The evolution of spectrum

The evolution of spectrum

Effective spectrum policies are necessary to encourage the investment required to meet increased demand for data services and enhance the quality and range of services offered. On a larger scale, these policies promote socio-economic benefits, address the digital divide and help reduce carbon emissions in all parts of the world.

To maximise this impact, long-term planning and short-term action are required in several areas. This includes licensing enough spectrum resources through planning and roadmap development, avoiding fragmentation and, importantly, guaranteeing technology neutrality in spectrum assignments.

Spectrum pricing also has a significant impact. Governments seeking to maximise state revenues from spectrum risk deterring investors and undermining competition in communications markets. Research shows that high spectrum prices are linked to slower network speeds and lower coverage. The primary goal of pricing mechanisms should instead be broadband development.

Approaches to assigning spectrum

Background

Licensed spectrum is necessary for mobile services to provide quality service and customer value. This, in turn, facilitates the investments needed to deploy mobile networks widely.

The licensing of spectrum bands for mobile services supports international harmonisation, which delivers lower-cost devices and equipment through economies of scale. Dynamic spectrum access techniques enable specific spectrum bands to be shared between multiple uses by avoiding signals being transmitted at the same time. However, exclusive licensing has been central to the success of mobile and any spectrum sharing mechanisms   should be considered as a complementary possibility.

Auctions

Auctions are an efficient way to allocate spectrum when there is competition for scarce spectrum and demand is expected to exceed supply. However, to succeed, they need to be planned carefully. Excessively high reserve prices may result in spectrum going unsold.

There are several different auction designs to choose between, each with its strengths and limitations. While multi-round auctions are often preferred, the best choice depends on market conditions and the objectives of the government and regulators. The most common are simple clock auctions, simultaneous multiple-round ascending auctions (SMRAs), sealed bids, combinatorial clock auctions (CCAs) or hybrid approaches.

When assigning spectrum via an auction, government objectives include:

  • Maximum long-term value to the economy and society
  • Efficient technical implementation of services
  • Sufficient investment to roll out networks and new services
  • Adequate market competition
  • A fair and transparent allocation process

Auctions can lead to more efficient spectrum use, but auction design and rules are important. Certain design choices raise the risk of spectrum not being sold or limiting network investments. For regulators, the main challenge is balancing the objectives of efficient spectrum assignment and supporting competition in communications  markets. Seeking to maximise auction revenues can have significant costs for society, especially the digital economy, if competition is undermined and network investment is limited.

Low participation should also be a concern, especially in mature mobile markets. A wide variety of tools are available for regulators to address these issues, including the choice of auction format, determination of spectrum lots, spectrum caps and set- asides, bid information disclosure and reserve prices. However, these tools are often conflicting and their effectiveness will depend on local market conditions.

Administrative assignments

Administrative assignments are most effective when market demand is lower. Like spectrum auctions, administrative assignments must be well planned to succeed. The selection criteria and process must be clear and the weight given to each objective should reflect its importance to society. The use of vague and subjective criteria, or a lack of transparency, increases the risk of favouritism and corruption as well as the potential for the outcome to be challenged in the courts. A trade-off may be needed between policy objectives and the licence fee. Even where the objective is clear, estimating the appropriate price can be challenging.

Regulatory objectives that may be considered part of an administrative assignment ‘beauty contest’ include coverage, service quality and a variety of social and economic goals.

A challenge with administrative assignments is the risk that successful applicants will be unable to fulfil their offers, particularly if market or technology forecasts prove inaccurate. Licensing authorities should set out the penalties that will be imposed if commitments are not met in advance.

Debate

Auction design is a delicate balancing act, but there is little doubt that policy decisions have an impact on the quality of mobile services. How should governments decide which spectrum assignment approach to use?


Industry position

Efficient spectrum assignment is necessary to realise the full economic and societal value of mobile.

Auctions are the main approach to assigning the right to use a particular spectrum band, but administrative assignments (e.g. beauty contests) can also be used where demand is expected to be lower than the supply of spectrum. Sometimes, a hybrid approach is used whereby the licensing authority initially selects a shortlist of bidders based on administrative criteria and then holds an auction to assign the licence among the shortlisted candidates.

