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2. Agenda • What do we mean by collective? • Demands and rewards • Why do we need collective spectrum – the business case • The Economic aspects • Economic balance between approaches • Stimulating the EU economy • Achieving collective operation in the EU • The technical aspects • Means to an end • Barriers and catalysts • A strategy for usage – when how where why • A strategy for combination – mix n’ match models • Criteria for usage Simon Forge SCF Associates Ltd All rights reserved 20082

3. What do we mean by collective? - forms of spectrum allocation Governments and regulators have essentially four choices before them:- • Managed – command and control – delegation of central authority • Markets– and secondary markets – the property owning model ‘Exclusive Use’ models The commons – unlicensed spectrum and use of open source software concepts for any user for any purpose. Uses technological developments for sharing of spectrum. Questions whether spectrum can even be considered as a resource, let alone a scarce resource. A mixed or collectiveapproach – any arrangement for multiple simultaneous users in same geographic area and spectrum range.Includes sharing spectrum in the commons and by overlap and ‘white space’ or ‘hole filling’ (dynamically) in other traditionally occupied spectrum regions, relying on technical developments to balance the need for the property ownership – ‘Sharing’ models But which choice will maximise economic growth? Simon Forge SCF Associates Ltd All rights reserved 20083

4. Is the crowded spectrum all a myth? Is it really free for all ? Today’s spectrum scarcity is very much an artificial product of archaic public policies RURAL UK Heavily used On average, only slightly more than 5% of the USA radio spectrum is used nationally at any given time. McHenry, Mark A., NSF Spectrum Occupancy Measurements Project Summary, 15 Aug. 2005, Vienna, Va. USA, Shared Spectrum Company. SUBURBAN UK DENSE URBAN UK Unused Spectrum utilisationstudies in USA and by UK’s Ofcom have investigated the degree of usage of the radio spectrum; they indicate many areas of the radio spectrum are not fully utilised. Source: OFCOM /Dettmer R, ‘Up the revolution’, IEE Review, May 2005, p. 44 Simon Forge SCF Associates Ltd All rights reserved 20084

5. A conceptual sea-change about spectrum economics - Gradually, we must question whether spectrum is an ownable asset - Is it just an intellectual construct* whose utility is rapidly decreasing as technology develops? • Regulatory proposals based on spectrum as a physical asset denominated by frequencies artificially constrain mechanisms that exploit this ‘super’-commons, producing economic inefficiencies • Moreover the property model invokes the tragedy of the anti –commons ** - whereby a scarce resource is prone to under-use because multiple owners are each endowed with the right to exclude others • A better approach is to draw on usage privileges that do not presuppose ownership, for a universal communication right, allowing anyone to transmit anywhere, at any time – and that this is the baseline rule for wireless communication • The commons model refocuses wireless regulation away from the ether as scarce transmission medium and toward the devices used for communication. • Unlicensed bands such as Instrument Medical and Scientific are a useful model *EG see : Kevin Werbach, Supercommons: Toward a Unified Theory of Wireless Communication, Texas Law Rev., Vol. 82 P.863 (2004) **see Michael A. Heller, The Tragedy of the Anticommons, 111, Harvard Law Review 621, 623 (1998) Simon Forge SCF Associates Ltd All rights reserved 20085

6. The principles of a collective use of spectrum as a layered architecture of ownership Legacy mechanisms Subletting type Sharing - Commercial terms ‘Borrowing’ type sharing - agreed or involuntary Secondary ownership Co-existence mode Collective Usages Primary ownership Sole usage (Command & Control selection - beauty contest etc) private operatorslease public holdings Sole usage (safety of life) restricted to public services Sole ownership Auctions, lotteries, Markets & trading of a purchased licence by private operator Public owns Licence-exempt free Commons -any user, any usage Simon Forge SCF Associates Ltd All rights reserved 20086

7. Agenda • What do we mean by collective? • Demands and rewards • Why do we need collective spectrum – the business case • The Economic aspects • Economic balance • Stimulating the EU economy • Achieving collective operation in the EU • The technical aspects • Means to an end • Barriers and catalysts • A strategy for usage – when how where why • A strategy for combination Simon Forge SCF Associates Ltd All rights reserved 20087

8. 16 mn Euro Aeronautical Terrestial Terrestrial Fixed links Defence Maritime Private PMR 2G mobile Other 3G Mobile Radio TV & Emergency (Taxis) The value of spectrum in one EU country which follows a market policy for auctions and secondary market resale (Ofcom’s view ofthe UK) VALUE in ‘000 Euros/MHz/year 1500 Will an authoritarianmanaged allocation be replaced by an (authoritarian) search for treasury funds through disposal of public property? 700 150 Source: Dettmer R, ‘Up the revolution’, IEE Review, May 2005, p. 44

