Path and speed of spectrum management reform under uncertain costs and benefits

Thumbnail Image
Official URL
Full text at PDC
Publication Date
Advisors (or tutors)
Journal Title
Journal ISSN
Volume Title
Instituto Complutense de Estudios Internacionales (ICEI)
Google Scholar
Research Projects
Organizational Units
Journal Issue
The unsolved question in spectrum management is no longer if a reform is necessary to enable higher market participation but the optimal path and speed of reform. We offer an expression to determine when to choose a gradual or big bang reform depending on current and expected technology and an expression to determine whether to wait or not for new technology. Gradual is better if the technological advance coefficient is high, the reversibility of the reforms is costly, the duration of the second reform is long, the probability of an outcome lower than expected is considerable or the reforms are not too complementary.
Unesco subjects
Alden, J. (2012). Exploring the value and economic valuation of spectrum. Report prepared for the ITU. Baumol, W., and Robyn, D. (2006). Toward an Evolutionary Regime for Spectrum Governance: Licensing or Unrestricted Entry? Brookings Institution Press. Bazelon,C., McHenry,G.(2013). Spectrum value. Telecommunications Policy, Volume 37, Issue 9, October 2013, Pages 737-747, ISSN 0308-5961. Benkler, Y. (2002). Some Economics of Wireless Communications. Harvard Journal of Law & Technology, 16 (1), 25-83. Cave, M (2002). Review of radio spectrum management. Report for Department of Trade and Industry and HM Treasury. Cave, M. and Webb, W. (2003). Designing Property Rights for the Operation of Spectrum Markets. University of Warwick (UK), Warwick Business School Papers in Spectrum Trading, num. 2. Cave, M., Doyle, C. and Webb, W. (2007) Essentials of Modern Spectrum Management. Cambridge University Press. ISBN 9780511536724 Cave, M., Webb,W. (2012).The unfinished history of usage rights for spectrum. Telecommunications Policy, 36(4), 293–300. Cave, M. Pratt, N. (2016). Taking account of service externalities when spectrum is allocated and assigned, Telecommunications Policy, Volume 40, Issues 10–11, October 2016, Pages 971–981. Coase, R.H. (1959). The Federal Communication Commission. The Journal of Law & Economics, 2, 1-40. Coase, R.H. (1960). The Problem of Social Cost. The Journal of Law & Economics, 3 (1), 1-44. Cornes, R. & Sandler, T. (1996). The Theory of Externalities, Public Goods and Club Goods. Cambridge University Press. Dewatripont, M.,and Roland,G.(1995).The design of reform packages under uncertainty. The American Economic Review, 85(5), 1207–1223. Dixit,A. (1992). Irreversible investment with uncertainty and scale economies. LSE Research Online Documents on Economics 19372, London School of Economics and Political Science, LSE Library. Dixit, A. and Pindyck, R. (1994). Investment under uncertainty. Princeton, NJ: Princeton University Press, 1994. European Commission (2012). Communication from the Commission to the European Parliament, the Council, the European economic and social Committee of the regions. Promoting the shared use of radio spectrum resources in the internal market. FCC (2012). Notice of Proposed Rulemaking and Order in the matter of amendment of the Commission’s rules with regard to commercial operations in the 3550-3650 MHz band, 12 December 2012. Frias, Z., González-Valderrama, C., Pérez-Martínez, J. (2016). Assessment of spectrum value: The case of a second digital dividend in Europe. Telecommunications Policy. ISSN: 308-5961; García, J.M. Valiño, A. (2013). Propuestas para la evaluación de la eficiencia de una atribución de espectro a un servicio de radio-comunicaciones. GCG: Revista de Globalización competitividad y Gobernabilidad. Vol7. Num2, 85-105. García-Zaballos, A., Foditsch, N. (2015). Spectrum Management, the key lever for achieving universality. Inter-American Development Bank. IDB-MG-322. Gillet, S. E., Lehr, W.H., Osorio, C.A., Sirbu, M.A. (2006). Measuring broadband’s economic impact. Final Report prepared for the U.S. Department of Commerce, Economic Development Administration. Goss, E. (2001). The Internet´s contribution to U.S. productivity growth. Business Economics, 36 (4), 32-42. Hazlett, T.W. (1998). Spectrum Flash Dance: Eli Noam’s Proposal for ‘Open Access’ to Radio Waves. Journal of Law & Economics, 41 (2) 805-820. Hazlett, T.W. (2003). Liberalizing US Spectrum Allocation. Telecommunications Policy, 27 (7) 485-499. Kwerel, E. & Williams, J. (2002). A Proposal for a Rapid Transition to Market Allocation of Spectrum, Washington, D.C., FCC - Office of Plans and Policy, Working Paper, 38. Kwerel, E., Williams, J. (2010).The spectrum regulator’s dilemma in a dynamic world: Limiting interference without stifling innovation. Conference held at the Information Technology and Innovation Foundation (ITIF), Washington, DC. Levin, H. J. (1970). Spectrum Allocation without Market. The American Economic Review, 60(2), 209-18 Litan, R. & Rivlin, A. (2001). Projecting the economic impact of the Internet. The American Economic Review, 91 (2), 313-31. López Sánchez, (2004). ¿Pueden las Tecnologías de la Información mejorar la Productividad? Universia Business Review, 1(1), 82-95. López Sánchez, J.I., Minguela Rata, B., Rodriguez Duarte, A., Sandulli, F.D. (2006). Uso de Internet y paradoja de la productividad: el caso de las