There is no single best way to assign spectrum. Instead, the merits of each approach should be assessed on a case- by-case basis. Auctions remain the most common approach globally. They work best when there is excess demand for spectrum and they help to select the mobile operators most likely to put their spectrum assignment to best use for the benefit of society.

Administrative assignments, on the other hand, may be suitable in areas where there is less demand for spectrum and may allow authorities to compare the range of policy objectives offered by candidates.

Whatever approach is chosen, it must be implemented with care. This includes identifying issues through public consultation and weighing the trade-offs of different design choices (noting the importance of efficient spectrum useand safeguarding competition). Sufficient time and transparency must be provided to allow potential candidates to make informed decisions.

Resources

Best Practice in Mobile Spectrum Licensing, GSMA, February 2022

Auction Best Practice, GSMA, September 2021

Spectrum for industries

Background

The development of new mobile technologies alongside the cloud, big data and machine learning are transforming the connectivity requirements of private mobile networks, also referred to as ‘networks for vertical industries’. These range from creating smart utility grids and automating manufacturing to delivering goods by drones and supporting advanced public safety and transport networks. Connected enterprises need to be agile and open to the challenges and opportunities of this era of digitalisation that 5G is delivering.

Policymakers play a vital role by managing the spectrum that underpins these developments, and great care needs to be taken to ensure private mobile network requirements are fully supported without harming other wireless users. Private networks are an integral part of 5G, enabling industrial applications, logistics hubs, local campus networks and many more functions. However, private networks do not imply private spectrum. Asymmetric carve- outs are an aggressive regulatory tool that has an economic cost and, with best-practice licensing, can be avoided.

Debate

As governments turn their attention to supporting high-speed network rollouts, regulators face the daunting challenge of deciding who gets access to spectrum.

How can governments and regulators develop spectrum policies that support mobile networks for verticals without negatively affecting commercial 5G services?

Industry position

Policymakers should ensure that private mobile networks can get the connectivity they need to support their use cases without undermining other spectrum users and uphold the fair and efficient assignment of mobile bands.

Spectrum set-asides can lead to insufficient spectrum being available for mobile operators to use and meet all their 5G requirements and capabilities. Scarcity also encourages higher prices to be paid for spectrum, which is strongly linked to less network investment, slower rollouts, limited coverage and reduced data speeds. Where industries require access to specific licensed bands, they can do so via sharing and leasing agreements with mobile operators (for example).

The following considerations should inform spectrum policy decisions related to private networks:

  • Commercial mobile operators support the needs of a wide variety of private mobile networks and have added capabilities with 5G.
  • Spectrum leasing or, when carefully planned, other types of spectrum sharing can be viable options for supporting industry verticals that want to build private networks.
  • Spectrum that is set aside exclusively for verticals in core mobile bands risks being underused and can undermine fair spectrum awards.
  • Spectrum that is set aside for mobile networks for verticals in core mobile bands can also threaten the wider success of 5G, including slower rollouts, worse performance and reduced coverage.
  • Policymakers should consider the coexistence challenges when different use cases need to be supported in the same mobile band.

Resources

Best Practice in Mobile Spectrum Licensing, GSMA, February 2022

Spectrum Policy Trends 2023, GSMA, February 2023

Spectrum harmonisation

Background

Spectrum harmonisation is the uniform allocation of radio frequency bands under common technical and regulatory regimes, across entire regions. Adherence to internationally identified spectrum bands has many advantages:

  • Lower costs for consumers due to economies of scale
  • A wider range of devices supported by a larger international market
  • Roaming or the ability to use a mobile device abroad
  • Fewer cross-border interference issues

Efforts to harmonise bands for mobile have taken different forms.

First step towards the harmonisation of any band happens at a World Radiocommunication Conference (WRC).Mobile allocation for a particular frequency band, and additional International Mobile Telecommunications (IMT) identification, have always been sought at WRCs to harmonise mobile use.

