Spectrum auctions are so last century

April 9, 2018

Shortly after Guglielmo Marconi invented the first radios in the late 19th century, he was also the first to observe wireless interference. To counter the issue, he developed a selective tuning approach and filed the 777 Wireless patent in 1901 “for improvements in apparatus for wireless telegraphy”. This patent enabled spectrum to be used exclusively to avoid interference from other users and guaranteed a clear signal between transmitter and receiver.

Over a century later – in the face of incredible advancements in technology and use of the radio spectrum – this approach is still being used. The ‘stay-in-your-own-lane’ technique has proved phenomenally successful. However, in the face of ever-growing use of wireless technology, we need to consider a different approach to continue to keep pace with both the demands of today and those we will face tomorrow.

There is also an added complication; money. Ofcom recently ran the auction to assign the first part of the spectrum to be used for 5G following similar principles to those set down by Marconi. The figures made newspaper headlines: £1.4bn was raised by just four mobile operators.

The money will undoubtedly be a boost for the Treasury and help towards our country’s infrastructure expenditure, but the reality is that the amount paid must be redeemed. Mobile operators need to monetise their investment and return value for their shareholders to maintain their business. They will therefore either increase the cost of their services to customers, or simply take the benefits of the additional spectrum to the areas of highest value – densely populated, urban locations. The rural, isolated areas with few people are expensive places to deploy networks and often get overlooked, leaving those living in these places to labour with poor connections and few options.

The deployment of 4G networks in the UK is a good example of how this approach plays out. Mobile broadband coverage varies drastically depending on location, even between cities: Middlesbrough comes top with 82.7% while Bournemouth sits at the bottom of a list of 20 with just 67.2% [OpenSignal study, 2017]. The rural-urban divide remains stark, as clearly demonstrated in Wales: 62% of urban landmass in Wales has 4G connectivity, but just 19% of rural areas, with 9% of the country having no data service from any operator [Ofcom, 2017].

This problem will not go away if we continue to allocate spectrum for exclusive use to the highest bidder, forcing these companies to push financial targets to make their investment pay. Notably, only four telecoms companies were awarded spectrum in the auction. This leaves the hundreds of small, local WISPs (Wireless Internet Service Providers), who could serve local communities but without the access to the spectrum to do so.

Instead, we should rethink the century-old approach to spectrum allocation and update the methodology for our new digital age. We need to enable new business models and there are various approaches to consider, such as adopting a more regional approach to spectrum allocation that recognises the demands and needs of different locations. This would avoid the use of nationwide licences that preclude smaller operators who are able to adjust to the specific needs of the local community.

It’s perhaps worth considering the approaches that the US has been taking. The Federal Communications Commission (FCC), the telecoms regulator for the US, uses a shared spectrum scheme called the Citizens Broadband Radio Service (CBRS) that allocates spectrum on a shared basis, using a three-tiered model to protect incumbents, enable larger operators and allow for general access for smaller spectrum users.

Ofcom could consider a similar, tiered-approach based on the specific needs of the UK that responds to need, rather than business demand, and that would better suit the connected country we are trying to become – helping to ensure rural communities are not left behind.

Marconi’s brilliant invention has certainly stood the test of time, but his approach to spectrum allocation has, for the increasing demands of this modern age, run its course. Let’s try to solve the not-spot issue and adopt something more ‘now’, that is fit for all – not forgetting the few.