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1.5 Spectrum

1.5.1 What is spectrum?

Spectrum is all around us. It is the entire range of electromagnetic radiation ranging from the longest radio waves through visible light to x-rays and the shortest gamma waves. These waves have different frequencies and wavelengths but all travel at the same speed. Part of the spectrum includes the frequencies used for radiocommunications. The boundaries of the radio spectrum are usually considered to range from 9 kHz (9,000 cycles per second) to 3000 GHz (3,000 thousand million cycles per second).

1.5.2 The importance of spectrum

Radio spectrum is a finite resource estimated to contribute some £24bn to the UK economy each year (Figure 1.14), of which public mobile telecommunications and broadcasting contributed 40% and 36 % respectively. Spectrum is a vital input to electronic communication services and networks and central to making the UK a dynamic and competitive communications market. It is essential to the operational effectiveness of the emergency and other essential safety-of-life services and is used for much cultural, social and scientific activity.

Figure 1.14: The value of spectrum

Sector	Value (£ billion)	Percentage
Of which Total radio industry *	20.3	100
Public Mobile	8.2	40
Broadcasting	7.4	36
Satellite Links	1.8	9
Fixed Links	1.6	8
Private Mobile Radio	1.1	5
Other **	0.2	1

Source: Radiocommunications Agency estimates
Note: *Totals may not agree due to rounding.
** other is defined to include amateur, citizen’s band, aviation, maritime and other equipment and services

1.5.3 Spectrum shortages

Some parts of the spectrum are more valuable than others. Higher frequencies have greater information carrying capacity but travel less far and are vulnerable to scattering – for example, by rainfall. Present technology cannot easily use spectrum above 60 GHz; the frequencies in greatest demand are those between about 100 MHz and 3 GHz, which are suitable for a variety of applications, including mobile. This range is generally considered to be prime spectrum, or the ‘sweetspot’ (Figure 1.15). The following diagram shows the emergence of important new technologies in this spectrum. It is essential that companies can obtain access to spectrum, in order for new technology to be developed.

Figure 1.15: Spectrum usage

Source: Ofcom

At the third GSM World congress (14 February 2005) it was reported that there were 13.5 million new 3G and GSM users worldwide in 2004. In the UK, demand for mobile communication services is likely to continue to increase as more fixed line calls move to mobile services.

In addition to shortages in different parts of the spectrum, there is also a spectrum scarcity in more congested geographic areas of the spectrum. The following diagrams demonstrate the current use of the spectrum in bands below 1 GHz (readings taken on 27 to 28th July 2004). The yellow and red sections show high usage, blue indicates low usage. The diagrams show that demand is greater in an urban area such as Southwark than a rural area like Baldock (Figure 1.16).
Figure 1.16: Comparative spectrum usage in urban and rural areas

Source: Radiocommunications Agency

1.5.4 Why is it regulated?

Radio spectrum is used for a wide variety of purposes, from radio astronomy to television broadcasting, from cellular telephones to aeronautical and maritime navigation and from radar to garage-door openers. Different parts of the spectrum are designated for different purposes by National Regulatory Authorities. The UK Frequency Allocation Table shows the different purposes for which spectrum has been allocated by Ofcom in the UK.

http://www.ofcom.org.uk/radiocomms/isu/ukpfa/?view=Search+form

Spectrum has to be planned and managed in order to reduce the risk of interference between users, which can destroy the value of spectrum for communications, for example by interrupting signals or degrading the quality of the signal. Some allocations are determined by international agreements through organisations like the ITU, CEPT or the EU. International conventions also ensure that services such as mobile phones work across borders (roaming).

1.5.5 New approaches to spectrum management

Ofcom enables access to spectrum through its powers under the Wireless Telegraphy Act (1904, 1949). It issues more than 250,000 licences in 30 different categories each year.

The emergence of new technologies requires spectrum management to be flexible and able to react quickly to changes in the market. It is essential that the regulatory regime for spectrum is able to respond to changes in the demand for and use of spectrum in the UK. Under the Communications Act 2003, Ofcom has a primary statutory duty to ensure the optimal use of the radio spectrum in the interests of citizens and consumers.

There are three main approaches to spectrum management. The general approach adopted world wide during the past 100 years has been for the spectrum manager to decide how best to allocate spectrum. Spectrum blocks are allocated to different purposes and assigned to different users. This approach was appropriate where much of the spectrum was used by government bodies such at the MoD, emergency services, aeronautical, maritime and broadcasting. Increased commercial use of the spectrum has increased demand in some areas and led to shortages. This has led to other approaches to spectrum management being investigated using market mechanisms to redistribute spectrum.

Ofcom’s vision for future spectrum management was set out in the Spectrum Framework Review, published in November 2004. Ofcom set out its plans to radically change the way that it manages spectrum with the aim of ensuring optimal spectrum use. It will do this by moving towards increased use of licence exemption and market mechanisms such as auctions, trading and liberalisation in this way. Ofcom believes that this will encourage efficiency by increasing the likelihood that spectrum will be held by those who can make best use of it, and by creating more freedom for spectrum to be used for more valuable applications. Ofcom intends to give the market as much freedom as possible to determine optimum use of the spectrum. It aims to reduce power restrictions and remove restrictions on technology and usage.

