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Brussels, 29 September 2005
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What is radio spectrum?
Radio technologies use electromagnetic waves to send information in free space. Many different radio applications can be used at the same time by employing waves of different “frequency” (the number of times an electromagnetic wave vibrates in a second, in “Hertz” units, Hz). This is akin to having many different “paths” to reach the same destination. As long as the “paths” are not exactly the “same”, signals do not affect each other (thereby avoiding “interference”). The radio spectrum is defined as all the waves operating at frequencies between 3 kHz and 300 GHz.
Signals transmitted at various frequencies behave in different ways. Broadly speaking, the lower the frequency, the greater the range (but the smaller the amount of information that can be carried). Furthermore, different frequencies are absorbed differently by air, water, buildings, etc. so radio applications are always seeking to use frequencies that are optimal for their purpose. For instance, mobile phone users expect to be able to communicate without hindrance inside buildings, and this requirement needs to be reflected in the selection of frequencies.
The radio spectrum is divided into "bands", i.e. ranges of frequencies. Different applications use different bands. Terrestrial TV is roughly in the area between 400 and 800 MHz, mobile phones around 900, 1,800 and 2,000 MHz, cordless phones just below 1900 MHz, WiFi “hot-spots” at 2.4 or 5 GHz and satellite communications often in even higher frequencies.
The radio spectrum is accommodating a growing number of applications (those mentioned above, but also GPS, civil and military radars, earth observation and weather satellites, telemetry, radio astronomy, medical implants, hearing aids, sensors, “smart” tags...). Given the transmission characteristics of radio spectrum, there is currently a particular high demand for frequencies below 3 GHz.
Access to radio frequencies is regulated by the 25 Member States, but not all in the same way. Some frequencies are “open” and free subject to certain technical constraints (e.g. power of radio signals), whilst others are “exclusive” and often expensive. Applications tend to “migrate” towards the frequencies to which they are best suited. While high “Quality of Service” applications (cellular networks, aviation, military...) prize exclusivity, there has been strong growth in products that take advantage of low barriers to spectrum access in licence-free bands (e.g. 2.4 GHz).
Why is spectrum management vital to economic success?
Traditionally, radio spectrum was seen as a scarce resource and used by a few public sectors only (e.g. defence, broadcasting). But over the past twenty years, the number of new wireless applications has soared, both in the commercial area and in the public domain. Access to spectrum is a critical requirement for all these sectors. Due to its impact on the development of new services, the availability of radio spectrum and its efficient use is a key factor for stimulating competitiveness, sustaining innovation and growth, and ultimately creating jobs.
What is the economic impact of radio spectrum use?
A number of economists have attempted to “put a price” on the intrinsic value of spectrum. Estimates vary considerably, but the numbers are always large. Estimates put the value of US spectrum at $771 billion, and U.S. consumer welfare gains associated with introducing a suitable system of issuing spectrum usage rights at $77 billion/year. Some European countries have also estimated the value of spectrum use per year for their economies (around £24 billion in UK; €2 billion in Ireland; 16 billion Kroner in Denmark).
Comprehensive and objective economic data on the impact of individual decisions on the use of the radio spectrum are hard to come by, given that radio technologies affect many disparate sectors and that any “decision” influences or even precludes a large number of alternative current or future uses which are not necessarily substitutable. The Commission intends to introduce gradually a spectrum impact analysis mechanism in the EU, while bearing in mind the uncertainties mentioned above.
Why is spectrum “managed” in the first place?
Interference can happen if several applications are using similar frequency bands (i.e. if they are taking the same radio “path”). The effect is a loss of information transmitted. When radio use began over a century ago, problems of interference were soon apparent between ships’ distress communications and also between radio broadcasters. So, public authorities stepped in to regulate the use of the spectrum. They did so using the:
“Administrative” model: the traditional approach, in which public authorities regulate in detail all the characteristics of radio emitters and license spectrum users. The key aim is to avoid interference, particularly for services of public interest. The approach is to issue individual rights to use frequencies by segmenting the available spectrum into specific bands reserved exclusively for certain technologies or applications.
What are alternative spectrum management models?
Different approaches managing the rights to use radio spectrum have been developed and are now considered as alternatives to the administrative model:
Trading and flexibility model: spectrum users are given a tradable right. The objective is to ensure that the most efficient use of spectrum prevails. This model appears suitable where commercial suppliers of wireless applications and services compete for exclusive rights to use spectrum resources. This model empowers a right holder to decide on the use.
Unlicensed model: several local users are jointly using the spectrum band without a licence, but there is no guarantee of interference-free operation. Interference effects have to be tolerated, but can to a certain extent be mitigated by technical means, so that they do not critically affect transmission. This management model, already used for e.g. cordless phones and WiFi, has considerably lowered the radio resource access hurdles for innovative applications.
New technologies open up the prospect of complementary spectrum management approaches such as “self-governing” systems via “intelligent” radios, or “underlay” use of spectrum (i.e. very low power applications operating in the same bands but not disturbing high-power transmissions).
Why does spectrum management need reform?
The traditional system of managing spectrum is under strain. The digital revolution has broken the boundaries between TV, telephony and the internet and the traditionally segmented and rigid approach to organising the use of frequencies has become inefficient, as new technologies are capable of delivering a mix of services and as technologies become substitutable.
