VII. Spectrum Allocation, Assignment and Enforcement
The FCC has had over 65 years of experience in spectrum, allocation, assignment and enforcement. While spectrum needs of other countries may differ from those of the United States, the following core principles have broad applicability to effective spectrum management:
In the Communications Act of 1934 establishing the FCC, Congress gave the FCC a broad grant of power to regulate spectrum "in the public interest." As a result, the FCC is constantly working to ensure that spectrum is allocated and assigned in a manner that minimizes or eliminates interference so that the American people receive the maximum benefits of wireless technologies and services.
The FCC shares spectrum management responsibilities and functions with the National Telecommunications and Information Administration (NTIA). While the FCC has authority over commercial spectrum usage as well as that of local and state governments, NTIA manages the federal government's use of spectrum for defense and other federal purposes. Because radio spectrum is a limited resource and decisions by one agency often affect the other, the two agencies work closely together to ensure that the American public receives the maximum benefits derived from the spectrum resource.
For at least the past two decades, the U.S. has undergone a transition from extensive regulatory planning in its spectrum management toward a dynamic market-based approach. The rapid evolution of wireless technology and ever-changing market demand, make it difficult for any spectrum regulatory body to forecast what services will be available or which frequency range will be efficient for a given service in the near future. The assessment of public demand for a given service is even more difficult. Therefore, we have increasingly adopted a flexible market-based approach. We believe that the certainty associated with extensive long-term planning generally is outweighed by the costs associated with such planning and its inability to accommodate flexible use and the introduction of new services. Although regulators should factor in future considerations in spectrum management, the process should maintain sufficient flexibility to meet future market demands and services. In all of this, the U.S. has attempted to balance its reliance on market forces with the need to safeguard the public interest in those cases where the market does not adequately provide for necessary services, such as public safety services.
General reliance on market forces to shape our spectrum management allows flexibility to respond to the ever-changing wireless communications market. The U.S. relies on private sector petitions to the FCC to determine specific spectrum needs. This approach keeps spectrum management within reasonable and practicable bounds, allowing consideration of specific requirements in the context of the impact on existing users. This approach also enables spectrum regulators to consider issues as they emerge, proceeding on the basis of the most current information while allowing all interested parties participate in the process.
In the United States, the FCC and the NTIA manage the spectrum through a system of frequency allocations, allotments, and assignments. The entire radio spectrum is divided into blocks, or bands, of frequencies established for a particular type of service by the process of frequency allocation. Further, these general allocations can be subdivided into bands designated for a particular service, or "allotment." Within these subdivided bands, specific channel plans may be implemented. For example, allocations made to the land mobile service are divided into allotments for business users, public safety users, and cellular users, with each group allotted a portion of the band in which to operate. Assignment refers to the final subdivision of the spectrum in which a party gets an assignment, or license, to operate a radio transmitter on a specific channel or group of channels at a particular location under specific conditions. The FCC also issues some licenses on a more general geographic basis.
U.S. Table of Frequency Allocations
The FCC has listed U.S. allocations in a Table of Frequency Allocations that can be found in Section 2.106 of the Commission's rules. We invite anyone interested in our rules governing spectrum, including the allocation table, to visit the FCC on the World Wide Web at "http://www.fcc.gov/oet/info/rules/".
Because radio waves transcend national borders, and because of the increasing number of global services, international coordination of spectrum is a critical component of the spectrum allocation process. The radiocommunication conferences of the ITU are the principal mechanisms for international spectrum allocation. The ITU's table of allocations represents a global consensus that reflects the needs of ITU Member States. The scheduling of conferences every two to three years with a specified agenda keeps the table of allocations flexible and current. Its general success is evidenced by, for example, the allocations provided during the 1992 conference for mobile-satellite services that are now coming into use.
These conferences may address any service throughout the entire radio spectrum, dependent on the agendas set by the ITU Council. In addition, there are also Regional Radiocommunication Conferences, which meet as necessary and have a restricted agenda devoted to specific services for the ITU region concerned. Based on the agreements reached at these conferences, the ITU publishes the international Radio Regulations, which include allocations and technical rules for radio operation for each of the three regions of the world. The ITU further designates such allocations as primary or secondary.
Primary allocations grant to specific services priority in using the allocated spectrum. When there are multiple primary services within a frequency band, they all have equal rights. A station, however, has the right to be protected from any others that start operation at a later date.
Secondary allocations are made for services that must protect all primary allocations in the same band. Services operating in secondary allocations must not cause harmful interference to, and must accept interference from, primary service stations. All secondary service stations have equal rights among themselves in the same frequency band.
The impact of an administration's spectrum allocation decisions is rarely confined to that administration's borders. Consequently, it is often necessary to engage in bilateral discussions to coordinate spectrum use at the borders and to resolve potential and real interference problems. For example, the United States routinely engages in such talks with Canada and Mexico. Those discussions have resulted in dozens of bilateral agreements regarding spectrum use between the United States and Canada and the United States and Mexico. For example, bilateral negotiations have been used to resolve interference complaints between each countries television stations operating near or in the border areas.
