solutions tend to demand less support than administration. For example, government administration requires a comprehensive national database of all frequencies in use, identifying individual users and their locations as well as functions and technical characteristics of the equipment used. Under the spectrum rights approach the main data requirement is limited to a register of all rights owners, kept up to date as these rights are traded. And under the spectrum commons approach, users are anonymous.

# **5.2 Making the New Approaches Work in Developing Countries**

It would be impractical to ask which of the three approaches to spectrum management is likely to work best in developing countries as a group. A single answer could not possibly apply to all. Rather, a case-by-case analysis is needed for specific country responses. This reflects the diversity of features and requirements of each approach. Also, developing countries comprise a heterogeneous group exhibiting wide variation of relevant physical and economic characteristics, critical spectrum issues driving change, and extent to which country conditions are conducive to effective implementation. In particular, the extent and pace at which spectrum management can be reformed in practice will be constrained by country governance and institutional capabilities, vested interests in the _status quo,_ and willingness to use the necessary political capital.

Developing countries typically exhibit one or more features that are likely to influence the design of spectrum reform strategies:

- _Low income._ Small markets relative to population size. Large rural and low-income urban population. Modern sectors demanding advanced services coexist with a traditional economy. Relatively undeveloped private sector. Limited supply of skilled workers and professionals. Most technology and equipment imported. Shortage of investment capital.<sup>129</sup>

- _Small base._ Incomplete infrastructure networks. Little or no service in rural areas. Few players despite liberalization. Important market segments still closed to competition.

- _Fast growth._ Substantial unmet demand for communication and information services. Rapid growth of wireless technologies by new entrants and incumbents, initially driven by mobile services.

- _Weak governance._ Limited tradition of rule of law. Weak enforcement. Ineffective or non-existent general competition law and merger controls. Slow and ineffective public administration. Overloaded and politicized judiciary. Government interference in regulatory affairs. Regulatory and policy capture by incumbents. Corruption.

- _High risk._ Regulatory uncertainty and often poor track record. Political risk and instability.<sup>130</sup> Large commercial risk rolling out new services.

- _Constrained fiscal space._ Spectrum and other fees are important sources of public revenue.

> 129Income is the basis for defining development. Income is also highly correlated with education, occupation, and other social and economic indicators. The World Bank classifies all countries by _per capita_ gross national income into high, upper-middle, lower-middle, and low income countries. The term _developing country_ is used to refer collectively to countries in the last three categories.

> 130Includes risk of expropriation of assets or profits through arbitrary taxation, exchange rates, restrictions on repatriation of profits, and other changes of the rules of the game.

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