OTTAWA – Delegates gathered in Ottawa last week to discuss spectrum policy and best practices from around the world.
A workshop, organized by the International Telecommunications Society (ITS) with local host Telus, focused primarily on auction design and spectrum policy as it pertains to the rollout of 5G services. The heavy pace of 5G auctions continues globally, with many administrations releasing new spectrum to support the introduction of next-generation wireless networks.
Telus’ VP of telecom policy Steven Schmidt, who also chairs ITS, invited Adam Scott to provide introductory remarks from a Canadian perspective. Scott is the director general of the spectrum licensing policy branch of the (newly named) department of Innovation, Science and Industry. Scott explained Canada has been using spectrum auctions as a tool to award licences since 1999 and noted auction design will continue to evolve so that auctions benefit Canadians while addressing the government’s policy priorities including lower cell phone prices, the introduction of 5G services and expanded rural broadband connectivity.
Canada completed its first 5G auction earlier this year when 600 MHz spectrum was licensed. As identified in the Spectrum Outlook 2018 to 2022 released last year, Canada is expected to release 3500 MHz spectrum for 5G use in 2020, followed by the release of millimetre wave spectrum in subsequent years. Scott confirmed the 3500 MHz licensing framework will be released soon.
The first keynote of the day was provided by regulatory economist Martin Cave, who specializes in competition law and the regulation of the communications sector. He is self admittedly pro-auction. Cave estimates revenues of US$1 trillion have been raised by administrations using spectrum auctions over the past 25 years.
Economists generally agree that properly designed auctions can efficiently allocate resources and capture rents for the use of public resources like spectrum. Cave believes that auctions can achieve more than efficient resource allocation and rent extraction. In his address, Cave argued auctions can also be used to pursue competition goals through the use of measures like spectrum caps and enforceable coverage requirements (both of which have been used in Canada).
A central debate during the workshop revolved around and whether high spectrum auction prices have had an impact on the retail prices paid by consumers, quality of service or network coverage; and whether auction design and spectrum policy decisions are driving up the cost of spectrum for operators.
Spectrum sharing is becoming more and more important to accommodate the growing demand for it.
Oliver Chapman of the GSMA presented research into the impact of spectrum prices on consumers. He explained the research found in developed countries, higher spectrum prices resulted in slower deployment of 4G networks and slower 4G speeds. The impact on consumer prices is less clear, and the GSMA plans to continue its research in the area.
Chapman also explained some countries have set aside spectrum for verticals, thereby constraining the supply of spectrum for mobile operators and possibly inflating spectrum prices. He noted operators have expressed concern that vertical set-asides may harm public 5G networks. Set-asides have been used in some jurisdictions, including Canada, as a measure to increase competition. Using set-asides for vertical industries is a relatively new phenomenon.
Cave described the direct assignment of spectrum to verticals as being one of the novel new features of 5G auctions. Others include the auctioning of increasingly higher frequency bands, and administrations placing spectrum sharing requirements on licensees. Chapman pointed to the World Radiocommunications Conference and the difficulty in finding new, clear frequencies to auction. Spectrum sharing is becoming more and more important to accommodate the growing demand for it.
Some countries are also using spectrum pricing to improve coverage. According to Chapman, Swedish operators in a recent auction could claim back part of their auction bids to pay for rural base stations. In the U.K., there is a proposal from operators to create a single rural network that would be built and operated by a jointly-owned company, involving public and private funds.
The day-long workshop concluded with a panel of all speakers, moderated by Janet Yale. Yale told the audience that the Broadcasting and Telecommunications Legislative Review Panel, which she chairs, is on track to deliver its final report to government at the end of January, but gave up no secrets what it’s going to say. The workshop themes of economic regulation and spectrum policy will undoubtedly be prominent in the panel’s report, however.