Bilateral and multilateral negotiations are also important at the international spectrum management level. The United States regularly develops spectrum and regulatory proposals to submit to the ITU World Radiocommunication Conferences. Prior to those conferences, the United States attempts to engage in bilateral or multilateral discussions with as many ITU member administrations as possible. These discussion take place both at regional WRC preparatory meetings where many administrations may be present, and at visits to individual countries. These discussions serve to resolve spectrum allocation and use differences prior to the convening of WRCs.
PUBLIC INTEREST CONSIDERATIONS
When there are competing interests for specific spectrum, the FCC must determine which use or uses of the spectrum will best serve the public interest. Traditionally, this has been done by considering the following factors:
PUBLIC NEED AND BENEFIT
MARKET-BASED APPROACH TO LICENSING
As liberalization, privatization, and competition increasingly characterize wireless communications policy around the world, market-based licensing policies will play a critical role in ensuring that the benefits of telecommunications technologies and services are made available to the widest range of people in the most timely and efficient manner.
In the past, the FCC relied often on comparative hearings, in which the qualifications of competing applicants were examined to award licenses in cases where two or more applicants filed applications for the same spectrum where they cannot all be granted. Comparative hearings, though, proved time-consuming and resource-intensive. The FCC also utilized lotteries in some cases to award licenses. Lotteries, however, created an incentive to acquire licenses on a speculative basis and resell them. More recently, the U.S. has turned to competitive bidding (auctions) to assign licenses. The FCC experience illustrates that competitive bidding represents an effective way to ensure that licenses are assigned quickly and to the entity who values them most highly, while recovering the value of the spectrum resource for the public.
Over the last 5 years, the United States has conducted twenty-one (21) auctions which have provided valuable insights into the advantages of using competitive bidding as a licensing mechanism.
Speed - In order for the public to derive the maximum benefit from spectrum use, authorizations to use spectrum should be assigned in a manner that minimizes delay and inefficiency. The united States has found that competitive bidding is the most effective means of assigning licenses for mutually exclusive applications for initial licenses to provide radiocommunication services, avoiding months or years (as is often the case with comparative hearings or lotteries) of regulatory or other delay.
Transparency - Auctions avoid appearances (and occurrences) of the government making decisions that are biased towards or against individual industry players. They provide a basis by which any potential licensee can determine the basis for the licensing decision. As conducted in the United States, auctions are completely transparent. The rules and procedures of the auctions are clearly established, and the outcomes are definitive.
Promoting Efficient, High-Value Use - Auctions help ensure that spectrum ends up in the hands of those who value it most highly as quickly as possible, thereby helping to avoid wasteful assignment of this scarce resource. This, in turn, encourages that services and technologies be made available more rapidly because the spectrum has been assigned at a cost that is based on the expected return for its use. In addition, "warehousing" of spectrum is discouraged, as auction winners will have to bear the full opportunity cost of letting spectrum for which they have paid go unused.
Preserving the Public Interest - By getting licenses into the hands of those entities that most value the spectrum in the first instance, the public recovers the full value of spectrum.
The FCC believes that licensing mechanisms based on competitive bidding should be considered an integral part of an overall approach to spectrum management that is based on the idea that market forces, not government regulators, are better able to decide what services and technologies consumers will want. For example, auctions combined with partitioning and disaggregation (through which a licensee can sell or lease part or their entire spectrum) allow potential licensees to more closely match market demands with their planned systems.
In this context, some countries have expressed concerns that auctions can lead to multiple service areas and result in fragmented services. The U.S. experience has not shown this to be a problem. To the extent that larger service areas are desired, participants in an auction can bid on licenses in several areas or an entire country (or, in some cases, in more than one country). In addition, if users demand unconstrained reaming, operators will work to interconnect their systems, as is the case with U.S. paging, personal communications service, and cellular companies. Conversely, if market forces dictate that smaller service areas make sense, users can partition or disaggregate their spectrum to match consumer needs. Thus, instead of having government regulators artificially defining market boundaries, other that for initial licensing purposes, auctions and associated licensing rules allow the market to determine the correct service area size.
Cases Where Auctions May Not Be Appropriate
Auctions may not be appropriate in all circumstances. Where there is no mutual exclusivity, auctions are not necessary because the license can more easily be assigned without consideration of any competing alternatives. In addition, there may be cases, public safety and national defense, for example, in which fundamental public policy goals might not be well served by using a competitive bidding mechanism.
There also may also be cases in which the most efficient and effective use of spectrum is achieved not by granting exclusive licenses to winning bidders, but rather through the shared use of the spectrum, either on a licensed -- as is the case with most private services in the United States -- or unlicensed basis. In such cases, other reimbursement methods may be considered to ensure that the public is adequately compensated for use of the resource.
