By Ross Bateson, Access Partnership.
The power centre from which decisions about spectrum policy are made has shifted in Europe, and there are shifts underway in the rest of the world too. Last year, national governments in Europe asked the European Commission to figure out whether it could divide the tranche of spectrum that has been made available for mobile satellite service around 2 GHz. In Africa, members of the Southern Africa Transport and Communications Commission (SATCC) have cast doubt on their continued support for pan-African policymaking by suspending their support for the African Telecommunication Union with plans to forge their own way. In the Middle East, those countries with the biggest wireless – not always from big countries – carriers are emerging as those with the most sway in matters of spectrum policy.
2007 will prove a big year for telecom and spectrum matters, and identifying the way through the corridors of power is necessary for anyone involved in wireless communication services.
What does it mean for wireless service providers and satellite operators?
The involvement of the European Commission in spectrum policy is highly significant. While the European policymaking process has for a long time involved the European Commission and its ‘Directorate B’, that involvement has been more a matter of courtesy than of conviction. But where the EU has formerly played an advisory or co-ordination role in the process of deciding how Europe would allocate spectrum, the real work was done by the European Conference of Postal and Telecommunications Administrations, known by its French acronym, ‘CEPT’.
A presence in Brussels will now be a prerequisite for any major wireless operator. If you are hearing about a decision or policy only after it has been published in the national press or the official gazette, then you can be sure it is too late.
By contrast, changes in Africa may add additional transparency to the spectrum allocation process, and are likely to have a salutary effect on the price of services and equipment as well. Where the African Telecommunications Union (ATU) will still, for the moment, be responsible for co-coordinating African positions for the up-coming World Radiocommunication Conference (WRC), the countries of Southern Africa are taking co-ordination to a new level. In recent meetings they have not only developed common positions towards international negotiations, but have also moved far towards harmonising their own spectrum allocations, a step which will help greatly in developing a more coherent wireless communications market among the members, and which will ultimately lead to cheaper equipment and service subscription rates for the region’s consumers. Leaders of the SATCC spectrum group include South Africa, Lesotho, and Uganda. Other parts of Africa have already taken moves towards developing a regional position before approaching the ATU. These are traditionally led by one particular country in that region. Thus the Cote d’Ivoire has influence in West Africa, Cameroon in Central Africa and Kenya in East Africa.
Even in the Middle East, where spectrum policy was for many years the reserved, and very much closed, domain of the military, a certain openness has emerged. The governments which play host to networks such as the UAE’s Etisalat, Egypt’s Orascom, and Morocco’s Maroc Telecom, are insisting on a wider role in the development of communications policy in the region, the better to support the international ambitions of their national operators. In doing so, they are positioning themselves as the (perhaps unwitting) power brokers of the region, and as such are creating additional portals through which to see and gather information about the region’s spectrum policy. Conversations about spectrum access in Sudan or Iraq, for example, take place in Cairo and Abu Dhabi.
The importance of 2007
These shifts in regional power hubs are of particular importance this year in the run up to the World Radiocommunication Conference (WRC). In Geneva this October, various decisions will be made which affect the access telecoms companies will have to spectrum for decades to come.
Out of nearly 30 items on the agenda, the attention for most mobile operators – and Telecom Finance readers – will be on Agenda Item 1.4. This strand of the meeting is concerned with finding new spectrum for what the ITU calls ‘IMT-2000 and beyond’. The ITU has identified the need for a lot more spectrum to be made available to the International Mobile Telecommunications (IMT) – 3G and 4G mobile technology – family by 2015 or so.
The fun begins with attempting to work out where that spectrum can be found in an ever-more crowded spectrum plan. Satellite services, broadcasting, fixed wireless and WiMAX-type services must all compete for spectrum with each other and the IMT players, of course. All have discreet needs and their services have distinct values which will be appreciated in vastly different ways from country to country and each administration gets their vote.
The WRC’s Agenda Item 1.4 involves the identification of which candidate bands, from a handful of them, should be allocated to IMT-2000 services. Of these, the debate so far has centred around two. First comes the sub 900MHz frequencies which will be made available following the switch off of analogue TV. The second key battleground has been over the higher frequencies at 3.4-4.2GHz, or the C-band.
