Legal Basis and Regulatory

Framework for Spectrum

Spectrum Management Training Program

Part 11: Authorization Processes
Prepared with assistance from Professor William Webb
Module Objectives
This module covers the overall context and objectives
of spectrum management and its practical realization in
a complex multi-layered structure of international,
regional and national levels. It includes the role and
functions of the different stakeholders, the legal
framework underpinning all of the interactions and the
role and operational principles of authorization
processes (licensing) of radio services.
STUDENTS
Module Topics
1. Historical background and evolution of spectrum management
2. ITU’s role and structure
3. ITU Radiocommunication Sector
4. ITU Constitution and Convention, World Radiocommunication Conferences
5. ITU Radio Regulations
6. International regional cooperation structures
7. National legal frameworks relevant to spectrum management
8. National Frequency Allocation Tables
9. National Regulatory Authorities: typical structures and functioning
10. Other national stakeholders involved in spectrum management
11. Frequency use authorization processes for various radio services
12. Overview of software tools and automated management systems
Part 11 Objectives
An introduction to the processes and options for
authorising spectrum use.

STUDENTS
Part 11: Topics
• Introduction – why authorisation is needed
• Licensed versus unlicensed
• Unlicensed authorisation
• Licensed overview
• Command & Control
• Auctions
• Incentive pricing
• Length of licence terms
• Additional licence conditions
• New approaches – DSA
 Authorisation is at the heart of
spectrum management
• In an ideal world anyone could use the spectrum whenever
they wanted
• But this could lead to interference depending on the
application and the intelligence in the radio device,
rendering the spectrum useless
• The solution to this is to apply rules to using the spectrum
that are designed to prevent, or minimise interference
• These rules of access are often known as an authorisation
• Setting the rules and then deciding who qualifies for the
authorisation takes up most of the time and effort of a
regulator
Part 11: Topics
• Introduction – why authorisation is needed
• Licensed versus unlicensed
• Unlicensed authorisation
• Licensed overview
• Command & Control
• Auctions
• Incentive pricing
• Length of licence terms
• Additional licence conditions
• New approaches – DSA
Authorisation falls into two categories
• There are two broad types of authorisation
– Licensed, where each user requires a specific licence to
transmit
– Unlicensed (also known as “licence exempt” and
“spectrum commons”) where typically anyone can use the
spectrum as long as they conform to the rules of entry
(typically power levels and similar) although some bands
are reserved for particular applications such as maritime
• Choosing between them is difficult
– The EC recommends that spectrum be unlicensed unless
there are clear reasons why licensing is needed
– Experience has shown that licensing is almost always
needed!
 Approaches to selecting (1)
• Predicted economic value
– Attempt to estimate the economic value derived from both unlicensed
and licensed use and select the higher
– Very difficult to predict what usage will be, especially in unlicensed
bands
– Some attempts to do this for white space access but little agreement
on future value
• Degree of congestion
– No need to license if there will not be interference
– Mostly true in the very high frequency bands (above eg 40GHz) where
there is plenty of spectrum and propagation is very poor
– Somewhat true in fixed link bands where the directional nature of the
transmission limits interference
– Might also apply when “detect and avoid” algorithms limit
interference to others or whether cognitive or dynamic spectrum
devices are able to intelligently avoid interference
 Approaches to selecting (2)
• Desire to promote innovation
– Unlicensed is seen as a good way to enable new technologies
and approaches to be trialled and hence can help promote
innovation