empresas españolas. Cuadernos de Economía y Dirección de la Empresa, 2, 149-174. Minervini, L.F. and Piacentino (2007). Spectrum management and regulation: Towards a Full Fledged market of spectrum bands. Working Paper num. 7. Università degli Studi di Macerata. Dipartamento di Studi Sullo Sviluppo Economico. Minervini,L.F. (2014) Spectrum management reform: Rethinking practices. Telecommunications Policy, Volume 38, Issue 2, March 2014, Pages 136-146, ISSN 0308-5961. Noam, E. (1998) Spectrum Auctions: Yesterday’s Heresy, Today’s Orthodoxy, Tomorrow’s Anachronism. Taking the next step to open spectrum access. Journal of Law and Economics, 44, 765-790. PCAST (2012). United States President’s Council of Economic Advisors on Science and Technology (2012). Report to the President. Realizing the Full Potential of Government-Held Spectrum to Spur Economic Growth, July 2012. Pindyck, R.S. (1993). Investments of uncertain cost. Journal of Financial Economics, num. 34, Issue 1, 53-76. Prasad, R. (2015). The production function methodology for estimating the value of spectrum, Telecommunications Policy, Volume 39, Issue 1, February 2015, Pages 77-88, ISSN 0308-5961 Radio Spectrum Policy Group (2011). RSPG Report on Collective Use of Spectrum and other spectrum sharing approaches. Smith-Nera (1996) Study into the use of spectrum pricing. London: Radio communications Agency, UK. International Telecommunication Union (2009). ICT regulation Toolkit. Module 5. Radio Spectrum Management. Webb, W (2009). An optimal way to licence the radio spectrum. Regulatory and Economic Policy in Telecommunications, 2, mar09, 100-112. Werbach, K. (2004). Supercommons: Toward a United Theory of Wireless Communication. Texas Law Review, 82 (4), 863-973. The World Bank Group (2016). World Bank Group. 2016. World Development Report 2016: Digital Dividends. Washington, DC: World Bank. License: CC BY 3.0 IGO. AIP have been implemented in the UK and Canada. and-statements/category-1/aip/update201008 More information about the process of an incentive auction can be found at: https://www.fcc. gov/wireless/auction-1000 Normally there will be a different limit for each type of device, for example, one for transmitters and a different one for receivers. In some cases the establishment of ex-ante regulation such as the definition of spectrum caps might be required to achieve effective competition. Spectrum caps are limits to the maximum amount of spectrum that a firm is allowed to use to provide a service. In other occasions ex-post measures might be enough. A complementary explanation is that digital radio receivers are still expensive, and the use of analogue devices is highly extended. Examples of infrastructure involved in high sunk costs are the deployment of satellite networks or undersea cables. Profit generated on account of the allocated spectrum. A list of Federal Spectrum uses elaborated by NTIA (National Telecommunications and Information Administration) can be found at Roaming is the possibility to continue receiving a service when travelling abroad. Roaming can be enjoyed either because a frequency band is harmonized or because user´s terminal can operate in the different frequency bands used in each country. This includes reusing infrastructure like telecommunication towers, the electric feeding system, communication devices and also rights of way and site leasing. There are three types of interference: geographical, out of band and in the band itself. Licenses would establish the maximum interference from the adjacent channel and the maximum out of band interference (Cave and Webb, 2003). The same radio communication device can work as a transmitter and receiver. For example, a mobile terminal is able to transmit and receive. Unwanted energy can also be the result of a combination of emissions, e.g. intermodulation products, or inductions upon reception. For example the use of transmission power control techniques intended to increase mobile phones battery life increases the probability of harmful interference to other systems Transmission devices send part of the power emitted outside their transmission band. The amount of power sent out of band depends on the features of the transmitter´s output filter. Furthermore, due to the existence of intermodulation products, interferences can be produced on frequencies different to those emitted, due to the emission of a mixture of frequencies taking place in the transmitter. There also exists interference caused by the accumulation of out-of-band signals from multiple nearby transmitters. When the transmitter of a new service is located at the coverage edge of the existing services the probability of interference increases. Services with similar typical power tend to share the same or nearby sites thus, reducing the possibility of coverage holes. A receiver can be blocked in the presence of a nearby high power signal. Under such condition the receiver is unable to receive any signal. The existence of guard bands may be necessary even to expand the allocation of a service to adjacent bands. For example, the expansion of mobile broadband to adjacent frequency bands requires creating a guard band of unused spectrum. For example, freeing up the so called digital dividend frequencies required to simulcast new and old television channels during a period of time to let people adapt building reception facilities.