Digital Dividend Discussions
The sub-900MHz frequencies to become available after analogue TV switch-off, popularly known as the Digital Dividend, are causing debate for a number of reasons. Most countries, even in parts of the world where the Digital Dividend is not likely to happen in the next decade, are happy with the concept that switching from analogue to digital broadcasting will free up some spectrum for the mobile phone companies. There is universal recognition at the ITU that these lower frequencies will help celcos to roll out mobile broadband to rural areas and this recognition is particularly strong amongst developing countries. However, in order to maximise the economic effect that this spectrum will have, it is necessary to find a band that is harmonised around the world as much as possible for mobile allocation.
One of the key reasons for the success of GSM networks has been that the standard started out across Europe using a single frequency at 900MHz. This allowed economies of scale to develop which in turn saw the developing markets able to rapidly roll out reasonably priced mobile networks. For this to be mirrored in 3G and beyond, the mobile phone manufacturers need to be able to mass-produce their handsets in as many markets as possible and this is greatly aided by having them all working off the same radio frequency.
Yes, nowadays it is possible to produce tri- and quad-band phones that will work in several areas, but these remain the expensive tools of the highly industrialised markets. The simpler a handset is, the cheaper it is to produce and mobile phone manufacturers will be able to substantially reduce equipment costs with harmonised spectrum.
Therein lies the rub. Different regions – the ITU has three which groups Europe, the Middle East and Africa into Region 1, the Americas into Region 2 and Asia into Region 3 – have different spectrum allocations and this has proved challenging. The UK, for example, has identified some spectrum at the very top of the band, above 800MHz. The US and Canada, meanwhile, wish to allocate spectrum lower than this, and every country has its own opinion on where the best place for allocating spectrum in the band lies. With this band ranging from 470-862MHz, estimates are that getting a phone to work right across this spectrum will necessitate production of an octo-band handset.
The rationale behind regional differences is understandable. Re-tuning TVs and moving military users, say, into new frequency bands is an expensive business. Using different spectrum for mobile communications to the rest of the world, however, could well prove more so. Everyone wants harmony – at the ITU as with the rest of the world – but no-one is agreed on how to achieve it.
The other talking point regarding finding new mobile spectrum is the presence of the 3.4-4.2GHz ‘C-band’ among the potential candidates. This band is allocated to fixed satellite services (FSS) throughout the world. The FSS players use the spectrum to provide important communications and safety-of-life services and the band is particularly used in tropical areas as signals do not suffer degradation from high rainfall.
Thus many developing markets in large parts of Africa and Asia are heavily reliant on the band, and cutting off basic communications and services such as tsunami warning systems in developing markets is not a popular concept at the ITU.
However, this band is the biggest chunk of spectrum on offer, and its potential value in offering high bandwidth services is substantial. Various capacity-hungry countries, led by Japan and South Korea, are keen on this piece of spectrum for their fourth generation mobile networks. A deep rift has thus been created in Asia either side of the Yellow Sea. Japan and South Korea – first movers in technology take up as ever – support the spectrum for 4G mobile. China, Thailand, Malaysia and Indonesia among others are vocal in their support of this for satellite services.
The spectrum is very popular with the WiMAX players who see this as an opportunity to catch up with their mobile counterparts in the spectrum land-grab. The battle lines are drawn, and studies looking at sharing the band between WiMAX and satellite services have proved – at best – inconclusive. Discussion looks set to continue for a while yet.
Whatever your technological persuasion, 2007 is a critical year in mobile spectrum and will have a huge impact on the future economic progress of the telecoms industry. While memories of the hangover from the 3G licensing process in 2000 remain, the value of spectrum is clearly on the rise. Last year’s Advanced Wireless Services spectrum auction in the US, in which the top bidder T-Mobile USA paid US$4.18bn for spectrum, showed that telecoms entities have not lost their willingness to pay top dollar per MHz pop.
What is more, the sub-900MHz spectrum likely to come online in the industrialised world in the next few years represents the pick of the bunch for many companies and some value estimates of a 700MHz-range sale in the US have gone into tens of billions. Issues with the C-band will affect everyone in the comms industry, whether your telecoms or TV network is reliant on satellite in this band, or your interest is in high capacity, future generation networks.
Opportunities to influence how spectrum is allocated and assigned in the various regions have shifted over the past several years. While some old conduits into the decision-making processes of the regions’ governments may still apply, it is important for network operators to develop new portals through which to learn about, and influence, the way this valuable commodity is parsed out. Engaging with those who govern the wireless industry’s life’s blood is important. Keeping abreast of who the governors are is essential.
Ross Bateson works for Access Partnership, a London-based regulatory firm for the communications industry, with a focus on spectrum acquisition and telecoms regulation.