Weekly wrap: why I think indefinite spectrum licences are a bad idea

One of the proposals in the European Commission’s Digital Networks Act (DNA) is for licences of unlimited duration, or at least 40 years (Article 24).  

Either way, this is a steep increase in licence duration from the current norm of 15-25 years.

The measure is, predictably, supported by the mobile industry.

Of course, the legislation includes safeguards such as regular reviews and the means to remove a licence from the holder as a last resort.

However, there are two problems with the idea of indefinite licensing.

Firstly, supporters argue that such licences offer long-term certainty and so encourage long-term investment. Yet surely current spectrum licences, of 20 years, for example, provide enough time for a return on investment?

History supports this thesis. Few, if any, mobile network operators in the entire history of the industry have ever gone bankrupt. There have been occasional instances of operators returning licences in exceptional circumstances, where too many have been awarded (six in a small country, for instance). These instances remain rare.

Twenty years is ample for a cycle of capital expenditure on network equipment to be followed by revenues and profits.

In contrast, a company that holds a licence without end lacks the motivation to invest beyond the bare minimum. The incentive to make a return is taken away because there is no payback period.

The current system works. Don’t ruin it.

The European Commission (EC) also suggests that use-it-or-share-it clauses in indefinite licences will ensure the efficient use of frequencies and foster competition. Yet we have seen little evidence so far of a great enthusiasm for spectrum sharing. Niche support for specific applications, perhaps, but not on the scale necessary to fulfil this role.

My second problem with the indefinite licence proposal is that it undermines the principle that the public is lending or leasing spectrum to mobile operators or other providers. In return, the operators provide a service. They do not own the frequencies. Radio waves are a public asset, and should remain that way.

The EC is not proposing to privatise radio waves but it is taking a step in that direction. It feels like regaining an indefinite licence would be a significant battle, probably a legal one and no doubt expensive.

Do we really want our radio spectrum to be owned by a small group of large corporations, or billionaires, for that matter? I don’t think so.

Here are the other stories PolicyTracker has covered this week:

• Scottish private network company Neutral Wireless has used the UK regulator’s new short-notice, short-duration licences to experiment with airborne 5G private networks
• The Croatian regulator’s new spectrum strategy outlines which bands it is considering for local licensing frameworks
• Three Ireland is reportedly in talks to merge with Virgin Media, while ongoing spectrum trades involving all Irish operators promise more of a level playing field in the mobile market
• The Egyptian regulator is awarding spectrum in the 1800 MHz, 2.6 GHz and 3.5 GHz bands to the country’s incumbent mobile operators
• The Russian Ministry of Digital Development, Communications and Mass Media is considering expanding the spectrum it makes available in its primary 5G band, 4.4–4.99 GHz, to facilitate rollout