The WRC process is still a useful way to support harmonisation. At WRC-15, for example, agreement was reached on three spectrum bands for mobile: 700 MHz, 1427-1518 MHz and 3.4-3.6 GHz. In 2019, mmWave bands were discussed and the harmonised use of 26 GHz, 40 GHz and 66 GHz was agreed. At WRC- 23, further harmonisation of the 3.5 GHz range occurred while the 6 GHz band was harmonised for the first time.

However, countries develop their communications systems at different rates, and negotiations at the ITU have struggled to keep pace with the needs of the fastest-moving markets. Over the past 10 years, countries have been developing bands for mobile use on their own, either regionally or unilaterally, to meet demand.

This has been clearest with activity around the 3.5 GHz range. Only 200 MHz of spectrum in the 3.3-4.2 GHz range was agreed at WRC-15 but, even before the 2015 conference, demand in some parts of the world had already risen well above that figure. Today, as much as 700 MHz is available in this spectrum band in some countries, leaving WRC-23 to tidy up harmonisation rather than initiate it.

Spectrum harmonisation through the WRC process remains an important goal and helps enable lower-cost mobile devices through economies of scale. However, many governments and regions are charting their own path, making inter-regional harmonisation and industry guidance on spectrum use vital to the spectrum development process.

Debate

What planning tools, forecasts of spectrum needs and technology analysis are required to support long-term development?

Industry position

Governments that align national spectrum use with internationally harmonised band plans will achieve the greatest benefits for consumers and avoid interference along their borders.

The mobile industry has had concerns about the pace of the WRC process for the past 15 years. Rapid growth in consumer demand for mobile has prompted countries and regions to look beyond WRCs to provide access to new mobile bands.

Where this has been necessary, multiregional harmonisation has been broadly achieved by loose consensus based on equipment availability. However, this approach risks leaving slower-moving nations without

input on which bands are best used, as equipment will only be developed in bands used by early-adopter nations. However, WRC-23 did manage a long-term view on some spectrum with the identification of the 6 GHz for mobile use.

At minimum, harmonisation of mobile bands at the regional level is crucial. Even small variations in standard band plans can result in many devices not being useable, with costly consequences for consumers.

Resources:

The GSMA at WRC-23


Spectrum licence renewal

Background

Managing spectrum renewals effectively is a vital part of any country’s spectrum management strategy. Uncertainty over future rights to use the spectrum may lead to mobile operators ceasing investment in developing their networks and competing less to grow their customer base until the uncertainty is resolved. Regulators serve consumers best by creating a transparent, predictable and coherent approach to spectrum licence renewal.

There is no standard approach to renewing or relicensing spectrum, but a presumption of renewal is generally widely suitable. Each market needs to be considered independently, with industry stakeholders involved at all stages of the decision process. Failure to effectively manage the process, in addition to investment in new services, can potentially affect mobile services for millions of consumers.

Debate:

There is growing competition for access to spectrum. How can regulators balance the need for clarity on renewals with the spectrum needs of new stakeholders?

Industry position

The right approach to licence renewals is an important part of a successful spectrum management strategy. Authorities should aim to minimise uncertainty by creating a presumption of renewal unless there has been a breach of licence conditions, a fundamental reallocation of spectrum to a new service is required, or an overriding policy need arises.

Recommendations for licensing and renewal approaches:

  • Where spectrum is to be assigned for the first time, there is no single best licensing approach and authorities should make their decision based on the market context. Auctions tend to be the most common approach.

  • When choosing the assignment approach, licensing authorities should prioritise the objectives of promoting efficient use of spectrum and network investment while also ensuring effective competition.

  • Whether an auction or administrative assignment is adopted, the details of the implementation should be transparent and focused on future certainty.

  • A decision not to automatically renew a spectrum licence should only be made under certain circumstances, such as for a serious breach of conditions or if spectrum is left idle.

  • Licensing authorities should work in close partnership with stakeholders to enable a timely, fair and successful licensing process. 