9. “ONLY TRANSCEIVE” Why do we need collective spectrum – the business case • Needs analysis -new uses for new radio:- • Basis for social collateral - higher quality medical & elderly care at far lower cost • Diverse industrial usages - manufacture, logistics/retail ( from RFID on) • Social and quality of life benefits – constant contact – EU migratory work patterns – juggling multiple lifestyles/workstyles • Modes of use in consumer/ professional products –Internet concepts of open usage • The value to the EU:- • Job creation, in knowledge worker segments • GDP stimulation from productivity spillover effects – 0.1% - 0.2% ?? - & GDP/head • GDP stimulation directly in revenues and product sales - already 3% of EU GDP comes from mobile in some way (GSM-E) • GDP stimulation long-term, by new industries, technologies and service innovation • Mobile Price rebalancing – the new business model for e-communications (Internet) and the economic stimulus (0.05 -0.1% ??) of lower costs Simon Forge SCF Associates Ltd All rights reserved 20089

10. Operators - services provision - revenues, SCF projected time series estimate • Suppliers/distributors - hardware (handsets), software, networks, content, estimate based on 2004 ratio [2] • Economic output per MHz at 900 MHz [3] €43B, 2005[1] €208B, 2007 €87B, €30B, 2007 2006 €168 m, € 28 m, 2006 2006 Direct • Economic stimulus of mobile working, cumulative driving effect of mobile productivity to 2020 [4] • Indirect stimulus to the economy by spend of direct impact revenues in other sectors:- • User surplus - Social and economic value – difference between what paid and prepared to pay • Producer surplus – difference between margins to stay in business and margins actually achieved 0.6% GDP Negligible Growth €95B [8] Indirect €165B, EU-27 2007 [5] • Novel usages in Health, Elderly care, E-comms networks, RFID etc • Direct stimulus in sales, of products and services • Indirect stimulus on other parts of the economy • Indirect stimulus by spend from sector LOW V. LOW 0.5 m [6] 0.4 m [7] 2.3 m 1.8 m [9] • Employment in sector • Employment stimulated by spend from sector Jobs The commons as economic driver – the commons provide Economic significance for EU Mobile TV Collective Licenced ‘Licence’ / Licence Exempt TBD TBD Significant TBD TBD Sources : 1 OFCOM, 2006; 2 CEBR, 2004; 3 Vodafone/OFCOM, 2006; 4 M. Maliranta & P. Rouvinen, 2006; 5 Extrapolation from R. Mourik, 2003 ; 6 GSMA, 2004 ; 7 J. Cardona, 2002; 8 Estimate, OFCOM study, Europe Economics, 2006; 9 Pro rata estimate Simon Forge SCF Associates Ltd All rights reserved 200810

11. Repricing impacts on existing services Why do we need collective spectrum – the business case Comparing the value to the EU of a commons with the markets based approach Licensed – more likely usages Licence- exempt – more likely usages • Mobile services - cellular • TV /radio entertainments & ads • Fixed radio local loop • Mobile services – non-cellular /cellular • Fixed radio local loop • Innovation in radio-based services • Health • Elderly care • Service sector and Industrial processes • Innovation in radio-enabled products using ICT based models Simon Forge SCF Associates Ltd All rights reserved 200811

12. Catalysing maximum economic growth Simon Forge SCF Associates Ltd All rights reserved 200812

13. Stimulating the EU economy - measuring spectrum management methods against Economic success factors Key : Positive force + ; Negative impact - ; Neutral effect +/- ; Strongly positive ++ Simon Forge SCF Associates Ltd All rights reserved 200813

14. Agenda • What do we mean by collective? • Demands and rewards • Why do we need collective spectrum – the business case • The Economic aspects • Economic balance • Stimulating the EU economy • Achieving collective operation in the EU • Technical aspects - the means to an end • A strategy for usage – when how where why • A strategy for combination Simon Forge SCF Associates Ltd All rights reserved 200814

15. More Unlicensed bands in breadth and number • More sharing – explicit agreementsor unknown • borrowing Growing demand for radio usage means the spread of • New technology which:- • allows transparent overlap of multiple signals (direct spread spectrum) • reuses ‘occupied’ spectrum - adapts and compensates with cognitive radio/SDR Simon Forge SCF Associates Ltd All rights reserved 200815

16. Technologies that could change how spectrum may be allocated • Software Defined Radio (SDR) • Cognitive radio (CR) and the white space / ‘borrowing’ opportunity • Sharing concepts of underlay and overlay-direct spread spectrum and UWB • Spatial multiplexing using multiple-input, multiple-output (MIMO) beam forming • Mesh and ad hoc networks – self organising, self optimising – coverage extension • Compression: coding of digital signals in less bandwidth • Bit rate encoding:number of bits per Hertz of bandwidth transmitted Simon Forge SCF Associates Ltd All rights reserved 200816

