In Business Model, Internet Access, Mobile, Spectrum, Spectrum Futures Conference

Spectrum matters because communications matters, and wireless and mobile communications now dominate all communications globally.

Spectrum sharing matters because communications spectrum is a scarce asset, and demand is growing very fast, both because billions of new Internet access users will come online, and because new Internet apps and devices consume vastly more bandwidth.

There is, for example, almost no uncommitted communications spectrum available in the sub-2-GHz range.

Though there is an expectation that much spectrum in millimeter bands (3 GHz to 300 GHz) can be allocated for communications purposes, most of that spectrum will be severely “short range,” and hence best suited for indoor or small cell applications.

Global mobile data traffic grew 69 percent in 2014, and each succeeding mobile generation seems to grow consumption by an order of magnitude, according to Cisco estimates. Long Term Evolution (4G) devices consume an order of magnitude more data than a non-LTE device, for example.

Any smartphone tends to lead to consumption of 37 times the data of a feature phone, according to Cisco. And smartphones are becoming the standard global device. Where today 28 percent of customers use smartphones, that will grow to perhaps 52 percent by 2018.

Use of Internet access plans might reach 84 percent by 2020, according to Ericsson.

In other words, smartphones will be as common as toothbrushes.

All of that means spectrum matters, as both the number of users, and the amount of bandwidth consumed by those users will grow an order of magnitude in five years.

Some idea of the value of such spectrum is easy to illustrate. It has been estimated that  the value of licensed U.S. mobile spectrum is $500 billion, for example. Likewise, it has been estimated that the value of U.S. Wi-Fi spectrum alone represents $140 billion in value.

To be sure, spectrum sharing also introduces a new element of business model uncertainty, because spectrum sharing can replace a large measure of scarcity with a large measure of abundance.

And abundance means lower value for licensed spectrum, even as it increases the range of sustainable business models that can be built on spectrum.

Nearly all of the most-useful communications spectrum already has been allocated, and much spectrum is inefficiently used.

Today, the U.S. government, for example, possesses almost 60 percent of radio spectrum and possesses over half—1500 MHz—of the valuable 300 MHz to 3 GHz spectrum useful for terrestrial wireless and mobile communications.

Much of that spectrum is lightly used or even not used. At a time when most observers believe people, organizations and businesses will need vastly more Internet and communications capacity, that is a waste of scarce resources.

So the thought naturally occurs: can those users continue to have communications functionality while allowing others to create commercial services? Traditionally, that would have required high cost and much time, neither desirable when Internet and communications demand changes so rapidly.

In fact, a 2012 National Telecommunications and information Administration report found that moving Federal users completely out of the 1755-1850 MHz band would cost  approximately $18 billion and take 10 years.

And that is the reason spectrum sharing is so important. It holds the promise of communications abundance.

Spectrum sharing is a more-efficient way to maximize use of scarce resources, at less cost and delay than required to clear spectrum the old-fashioned way.

Spectrum Sharing Now is Commercially Feasible

Spectrum sharing now is practical because we are able to apply cheap and sophisticated signal processing to communications tasks. As a result, virtually all communications spectrum can be used more efficiently and effectively.

Cheap and sophisticated signal processing allows commercial use of millimeter wave spectrum (3 GHz to 300 GHz) for the first time. The same advances allow us to use existing spectrum more efficiently, moving beyond simple frequency or spatial separation.

Those methods work, but also create fallow resources. Since nobody but the licensee can use the capacity, when the licensee is not using spectrum, nobody else can use it, either. In some cases, as in the United Kingdom and United States, as little as 10 percent of spectrum gets used. In other cases, none of the capacity is used.

Two fundamental approaches now are feasible to allow many users to share capacity without causing interference to existing licensed users, but also vastly expanding the amount of capacity available to support communications and apps.

Devices themselves, or databases, are able to sense or predict where interference would occur, and then shift access operations to non-interfering frequencies or channels. Cognitive radio is an example of the former approach; databases an example of the latter approach.

In other words, where we traditionally have used “command and control” methods–giving certain entities exclusive rights to use certain channels or blocks of spectrum–it is commercially feasible to use other methods that efficiently reclaim unused spectrum.

As Google Principal Wireless Architect Preston Marshall has noted, traditionally we had to isolate users, usages or technologies in order to protect against interference. That is no longer are the only choices.

Licensing traditionally has used spatial division (different frequencies or geographies) to prevent interference. Today, we can use sensing or databases to allow users to share any specific block of spectrum or channels, while still avoiding interference.

