Simon Forge SCF Associates Ltd All rights reserved

Simon Forge SCF Associates Ltd All rights reserved What do we mean by collective? Demands and rewards Why do we need collective spectrum – the business case The Economic aspects Economic balance between approaches Stimulating the EU economy Achieving collective operation in the EU The technical aspects Means to an end Barriers and catalysts A strategy for usage – when how where why A strategy for combination – mix n match models Criteria for usage Agenda

Simon Forge SCF Associates Ltd All rights reserved Managed – command and control – delegation of central authority Markets – and secondary markets – the property owning model What do we mean by collective? - forms of spectrum allocation Governments and regulators have essentially four choices before them:- Exclusive Use models Sharing models The commons – unlicensed spectrum and use of open source software concepts for any user for any purpose. Uses technological developments for sharing of spectrum. Questions whether spectrum can even be considered as a resource, let alone a scarce resource. A mixed or collective approach – any arrangement for multiple simultaneous users in same geographic area and spectrum range. Includes sharing spectrum in the commons and by overlap and white space or hole filling (dynamically) in other traditionally occupied spectrum regions, relying on technical developments to balance the need for the property ownership – But which choice will maximise economic growth?

Simon Forge SCF Associates Ltd All rights reserved Spectrum utilisation studies in USA and by UKs Ofcom have investigated the degree of usage of the radio spectrum; they indicate many areas of the radio spectrum are not fully utilised. Is the crowded spectrum all a myth? Is it really free for all ? Source: OFCOM /Dettmer R, Up the revolution, IEE Review, May 2005, p. 44 RURAL UK SUBURBAN UK DENSE URBAN UK Todays spectrum scarcity is very much an artificial product of archaic public policies On average, only slightly more than 5% of the USA radio spectrum is used nationally at any given time. McHenry, Mark A., NSF Spectrum Occupancy Measurements Project Summary, 15 Aug. 2005, Vienna, Va. USA, Shared Spectrum Company. Unused Heavily used

Simon Forge SCF Associates Ltd All rights reserved Regulatory proposals based on spectrum as a physical asset denominated by frequencies artificially constrain mechanisms that exploit this super-commons, producing economic inefficiencies Moreover the property model invokes the tragedy of the anti –commons ** - whereby a scarce resource is prone to under-use because multiple owners are each endowed with the right to exclude others A better approach is to draw on usage privileges that do not presuppose ownership, for a universal communication right, allowing anyone to transmit anywhere, at any time – and that this is the baseline rule for wireless communication The commons model refocuses wireless regulation away from the ether as scarce transmission medium and toward the devices used for communication. Unlicensed bands such as Instrument Medical and Scientific are a useful model *EG see : Kevin Werbach, Supercommons: Toward a Unified Theory of Wireless Communication, Texas Law Rev., Vol. 82 P.863 (2004) **see Michael A. Heller, The Tragedy of the Anticommons, 111, Harvard Law Review 621, 623 (1998) A conceptual sea-change about spectrum economics - Gradually, we must question whether spectrum is an ownable asset - Is it just an intellectual construct* whose utility is rapidly decreasing as technology develops?

Simon Forge SCF Associates Ltd All rights reserved The principles of a collective use of spectrum as a layered architecture of ownership Collective Usages Primary ownership Sole usage (safety of life) restricted to public services Sole ownership Auctions, lotteries, Markets & trading of a purchased licence by private operator Public owns Licence-exempt free Commons -any user, any usage Sole usage (Command & Control selection - beauty contest etc) private operators lease public holdings Legacy mechanisms Subletting type Sharing - Commercial terms Borrowing type sharing - agreed or involuntary Co-existence mode Secondary ownership

Simon Forge SCF Associates Ltd All rights reserved What do we mean by collective? Demands and rewards Why do we need collective spectrum – the business case The Economic aspects Economic balance Stimulating the EU economy Achieving collective operation in the EU The technical aspects Means to an end Barriers and catalysts A strategy for usage – when how where why A strategy for combination Agenda