Resources:

Best Practice in Mobile Spectrum Licensing, GSMA, February 2022

Spectrum licensing

Background

Spectrum licensing is central to the delivery of high-quality mobile broadband services and long-term investment in networks. The amount of spectrum made available, and the terms on which it is licensed, drive the cost and quality of mobile services.

Mobile is a capital-intensive industry requiring significant investment in infrastructure. Governments’ spectrum licensing policies, when supported by a stable, predictable and transparent regulatory regime, can make markets significantly more attractive to investors.

Spectrum management for mobile telecommunications must include the release of new spectrum in harmonised mobile bands, renewal of licences coming to the end of their initial terms and the assignment of new bands for mobile broadband services.

Providing for flexible spectrum use by limiting licence conditions enables spectrum to be redeployed as technology and market conditions change, bringing down the cost- of-service provision. However, spectrum licences have sometimes contained terms and conditions that go beyond those necessary to guarantee co-existence among users.

Debate

Spectrum licensing is at the heart of mobile services. What measures can policymakers implement to guarantee long-term investment and certainty?

Industry position

Effective spectrum licensing is critical to the future expansion of mobile services. Licensing frameworks should encourage the investments needed to expand mobile access, meet increased demand and enhance the range of services offered.

Access to spectrum is essential for the supply of mobile services. The way spectrum is assigned and managed has an impact on competition.

Recommendations for licence terms and conditions:

  • Authorities should limit conditions on the use of spectrum to those necessary to guarantee co-existence.
  • Spectrum licences should be technology- and service-neutral.
  • Governments with particular policy objectives should consider regulation that supports the commercial provision of widespread and affordable access before imposing conditions.
  • When conditions are imposed, any related costs should be deducted from spectrum costs.
  • Mobile licences should have a minimum 20-year term to provide sufficient certainty to support mobile network investment, which has long payback periods, as well

as presumption of renewal.

Resources:

Best Practice in Mobile Spectrum Licensing, GSMA, February 2022

Spectrum needs and vision 2030

Background

Mobile networks operate across an evolving range of technologies, from 2G to 5G. Each of these technologies requires spectrum relative to the role they play in society. 2G voice applications use small tranches of spectrum compared to the much wider channels required for dense, high-throughput 5G usage. Governments can support mobile growth by having a long-term vision of the spectrum access that mobile operators will receive.

In some regions, 2G and 3G networks are starting to be switched off. These technology sunsets allow spectrum to be refarmed for more efficient technologies, such as 4G and 5G.

5G supports significantly faster mobile broadband speeds and heavier data usage than previous generations of mobile technology, while also enabling the full potential of IoT. From connected cars and smart cities to the industrial internet and fibre-like fixed wireless access (FWA), 5G allows more devices to access more data than ever before.

The efficiency of 5G is essential to preserving today’s most popular mobile applications, such as on-demand video, in an environment of high-user demand.

The following usage scenarios are the four main pillars of 5G:

Enhanced mobile broadband, including peak download speeds of at least 20Gbps and a reliable 100Mbps user experience data rate in dense urban areas.

Ultra-reliable and low latency communications, including 1ms latency and very high availability, reliability and security to support services such as virtual reality (VR) and connected vehicles.

Massive machine-type communications, including the ability to support at least one million IoT connections per square kilometre with long battery life and extensive wide area coverage.

Fixed wireless access, including the ability to offer fibre-like speeds to homes and businesses in rural and urban areas — in developed and developing markets

The speed and availability of 5G services depend on mobile operators having access to spectrum in low, mid- and high bands to build cost-effective networks. Robust licensing and timely availability of spectrum is also vital to the success of 5G deployment. With these in place, 5G can transform digital economies across the globe, help close the broadband usage gap and support digital inclusion. Although countries in different regions have adopted different combinations of those bands, regional and global harmonisation have created economies of scale that, in turn, have made mobile services and handsets more affordable.

The roadmap for spectrum access should be made transparent by governments and regulators to optimise network planning and reduce capital expenditure. By working together with industry, governments can help ensure connectivity is affordable.

