Refarming of Spectrum Resources

Market entry with regard to new wireless-based services is inextricably connected to the assignment of appropriate frequencies.  What is important in terms of market entry are not frequencies in general, but specific frequency ranges for which equipment is manufactured on a large scale and which therefore offers both low costs of network equipment and handsets and availability of handsets and service functionalities.  The success of the European GSM standard (900 and 1800) since the mid 1990s has driven down the costs of equipment and made a plethora of functions available on GSM networks.  In addition, the networking economies offered by the existence of networks in most countries in the world, with few exceptions such as South Korea, provide additional features such as international roaming.  As a result, GSM frequencies are highly valuable and have in many countries been auctioned for high prices.  The CDMA 800 standard, which had a slow start, picked up momentum with massive growth in India and China and has now made CDMA frequencies extremely valuable as well.  As these popular frequencies become occupied and/or become expensive, other frequency ranges such as CDMA 450 are likely to attract the attention of manufacturers and service providers.

The ITU oversees the allocation of spectrum to various services based on three regions.  Yet, equipment is manufactured by companies that see the world as their market and especially with mobile services; handsets do not necessarily stay in one region.  Partly because of the rapid pace of technology and market development and partly because of the inconsistency of the allocations and different national spectrum policies and priorities, frequency ranges are not uniformly available for new services.  For example, the most common GSM handsets that use the 900 MHz and 1800 MHz frequency ranges in ITU regions 1 (Europe) and 3 (Asia Pacific), cannot be used in ITU region 2 (Americas) where those frequencies have been assigned for different services.  An example of technology and market development causing difficulties is the use of CDMA 800 frequencies for AMPS, a now obsolescing mobile telephony standard, in Sri Lanka.

Therefore, the efficient use of wireless requires government action in the form of spectrum refarming, the clearing of frequencies from low-value (by economic and/or social criteria) and reassignment to high-value applications.  This is a complex and difficult task in that the occupants of the frequencies to be reassigned are unlikely to be pleased by the change, because of disruptions to their activities.  In addition, refarming will make the equipment previously used in those frequencies completely unusable, at least in that country.  This means that they must be compensated on a replacement-cost basis.  The funds for compensation must be raised from the beneficiaries of refarming, ideally as part of auction proceeds.

Refarming frequencies for use by IEEE 802.11 type technologies poses additional challenges.  In the old model of exclusive assignments, there is a clearly identifiable entity that benefits from the refarming exercise and can therefore be used as the source of compensation payments.  In the case of unlicensed frequency bands such as 2.4 GHz, there is no identifiable beneficiary.  Thus, the government has to find an alternative source of funding for refarming in these instances.  In addition, the new unlicensed technologies require a range of frequencies that can be used by many in common, rather than the old discrete frequencies.  This also poses a challenge to the spectrum manager.

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