The implications are very clear: though physical spectrum is a scarce resource, we often use such resources inefficiently. As Ofcom has noted, in many cases licensed or unlicensed spectrum actually is used at about 10 percent of theoretical maximums.

Spectrum Sharing Can Take Many Forms

Spectrum sharing is the simultaneous usage of a specific radio frequency band in a specific geographical area by a number of independent entities.  Simply, it is the “cooperative use of common spectrum” by multiple users.

Spectrum sharing also can take many forms, coordinated and uncoordinated. Coordinated forms include:

  • capacity sharing between business entities (roaming, wholesale, pooling of assets)
  • TV white spaces (database determines what you may use, when and where)
  • spatial sharing between business entities (you use here, I use there)
  • priority sharing between entities (I have first rights, you have secondary rights) Licensed shared access or authorized shared access are examples
  • license assisted access (bonding of mobile and Wi-Fi assets)
  • cognitive radio (devices determine how to avoid interference)

Uncoordinated forms of access historically is best illustrated by Wi-Fi.

The point is that spectrum sharing can take a number of forms, some confined to contracts and agreements between economic actors while others arguably are more profound.

One might argue that liberalized leasing or trading rules represent a simple case for spectrum sharing.

Forms of sharing that enable shared use of currently-licensed spectrum arguably are among the most innovative.

Someplace in the middle are use of cognitive radio or database approaches to allow shared use of new spectrum, whether licensed or license-exempt.

In some cases, sharing is a business arrangement between entities. Historically, mobile virtual network operator wholesale is a form of sharing. So too is “roaming,” in a sense. In other cases, mobile operators might agree to pool and share licensed spectrum assets.

The arguably more important forms of spectrum sharing use new technology to intensify the use of existing spectrum, such as LSA that allows many users to share a specific block of spectrum.

The concept is to free up capacity quickly by allowing commercial users access to currently-licensed spectrum on a secondary basis, while licensed users continue to retain priority use of their spectrum.

The advantage is that such sharing avoids the huge time and expense of relocating existing users so other users can move in.

So far, thinking has centered around such sharing 2.3 GHz in some regions and 3.5 GHz in other regions.

Licensed shared access (LSA) and authorized shared access (ASA) illustrate the concept.

Such sharing allows licensed services to share spectrum in a band with new users without disrupting existing users, while still increasing the amount of spectrum available for other users.

The new form of licensing is under formal review in the United States and European Union, and will be addressed by the International Telecommunications Union.

This is important for a number of reasons, the most important reason being that it is less disruptive than moving users from their current bands to give access to new users. Not only does this approach save the significant costs for relocating users and their access gear from one frequency to another, it also creates new capacity much faster than any relocation approach requires.

Under the licensed shared access approach, additional users can use the spectrum (or part of the spectrum) in accordance with sharing rules that protect incumbents.

Such approaches almost always will require incentives for the incumbent users to permit sharing.

That might include direct payments from the new user or the regulator, payments to upgrade equipment or take other costly actions than would facilitate sharing or savings on fees paid to the regulator for underused spectrum.

In Europe, such sharing likely will emerge first in the 2.3 GHz band, to support mobile services. LSA is being worked on in France, Finland, Italy and the Netherlands.

The United States is developing an approach to sharing in the 3.5 GHz band, as well. In the U.S. model, a three-layer model is envisioned, with protected incumbent access, priority access (some interference protection) and general authorized access (opportunistic access without interference protection).

An Era of Abundance and Change

Spectrum sharing is one method by which vast amounts of new communications spectrum–hundreds of megaHertz of spectrum–can be made available, faster and more affordably than would be the case if current users were relocated.  

The big coming change is that abundant and affordable computing now makes possible the use of spectrum that was commercially unusable in the past, and also shared use of spectrum that is inefficiently used at present, without moving existing licensed users, something that is both expensive and time consuming.  

Spectrum is valuable. That will continue to be the case. Exclusive rights to use spectrum creates the foundation for commercial applications and also confers business advantage.

But exclusivity increasingly will be challenged.

What will spectrum sharing mean for Internet service providers and consumers? How might industry dynamics and the supply of Internet access services change? Who wins, who loses?

Those are the sorts of spectrum sharing issues policymakers, ISPs and their suppliers must confront, and why Spectrum Futures–a forum for “whole ecosystem” consider of those issues,  exists.

Simply, spectrum sharing affects the future of telecommunications and all businesses built on the use of communications.

So spectrum sharing directly encourages and shapes whole business models, partly by increasing the amount of spectrum; partly by reshaping the value of licensed spectrum and partly by creating space for new business models potential built on either cheaper spectrum or new unlicensed spectrum.

