Spectrum Trading: Implementing Secondary Markets in the European Union
Radio spectrum in the European Union has been generally assigned to organizations/individuals on a ‘first-come, first-served’ basis. The principal exception is when the relevant spectrum bands are considered a scarce resource, in which case licences are often awarded to a limited number of organizations following an administrative review or auction (as with mobile phone licences). Previously, the transfer of spectrum rights has been restricted. Under the new European Commission (EC) Framework, however, Member States may make provision for undertakings to transfer the rights to use radio frequencies with other undertakings. If secondary trading of radio spectrum is allowed by Member States it will be easier for licensees to transfer rights to other users. There is increasing pressure from the industry for governments to allow the creation of secondary markets for the trading of spectrum (e.g. to allow the sale of 3G spectrum rights).
A detailed report on spectrum trading that was issued by the EC on May 25, 2004, describes conditions and options for introducing secondary trading of radio spectrum in the European Community. The report states that, in general, benefits from spectrum trading would greatly outweigh the costs associated with trading and liberalization, although there are certain uses of spectrum (e.g. certain global ‘safety of life’ services) where trading or liberalization would not be appropriate.
Summary Recommendations from the Report
- Spectrum trading and liberalization will facilitate introduction of new services and promote innovation; without measures innovation may move outside Europe
- Trading will remove barriers to market entry and promote competition in supply of spectrum-derived services
- Member States should manage implementation of spectrum trading but that national frameworks should have certain common generic features across the EU
The report has four parts:
- Part A: Access to radio spectrum and role of secondary trading provides an introduction to spectrum trading for those not already familiar with this topic.
- Part B: Implementation of spectrum trading examines the areas in which Member States introducing spectrum trading will need to develop policies and frameworks. It goes on to identify the range of options open to Member States.
- Part C: Member State frameworks and stakeholder perspectives discusses the current plans of Member States in respect of introducing spectrum trading, and describes the views of different spectrum stakeholders as expressed during the consultation process.
- Part D: The Community dimension discusses the case for co-ordination of spectrum trading frameworks across Europe and presents the study’s recommendations to the European Commission.
Subsequent to the report’s publication, the EC requested that the Radio Spectrum Policy Sub-Group (RSPG) on Spectrum Trading study the question of implications and conduct public consultation on a number of key questions arising from the report. The RSPG responded by addressing these questions to ensure that the introduction of secondary trading in some or all Member States has a positive effect in the European Community, in particular for the EU internal market and for European competitiveness. A summary of the general findings resulting from the consultation follow:
- Most respondents agree that secondary spectrum trading could be beneficial. Potential advantages of trading include facilitating market entry, permitting more rapid redeployment and faster spectrum access for innovators and new players and allowing new technologies to gain access to spectrum more quickly. For existing operators benefits could include the opportunity to sell unused or underused spectrum and make more flexible use of spectrum.
- Potential drawbacks relate to competition and interference control and market fragmentation. Sufficient safeguards need to be implemented by administrations to ensure that the potential benefits of this introduction are not offset by adverse consequences.
- A phased introduction of secondary trading is favoured. This should take into account the possible interaction between the issues of trading and making licences more flexible.
The RSPG issued an opinion on spectrum trading in November 2004 taking a phased approach to introduction initially in bands where there would be minimal impact and restricting trading to bands other than those used for the following services:
- used for government services (e.g. for defence and security) and safety-of-life services (e.g. for civil aviation);
- allocated to terrestrial broadcasting service, to the broadcasting-satellite service and the fixed-satellite service where it is used for direct-to-home television allocated to scientific services (e.g. radio astronomy, Earth-exploration, space research).
European Commission, Study of options for introducing Secondary Trading of Radio Spectrum in the European Union: Executive Summary, May, 2004.
The Radio Spectrum Policy Group Opinion on Secondary Trading of Rights to use Radio Spectrum RSPG04-54 FINAL VERSION, Nov, 2004.