Debate

The GSMA recognises that an average total of 2 GHz of mid-band spectrum needs to be made available to licensed mobile. How can regulators meet the spectrum demand for 5G capacity and which harmonised bands can be used?

Industry position

5G needs a significant amount of new harmonised mobile spectrum. Governments should carefully consider spectrum demands when 5G usage reaches its peak. Advanced use cases will require additional spectrum.

As data traffic continues to increase, more users switch to 5G for mobile and FWA and new, innovative use cases take off, more spectrum across low, middle and high bands will be needed.

On average, 2 GHz of mid-band spectrum per country will be needed between 2025 and 2030. Mid-band spectrum has been the main driver of 5G launches so far and is expected to help realise most of the socio-economic benefits of 5G in the next decade. Meeting spectrum needs in this range is vital to the future of 5G and requires policymakers to formulate a clear spectrum roadmap.

An average of 5 GHz of high-band spectrum will be needed per market by 2030. It complements low- and mid-band spectrum implementations in dense urban areas and provides fibre-like connectivity throughFWA. It also helps ensure secure, reliable and low-latency networks in manufacturing plants or high-density locations, such as sports and music venues and travel hubs.

Low-band spectrum needs for 5G are greater than the actual capacity available below 1 GHz. However, expanding in this range as far as possible is vital to giving rural communities equitable access to mobile services available in urban areas meeting digital inclusion goals. Current proposals in the 600 MHz band will allow for between 2x35 and 2x40 MHz of additional low-band capacity. Expanding low-band spectrum by this amount can improve rural download speeds by 30 to 50 per cent.

Resources:

Vision 2030: Low-Band Spectrum for 5G, GSMA, June 2022

Vision 2030: mmWave Spectrum Needs, GSMA, June 2022

5G Spectrum Public Policy Position, GSMA, June 2022

Vision 2030: Insights for Mid-Band Spectrum Needs, GSMA, July 2021

5G Spectrum Guide – Everything You Need to Know

Spectrum pricing

Background

The primary goal of charging a fee for spectrum is to award spectrum to those who will use it most efficiently to deliver maximum benefits for society. In this way, a well-designed auction will assign spectrum to those who value it most, providing an incentive for them to use it efficiently through investment in widespread, high- quality mobile networks. However, charging for spectrum can also provide substantial state revenues and lead governments to artificially inflate spectrum prices at the expense of efficient spectrum use and the wider economy.

Extremely high-priced auctions are typically the result of national policy decisions, such as setting excessive reserve prices, making an insufficient amount of spectrum available for auction and a lack of clarity on future releases or the renewal process for expiring licences. Such factors can create uncertainty or artificial scarcity of spectrum and encourage mobile operators to bid above their true valuation of the licences on offer.

Debate

More and more telecoms regulators are recognising the negative impact of high spectrum prices, but getting governments onboard is not always easy. How can regulators and mobile operators work together to highlight the benefits of affordable spectrum to all relevant levels of government?


Industry position

Spectrum is a valuable asset, but a long-term vision is needed to maximise this value. The primary goal in all awards should be to encourage the most efficient use of spectrum through investment in widespread, high-quality networks.

Many countries around the world have successfully struck the right balance between increasing revenues and delivering efficient spectrum awards.

Recommendations for spectrum pricing and fees:

  • Spectrum prices should promote, and not undermine, the optimal use of spectrum for the benefit of society.
  • High spectrum fees reduce the funds available for investment and will negatively impact the quality, speed and reach of mobile broadband services.
  • Licensing authorities should set auction reserve prices conservatively to allow the market to determine a fair price and to reduce the risk of leaving spectrum unassigned.
  • Authorities should be particularly careful not to set renewal fees that remove returns on earlier investments. Renewal fees should only recoup administrative costs.
  • Costs related to conditions or obligations attached to the licence should be deducted from spectrum fees.

Resources

Best Practice in Mobile Spectrum Licensing, GSMA, February 2022

Spectrum sharing, leasing and trading

Background

Ever increasing data traffic means mobile services must have access to ever-increasing spectrum to meet demand. This creates the need for better spectrum management, to improve the efficiency of spectrum use and ensure its viable use in less economically viable areas. Also, completely clearing new frequency bands for future mobile use has become increasingly difficult.

