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7 February 2018

From Germany to Australia, regulators know the spectrum system is creaking

While regulators round the world are watching the CBRS saga (see previous item) with interest, many expect these flexible systems, with new approaches to license time and place, to be mainly relevant to 5G policy, where there is a greater chance to rewrite the rules. The debate is heating up, around the way that licensing frameworks will need to change to enable 5G to achieve its objectives amid moves to wireline/wireless convergence, dynamic spectrum regimes and multiple mobile use cases including those in the Internet of Things.

In the US, the disruptive approach to spectrum has been backed heavily by the cable and Internet community, as well as consumer advocates, with companies like Google providing heavyweight support – largely in the face of opposition from established MNOs.

In some other countries, however, even the big operators are recognizing the need for a radical new take on spectrum in 5G – though mainly with a view to reducing their own costs. In Germany, Markus Hass, the CEO of Telefónica Deutschland, recently warned that 5G “won’t work out” if the regulator holds a conventional, competitive auction but also insists on imposing rural coverage targets.

Politicians including Chancellor Angela Merkel have proposed investing €20bn ($25bn) in the roll-out of higher speed fiber networks, possibly funded by the proceeds from a 5G auction – which has led to Deutsche Telekom warning of “political considerations” inflating spectrum prices. (Another suggestion is that the fiber should be funded by the government selling its 31.9% stake in Deutsche Telekom).

Last week, the regulator, the Federal Network Agency, published a draft proposal for initial 5G auctions – of 120 MHz of paired frequencies in the 2 GHz band, and a 300 MHz unpaired block in 3.6 GHz. The auction should be conducted before the end of the year.

Some analysts believe that, if midband spectrum is auctioned in the traditional way and looks set to be very expensive, MNOs will just shun the process and rely on refarming sub-6 GHz 2G, 3G or 4G bands, and supplementing capacity by using plentiful millimeter wave frequencies. Of course, the barrier to that approach is that the regulatory conditions for most mmWave bands are even less certain, and likely to be decided over a longer period, than those for midband 5G. Some unlicensed mmWave bands are already in commercial use, such as 60 GHz for WiGig and those above 70 GHz for wireless fiber in some countries. But the main licensed options are the former LMDS frequencies between 26 GHz and 39 GHz, which still present technical challenges to support full mobility and affordable devices; and are not available in many areas.

A more progressive approach has been adopted by the Australian government, which plans to introduce legislation this year to modernize spectrum management, including adopting a single spectrum licensing framework. While not specific to 5G, this is clearly designed to enable a more consistent, flexible approach that would help make 5G deployable and monetizable.

The government recently announced the results of two reviews into Australia’s spectrum systems, together with a series of recommendations that would be implemented by the telecoms ministry and regulator ACMA.
Central to these recommendations are proposals to
• develop pricing mechanisms aimed at ensuring optimal efficiency of spectrum markets
• allow spectrum to be put to its highest value use
• consolidate tax legislation to support the move to a single spectrum licensing framework.
• create a whole-of-government approach to managing government spectrum holdings
• establish an advisory committee made up of members of relevant government agencies to oversee the new approach.

Communications minister Mitch Fifield said the ideas would help fulfill the administration’s goal to make the most significant reforms to Australian spectrum management for the past 25 years. A package of reforms will be introduced to parliament this year following further consultation with industry, he said.