What
is Spectrum Trading?
“In
the traditional administrative approach to assignment and authorization system,
spectrum is first allocated specified uses and then assigned to particular
firms or public organisations that carry out the authorized use according to
specific obligations as are laid down in a licence or permit. Secondary trading
of spectrum, or simply ‘Spectrum Trading,’ permits the purchaser to change the
use to which the spectrum was initially put while maintaining the right to use.”
Spectrum trading allows parties
to transfer their spectrum rights and obligations to another party, in return
for a financial or market benefit. It
allows the present user to decide when and to whom the spectrum authorization
will be transferred and what sum it will receive in return. The market, not the regulator, determines the
value. Further, a consultancy report
commissioned by the European Commission, the consulting firm Analysys was cited
whereby the following methods for transferring rights of use were identified -
• Sale – Ownership
of the usage right is transferred to another party.
• Buy back – A
usage right is sold to another party with an agreement that the seller will buy
back the usage right at a fixed point in the future.
• Leasing – The
usage right is transferred to another party for a defined period of time but
ownership remains with the original rights holder
• Mortgage – The
usage right is used as collateral for a loan, analogous to taking out a
mortgage on an apartment or a house.
Spectrum trading
covers a range of possibilities, from straightforward change of ownership of an
assignment with no change of use to more advanced variants in which assignments
may be divided or amalgamated and use changed.[[2]]
Design
Elements of institutional framework for Spectrum trading
The
success of spectrum trading depends on appropriate institutional framework that
precisely determines how rights of use of spectrum are transferred. In case
spectrum trading is to be introduced in a country, the basic design elements
that will need deliberation will be –
(i)
The band which is available for use;
(ii)
The geographical area in which it can be used;
(iii)
The period for which the licence is entitled;
(iv)
The uses to which it can be put;
(v)
The licensee’s degree of protection from other
users;
(vi)
The licensee’s obligation not to interfere with
other spectrum user’s rights.
(b) Flexibility
or otherwise with Licensees to determine the services they want to provide with their spectrum, using
the technology they deem to be the most efficient.
(c) Transferability
of property rights after trade - sale or lease, in whole or in part.
(d) Terms
and conditions of compulsory purchase backs (with compensation)
if required by government under some extreme circumstances.
(e) Need
for defining or otherwise of the emission levels, interference limits
(f)
Arbitration
mechanisms in case of disputes.
(g) Mechanism
of putting in place a public register [[4]]
to record changes in ownership and to ensure transparency for private users,
effectively displaying information on opportunities and easing entry into
unoccupied bands. [[5]]
[1] http://www.ictregulationtoolkit.org/en/PracticeNote.3076.html;
The ICT Regulation
Toolkit is a joint production of infoDev and the International
Telecommunication Union.
[2]
Messolonghi, September 2002, REFARMING AND
SECONDARY TRADING IN A CHANGING RADIOCOMMUNICATIONS WORLD, Electronic Communications Committee (ECC) within the European Conference
of Postal and Telecommunications Administrations (CEPT)
[4] For
example the Australian Communications Authority (ACA) maintains searchable
register of licences to facilitate trading. - www.aca.gov.au
[5]
The ability of regulators and licensees to keep
track of current licences is an important component of market-based systems and
can be facilitated by a publicly available database. Knowledge of the location
of existing Tx’s and Rx’s (where feasible) will allow potential purchasers of
rights to accurately model the existing interference environment they are
seeking to enter and to enable them to properly assess the rights they seek to
acquire. The database :
- should enable regulators if called upon to
adjudicate spectrum disputes and to enable them to track and assess the
usage of spectrum in differing bands;
- Should include additional tools to analyze, data
on spectrum historical occupancy/usage and to interpret alternative
propagation models.
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