metadata: authors: 0: author: Neto,Maria Isabel A. S.
1: author: Wellenius,Bjorn
count: World
docna: 0: docna: The radio spectrum : opportunities and
            challenges for the developing world
docty: Policy Research Working Paper
subtopic: Conflict and Fragile States,Social Policy,Legal Products,Judicial System Reform,Telecommunications Infrastructure,Information Technology,Common Property Resource Development,Legal Reform,Legislation,Regulatory Regimes
teratopic: Environment,Information and Communication Technologies,Transport
abstracts: cdata!: The radio spectrum is a major component
            of the telecommunications infrastructure that underpins the
            information society. Spectrum management, however, has not
            kept up with major changes in technology, business practice,
            and economic policy during the past two decades. Traditional
            spectrum management practice is predicated on the spectrum
            being a limited resource that must be apportioned among uses
            and users by government administration. For many years this
            model worked well, but more recently the spectrum has come
            under pressure from rapid demand growth for wireless
            services and changing patterns of use. This has led to
            growing technical and economic inefficiencies, as well as
            obstacles to technological innovation. Two alternative
            approaches are being tried, one driven by the market
            (spectrum property rights) and another driven by technology
            innovation (commons). Practical solutions are evolving that
            combine some features of both. Wholesale replacement of
            current practice is unlikely, but the balance between
            administration, property rights, and commons is clearly
            shifting. Although the debate on spectrum management reform
            is mainly taking place in high-income countries, it is
            deeply relevant to developing countries as well.
repnme: repnme: The radio spectrum : opportunities and
            challenges for the developing world
display_title: The radio spectrum : opportunities
            and challenges for the developing world
listing_relative_url: /research/2005/10/6323669/radio-spectrum-opportunities-challenges-developing-world
topicv3: Personal Property Rights m1326571 1907,Telecommunications and Broadband Access
            m1327340 286,Competition Law m1327469 1031,Broadband Networks m1327576 291,Military m1505651 3036
publishtoextweb_dt: 2010-07-01T00:00:00Z
historic_topic: Environment,Information and Communication Technologies,Transport
no_of_pages: 24
author_keys: 0: author_key: 675715
1: author_key: 90727
model_extractions: WPS3742

# **The Radio Spectrum** _Opportunities and Challenges for the Developing World_

Björn Wellenius Isabel Neto World Bank Policy Research Working Paper 3742, October 2005 _The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the view of the World Bank, its Executive Directors, or the countries they represent. Policy Research Working Papers are available online at http://econ.worldbank.org._
# **1. Introduction**

The radio spectrum is a major component of the telecommunications infrastructure that underpins the information society. Wireless technologies are used by new entrants to develop own networks and by incumbents to modernize existing infrastructures. Mobile phones are outgrowing fixed service and reach deeply into lower income groups. New fixed wireless technologies in rapid succession result in innovative business models and hold promise to extend competition to all market segments, accelerate development of broadband infrastructures, and connect the rural and urban poor. The spectrum is also widely used for radio and television broadcasting and by the military, and is essential for a broad range of other activities including law enforcement, energy and transportation, manufacturing, medical diagnosis and therapy, global positioning, navigation aids, meteorology, disaster warning, and astronomy, among others.

Spectrum management, however, has not kept up with major changes in technology, business practice, and economic policy during the last two decades. It lags far behind the development of competitive, private-sector led telecommunications reforms worldwide. A vigorous debate is underway on spectrum reforms to overcome persistent shortcomings of the traditional regime. This debate is accelerating and commanding broad public attention.<sup>1</sup> While it is largely taking place in high-income countries such as the U.S. and Europe, its significance is global. Spectrum reform offers low- and middle-income countries important new opportunities as well as challenges. This paper addresses three questions: What is the case for radio spectrum reform? What is the spectrum debate all about? Why does this matter to developing countries? These questions are discussed below. Later work will examine what developing countries can do about these opportunities and challenges and how the World Bank Group could help. The concluding section of this paper proposes some questions that might be addressed at that time.

