Radio Spectrum: The Oil of the 21st Century?

 |  Includes: AIRO, ALVR
by: Kenneth Ashworth

In what many termed “the pre-Davos summit,” regulators, politicians and industry representatives from around the world met last week at the International Telecommunications Union [ITU] in Switzerland to discuss the future use of radio spectrum.

What is the importance of such a meeting? Radio spectrum throughout the world is valued at well over $2 trillion. However its management, through government regulation, is somewhat antiquated, and not in step with new technologies that place ever greater demand on this scarce resource.

Martin Sims, of the UK organization Policy Tracker, asked the regulators and ministers in attendance to ponder if radio spectrum is as important for economic growth in the 21st century, as oil was in the 20th century, a notion proffered earlier by the former US Senator Larry Pressler.

As radio spectrum provides the foundation of the global communications and broadcast industries, participants agreed that its importance today is far greater than ever. In contrast to oil, the supply of radio frequencies does not diminish with use or over time, yet it is a scarce resource that must be managed effectively.

The communications industry contributed more that $1 trillion to the global economy last year. It was noted by Dimitri Ypsilanti from the Organization for Economic Cooperation and Development [OECD] that 60-70% of the value added in the economy is from the services sector, which itself relies heavily on communications, and in turn places even greater value on the use and importance of radio spectrum.

Efficient spectrum management

The effective and efficient management of radio spectrum in the 21st century requires greater flexibility amongst government regulators that will allow for a harmonisation of policies and practises on a global basis. As the “guardian of the world’s radio spectrum,” the ITU is in a key position to influence change in the way spectrum is managed. Dr. Hamadoun Touré, Secretary-General of the ITU, noted that the challenge is to maximise access to radio spectrum, while ensuring its efficient use.

According to Frank Greco, Deputy Head of Unit for “Radio Spectrum Policy,” at the European Commission, “flexibility in the use of spectrum can boost Europe’s economic growth and competitiveness by fostering innovation.” He added that companies that rely on access to spectrum are not judged simply on their merit or technology. It is access to this finite resource that determines their success. Thus with faster and more simple procedures that grant access, more companies can participate in the spectrum economy.

Paolo Gentiloni, the Italian Minister of Communications, emphasized that spectrum management must remain transparent, and the allocation of frequencies must be equitable, ultimately providing the consumer interoperability of services, and economies of scale for manufacturers and operators. To achieve this, Minister Gentiloni said that regulation should “avoid rules that prevent the introduction of new and more efficient services,” particularly innovative technologies.

Consumer benefit

The importance of spectrum management today is perhaps most important in the areas of convergent telecommunications technologies, and the benefit to consumers. Dr Touré said during the conference that new wireless technologies would catalyze economic development, especially in rural areas and developing countries. In these areas, he noted that market mechanisms that deliver efficient spectrum management would ensure consumers benefit from the best prices and best services.

Don Whiteside, Vice President of Technical Policy & Standards at Intel (NASDAQ:INTC) further stated that wireless broadband is the main driver of convergence, and in turn the key enabler for crossing the digital divide and enabling all citizens to be included in an enlightened society. As technologies converge and services for television, telecommunications and Internet are no longer separate, the spectrum for these services also will need to become harmonized, according to Erkki Ormala, Vice President of Technology Policy at Nokia (NYSE:NOK). With technology neutral spectrum, and converged services, ultimately the choice for the consumer will not be “what technology” to use, but simply “how” to use it.

Impact on WiMAX

One of the prime beneficiaries of improved spectrum management and harmonisation will be WiMAX. Improved flexibility in the allocation of radio frequencies will aid the WiMAX industry in gaining access to radio frequencies that today are not readily available.

The tenet that spectrum should be technology neutral recently lead the UK regulator Ofcom to decide to auction 2.6 GHz spectrum later this year, which will allow the spectrum to be used with WiMAX.

Technology neutrality is also a key issue that will enable WiMAX to be included in the definition of IMT-2000 at the World Radio Congress in November 2007. According to Frank Greco, there is presently no case for the exclusion of WiMAX from IMT-2000, and there seems to be consensus that the 2.6 GHz frequencies will be aligned with WiMAX by the end of 2007.