Satellite Licensing and Auctions
In the U.S., the FCC has used auctions to award satellite licenses in only two instances. In both cases, the satellite systems were recognized by treaty as domestic services. The FCC auctioned orbital locations that had been allotted to the United States for the provision of domestic Direct Broadcast (Video) Satellite Service. The other involved domestic Digital Audio Radio Satellite Service (DARS) where no neighboring country had allocated the spectrum that the United States is using for this service.
With regard to the licensing of satellite systems, the preferred approach of the U.S. is to award licenses for as many systems as possible. The U.S. has avoided using auctions in potentially mutually exclusive situations by thorough negotiations and engineering solutions. In the case of fixed-satellite service, for example, auctions have not been used.
For global systems, sequential auctions in countries where the operator would like to provide service could result in uncertainty to the satellite operator as to the final costs of the system. To avoid this uncertainty it would be necessary to create coordinated, multinational auctions in order to address properly the interdependency between national licensing decisions and international provision of service.
However, a coordinated multinational auction would likely involve a substantial investment of time and resources by multiple administrations, raising issues of national sovereignty and access that could delay service. Thus, all parties can benefit if countries avoid mutually exclusive auction proceedings by using other means, such as negotiations among proponents that are coordinated by the regulator and engineering solutions.
FINANCING FOR SPECTRUM MANAGEMENT
Every country faces challenges in ensuring that its spectrum regulatory body has sufficient funding to meet the costs of spectrum management. License fees represent one way to improve the economic and technical efficiency of national spectrum management. At the FCC, two types of fees are collected -- application fees and regulatory fees -- to cover the cost of allocating the use the spectrum. In addition to paying for the administrative cost of managing the use of spectrum, the fees may also serve to discourage the filing of frivolous applications. If set too high, however, fees can result in under-utilization of the spectrum.
As of 1987, the FCC has collected application fees for all FCC-licensed services. These fees are intended to cover only the direct administrative costs of processing a license application. They are set according to the type of service and are reviewed regularly.
In contrast, the FCC's regulatory fees for spectrum users are applied toward the agency's broad range of enforcement, policy, rulemaking and international activities. By statute, the total fees collected must cover (but cannot exceed) the level of funding appropriated by the U.S. Congress for these activities. These fees are assessed annually and vary from service to service.
SPECTRUM MONITORING AND ENFORCEMENT
Effective spectrum monitoring and enforcement requires tools to ensure adherence to spectrum allocation and use regulations, as well as identification and elimination of interference. The U.S. uses a variety of tools to monitor spectrum use and enforce adherence to U.S. rules and regulations. Among these tools are (1) databases of information on licensed systems; (2) information, in the form of national rules, on general licensing and technical requirements concerning specific services; (3) electronic equipment for determining the sources of interference and illegal radio operations; and (4) regulatory mechanisms for assessing penalties on licensees not complying with regulations.
In both the domestic and international context, maintaining a database of relevant technical parameters on individual communications systems is one tool necessary to monitor compliance with spectrum use regulations. In cases of complaints of non- compliance with regulations, the regulator need merely access the database to obtain technical parameters to help determine whether a station is in compliance.
In some cases, it is not practical to maintain a database on all licensed systems and that system's components. For example, many systems communicate with consumer handsets that are not individually licensed. In those cases, codifying general licensing conditions and technical requirements in a rule book provides a basis for determining compliance.
With either a database of actual system parameters or a rulebook stating required conditions, spectrum regulators can conduct engineering and managerial analyses to ensure that operators comply with the relevant technical rules for spectrum use.
Identifying interference sources is also a critical component of ensuring compliance with spectrum use rules. At the FCC, the electronic direction finder has proven to be highly effective for pinpointing interference sources and taking measures to eliminate interference. If an interference complaint is received, the direction finder can be used to locate an interfering transmitter. In domestic cases of interference, a letter can be sent to the operator of the interfering station or a physical investigation of the transmitting site can be made. In the case of interference from international sources, a special note is sent to the administration of the offending operator, informing that administration of the infringement.
In cases of repeated interference or illegal operations, the FCC has authority to assess penalties on the offending party. For this type of action to be effective, penalties related to specific violations must be clearly defined and publicized. Depending on the severity of the infraction, penalties can include warnings, fines, revocation of license, equipment seizure and in severe cases, incarceration.
Another important role of the FCC in spectrum monitoring and enforcement is related to ensuring that radio transmitters and other electronic devices meet certain standards in order to control interference to radio services.
The FCC carries out this role in two ways. First, it establishes technical regulations for transmitters and other equipment to minimize their potential for causing interference to radio services. Second, the FCC administers an authorization program to ensure that equipment reaching the market complies with all technical requirements. The FCC's authorization program requires that equipment be tested either by the manufacturer or at a private test laboratory to ensure that it complies with all technical requirements. Once the equipment has been tested and found to comply with technical requirements, it may be marketed without approval from the FCC. (Self-certification). However, for equipment that has been determined to pose a greater risk of interference, the FCC requires the submission of an application that must be reviewed and approved before the equipment can be marketed.
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