<u>______________________________</u> The authors thank Johannes Bauer, Kenneth Carter, Martin Cave, Adrian Foster, Robert Horvitz, Robert Jones, Charles Kenny, Don MacLean, Peter Smith, and Nick Williams for their valuable comments and suggestions. The authors can be reached at wellenius@attglobal.net and ineto@worldbank.org.

# **2. What is the case for spectrum reform?**

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Traditional spectrum management practice is predicated on the spectrum being a limited resource that must be apportioned among uses and users by government administration.<sup>2</sup> The most intensely used part of the spectrum (up to 3 GHz) is allocated among service categories and, within these, assigned to individual users on exclusive or shared bases seeking to prevent interference among them.<sup>3</sup> Spectrum management focuses mainly on the rules and procedures for dealing with technical issues, operating and licensing, and administration, with less attention to economics and business practices. Regulations and standards for using the radio spectrum, including worldwide and regional spectrum allocations among some 40 service categories (e.g. mobile, broadcasting, radio astronomy), are negotiated among governments and agreed from time to time at the level of international treaty.<sup>4</sup> Within this broad framework, spectrum management practices vary among countries (Nunno 2002).

For many years, government administration of the spectrum worked well, and in some situations still does today. These practices, which trace back to the early days of radio telegraphy over 100 years ago, reflected prevailing technology and worked reasonably well under monopoly provision as small numbers of clearly differentiated services evolved at a slow pace. The approach to licensing of most services was essentially firstcome, first-served, as there was enough spectrum to accommodate most or all users and permit adequate separation among potentially incompatible uses.

During the last ten years, however, the spectrum has come under pressure from rapid demand growth for wireless services and changing patterns of use. Mobile phone service took off in the mid-1990s, developed at an unprecedented pace, and today has about two billion customers worldwide and is still growing.<sup>5</sup> Wireless has become the technology of choice to develop existing and new networks by incumbents as well as new entrants in fast-growing competitive telecommunications markets. New wireless devices (e.g. cordless phones, computer routers, Internet hot spots, mobile Internet) have proliferated requiring ever greater spectrum resources. By now the whole spectrum below 275GHz has been allocated at the international level (RA 2002). In many countries the most valuable parts of the spectrum are already allocated to particular services and assigned to 2
individual users.<sup>6</sup> This is compounded by technical characteristics of many services that can only be accommodated in certain parts of the spectrum and by long lead times to introduce major new services (OFCOM 2004). Spectrum shortage suppresses competitive entry of new operators and services.<sup>7</sup> Substantial amounts have been paid for some new wireless licenses.<sup>8</sup> Spectrum scarcity partly results from the spectrum management regime itself. Spectrum shortages coexist with overall underutilization and inefficient use (Rosston et al. 2001). Frequencies assigned on an exclusive basis are utilized during only a fraction of the time.<sup>9</sup> Country-wide licenses are often used only in some regions.<sup>10</sup> The authorities cannot readily adjust existing assignments in response to changing demand. Spectrum allocated to new applications that turn out to be unsuccessful remain unused.<sup>11</sup> In the absence of appropriate incentives, licensees seldom return unused spectrum or replace old technologies by new solutions requiring less spectrum.<sup>12</sup> The cost of such inefficient use of the spectrum can be huge. By one estimate, about one-half of the total value of the spectrum is wasted on uneconomic uses (The Economist 2004).

