Subject: [NEXTEL-1] EC To Undertake Major Study On Spectrum Trading

From: [email-masked]
Date: Fri, 03 Oct 2003 11:29:18 -0400

EC To Undertake Major Study On Spectrum Trading

Oct 01, 2003

Authorities in the United States are closely watching as the European
Commission (EC) is about to embark on a sweeping review of the complexities
surrounding the issue of trading radio spectrum. The EC already has hired three
entities - Analysys Consulting Ltd., DotEcon Ltd. and Hogan & Hartson LLP -
to undertake a strategic study on the subject. U.S. officials are concerned that a

pan-European spectrum trading policy could adversely impact American firms
doing business in Europe, according to Administration sources.

The EC, which is the administrative arm of the European Union, considers the use
of radio spectrum for electronic communications services a fundamental
component for economic growth within the EU. Key consumer services like
broadcasting and cellular telephony, as well as essential services like
transportation, utilities and emergency service providers, are critically
dependent
on the continuing availability of radio spectrum.

More Flexibility Sought

A growing number of EU members states believe that significant economic
benefits might be achieved by improving flexibility in the usage rights relating
to
individual radio frequencies, by allowing these rights to be traded. For example,
as
the radio communications market is characterized by rapid and unpredictable
change, spectrum trading may provide a dynamic means for spectrum rights to be
acquired or disposed of. This could potentially lead to much more efficient use of

radio frequencies.

It is for this reason that many European countries are actively exploring means of

introducing spectrum trading - especially now that the new EU regulatory
framework for electronic communications allows member states to make
provisions for spectrum users to transfer rights to use radio frequencies.

Nevertheless, there are a raft of challenges associated with the practical
introduction of spectrum trading, and the options available for resolving each of
these challenges are varied. Given the wide range of possibilities, there is a
risk
that individual EU member states may adopt disparate approaches. Such a result
would not only prevent the full economic benefits of spectrum trading from being
realized on a European level, it could prove disastrous for U.S. interests on the
European continent, according to sources at the Commerce Department.

Similar to U.S. spectrum policy, rights to use a given radio frequency in Europe
are generally assigned to organizations or 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 licenses are often awarded to a limited number
of organizations following a "beauty contest" or auction (as with mobile phone
licenses).

Previously, the transfer of spectrum rights has been restricted. However, under
the
new EC framework, EU member states may provide 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.

In Search Of Secondary Markets

Notably, there is increasing pressure from the industry in Europe for governments
to allow the creation of secondary markets for the trading of spectrum (e.g., to
allow the sale of 3G spectrum rights). This study will consider a possible
introduction of spectrum trading, including "changes of ownership" as well as
"changes of use" with the main focus on the European dimension.

From an EU perspective, simple inconsistencies over the definition of "property
rights" or trading mechanisms between EU member states could easily
compromise the potential economic benefits arising from a single European
market. Hence, it will be the task of Analysys, DotEcon and Hogan & Hartson to
assess the need for a EU-wide approach regarding the introduction of spectrum
trading across the EU.

The "Study on Conditions and Options in Introducing Secondary Trading of Radio
Spectrum in the European Community" will get underway this fall and is expected
to be completed by next May, according to Louise Nunn, a spokesperson for
Analysys. TPR has learned the study will include an examination of the plans of
individual member states for the introduction of secondary markets for radio
spectrum trading; a review of the experiences in countries outside the EU where
spectrum trading has been implemented; and an analysis of the advantages and
disadvantages of the various options available for introducing spectrum trading
mechanisms.

www.telecomweb.com

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