Simon Forge SCF Associates Ltd All rights reserved VALUE in 000 Euros/MHz/year mnEuro Aeronautical Terrestial Terrestrial Fixed linksDefence Maritime Private PMR 2G mobile Other 3G Mobile Radio TV& Emergency (Taxis) Source: Dettmer R, Up the revolution, IEE Review, May 2005, p. 44 The value of spectrum in one EU country which follows a market policy for auctions and secondary market resale (Ofcoms view of the UK) Will an authoritarian managed allocation be replaced by an (authoritarian) search for treasury funds through disposal of public property?

Simon Forge SCF Associates Ltd All rights reserved Why do we need collective spectrum – the business case Needs analysis - new uses for new radio:- Basis for social collateral - higher quality medical & elderly care at far lower cost Diverse industrial usages - manufacture, logistics/retail ( from RFID on) Social and quality of life benefits – constant contact – EU migratory work patterns – juggling multiple lifestyles/workstyles Modes of use in consumer/ professional products –Internet concepts of open usage The value to the EU:- Job creation, in knowledge worker segments GDP stimulation from productivity spillover effects – 0.1% - 0.2% ?? - & GDP/head GDP stimulation directly in revenues and product sales - already 3% of EU GDP comes from mobile in some way (GSM-E) GDP stimulation long-term, by new industries, technologies and service innovation Mobile Price rebalancing – the new business model for e-communications (Internet) and the economic stimulus ( % ??) of lower costs ONLY TRANSCEIVE

Simon Forge SCF Associates Ltd All rights reserved The commons as economic driver – the commons provide Mobile TV Collective Licenced Licence / Licence Exempt Jobs Employment in sector Employment stimulated by spend from sector 0.5 m [6] 0.4 m [7] 2.3 m 1.8 m [9] Indirect Economic stimulus of mobile working, cumulative driving effect of mobile productivity to 2020 [4] Indirect stimulus to the economy by spend of direct impact revenues in other sectors:- User surplus - Social and economic value – difference between what paid and prepared to pay Producer surplus – difference between margins to stay in business and margins actually achieved 0.6% GDP Negligible Growth 165B, EU [5] 95B [8] Direct Operators - services provision - revenues, SCF projected time series estimate Suppliers/distributors - hardware (handsets), software, networks, content, estimate based on 2004 ratio [2] Economic output per MHz at 900 MHz [3] 208B, B, 30B, m, 28 m, B, 2005[1] Economic significance for EU Sources : 1 OFCOM, 2006; 2 CEBR, 2004; 3 Vodafone/OFCOM, 2006; 4 M. Maliranta & P. Rouvinen, 2006; 5 Extrapolation from R. Mourik, 2003 ; 6 GSMA, 2004 ; 7 J. Cardona, 2002; 8 Estimate, OFCOM study, Europe Economics, 2006; 9 Pro rata estimate Novel usages in Health, Elderly care, E-comms networks, RFID etc Direct stimulus in sales, of products and services Indirect stimulus on other parts of the economy Indirect stimulus by spend from sector LOW V. LOW TBD Significant TBD

Simon Forge SCF Associates Ltd All rights reserved Why do we need collective spectrum – the business case Comparing the value to the EU of a commons with the markets based approach Licensed – more likely usagesLicence- exempt – more likely usages Mobile services - cellular TV /radio entertainments & ads Fixed radio local loop Mobile services – non-cellular /cellular Fixed radio local loop Innovation in radio-based services Health Elderly care Service sector and Industrial processes Innovation in radio-enabled products using ICT based models Repricing impacts on existing services