Measures have been introduced to mitigate these shortcomings. Some spectrum has been freed to accommodate growth and new services. This has been achieved by reallocating spectrum from one service to another (Cramton et al. 1998), increasing the technical efficiency of spectrum use, increasing the amount of spectrum sharing among services and users, moving towards flexible spectrum allocations,<sup>13</sup> and extending the upper end of the spectrum.<sup>14</sup> Economic efficiency of spectrum assignment and use has been enhanced through market-oriented measures. Auctions are now commonly utilized when there are more applicants for new licenses than the spectrum can accommodate (e.g. mobile service). Compared with administrative assignment, auctions often are fairer, more transparent, and result in economically more efficient use of the spectrum (Cramton 2001, Lee 2003).<sup>15</sup> Charging for spectrum use to reflect as far as possible its marginal value is expected to encourage efficient use and create incentives to save and return unused spectrum (Cave 2002).<sup>16</sup> Charging government, including the military, for their 3
spectrum use may potentially release significant portions of spectrum for alternative services.<sup>17</sup> Despite these partial improvements, government administration of the spectrum is now widely regarded as inadequate. It results in major technical and economic inefficiencies, excessive regulatory burden on authorities and companies, limited ability to protect critical uses, and obstacles to technological innovation. Incumbent licensees have minimal incentive to use their spectrum more efficiently, and licenses protect them from competition and innovation (Snider 2003). Market-oriented improvements have yielded limited benefits. Auctions account for only about two percent of all spectrum assignments (The Economist 2004), cannot offset inefficiencies of allocation among services, and arguably can discourage investment (Noam 1998).<sup>18</sup> Administrative pricing of spectrum use is unlikely to accurately second-guess market value. These measures further add to cost and delays, and have lead to several spectacular failures and disputes.<sup>19</sup> Current practices, moreover, do not take full advantage of the possibilities offered by new technologies, and interference management techniques in particular.

Further tinkering with the existing regime at the margin is unlikely to suffice. Improved spectrum management policies and practices are needed to sustain growth, innovation, and efficiency while preserving the balance among broader government goals and capabilities.

# **3. What is the spectrum debate all about?**

In response to the difficulty government administrations have in coping with increasing demands on the spectrum, a growing number of countries are shifting towards alternative models. There are two major trends, one driven by the market, the other by technology innovation (ACA 2000, Lie 2004). Practical solutions are evolving that combine some of the features of both.<sup>20</sup> 4
# **_3.1 Market-driven spectrum management: spectrum property rights_**

Spectrum use can be improved through trading.<sup>21</sup> Some spectrum rights initially assigned through administrative or market mechanisms to individual licensees for exclusive predetermined uses can subsequently be traded in secondary markets. There is a wide range of options for spectrum trading. Spectrum trading may be restricted to the lease or sale of certain types of whole licenses with no other changes permitted. Or greater freedom may be allowed, such as reconfiguring licenses (sub-dividing and aggregating by geography or frequency), short- or long-term leasing or sharing of some of the license rights, and changing use or technical standards to several degrees (ACA 2002, Cave 2004, Lie 2004). Once a spectrum trading market is in place, markets can be left to develop on their own through private sector mechanisms. Some form of spectrum trading is already in use in a few countries (e.g. New Zealand, Guatemala, United Kingdom, and United States) (NZMED 2000 and 2005, Ibarguen 2003) and is being translated into legislation in the European Union (Analysys et al. 2004).<sup>22</sup> Although so far only small parts of the spectrum are being traded, and market intermediation as it exists in other industries has yet to materialize, by some estimates much of the spectrum could be tradable in a few years.<sup>23</sup> The argument for spectrum trading is that it can correct for economic inefficiencies of initial spectrum assignments to users and respond to changing user needs over time. To the extent that the rules allow for changes in use, spectrum trading may also correct some of the artificial scarcities arising from the administrative allocation of spectrum among different classes of uses (van Caspel 2002). Competitive trading allows licensees themselves to evaluate the opportunity cost of spectrum, creates financial incentives to utilize their spectrum efficiently, and may result in unused spectrum being released into the market (Valetti 2001).<sup>24</sup> Spectrum trading can lower barriers to entry by reducing the risk of initial investment in licenses as these can be resold, and by allowing new entrants to acquire spectrum in the market rather than lobbying and waiting for new administrative assignments (Cave 2002).

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There are concerns, however, that spectrum trading will increase the risk of interference, allow spectrum hoarding by players seeking to restrict competition, lead to high transaction costs in assembling spectrum bands for contiguous geographical areas, and reduce the benefits from international harmonization and standardization (Lie 2004).