– Some regulators have the promotion of innovation as one of
their duties
– But difficult to know how much unlicensed spectrum is needed,
and in which frequency bands, and with which rules of access to
best achieve this
• Having a balanced approach
– A more general view that a “balanced scorecard” approach
should be adopted to spectrum management where many
different types of access are enabled since it is hard to predict
which will be the most successful
 In practice
• Bands that are compromised due to interference or
similar are often unsuitable for licensed and are used
for unlicensed instead
• Where unlicensed use has grown and expansion is
possible (eg 5GHz Wi-Fi) this is often considered
• Unlicensed allocations are often made at a regional or
global level because of the need for economies of scale
and the desire for device roaming
• But in most cases regulators tend towards licensing,
especially where they are under pressure from
Governments to raise revenue
Part 11: Topics
• Introduction – why authorisation is needed
• Licensed versus unlicensed
• Unlicensed authorisation
• Licensed overview
• Command & Control
• Auctions
• Incentive pricing
• Length of licence terms
• Additional licence conditions
• New approaches – DSA
 Reason for restrictions
• Unlicensed access is always subject to rules of entry such as:
– Maximum power levels (typically low)
– Maximum duty cycle of transmission
– Maximum bandwidth
– Need for detect-and-avoid
– Requirement to use polite protocols
• These rules are designed to prevent excessive interference
– Low power levels means that one transmitter can only affect those
nearby, this is helped by the fact that unlicensed bands are typically at
higher frequencies
– Determining appropriate rules is often as much guesswork as it is
theory
– Key problem is that once unlicensed devices are in use it can be near-
impossible to modify their behaviour or even track them down and
can take a decade for them to stop being used
 Example at 2.4GHz
• A band that was considered useless because of
interference from microwave ovens and industrial
equipment
• Maximum transmit levels in the region of 100mW
(varies around the world)
• Actually shared with the military in some
countries but few realise this and it has very little
impact
• Few other restrictions
• But now heavily used by Wi-Fi and Bluetooth and
worries of congestion are increasing
 Process
• A regulator typically needs to issue a law
declaring a band exempt from licensing
• The law sets out the types of usage allowed and
often the specific technologies that meet these
requirements
• In the UK this law is termed a Statutory
Instrument – there are different titles elsewhere
• It can often take 2-3 years to consult, draw up the
rules and pass the appropriate regulation
Part 11: Topics
• Introduction – why authorisation is needed
• Licensed versus unlicensed
• Unlicensed authorisation
• Licensed overview
• Command & Control
• Auctions
• Incentive pricing
• Length of licence terms
• Additional licence conditions
• New approaches – DSA
 Transmitter versus area-based
• There are broadly two types of licences
• Transmitter licenses allow for one transmitter at a specific
location
– Suitable for private mobile radio
– Used for fixed microwave links (a transmitter at each end of the
link)
– Can also be used for broadcasting in some cases
• Area licenses allow an operator to cover a particular area
such as an entire country
– Typically no restriction on the location or number of
transmitters
– May be restrictions on the level of interference that can be
caused, particularly in border regions
 Transmitter licenses are typically
simpler to handle
• Often given out on a first-come first-served basis
• May well be a sufficient number to satisfy need –
and if not restrictions or pricing can be used to
lower demand
• Do require some form of planning to ensure they
do not interfere
– Could be as simple as a circular exclusion zone
– Or as complex as a detailed propagation planning tool
An example transmitter license process
Departments Receive application Timeline
involved (eg via website) (weeks)

