Saturday, August 23, 2008

A Better Way of Allocating Wireless Spectrum

Allocating wireless spectrum to mobile service operators is a very important subject. Many people have tried to figure out the best way of equitably distributing spectrum to operators and inspite of this being an old global subject, there doesn't seem to be any fair way that satisfies all.

Here I suggest a way out, which I think is fair to all concerned parties. To give you a flavour of my approach, compare wireless telecom with automobile industry. Like spectrum, road space is a scarce resource that needs to be allocated to the users. But there no one talks about affixing and allocating road space to various car manufacturers -- Hyundai gets this portion of road space, Maruti gets this much, Ford gets this much, ...

The road space is allocated to the users as and when they need it. There are no auctions and no controversies. Even though road space is scarce, any number of car manufacturers can set up shop, which increases competition.

Same way I suggest that mobile spectrum needs to be allocated to the users for the duration they talk on phone and not to the operators. That means as many operators can offer their services in a geography as they care without having to pay massive amounts. Here are some basic assumptions of my suggested approach:
  • The amount of spectrum required in a location is a function of number of users to be supported, for the duration they are communicating (voice/data/signalling) AND not necessarily the function of number of operators.
  • Auctioning is unfair because it seeks to extract large amount of cash from operators and pass it to government. These costs get passed on to the mobile users. The objective of spectrum allocation for the government should not be to make money. They get their dues from license fee and taxes in any case. Ideally, the spectrum should be free; no one incurred any costs in creating it, it has always existed naturally and will always be there.
  • The spectrum should be actually allocated to the mobile users for the duration they are communicating, and not to the operators.
  • Since spectrum requirement is a function of number of users, there can be as many operators as possible.
  • Operator-wise spectrum allocation is inefficient because of the following reasons:
  • The spectrum allocated to a particular operator may get full
    (preventing more subscribers to make calls) while spectrum allocated to another
    operator in the same locality is lying idle. On the whole, spectrum is available
    but certain users are still not able to make calls.
  • The spectrum utilisation for each operator continuously varies from
    location to location and time to time. But the spectrum is allocated to each
    operator in the sizes of crude blocks not tuned to exact requirements on the
  • The issue of spectrum allocation is so massive and important that, if necessary, it warrants a little investment in technology improvements and fine tuning of telecom equipment to achieve a fair and efficient spectrum utilisation.


Parijat said...

You make good points and an interesting proposal, albeit drastic. The investment required to make the switch to the new model will be tremendous and it is not clear what the motivation for the Operators will be to make such an investment. The only possibility is for Governments to enact new laws to force Operators to fall in line, but why would government willing let go of a cash cow (viz., spectrum auctioning) unless the public demands it?

I'd like you to explain how wireless communication would work if operators didn't have allocated spectrum. Would each packet of communication carry the identification of the Operator?

Also, Spectrum allocation to Operators results in the Vendor lock-in for the mobile users. What business model for the operators do you foresee in the new Spectrum Allocation theory that you have proposed?

superexpert said...

The following steps are required in order to implement this suggestion:

1. More detailing of the principle suggested here after due discussions and analysis.

2. Evolving a vendor neutral technology standard and protocols (for reserving and releasing spectrum, etc.), probably by ITU or someone similar.

3. Thorough testing.

4. Government to adopt this policy of spectrum allocation. Why would government do this? Because many people in government realise that the objective of spectrum allocation is not to make money but allocate it fairly. They know that auction increases the cost for the operator and makes the service more costly for the users. However, as of today there is not other approach available apart from auction that is evidently fair.

How will it work? The operators will still set up their base stations and their subscriber's phone will make a connection to their base station on a particular frequency. Even today when a particular frequency is occupied, the station doesn't allocate that frequency to another user. All that has to be done is that this station will announce to the nearby stations from the same and other operators that this frequency is reserved until the call completes so that no one else assigns that frequency to any other user in the same geography.

Why will operators support it? One, because government says so. Second, they stand to save huge auction fees - billions of bloody dollars, which don't create any assets.

It's not clear to me how would spectrum allocation to operator cause vendor lock-in. It does exist but for other reasons.

Cheers, Ankur