Moreover, secondary trading arguably does not go far enough. Licensee rights are generally granted subject to eligibility, service, technical, and implementation requirements. These administrative requirements often result in economic inefficiencies that downstream markets, however well they may work, cannot overcome by themselves.<sup>25</sup> Instead, some argue that markets should become the primary means to attribute spectrum among uses and users. To this end, the rights generally granted to licensees should be broadened, permitting flexible use of the allocated spectrum and eliminating all licensing requirements that are not related to interference or anticompetitive concentration (Rosston et al. 2001).

These arguments have led to proposals for developing markets for spectrum property rights akin to those in place for most other industries.<sup>26</sup> A licensee would have exclusive and transferable rights to use specified frequencies within a geographic area, with flexible rights of use governed primarily by technical rules to protect against interference. Licensees would be free to sell, lease, divide, and aggregate spectrum parcels without limitation as to uses or technologies other than to comply with interference and competition rules. Other prospective users of these frequencies would need to obtain the licensee’s approval and agree on terms and conditions.

The main argument for the spectrum property rights approach is that it would increase dramatically the economic efficiency of spectrum use. One consequence of putting all spectrum on the market would be that so much spectrum might be freed that the price could drop close to zero (Faulhaber et al. 2002).<sup>27</sup> Additional arguments include improved transparency (hence reduced opportunity for corruption), faster response to changing technology and demand, and reduced administrative burden on governments and users.

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Concerns about the spectrum property rights approach relate mainly to the risk of abuse of market power, government capacity to pursue and preserve social objectives, managing interference and related disputes, and compatibility of technical standards (Valetti 2001). A particular worry is that an all-out property rights regime might encourage commercial hoarding of spectrum rights, which could exclude commercial competitors as well as innovative, non-profit, public-service, or other uses of the spectrum that benefit society as a whole.<sup>28</sup> Another concern relates to the transition from the existing system (and existing assignments of rights) to a property rights regime and the initial assignment of rights.

Some, moreover, argue that the move towards markets of spectrum property rights merely entrenches the orthodoxy of licensing the spectrum to singular users,<sup>29</sup> while the underlying assumptions of inherent spectrum scarcity and need for exclusive use to protect against interference are being challenged by new technologies.

# **_3.2 Technology innovation-driven spectrum management: spectrum commons_**

The second major driver of the spectrum debate is technological innovation. Radio technologies now coming to market or under development allow for more efficient use and easier sharing of the spectrum and may render spectrum scarcity obsolete. At the heart of these new technologies is the application of advanced digital processing techniques and resulting increased capability to control interference. Major developments include compression (eliminating redundant information), multiplexing (sharing the capacity of one set of frequencies among several signals), and spread spectrum (distributing one signal over many frequencies) (Snider 2003).<sup>30</sup> Other recent innovations include smart radios and antennas, software-defined radios, cognitive radios, and mesh, ad-hoc, or viral networks.<sup>31</sup> As a group, these technologies enable users not to cause insurmountable interference to each other even when transmitting at the same time, in the same place, and on the same parts of the spectrum.<sup>32</sup> 7
Technological innovation is ushering in a commons approach to spectrum management.<sup>33</sup> In a spectrum commons model, spectrum is available to all users that comply with established technical standards (e.g. power limits) to mitigate potential interference. Usage rights are flexible, with minimal or no restrictions placed on the types of use of the spectrum. In contrast with administration and property rights, both predicated on spectrum scarcity and exclusive use, the commons approach is based on sharing spectrum widely among users without guarantees of interference-free operation. Several specific models are being tried or proposed. The license-exempt model allows using designated bands without a license.<sup>34</sup> Sometimes the authorization for use of these bands is accompanied by some limitations, such as regarding transmitted power, range, or protocols.<sup>35</sup> A more general open wireless networks model involves qualified users managing themselves the use of spectrum as public property through intelligent use of technology (Benkler 1998).<sup>36</sup> Different forms of spectrum commons are already in place in several countries, usually in the bands allocated to industrial, scientific and medical devices.<sup>37</sup> The advent of technologies such as WiFi, and more recently WiMax, open up opportunities for broadband access in license-exempt bands, at various distance ranges. According to the ITU, by late 2004, 55 countries had allocated spectrum for license-exempt use (ITU 2004). There are numerous consultations underway around the world about extending the commons approach to additional services. The trend is for license-exempt use to grow. Several countries have also permitted the use of some new technologies, such as ultrawide band (UWB), to operate across bands in which exclusive user licenses are in use, acknowledging that spectrum sharing is possible. The U.S. is also furthering this idea by discussing the concept of allowing any transmission whose interference does not surpass a certain level to exploit already-assigned frequencies (FCC 2003a).<sup>38</sup> These initiatives, however, stay shy of the more general idea of open wireless networks.