To the extent that use of licensed spectrum has underpinned mobile service provider (and other provider) business models, increased reliance on shared spectrum and license-exempt spectrum will reshape the fortunes of whole industries.

“The norm for spectrum use should be sharing, not exclusivity,” according to the President’s  Council of Advisors on Science and Technology report.

Be clear on this matter: spectrum sharing can be viewed as good public policy because it more efficiently makes available lots more spectrum for Internet access, mobile communications and other applications humans, governments, companies and industries find useful.

Spectrum sharing also represents a revolution in spectrum policy, a challenge to business models based on spectrum scarcity and an opportunity for business models based on sustainability.

We might all readily agree that freeing up lots of new spectrum, unlicensed or at low cost, will be directly helpful to the project of getting billions of new people connected to the Internet, not to mention the future business of connecting sensors and devices to the Internet.

What also matters, though, is the sustainability of business models that support Internet access providers. To the extent that scarcity underpins business models, less scarcity might be a threat of some magnitude.

Conversely, to the extent that license-exempt access supports many other endeavors, more spectrum–licensed or unlicensed–creates additional possibilities across the ecosystem.

And as we already have seen with Wi-Fi offloading of mobile device Internet access, the implications are subtle and complex.

Mobile and fixed service providers now see license-exempt access as part of the access infrastructure, even if larger amounts of unlicensed communications spectrum also might be competitors to mobile access.

Conversely, access to unlicensed spectrum also underpins other business models, including models that might envision use of license-exempt spectrum to create substitutes for some “mobile” services, at some times and some places.

To this point, mobile phone services (among others) have exemplified the former; Wi-Fi the latter. But something very new is happening: licensed and unlicensed capacity are being used in new ways to support all sorts of business models.

As a general rule, we should assume that both licensed and license-exempt communications spectrum will be supported in the future. The issue is how much of each will be used.

Ofcom, the United Kingdom communications regulator, identifies three areas where spectrum sharing will be important:

  • indoor use, generally Wi-Fi
  • outdoor use, generally mobile
  • Internet of Things (IoT), on a variety of platforms

That might be too limited a list. But you get the idea: spectrum sharing is significant because it allows relatively rapid and affordable increases in communications spectrum, without the time and expense of relocating existing users.

Spectrum sharing is important because it also allows more efficient use of new bands of spectrum, often without the expense and overhead of command-and-control mechanisms.

Spectrum Sharing Matters

Spectrum sharing matters because communications spectrum is a scarce asset, and demand is growing very fast, both because billions of new Internet access users will come online, and because new Internet apps and devices consume vastly more bandwidth.

Even as national regulators release new blocks of spectrum for communications use, we also can use new technologies to improve the usage of valuable licensed communications spectrum, without the disruption of relocating existing users.

In one sense, spectrum is artificially scarce, the result of “command and control” licensing. In other words, when spectrum can only be used by one set of users, and those users do not use the assets, the capacity is “wasted.”

That might especially be the case for licensed government spectrum, where users do not have any economic incentives to maximize use of the asset.  

Efficient use of latent and already allocated bandwidth is possible and necessary. Consider present allocations of spectrum.

Total mobile spectrum in the United States is 608 MHz, for example. In France, 555 MHz is available. In Germany 615 MHz is available; in Italy 540 MHz; in Japan 500 MHz; in Spain 540 MHz. In India 220 MHz is available for mobile communications.

In the United States, that works out to 2.1 Hertz per subscriber; in France 9.3 Hertz per subscriber; in Spain 11.8 Hertz per subscriber. In Germany, 6.2 Hertz per subscriber is available.

In India, just 0.2 Hertz per subscriber is available. And that is in a market where voice connections on second generation networks dominate. As 3G and 4G networks come online, and more customers use mobile Internet access services, bandwidth needs will grow an order of magnitude initially.

Beyond that, the impact of smartphones, Internet access and changing application consumption is clear: bandwidth requirements continually increase. In fact, consumer mobile data consumption has grown at 57 percent annually.

At growth rates that high, a variety of remedies are necessary, but more efficient use of existing spectrum must be part of the solution. Spectrum sharing is key in that regard.

by Gary Kim, Spectrum Futures


What will it take, who will lead, and what new opportunities will develop as part of the effort to connect a billion or more new Internet users across South Asia? That is focus of Spectrum Futures, a conference sponsored by the Pacific Telecommunications Council.

PTC is the leading membership organization for telecommunications and information and communication technology (ICT) professionals with interests in the Asia-Pacific region, and the producer of the Spectrum Futures conference.

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