Admin Check applicant

1
details

Check whether
Technical allocation possible 2
without interference

Issue licence and

Admin invoice / process 1
payment

Licensing Update database 1

Area licensing: A restricted number of
licenses
• When licensing an area there are almost invariably a
restricted number of licenses for a band
– Often the licenses are exclusive and the number is set by
dividing the overall bandwidth by the bandwidth per licence –
eg 3-4 cellular licenses
• If there are more applicants than licences (and there
normally are) then some method of deciding who to award
the licence to must be adopted
• This is often known as the assignment process and can be
via
– The choice of the regulator (“command & control”)
– A market approach using mechanisms such as auctions,
spectrum pricing and trading
 Licenses have technical conditions
• Regardless of the assignment process the license will
have technical conditions specifying factors such as:
– Bandwidth
– Maximum transmit power
– Out-of-band emissions
– Sometimes the technology that can be used or the use
that the band can be put to
• These can be different for each band but will tend to be
similar across regions or even the world
• Some of these conditions are encapsulated in technical
standards such as 3GPP
The remainder of Part 11 refers to area licensing
Part 11: Topics
• Introduction – why authorisation is needed
• Licensed versus unlicensed
• Unlicensed authorisation
• Licensed overview
• Command & Control
• Auctions
• Incentive pricing
• Length of licence terms
• Additional licence conditions
• New approaches – DSA
 Executive decision is not transparent
• The simplest approach is for the regulator to decide
who gets a licence
• This was often done up until the 1980s and was
referred to as a “beauty contest”
• However, with a large degree of subjectivity it is very
hard to be transparent and hence decisions can often
be challenged
• There are still cases where this is appropriate such as
when assigning the spectrum to Governmental use, to
amateurs, to radio astronomy and similar
• There may be good local reasons why this approach is
used when there are broader societal goals to achieve
Broadcasting is often via this approach
• Most TV transmitter rights are not auctioned but are
given out to broadcasters or companies that provide
transmission services
• Public service broadcasters are normally granted
spectrum by Governments in order to meet their
mandate
• TV transmission rights tend to be highly constrained by
the need for international planning in any case
• More recently there have been some auctions of local
TV rights (with associated spectrum)
• However, there is an increasing expectation that
broadcasters will need to make more use of market-
based access to spectrum in future
 First-come first-served
• Another variant is FCFS, used where there are
likely to be sufficient licenses to meet demand
and where auctions are not suitable
– Key areas are private mobile radio and fixed link
licenses
• Licenses are offered at any time up until a band is
considered full
– Sometimes a cost-recovery fee is applied by the
regulator to pay for the administrative effort required
• Pricing can sometimes be used, with the price
increasing as the band becomes more congested
Part 11: Topics
• Introduction – why authorisation is needed
• Licensed versus unlicensed
• Unlicensed authorisation
• Licensed overview
• Command & Control
• Auctions
• Incentive pricing
• Length of licence terms
• Additional licence conditions
• New approaches – DSA
 Auctions are widely used
• Since their introduction in the 1980s, auctions have
steadily become the de-facto way to distribute licenses
• They have many advantages
– Transparent
– Simple to understand (at least at a high level)
– Raise revenue for the country
– Fit with economic theory as to how to optimise use of the
spectrum
• But they are widely disliked
– Often seen as “the least bad way” to assign spectrum
– Can be seen as taking money out of the industry although
it is economically incorrect to look at it in this way
 Running an auction
• Set the rules of access to the band
• Decide on the number of lots or licenses
• Determine the auction approach to be used, typically in
conjunction with an auction specialist
• Consult on all the rules and modify the approach
accordingly
• Build the necessary auction software and website along
with secure access and funds transfer as needed
• Run the auction, typically over a few weeks
• Publish the results, audit as necessary and then issue the
licenses
• Typically requires a significant team of experts often for a
year or more for major auctions
Part 11: Topics
• Introduction – why authorisation is needed
• Licensed versus unlicensed
• Unlicensed authorisation
• Licensed overview
• Command & Control
• Auctions
• Incentive pricing
• Length of licence terms
• Additional licence conditions
• New approaches – DSA
 A proxy for market mechanisms
• Pricing (also known as incentive pricing) is when
an annual fee is charged for the use of the
spectrum with the aim to encourage the licence
holder to use the spectrum more efficiently and
to hand it back if they no longer need it
• It is generally applied when auctions have not
been used (since the auction fee is effectively an
up-front payment of the annual pricing)
• Typical bands include broadcasting and private
mobile radio
