Māori people and language; New Zealand; Treaty of Waitangi Walker, Piripi, 22–3, 27, 30 Webb, William, 169, 263, 290, 292 Weiss, Martin, 213, 214, 217, 291–2 white space (TV). See television white space (TVW S ) wholesale mobile networks: about, 243; analysis, 134–5, 254–6; capacity trading, 132–3, 135, 243–5; funding, 135; infrastructure, 132, 254; long-term evolution (L T E) networks, 126, 134, 243, 246; mobile virtual network operators, 238–9, 256n1; network access, 238–9, 256n1; open access capacity market, 246–8, 254–6, 257n4; public/private partnerships, 125–7, 128–9, 130–1; real-time vs. forward market, 246–8, 257n4; vs. retail

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network, 243; roaming rate regulations, 102–4, 108, 109n11; spectrum sharing schemes, 245; viability, 131–3; virtual network operators (V NOs), 238–9, 256n1 Wi-Fi services: access, 76–7; capacity and coverage, 266, 283n8; costs, 265–6; deployment and utilization, 147–8, 153, 154, 216–18, 233n5, 265–6; polycentric governance, 216–18; university campuses, 216–17; vehicle-to-vehicle, 273 Wind Mobile (Globalive Wireless [Canada]), 97–8, 100, 104, 108n6, 109n7 Winner, Langdon, 13 Wireless Code of Conduct (Canada), 101–2, 109n9 wireless communications and operators. See mobile communications; mobile network operators (MNOs) wireless Internet service providers (WISPs), 170, 217–18 Womersley, Richard, 11 World Radiocommunication Conference: (WR C ), 7; WR C 2000, 171; WR C 2003, 199; WR C 2012, 58; WR C 2015, 46, 62, 63n1, 275–6 Woyach, Kristen, 213 Wu, Robert, 168 Yahsat (internet service), 81 Yleisradio (Yle [Finland]), 49–51, 60, 63n2 Youell, Toby, 11

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