19 Oct 2010

Cellular Spectrum Regulation in Europe (Page 2 of 2)

Many look back as the success of GSM and make the case for Europe to re-adopt an identical regulatory model today. However clocks cannot be turned back. A number of the features of the GSM success were "of their time".

However, perhaps the key lesson is the importance of the full engagement of governments in setting the broad objectives for their national mobile infrastructures coupled with a sense of urgency to ensure their countries are at the cutting edge of having the most advanced communications networks.

Regulatory Generation "3" 2000-2010 (paralleling 3G deployment)

In the late 1980's a tidal wave of "global unregulated free market" liberalism swept out of the US and UK and brought in its wake a new generation of regulatory model in spectrum/mobile radio whose key characteristics are: - Spectrum auctioned to highest bidder in many EU countries (auction rules generally set to secure immediate payment).

  • A pre-disposition to leave as much as possible "to market forces" including the infrastructure vision and pace of development.

  • Placing competition almost as the sole public interest in mobile infrastructure e.g. Ofcom's efforts towards spectrum equalisation.

  • Regulatory "interventions" generally limited to price regulation where market failures are perceived e.g. roaming and termination rates.

The model has delivered a strong economic result in the mobile radio industry, undoubted consumer benefits and provided a flourishing climate for handset innovation (eg the i-Phone. Devices) and devices built around unlicensed spectrum.

However it has been far from a perfect regulatory model and has under-delivered in a number of important respects at the network/infrastructure level:

  • The speed of network roll-out of 3G technology across Europe was very unimpressive (compared to Japan). Japan achieved an extent of national network coverage in 3 years that took most EU countries 6-7 years to achieve.

  • Even today 3G network coverage is "patchy" for very high speed mobile broadband and there are hundreds of thousands of tiny speed black holes even where coverage is supposed to be good. The regulatory model has no effective levers to deal with either issue.

  • Some spectrum auctions have been poorly designed and pure auctions alone did not deliver on all public policy objectives e.g. rural coverage etc..

The regulatory model is not delivering spectrum for new public network opportunities on an EU scale in a timely way (e.g. mobile TV and LTE).

The imperative for ever more mobile network competition seems to have run out of steam. The UK has twice tried to engineer a 5 mobile network operator market and twice this has collapsed, in the first case down to 4 operators and more recently down to 3. Perhaps there is a message here somewhere in terms of a need for a change of emphasis of where regulatory energies are most productively applied.

The evolution of the "global unregulated free market" model in the form of "Spectrum Trading" appears "dead in the water". Spectrum trading was intended to create a liquid market in spectrum that would allow much faster access to spectrum for future innovations. It did not get any traction across the EU even as an idea.

If this progression of the market oriented approach to spectrum is "dead in the water", at least for internationally harmonised spectrum, and the model does not allow for "command and control" - it leaves a critical vacuum for bringing on stream new (re-farmed) spectrum for future big ticket radio network innovation.

A Better Regulatory Model

It is one thing to make the case for change but much more challenging to say what such a better model might look like. We can learn much from our recent experiences. From the 3rd (current) generation and 2nd generation models we see that network competition and market forces are critically important engines of delivery.

However the critical success factor of GSM was the engagement and leadership of governments in setting an overall goal for more advanced national infrastructures and injecting a sense of urgency in getting them rolled out on a time-scale to gain all the benefits of being at the leading edge. It is a strange anomaly that governments do engage with the fixed broadband infrastructure and do have visions of fibre optic networks... yet are so detached from advance mobile networks and seemingly devoid of vision and ambition.

Europe is struggling to get out of recession, new investments in infrastructure would help in that struggle and more advanced national mobile networks based upon LTE technology could be implemented at a fraction of the price of national fibre optic networks and be quite complementary to them. This needs to be coupled with a sense of ambition to see a scale of deployment happen in 3 years rather than the 6-7 years that is likely to be the case if we remain on the current trajectory.

Developing a new 4th generation regulatory model for spectrum and mobile radio is a complex undertaking. It is likely to come as a series of incremental changes rather than with "a big bang". Since it will take time...what is needed now is a recognition that change is needed. This needs to be driven by governments setting goals for national and European broadband mobile infrastructures. The visions coming out of the European Commission are too limited in their ambitions and most critically lack a sense of urgency. There are no prizes to be had in a global competitive world in coming second.

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About the author

Stephen Temple (www.stephentemple.co.uk) has had a 25 year Civil Service career that embraced spectrum management, telecommunications policy/regulation, industrial policy and procurement. His achievements include the industrial strategy (GSM MOU) for the highly successful GSM mobile revolution, opening up the 1800 MHz bands for mobile radio, bringing digital terrestrial TV to the UK and was also involved in founding DVB and ETSI. In the private sector he was Director of Advanced Technologies at ntl and then MD of their Networks Division and later Director of Strategic Projects at Vodafone HQ. He was a member of the last Government's Steering Group for the Digital Britain Project and drafted the infrastructure section of the final report.

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