At the same time, there is a growing thirst for spectrum from new parties, such as industry verticals. Where regulations permit their use, and if implemented correctly, tools such as spectrum sharing, trading and leasing can help make spectrum use more efficient.

Debate

Spectrum sharing can make spectrum use more efficient and create more value for consumers, but complex frameworks may hamper uptake. How can governments create a simple sharing framework that still ensures the robust and transparent definition of rights?

Resources

GSMA Public Policy Position: Spectrum Sharing

 GSMA Report: Spectrum Leasing in the 5G Era

Industry Position

Spectrum sharing reduces the spectrum shortages faced by some mobile operators while also ensuring valuable spectrum does not lie fallow. It enables more intensive spectrum use and higher volumes of services, improves service quality and lowers the costs of service provision. All this supports greater capacity and more affordable services.

Spectrum leasing and trading enable the parties with the best information on the value of spectrum to determine its price. To justify the sale, a buyer or lessee needs to create more value from the acquired spectrum than the seller.

Voluntary leasing and trading also reduce risks for operators since they can sell or lease unused spectrum while having the opportunity to acquire new capacity as they grow. The ability to trade and lease licences can ensure that spectrum is used efficiently without additional charges needing to be imposed by government.

Trading is more likely when there is substantial available spectrum, when future spectrum and the regulatory framework are predictable and when there is a need to support network deployment by the lessee, such as for verticals.

Recommendations on spectrum sharing, leasing and trading:

  • Licensing authorities should allow voluntary spectrum sharing, leasing and trading among operators and facilitate these mechanisms through clearly defined spectrum rights, long licence terms and limited administrative costs.
  • Authorities should only be notified of the agreements taking place so that it is clear who holds spectrum usage rights. Notification enables authorities to assess whether a proposed trade would create any risks to competition.
  • Before a formal spectrum secondary market framework is established, authorities should be prepared to assess proposals for sharing, leasing and trading subject to consultation and consider risks to competition or of interference.
  • Transparent and well-timed licence renewal processes, and information on spectrum availability, pricing and conditions, will facilitate sharing, leasing and trading.
  • Competition issues should be assessed based on the specific circumstances of each sharing, leasing and trading agreement.
  • Long licence terms allow the buyer or lessee of the rights to invest in using the spectrum.

Technology neutrality

Background

Technology-neutral spectrum licensing is widely recognised as best practice when assigning spectrum to mobile operators. It enables operators to refarm spectrum used for GSM (2G) or 3G to 4G and 5G at a pace driven by market demand. This allows spectrum to be used more efficiently, which should always be the overarching goal of spectrum management for all regulators and governments. It also maximises the technical efficiency. As a result, users benefit from better mobile broadband coverage, higher data speeds and lower mobile data prices than they would otherwise.

Debate

New spectrum bands are needed to make the most of 5G, but reusing existing bands will also be possible. What are the best ways for regulators to apply technology neutrality and allow mobile operators to make the best use of existing bands for 5G?

Industry position

To get technology neutrality right, there are a few things to keep in mind:

  • Attempts to extract additional revenue have misfired and held back the introduction of new mobile technologies.
  • While a renewal process provides an opportunity to reissue spectrum licences as neutral, regulators should not delay the introduction while waiting for existing licences to expire.
  • When assigning new spectrum, regulators should do so in a technology-neutral manner or, at the very least, not restrict the introduction of next-generation technologies, such as 5G.

The decision to allow, and actively support, technology neutrality is being made easier by technological advancements. For example, the options for managing refarmed bands have improved by leaps and bounds.

The most important development is the ability to ‘gracefully refarm’ bands so they are used simultaneously for several technologies, including 4G and 5G. This allows newer technologies to be introduced in line with growing mobile broadband demand while also supporting legacy users. For regulators, this means they no longer need to worry that refarming will leave legacy users unserved.

Resources

The Benefits of Technology Neutral Spectrum Licences, GSMA Blog, 14 June 2019