Will Spectrum Sharing Make Telecom Licences Obsolete?
2017.02.15   |   2 pages   |   NextGen Strategy Reports

Author:
Liam Mimnagh


LinkedIn

Share:

Sign up to receive our latest insights and reports

Sign up

Issue: Will Spectrum Sharing Make Telecom Licences Obsolete?

A truly competitive market is largely self-regulating, but major infrastructure investment can be too risky for private capital.  Where this is an issue (as with mobile networks), licensing with regulation has been used by governments to simulate competition and incentivise investment.  But, regulation lags developments, favours incumbents and limits new entrants.  Is it time to deregulate telecoms, moving away from licensing and exclusive spectrum allocations?  What would this mean for MNOs? 

 

Analysis, Inferences and Implications

Telecom licences and spectrum auctions/allocations were designed when voice was the primary service, and large-scale, somewhat speculative infrastructure investments were required in fixed and mobile networks.  Today voice is just another data stream and, having invested in infrastructure and spectrum, network operators complain OTT players, who use the networks to develop lucrative products and services without any permission or access payments (which are anyway paid by the user), have an unfair advantage.  Regulators and network operators also face challenges of network and spectrum efficiency - static fixed-block allocation of spectrum to government (military, aviation) and private (MNO) sectors results in much of this resource being underutilised (i.e. services requiring spectrum not running all the time nor being used in all locations at the same time).

Allocating spectrum using a sharing model with tiered authorisation has the potential to release spectrum to the market.  It offers new entrants such as specialist telecom players, OTT players, the IoT community and other niche players access to spectrum nationally and/or locally and enables them to deliver new services to the public.  Current experimentation seeks to utilise spectrum more efficiently, e.g. to deliver internet services to locations where up until now it has been commercially or geographically unfeasible.  Network operators, who complain of spectrum imbalances within their own market would also themselves alleviate scarcity through use it or share it conditions.   

Allocating spectrum dynamically rather than issuing exclusive licences could create a market whereby participants (OTT or niche players in enterprise or utility sectors) subscribe and pay for spectrum when they need it rather than competitively bidding for expensive blocks of spectrum for a fixed period, paving the way for new and alternative types of network access for specialist players. 

Using this approach, all participants pay for spectrum and, ultimately, for access to the citizen/ customer who is the beneficiary and the primary regulator concern.  Letting the market decide how spectrum is allocated is under consideration alongside some regulators re-evaluating their own role in the now converged world of telecoms and media.  Spectrum sharing may appear as a threat to network operators, undermining sunk investment (connected to licence obligations) but it offers efficiencies (as, for example, Wi-Fi offers MNOs savings through its ability to offload data traffic).

Available returns from fixed and mobile networks are now well understood, so the market provides investment incentives for private capital, depending on the business case.  Combined with dynamic spectrum sharing, the case for licensing is considerably weakened and regulators in advanced markets have already shown a willingness to consider a deregulated market, which will move MNOs into a whole new competitive space where none of their business can be taken for granted.

 

Companies: FCC, Ofcom

Countries: USA, UK

Keywords: self-regulation, spectrum auctions, Voice, Citizens Broadband Radio Service, offloading, tiered authorisation, OTT, mobile networks, innovation band, spectrum sharing, spectrum, MNOs, regulation, IoT, Wi-Fi, Telecom licensing,

1

Issue: Will Spectrum Sharing Make Telecom Licences Obsolete?

1

1.1

Analysis, Inferences and Implications

1

1.2

Supporting Research & Analysis

2

Our Clients

A valuable program, differentiated by its best practice case study approach. Many external providers supply regular updates on MNO KPIs, but it's how operators are approaching these issues we want to know about Orange Group
Mobile Market Development 2015