A ‘licensed-but-shared’ model may help maximise revenue, utility of spectrum bands
There are two models for sharing spectrum: licensed and unlicensed. Under the licensed model, a company purchases exclusive rights to provide mobile services in a spectrum band. In contrast, the unlicensed model allows different entities to share the same spectrum band for free, if they follow certain protocols.
Can we consider an alternative that allows a spectrum band to be simultaneously licensed to multiple companies for a price, while requiring them to share the band? A ‘licensed-but-shared’ model may help maximise revenue and utility of spectrum bands.
The spectrum scam happened because the licensed model granted exclusive rights to a select group of companies at a low price. This is in stark contrast to the unlicensed model that permits anyone to rig up a WiFi access point for free.
In simple terms, wireless spectrum is a natural resource that is traditionally shared across bands, time, and regions. A spectrum band is a range of frequencies over which electromagnetic waves are transmitted for wireless communication. The government controls the use of a spectrum band and licenses it to a company for its exclusive use for a period of time (usually spanning decades). Some of the bands are currently reserved for military use, while others for satellite communications, television broadcast signals, and even wireless microphones. The same band can also be licensed to multiple companies by giving each company the exclusive right to use it in a certain geographical region.
The licensed-but-shared model proposes to share a spectrum band (at the same time and in the same region) across various companies by exploiting behaviour typical to wireless. Firstly, two companies do not have peak wireless traffic at the same instant. Secondly, the transmission of mobile data can be delayed slightly without a perceptible degradation in quality. A spectrum-sharing mechanism can be developed around these two themes wherein mobile devices deploy intelligent algorithms that sense the spectrum band for traffic and communicate at the first available opportunity when the band is free. This mechanism evenly distributes the traffic load of mobile devices belonging to different operators and thus increases the utilisation of the spectrum band. One of the challenges in the model is to ensure that all the competing entities get an equal share of the band.
A pricing mechanism for spectrum must extract the maximum value of a band while preserving competition.
In the third model, the government can replace the auction process with a fixed price for a spectrum band. Any company that pays this rate can provide mobile services in the band. Companies can be encouraged to pay more if they want a bigger share of the band. The price of a band can be revised periodically, which will reflect the demand for it. It can also be used to control the number of companies operating in a band.
This unique pricing model will allow companies to dynamically adapt their strategy, according to demand. It will also allow smaller companies to challenge the incumbents by paying for cheaper and short-term licences for spectrum.
(The author is employed by Qualcomm. However, the views expressed are his own and not those of the company)