Consequently, as spectrum use has evolved, so traditional regulation has thrown up often unintended barriers to suppliers of innovative applications and services. With the rapid growth in society’s demand for wireless applications, traditional spectrum management approaches are increasingly yielding inefficient spectrum utilisation and artificially restricting innovation and competition. New and presumably better technologies are forced higher and higher up in the spectrum, leading to smaller coverage and therefore more expensive networks. Action is needed to improve the efficiency of spectrum use, promote innovation and provide greater flexibility for users and more choice for consumers.
Why does spectrum management have a European dimension?
Besides the fact that radio waves “don’t respect borders”, developing and commercialising new wireless technology is very expensive, especially for mass-market applications. Such applications naturally seek large markets to benefit from economies of scale. Spectrum users have difficulty understanding why regulators often “don’t get their act together” and leave them with different frequency bands (and therefore different radio equipment) globally and within Europe. Prices are consequently higher than they could be and free movement of goods and services among countries is impeded. A common European approach to spectrum management helps to build an EU single market in this field.
What is the Commission’s role in spectrum management?
Spectrum is still managed nationally, but the Commission has a key role to play in supporting a coordinated pan-European approach. Reforms are being actively discussed in most Member States, and several different approaches are under consideration. By providing a structure for coordination and collaboration, the Commission can enable Europe to take a single, strategic and coherent path towards spectrum reform.
Various mass-market applications and social uses of radio can be good candidates for a single European approach. The Radio Spectrum Decision and the Framework Directive for Electronic Communications require the Commission to promote harmonisation measures that strengthen the single market for agreed EU policies. The overall objective is to enable the rapid uptake of new applications by providing industry with the opportunity to target a large market, backed by a clear, legal framework.
Simply speaking, what is the Commission’s new “strategy” on spectrum?
In essence, the Commission wants Europe to overcome three main obstacles:
Despite its economic and social importance, spectrum has often been overlooked in the past by policy-makers, since it cuts through many sectors and due to its undoubted technical intricacies. Hence, radio resources are not utilised to their full economic potential.
Compared to its competitors (US, Japan, China, India...), Europe suffers from highly fragmented and slow decision-making on spectrum use. Ultimately, European companies and European consumers pay for this. Radio spectrum is therefore an important enabling factor for the development of the EU single market for radio equipment and services.
Reform of spectrum management is increasingly important to the economic well-being of society. Reform is under way in many countries, including some in Europe, albeit mainly from a national perspective. The introduction of third-generation (3G) spectrum auctions is a case in point. A common EU approach on managing radio resources is therefore critical.
While fully supporting and instigating reform, the Commission wishes to ensure that Europe introduces changes to spectrum management in a coordinated way. It also wants to remove the barriers to mass markets and lower prices that differing national spectrum rules place in the way of business and consumers. The end-result of this coordinated work should allow for a true internal market for radio spectrum in Europe.
The Commission accepts that there is no “magic wand” for quickly reforming spectrum use, in particular since the spectrum is not a “blank canvas”, and any reform needs to take account of the legacy of many years of earlier regulations and approaches. Coordinated action on a number of specific issues is however necessary.
The strategy presented by the Commission on spectrum is effectively a “roadmap”, where these actions are drawn together under a single policy “umbrella”, as part of the Commission’s “i2010” strategy to foster jobs and growth in the digital economy (see IP/05/643). The main activities in this roadmap aim at ensuring that innovators can place new technologies on the EU single market quickly and with legal certainty, co-ordinating the introduction of spectrum trading, and exploiting the opportunities provided by the spectrum freed up by the switch-over from analogue to digital TV.
What does the Commission propose on spectrum trading?
Spectrum rights in bands used for “terrestrial electronic communication services” (including mobile, broadcasting and data communications) should be tradable. This would mean that, in those specific bands, a licence to use spectrum could be freely transferred between holders, so that they can make an informed choice on where in the spectrum they want to operate and whether the cost of the spectrum right makes this worthwhile.
Whoever holds a spectrum right should also be able to choose how it is used, so long as they do not interfere with other users. This will make it easier for innovators to access spectrum and to position their innovation in the part of the spectrum where it stands the best chance of being successful.
An uncoordinated national introduction of trading with or without change of use could lead to additional fragmentation. Benefits would be greater is such opportunities were provided in a coordinated way across the EU, in order to allow companies to target pan-European services and economies of scale, if they so wish.
What about digital switchover for TV?
Spectrum is a highly generic resource in the sense that one part of it can, broadly speaking, substitute any other part in the production of most wireless services. The slow turn-over of wireless technology has “frozen” large amounts of spectrum for specific applications.
Europe’s switch from analogue to digital television has the potential to free up many frequencies in the most valuable part of the radio spectrum for new uses, both in broadcasting and in other applications.
This is a unique opportunity, and there is a need to avoid separate national decisions taken without consideration of the common European interests, and to ensure that a common strategy is adopted on this critical issue.
European Commission website on Radio Spectrum Policy:
Communication “EU spectrum policy priorities for the digital switchover in the context of the upcoming ITU Regional Radiocommunication Conference (RRC-06)”, COM(2005) 461
see also IP/05/1199