1.5.6 Current and future balance of spectrum use

Ofcom is obliged by the Communications Act to designate new allocations of spectrum as being licence exempt unless the nature of interference obliges it to assign individual licences. In the future, new technologies such as software defined radio, (which automatically selects and uses available spectrum), may make licence exemption a more significant part of Ofcom’s approach to spectrum management, provided that these technologies can be shown not to cause interference to other spectrum users (Figure 1.17).

Figure 1.17: Spectrum usage

Source: Ofcom

Where licensing is necessary, there will be two key areas of implementation of change:

• The transition to spectrum trading and liberalisation in relation to mobile services
• The release of newly available spectrum into the market over the next 2-3 years

1.5.7 Spectrum trading and liberalisation

In order to allow market forces to decide on the best possible use of spectrum, auctions need to be combined with liberalisation and trading. This enables the market to decide on the most efficient use and user of the spectrum.

Spectrum trading allows the holders of certain wireless telegraphy licences, granted by Ofcom under section 1 of the Wireless Telegraphy Act 1949, to transfer all or part of their rights and obligations under their licences to another party. Trading is entirely voluntary. Ofcom is not concerned with the underlying contractual arrangements which relate to the transfer of rights. Therefore, companies are free to structure these arrangements as they wish.

The following table (Figure 1.18) is a summary of how Ofcom intends to implement trading over the next few years. For further info, see Ofcom’s Spectrum Licensing Portal and trading information web pages:

http://www.ofcom.org.uk/radiocomms/isu/ukpfa/intro
http://www.ofcom.org.uk/radiocomms/ifi/

Figure 1.18: Licences that have become tradable in 2004 and due to become tradable from 2005

 

2004	2005	2006	2007	Other
Analogue Public Access Mobile Radio	Wide area Private Business Radio	Emergency services	2G and 3G mobile	Mobile satellite
National paging	On-site PBR		Programme Making & Special Events	Satellite shared with terrestrial services
Data networks	Digital PAMR		Aviation and maritime communication	Radio broadcasting
National and regional PBR	10 GHz FWA		Radionavigation (Radar)	Television broadcasting
Common Base Stations	32 GHz
Fixed wireless access	40 GHz
Scanning telemetry
Fixed terrestrial links

Source: Ofcom

In 2004, roughly 1,057 licences became tradable, with a further 37,000 licences due in 2005 (totalling approximately 69% of all licences). Some licences contain a greater number of assignments than others. An assignment is the spectrum frequency or frequencies that are awarded to the licensee, some licences effectively contain sub licences by consisting of numerous assignments. There are 50,000 assignments which became tradable in 2004, with a further 80,000 licences to follow later in 2005.

Spectrum liberalisation allows greater freedom to decide how to use spectrum. Traditionally, wireless telegraphy licences have specified the use to which spectrum can be put and the means by which that spectrum can be exploited, including details of the services that can be offered and the wireless technology and its operating parameters. Spectrum liberalisation involves the reduction or removal of these restrictions.

Spectrum trading and liberalisation are distinct, though complementary, developments. Spectrum trading involves transfers of licence rights and obligations whereas liberalisation involves the reduction or removal of licence restrictions. It is possible to have trading without liberalisation and vice versa but liberalisation will be an additional reform that is expected to add significantly to the benefits from trading. In practical terms, spectrum trading and liberalisation should facilitate greater innovation, investment and competition in the supply of wireless services. Consumers should have access to new services more quickly, and pay less for the services they already buy.

A recent report produced for the European Commission by Analysys Consulting estimates that the benefits to the European Union of spectrum trading and liberalisation could amount to as much as €9 billion per year (and about £1 billion per year for the UK).

1.5.8 Newly available spectrum

Ofcom expects to release new spectrum on to the market in the next 2-3 years. Spectrum awards are likely to follow a competitive process, usually an auction, which is likely to be an efficient mechanism as spectrum is awarded to those who value it most highly. Ofcom intends to give the market more clarity about likely opportunities to obtain access to areas of spectrum through the gradual release of spectrum according to a detailed timetable of spectrum auctions. Ofcom will also provide information concerning accessibility to new and existing licences.

The table below (Figure 1.19) summarises Ofcom’s proposals for new awards in bands below 3 GHz.

Figure 1.19: Proposed new spectrum awards

Bands below 3 GHz	2005-2006	2006- 2007	2007-2008
1781-1785 MHz/1876-1880 MHz (GSM/ DECT guard bands)	●
2290-2302 MHz	●
2010-2025 MHz	●
410-415 MHz/420-425 MHz, 872-876 MHz/917-921 MHz (Ex-Inquam bands)	●
2500-2690 MHz		●
1452 -1492 MHz (L Band)		●
1790-1798 MHz			●

Source: Ofcom

Ofcom also expects to make a number of awards in bands over 3 GHz during this period (possibly at 10 GHz, 28 GHz and 32 GHz), subject to external factors such as agreement with public service users.

1.5.9 International comparison

Spectrum trading has been introduced in several other countries around the world, most notably in New Zealand, Australia and the USA. There is a net gain to the economy as a whole each time a licence is traded because the licence is worth more to the buyer than the seller. According to the Australian Communications Authority, Australia has seen an average annual turnover of 8% of all tradable licences. Where change of use is permitted it is likely that the net benefit will be higher in the UK than in Australia given the greater level of spectrum congestion. Consequently, the benefits that Ofcom anticipates will be significantly greater than the cost of introducing trading in these countries. Trading has already been introduced to a limited extent in some European countries, such as Norway, but is likely to be introduced more widely across Europe in the future.

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