Using spectrum policy for social and political goals: International evidence

Using spectrum policy for social and political goals: International evidence

Bronwyn Howell

Absent congressional action, the Federal Communications Commission’s (FCC) statutory authority to conduct spectrum airwave auctions is set to expire this year. The United States has been a world leader in spectrum auctions. Well-designed auctions conducted in a timely manner have enabled spectrum, a scarce resource, to be allocated to the most high-value uses in a transparent manner with minimal political controversy. The country’s early deployment of each new generation of mobile technology is a testament to its effective auction policy. Importantly, auctions have also raised significant sums for governmental use in other sectors.

On March 3, anticipating the aforementioned authority expiration, Sens. Roger Wicker (R-MS) and John Thune (R-SD) sent a letter to FCC Chairwoman Jessica Rosenworcel requesting information on future spectrum auction opportunities and auction-rule policy reforms that could promote international competitiveness, maximize spectrum use efficiency, and foster rapid deployment of next-generation technologies. It is timely, therefore, to consider whether other countries’ spectrum policies might inform future US spectrum policy.

A key feature of US spectrum policy has been its preeminent focus on competition, efficiency, and rapid technology deployment. However, in other countries, spectrum policy is being used as a means of achieving social and other goals. Two examples of note are New Zealand and South Africa.

New Zealand: Allocations for indigenous Māori people

Last month, New Zealand’s Communications Minister David Clark and Maori Development Minister Willie Jackson announced that a yet-to-be-formed “Maori Spectrum Entity” would “receive an ongoing allocation of 20 percent of future national commercial spectrum allocations, at no cost.” This is in addition to the 25 percent of spectrum designated for 5G technology under the Maori Spectrum Working Group.

Māori people have long considered spectrum access a right. The 1840 Treaty of Waitangi signed between the British Crown and Maori tribal leaders granted the tribes “exclusive and undisturbed possession of their lands and estates, forests, fisheries and other properties.” Maori tribal leaders have asserted that since they exercised control over the air above their lands in 1840, they are entitled to a share of the spectrum within it. The claim is controversial: The preferred political spin is that the allocation aligns with New Zealand’s obligations as a signatory to the United Nations Declaration on the Rights of Indigenous Peoples.

In the short run, the move has been welcomed by the industry, as the settlement means an auction of 5G spectrum, originally planned for 2019, can at last proceed. In the interim, all operators have used temporary spectrum allocations, enabling some 5G service offerings. However, the certainty of long-term allocations will undoubtedly enable more substantive 5G investments to proceed.

In the long run, future spectrum allocation at no cost to indigenous entities but at positive cost to all other operators will skew the competitive playing field. The indigenous entity can deploy future spectrum-requiring applications at lower cost than any other provider and can either monopolize the market or shield profits from other parties. A historic example is informative here. In 1999, New Zealand’s government allocated a discounted bundle of 2-gigahertz 3G spectrum to an indigenous entity as a one-off gesture. This spectrum subsequently brought new entrant NZ Communications Limited (later renamed “2degrees”) into New Zealand’s market — which would have been more costly and time-consuming had the spectrum not already been gifted.

South Africa: Addressing social inequities

Last month, South African Minister of Communications and Digital Technologies Khumbudzo Ntshavheni announced that all households “will be given access to 10GB [of online data usage] per month.” (The policy resembles allocations of basic water, sanitation, and electricity services to indigent households.) The supporting argument is that “data has become a new utility like water and electricity that [a] home needs.” However, the question of who pays is crucial. Water and electricity are provided by state-owned entities; data is provided by private network operators.

Unsurprisingly, the announcement was well received by consumers, but was less well received by the country’s mobile network operators. The sticking point: Network operators “ignoring social obligations and opting to pay negligible penalties instead of connecting [South African] people” risk losing their spectrum licenses. Having to foot the bill for free data or lose precious spectrum licenses rubs salt in the wound of spectrum-starved operators who have endured over fifteen years of failed attempts to auction more spectrum. (The latest auction, scheduled for this week, has completed its first phase but is facing legal challenges.) Further delays in South Africa’s 5G deployment thus seem inevitable.

Lessons for the US While on one hand, meeting international treaty obligations and subsidizing data to low-income households is laudable, using spectrum allocations to achieve underlying policy objectives is fraught with difficulty. Hopefully US spectrum policy will continue on its well-honed past trajectory, and is not meddled with to achieve social and other objectives. There are better tools for those purposes.

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