Get your hands off my spectrum! Why the GSMA doesn’t want to share
On the eve of its major MWC annual conference and exhibition, the GSMA has published a report that pours cold water on the concept of spectrum sharing for mobile broadband. Keep it exclusive, is its message, otherwise risk losing billions of euros worth of economic benefits.
To support its stance, the GSMA commissioned a study from Deloitte and Real Wireless to scope and model the strategic and economic impacts on the mobile industry of Licensed Shared Access (LSA). This is a spectrum sharing model in which an incumbent licensed user is permitted to sub-license and share spectrum access with LSA licensees. The idea has been gaining traction amongst regulators and policy makers in Europe and the US, as they try and plan for increased future use of mobile broadband.
There is no question that overall mobile use is increasing – as device penetration increases, smart device data usage increases, and M2M/IoT services come online. There’s also no doubt that spectrum is a fixed commodity. So how do you enable greater wireless use within a finite space?
Leaving aside technology improvements around the air interface for a moment (this will certainly help, but it’s not the sole solution), there are steps that regulators can take that are independent of this technology. Re-farming spectrum is one approach, to make more available to mobile operators (who apparently can never get enough), often to the detriment of broadcasters or the military. There’s the unlicensed approach, favoured by the ‘white space’ community. And then there’s spectrum sharing, on a licensed basis – LSA.
The report utterly dismisses unlicensed spectrum sharing, saying LSA is “the more robust and attractive sharing opportunity for mobile network operators to complement their portfolios of exclusive spectrum. Licence-exempt access, while attractive and beneficial for certain carrier applications and conditions, such as data-offloading, enables only best effort access and performance. It is thus relatively ill-suited for carrier-grade mobile service applications in which reliability and performance are key competitive dimensions.”
And with that put-down, the report moves on to focus on LSA.
There are two types of licensed sharing: horizontal (between mobile operators) and vertical (between an operator and a non-operator). The assessment focuses on vertical sharing, as the report sees this as the more significant and realistic mid-term sharing approach. Specifically, it looks at a model that assesses the prospective value of two potential LSA scenarios – the release of 50MHz in the European Union in the 2.3GHz band from 2020, and of 100MHz in the 3.5GHz band in the United States from 2016.
It assesses the pros and cons of the approach, and the GSMA concludes (in its press release) that the disadvantages to mobile operators outweigh the potential advantages. However, the report itself says that each sharing opportunity should ideally be evaluated on a case-by-case basis, “making a generalised approach impossible”.
“While sharing schemes could provide a complementary approach to ease rapidly growing demand for spectrum, exclusive access to spectrum for mobile use is the optimal regulatory approach, providing the necessary market certainty to stimulate investments in networks and services,” said Tom Phillips, Chief Regulatory Officer, GSMA.
Looking at the advantages first: sharing could quickly reduce spectrum shortages, encourage competition amongst carriers, and generate access fees and GDP growth for governments. It could facilitate better in-building and rural service coverage, increased roaming support through band harmonisation and better user QoS.
Now the risks: Operators would have extra fees and regulatory issues to deal with, they would have to rely on non-exclusive spectrum, have increased technical complexity, possible limited service differentiation, and devices might be an issue – increased cost, reduced battery life, etc. Also, governments might face negative economic impact if the whole sharing model fails.
And then there is the economic analysis. In 2012, another Deloitte study for the GSMA found that doubling mobile data use between 2005 and 2010 led to a 0.5 per cent increase in GDP. There is no doubt that spectrum is a valuable commodity, and its use generates huge amounts of direct and indirect revenue.
A mobile broadband economic model was applied to the European Union, for the period 2013-2030, looking at how an extra 50MHz of spectrum in the 2.3GHz band – if fully deployed in an LSA model – would impact the economics.
If the spectrum was provided on an exclusive basis, this could generate an additional €124bn of value add across the EU28 economies (€55bn in direct effects, €33bn in indirect effects and €35bn in induced effects), including €74bn of tax revenues. In addition, up to €69bn of incremental consumer surplus could also be generated. But if it was allocated on a shared LSA basis, and taking into account the uncertainty derived from the increased risk required by operators to invest, the level of economic benefit would be reduced to €86bn.
“To attract investment and reap the full economic benefits of mobile broadband, regulators need to provide access to a critical mass of spectrum,” said Phillips. “For the EU and US, this can be achieved through the harmonisation of bands, on similar contractual terms and conditions, as well as limited geographic and timing exclusions. For these reasons, shared spectrum is not a substitute for exclusive-access spectrum.”
It is important to note that whilst the GSMA concludes that exclusive spectrum use is best, that’s not quite the conclusion of the actual Deloitte report – which contains a very carefully worded “key findings” summary.
It says that: “operators have noted that in general a solution whereby the incumbent migrates into a subset of frequencies which it retains under exclusive usage to allow exclusive licensing of the remaining frequencies for MNOs is likely to be more efficient and potentially produce a better result for the economy than sharing the entire band.”
Note the phrase “operators have noted”.
Then flick back to the front of the report and Deloitte’s “Important Notice”, where it says: “the information contained in the report has been obtained from the GSMA and third party sources… Deloitte has neither sought to corroborate this information nor to review its overall reasonableness.”
The report actually concludes that: “Spectrum sharing can deliver targeted benefits to MNOs if favourable agreements are reached with incumbents and if regulators provide a policy framework that enables and facilitates a negotiation process without being overly prescriptive in dictating solutions.”
There are many “ifs” in that statement, and these lead to increased uncertainties and risks, which is why the report adds yet again that “each sharing opportunity be evaluated on a case by case basis, making no generalised approach possible.”
“If an appropriate regulatory framework for spectrum sharing is established, all parties will be focussed on maximising the likelihood of investment by MNOs and the generation of the relative benefits,” the report concludes. “Incumbents will be able to compensate their loss of exclusivity, regulators will reduce mobile spectrum shortfalls and will maximise spectrum utility, while MNOs will maximise the economic return from their assets supporting the sharing.”
The report is extensive and there is much to read and discuss – it is an excellent discussion document on the feasibility of spectrum sharing. If you are in any way interested, then we suggest you download it now. Then draw your own conclusions.