 Setting the price is very difficult
• Ideally the price should be the market value – ie the
price that someone would pay at auction to acquire
the spectrum
• But auctions are rare and each band is different so
there is often insufficient evidence for this approach
• If the price is set too high then there is a danger that
the spectrum will be returned and will lie fallow
• Hence regulators tend to set prices on the low side to
avoid that risk
– But this means that they have less impact with the result
that little spectrum has been returned in practice
 The price is normally set by least cost
alternative
• One way to estimate the price is to look at what the
licence holder would need to do if a small amount of
their spectrum were taken away
• Typically this would require more base stations, more
efficient technologies or similar
• The cost of these alternatives can be determined and
the lowest cost used as a proxy for the value of the
spectrum
• However, this does not take into account whether the
spectrum is more valuable to a completely different
type of use and hence should be priced higher to
encourage its return more quickly
 Pricing of Governmental spectrum
• It has been thought that pricing is the ideal approach
to Governmental holdings
– The spectrum has not been obtained at auction so some
pricing should apply
– Most think that Governments do not optimise their use of
spectrum and tend to hoard rather than return
• But in practice price incentives on Governments are
weak
– If a department needs more money it asks the Treasury
– Fees paid for spectrum then go from the department to
the Treasury then back to the department in a money-go-
round
Part 11: Topics
• Introduction – why authorisation is needed
• Licensed versus unlicensed
• Unlicensed authorisation
• Licensed overview
• Command & Control
• Auctions
• Incentive pricing
• Length of licence terms
• Additional licence conditions
• New approaches – DSA
 Indefinite or fixed term?
• A key question is whether licences should be given out
forever or have a fixed term (eg 15 years)
• Most assume a fixed term – but by comparison most
housing licences are freehold and hence indefinite
• There are good arguments for indefinite as it avoids a
period towards the end of the licence when little
investment is made and avoids the regulator having to go
through a complex re-auction process
• Having an end-date does allow for spectrum to be
repurposed at that point – but in practice it rarely is
• Re-auctioning does allow another opportunity for more
revenue to be raised but so does charging an annual fee for
ach year of licence extension
Part 11: Topics
• Introduction – why authorisation is needed
• Licensed versus unlicensed
• Unlicensed authorisation
• Licensed overview
• Command & Control
• Auctions
• Incentive pricing
• Length of licence terms
• Additional licence conditions
• New approaches – DSA
 Many other conditions can be
attached
• Economists strongly recommend that licences have the
minimum number of conditions so that any secondary
market (eg trading) is not restricted
• But regulators and politicians see auctions / licence issues
as a way to achieve societal objectives and appear to get
something for nothing (since the money lost in the auction
process can never be quantified)
• The sort of conditions include:
– Coverage obligations
– “Use it or lose it” clauses
– Data rate requirements
– Provision of service to Governmental / public safety users
– Requirement to provide wholesale access to the network
Part 11: Topics
• Introduction – why authorisation is needed
• Licensed versus unlicensed
• Unlicensed authorisation
• Licensed overview
• Command & Control
• Auctions
• Incentive pricing
• Length of licence terms
• Additional licence conditions
• New approaches – DSA
 DSA – unlicensed access to licensed
spectrum
• Dynamic spectrum access (DSA) or white space
access allows unlicensed users to access licensed
spectrum by first consulting a database and then
ensuring they do not cause interference
• There are many “light licensing” approaches that
seek to allow unlicensed access but with greater
certainty of freedom from interference through
registration of use
• DSA is currently being proposed for many bands,
especially in the US for bands used by the military
Summary
• One of the key roles of the regulator is to authorise use of the
spectrum
• This can be done by exempting the use from the need for a licence
(unlicensed) or by issuing (a set number of) licenses
• In both cases there is a regime of technical conditions that seek to
avoid interference
• Where licences are scarce a mechanism is needed to decide who
should be awarded them, approaches include executive decision or
auctions
• Pricing can be used to encourage users to give back spectrum rather
than hoard it
• Other factors to consider include the duration of the licence and
whether any other conditions such as coverage obligations should
be attached to it
References for further reading:
• Cave, Doyle, Webb, “Essentials of Modern Spectrum Management”,
Cambridge University Press
• ITU, National Spectrum Management Handbook,
http://www.itu.int/pub/R-HDB-21
• Ofcom, Spectrum Framework Review -
http://stakeholders.ofcom.org.uk/consultations/sfr/
• Ofcom, Spectrum Attribution Metrics -
http://stakeholders.ofcom.org.uk/binaries/consultations/spectrum-
management-strategy/annexes/Spectrum_attribution_metrics.pdf