17. True sharing transparently -advanced signal processing Spectrum utilisation efficiency Hi Lo Underlay and overlay • Interstitial • White spaces • Dynamic temporal (CR) UWB Short range low power (?High freq?) Spatial/ directional mux (mesh/MIMO) Transparency = 1/interference probability Low High transparency Methods of sharing for ‘Collective use’ Simon Forge SCF Associates Ltd All rights reserved 200817

18. Code We can multiplex in (at least) four orthogonal dimensions Time Direction Space (cell/domain) Radio advances to meet demand for spectrum • Highly spread signals (‘code’ or spread spectrum) such as UWB • Cognitive Radio – dynamic adaptive co-working (‘time’) • Smart Antennae – directionally muxed MIMO channels • Mesh Networking – self organising (‘space’) Simon Forge SCF Associates Ltd All rights reserved 200818

19. Radio prolongation of wired access point Simon Forge SCF Associates Ltd All rights reserved 200819

20. A strategy for usage – when how where why to use what Legacy command and control Legacy markets based Shared/ co-existence Commons Leads to A strategy for combination ….. Simon Forge SCF Associates Ltd All rights reserved 200820

21. A strategy for combination – mix n’ match models – how to Needs several components- • A strategy for living with legacy models of allocation:- • Respect existing licensing agreements in terms of bandwidth allocated in medium term • Extend licences with sub-let permission clauses (market and public service) • Open guard bands where necessary to white space sharing • Examine reform of existing allocations where technology enables more efficient usages (eg military and ATC primary radar) • A strategy for Introducing CUS models in a regulated manner :– • Introduce new rules for co-existence in each part of the spectrum – sub-lets, borrowing, white space and guard bands • Introduce EU-agreed commons bands and mechanisms for co-existence with type testing and monitoring, specifically in UHF region (above 4GHz less of a problem) • A strategy for co-existing - CUS together with legacy models: progressive developments of CUS application – and how much to give to each type of usage Simon Forge SCF Associates Ltd All rights reserved 200821

22. Projections of Percentages of each type of spectrum allocation in the EU

23. A strategy for usage – How much to give to collective usages Command & Control Market based approach Collective Sharing - subletting Collective - Commons Collective Sharing – borrowing impacts Criteria Market National Technology Social General EU Demands* priorities development priorities Economics * Latent or expressed • - Leads to a strategy for unlicensed allocation - and whether pro-active or trails demand Simon Forge SCF Associates Ltd All rights reserved 200823

24. A strategy for usage – who is responsible? Central accord (EC-level) on bands for an EU commons across all MS (eg a first 20 MHZ in Digital Dividend) Member State ratified and implemented NRA/MS extensions of licences (commercial and public service) for Sharing by subletting as formal contract White space agreements if acknowledged use - eg in guard bands – requires official interference testing White space type-testing if ‘free’ use, and monitoring Type testing for CR dynamic seizing or ‘borrowing’ if tacitly acknowledged Leads to a blueprint for a new spectrum management structure and strategy for NRAs and EC-level spectrum management, with an EC facilitator/co-ordinator Simon Forge SCF Associates Ltd All rights reserved 200824

25. General Implications for EU regulators – NRAs mainly, with EC co-ordination and guidelines where useful • Reshape existing licences (for all management types) • subletting clauses added • Public services - command and control licences • incentives to sublet/share added • Incentives to relinquish spectrum for commons emphasised • Technical audits of efficient usage in periodic reviews for those with mandates to spectrum • c) More “active” regulatory role in deployment of radio technology:- • National interference monitoring continually • Type testing laboratories and rigs for interference level conformance, for pre-set power and frequency specs • Greater international participation and agreements at technical level • d) Gradually, less regulatory activity in commercial licence markets for auctions and trading possibly

26. Create scenarios to outline main economic impacts of each allocation mechanism, for first directions of economic impacts Analyse each scenario using economic impact estimation approach and compare results (via Tri-level economic aggregation Micro-Meso- macro) Include impacts of the e-factor*, the tele-economy*, on results, and specifically on social overhead capital *Following World bank study on models for long-term impacts of new technology and specifically ITC developments at a global level, 2000 and also impacts of near-zero pricing on demand The next step : further estimating the economic impacts of spectrum allocation approaches

27. Markets with administration • No sharing • Auctions • Spectrum trading • Property rights • Legislative managed command & control • Circuit switched • Open • World • Unlicensed bands • Collective shared usage • Packet Radio • Broadband • Markets • State • Allocation • World • Command & control • Broadcast • Military Spectrum allocation will advance with demand for ubiquitous, pervasive services with new radio access techniques 1911 1983 2015? Simon Forge SCF Associates Ltd All rights reserved 200827