Spectrum issue – more to it than meets the eye

The industry, quite rightly, is asking the government for clarification regarding its spectrum policies. There is good evidence that more spectrum is required if we want to make the most of all the new opportunities that mobile and wireless broadband technology have to offer our society and our economy.

But at the same time there is a clear issue about the use of that spectrum. In the end spectrum is nothing more than infrastructure and, as we have seen in the fixed network, if infrastructure becomes monopolised some serious issues arise regarding the use of it.

Increasingly mobile infrastructure will follow the same path as fixed infrastructure; it becomes a major utility for the digital economy. There is widespread talk about the digital dividend that spectrum has to offer but it is important to discuss how this dividend is used.

The recent developments in mobile broadband clearly show that the industry structure around mobile networks has stifled innovation. This lack of competition has been described as the happy mobile triopoly, where none of the players really wanted to rock the boat too much – one only has to look at the similarity of prices and products between the three players for evidence of this.

Even more worrying is the fact that for more than a decade the mobile operators have kept their mobile networks closed to any outside content or services, unless those who want to use it pay the operators up to 80% of their revenue. To use the m-payment facility of the mobile operators will cost you 40% of your revenue – compare this with the charges by credit card companies, PayPal, BPay etc and it is obviously outrageous. There will be very few organisations that could build any digital economy services based on such charges.

So to give spectrum to companies that then use it to monopolise – or at least stifle – certain developments is obviously not the right way forward.

ACMA has also consistently looked at these broader and longer-term issues and opportunities, and it has come up with an innovative spectrum plan that would take into account the social and economic benefits of the nation as well as the commercial interest of the spectrum buyers.

There have been discussions on wireless commons, shared infrastructure requirements, etc. While these are still tricky issues further discussions are taking place in relation to intelligent transport systems, emergency services and some of the private systems.

We understand that ACMA has also been looking at new opportunities in areas such as Ultra Wide Band (UWB) and ‘white spaces’ (unused spectrum). New developments in increasingly more sophisticated software-based wireless devices are making it possible to start looking at cognitive radio systems, where either a network or a wireless node changes its transmission or reception parameters to communicate efficiently, avoiding interference with licensed or unlicensed users.

These new developments are essential if we want to make the most of the opportunities that wireless broadband has to offer. Governments around the world increasingly see the need to use the broadband network to assist them in addressing some of the problems in the delivery of healthcare, education, public safety, smart grid services and other government services. As the present Australian government rightly concluded, this requires a structural separation between infrastructure and services. There is no doubt that wireless and mobile broadband will also play a key role in the delivery of these trans-sector services. The many mobile pilots and trials within these sectors have all come to the conclusion that utilising the vertically-integrated service from the mobile operators makes it impossible for them to build an affordable business model for a mass market deployment of these applications.

ACMA is showing its leadership here also. It played a major part in the broadband over powerline (BPL) debate and has since moved its developments in this area onto smart grids and smart infrastructure in general. Obviously some more serious industry-wide discussion is needed before we can fully realise the spectrum benefits associated with these activities.

All of this needs to be considered when we develop the wireless and mobile infrastructures for the next decade. Social and economic benefits will most certainly outweigh the pure commercial financial gains, so, rather than trying to fetch the highest price at these spectrum auctions, these social and economic benefits need to be monetised in order to develop a sound social and economic business model.

Recent OECD reports clearly show that the savings that can be made by sectors such as healthcare, transport and education could easily pay for the cost of rolling out national broadband. Locking ourselves into a situation where we can’t use these benefits would be a very serious policy mistake indeed.

If we don’t do this right now the country will end up in exactly the same situation as it did in relation to the fixed market, where Telstra (only interested in the financial benefits of its shareholders) was not willing to come up with infrastructure or wholesale models that would make it economically viable for others to use that infrastructure.

Paul Budde

BuddeBlog