Simon Forge SCF Associates Ltd All rights reserved Catalysing maximum economic growth Spectrum management method Innovation Effect Economic Growth Impact (GDP growth and jobs) Administratively Managed - command and control Low innovation and glacial pace of introduction Incumbents protect territory Low opportunities for new job creation as unlikely to seed new industries, segments or competition Markets – and secondary markets Low/medium and slow – must return investment from last generation – the 3G affect. Spectrum bought to shut out or slow others/new technols Higher than command and control But medium/large sums required imply slow release of general economic benefits as a series of large-scale builds The Commons High – fast and easy entry as little or no red tape High if and when technology appears for sharing effectively Mixed or collective approach High – as low barriers to entry and can share outside commons High – opportunity for new products/services and secondary spillover effects

Simon Forge SCF Associates Ltd All rights reserved Economic- social Factors Command and control Markets & Trading with exclusive usage rights Commons with appropriate technologies Collective approach – Commons/Markets/ C&C & co-existence techniques Promote competition (in services, infrastructures and technologies) -+/-++ Incentive to invest in new technology & equipment Promote new services Promotion of spectrum neutrality – technical and application service - flexibility for any service or technology -+++ Promotion of broadband access in rural areas +/- +++ More flexibility in spectrum usage to overcome scarcity - create a friendly environment for innovation -+++ Empowering spectrum users (the market players) to decide upon usage as much as possible -+++ Prevention of abuses of market power/ monopoly +/--++ Promotion of social interest factors eg cultural diversity, public/minority interests +/- ++ Maturity of technology - feasibility of full usage of new sharing technologies in the near-term Resolve single market and harmonisation issues -+/-+++ Control interference to single frequency technologies Adaptability to novel technology development Stimulating the EU economy - measuring spectrum management methods against Economic success factors Key : Positive force + ; Negative impact - ; Neutral effect +/- ; Strongly positive ++ Simon Forge SCF Associates Ltd All rights reserved

Simon Forge SCF Associates Ltd All rights reserved What do we mean by collective? Demands and rewards Why do we need collective spectrum – the business case The Economic aspects Economic balance Stimulating the EU economy Achieving collective operation in the EU Technical aspects - the means to an end A strategy for usage – when how where why A strategy for combination Agenda

Simon Forge SCF Associates Ltd All rights reserved New technology which:- - allows transparent overlap of multiple signals (direct spread spectrum) - reuses occupied spectrum - adapts and compensates with cognitive radio/SDR Growing demand for radio usage means the spread of More Unlicensed bands in breadth and number More sharing – explicit agreements or unknown borrowing

Simon Forge SCF Associates Ltd All rights reserved Technologies that could change how spectrum may be allocated Software Defined Radio (SDR) Cognitive radio (CR) and the white space / borrowing opportunity Sharing concepts of underlay and overlay- direct spread spectrum and UWB Spatial multiplexing using multiple-input, multiple-output (MIMO) beam forming Mesh and ad hoc networks – self organising, self optimising – coverage extension Compression: coding of digital signals in less bandwidth Bit rate encoding: number of bits per Hertz of bandwidth transmitted

Simon Forge SCF Associates Ltd All rights reserved Methods of sharing for Collective use Interstitial - White spaces - Dynamic temporal (CR) Short range low power (?High freq?) True sharing transparently -advanced signal processing Spatial/ directional mux (mesh/MIMO) High transparency Low UWB Spectrum utilisation efficiency Transparency = 1/interference probability Hi Lo Underlay and overlay

Simon Forge SCF Associates Ltd All rights reserved Radio advances to meet demand for spectrum Highly spread signals (code or spread spectrum) such as UWB Cognitive Radio – dynamic adaptive co-working (time) Smart Antennae – directionally muxed MIMO channels Mesh Networking – self organising (space) Direction Space (cell/domain) Code Time We can multiplex in (at least) four orthogonal dimensions

Simon Forge SCF Associates Ltd All rights reserved Radio prolongation of wired access point

Simon Forge SCF Associates Ltd All rights reserved A strategy for usage – when how where why to use what –Legacy command and control –Legacy markets based –Shared/ co-existence –Commons –Leads to A strategy for combination …..

Simon Forge SCF Associates Ltd All rights reserved A strategy for combination – mix n match models – how to A strategy for living with legacy models of allocation:- Respect existing licensing agreements in terms of bandwidth allocated in medium term Extend licences with sub-let permission clauses (market and public service) Open guard bands where necessary to white space sharing Examine reform of existing allocations where technology enables more efficient usages (eg military and ATC primary radar) A strategy for Introducing CUS models in a regulated manner :– Introduce new rules for co-existence in each part of the spectrum – sub-lets, borrowing, white space and guard bands Introduce EU-agreed commons bands and mechanisms for co-existence with type testing and monitoring, specifically in UHF region (above 4GHz less of a problem) A strategy for co-existing - CUS together with legacy models: progressive developments of CUS application – and how much to give to each type of usage Needs several components-

Simon Forge SCF Associates Ltd All rights reserved Projections of Percentages of each type of spectrum allocation in the EU

Simon Forge SCF Associates Ltd All rights reserved A strategy for usage – How much to give to collective usages Command & Control Market based approach Collective Sharing - subletting Collective - Commons Collective Sharing – borrowing impacts Market National Technology Social General EU Demands* priorities development priorities Economics - Leads to a strategy for unlicensed allocation - and whether pro-active or trails demand Criteria * Latent or expressed

Simon Forge SCF Associates Ltd All rights reserved A strategy for usage – who is responsible? Central accord (EC-level) on bands for an EU commons across all MS (eg a first 20 MHZ in Digital Dividend) –Member State ratified and implemented NRA/MS extensions of licences (commercial and public service) for –Sharing by subletting as formal contract –White space agreements if acknowledged use - eg in guard bands – requires official interference testing –White space type-testing if free use, and monitoring –Type testing for CR dynamic seizing or borrowing if tacitly acknowledged Leads to a blueprint for a new spectrum management structure and strategy for NRAs and EC-level spectrum management, with an EC facilitator/co-ordinator

Simon Forge SCF Associates Ltd All rights reserved General Implications for EU regulators – NRAs mainly, with EC co-ordination and guidelines where useful a)Reshape existing licences (for all management types) subletting clauses added b)Public services - command and control licences incentives to sublet/share added Incentives to relinquish spectrum for commons emphasised Technical audits of efficient usage in periodic reviews for those with mandates to spectrum c ) More active regulatory role in deployment of radio technology:- National interference monitoring continually Type testing laboratories and rigs for interference level conformance, for pre-set power and frequency specs Greater international participation and agreements at technical level d) Gradually, less regulatory activity in commercial licence markets for auctions and trading possibly

Simon Forge SCF Associates Ltd All rights reserved The next step : further estimating the economic impacts of spectrum allocation approaches Create scenarios scenarios to outline main economic impacts of each allocation mechanism, for first directions of economic impacts Analyse each scenario using economic impact estimation approach and compare results (via Tri-level economic aggregation Micro-Meso- macro) Include impacts of the e-factor*, the tele-economy*, on results, and specifically on social overhead capital * Following World bank study on models for long-term impacts of new technology and specifically ITC developments at a global level, 2000 and also impacts of near-zero pricing on demand

Simon Forge SCF Associates Ltd All rights reserved ? Spectrum allocation will advance with demand for ubiquitous, pervasive services with new radio access techniques OpenWorld Unlicensed bandsUnlicensed bands Collective shared usageCollective shared usage Packet RadioPacket Radio BroadbandBroadband MarketsMarkets Markets with administration No sharingNo sharing AuctionsAuctions Spectrum tradingSpectrum trading Property rightsProperty rights Legislative managed command & controlLegislative managed command & control Circuit switchedCircuit switched StateAllocationWorld Command & controlCommand & control BroadcastBroadcast MilitaryMilitary