The argument for a spectrum commons is mainly that it encourages spectrum-efficient new radio technologies.<sup>39</sup> A spectrum commons also precludes spectrum warehousing, can reduce spectrum scarcity,<sup>40</sup> and may result in lower capital requirements.<sup>41</sup> By 8
promoting technological innovation, the commons approach lowers entry barriers and enhances competition. The regulatory and financial burden on all players is reduced, as users do not need to obtain exclusive licenses since the new technologies themselves provide more cost-effective alternative means to contain interference. Moreover, exclusive-use licensing is poorly suited to authorize these new technologies, and thereby delays the benefits they can bring (Ikeda 2003, Benkler 2002, Reed 2005).

The main concern about the commons approach is that, to the extent that spectrum scarcities may remain despite technological innovation, there is the risk that the commons will be overused and result in excessive interference.<sup>42</sup> Associated risks are spectrum hoarding and intentional harmful interference.<sup>43</sup> Related areas of concern include enforcement,<sup>44</sup> managing spectrum disputes,<sup>45</sup> coexistence with legacy equipment,<sup>46</sup> and irreversibility of deregulation and related loss of government control of the spectrum.<sup>47</sup> Moreover, there are some indications that a commons regime may not be as attractive to investors as an exclusive rights system (FCC 2003).<sup>48</sup>

# **_3.3 Combined approaches: administration, property rights, commons_**

Looking forward, at least in the medium term, the debate on spectrum reform is not ushering in immediate wholesale replacement of current policies and practices. Rather, the balance between administration, property rights, and commons is shifting. Although either the spectrum rights or the commons approach to the spectrum arguably would be an improvement over traditional administration, it is unclear whether and which one would be best in the long run.

Comparisons among spectrum management models depend on complex tradeoffs among factors and on how the different models are defined (Ting et al. 2004). The spectrum rights approach is likely to work best where there is acute spectrum scarcity and the transaction costs of moving spectrum from low to high value uses is low. When transaction costs are high, the rights model would arguably still be better than administration but some economically efficient adjustments would not take place (FCC 2002). In the medium term, exclusive spectrum rights (either under government 9
administration or a property rights regime) might be appropriate where large-scale investments in network infrastructure are needed. Commons approaches have advantages for short range communication, in relatively closed spaces (such as offices, hotels, or airports), or where communication density and use of the spectrum are low such as in rural areas.

The different models are not necessarily mutually exclusive.<sup>49</sup> Commons can work alongside a property rights solution while reducing transaction costs. A group of frequencies could be organized as a commons among participants but have exclusive rights with respect to third parties. Mobile operators own the right to use certain frequency bands, but their customers share these bands regulated through technology.<sup>50</sup> Equipment suppliers could acquire exclusive spectrum rights within which the buyers of their products would operate on a shared basis. Amateur radio is a service where many individually licensed users share parts of the spectrum in common.<sup>51</sup> Spectrum rights can be designed so as to approximate some of the benefits of the commons model. A variant of the exclusive property rights approach would subject licensees to government-mandated easements. Easements would, for example, allow other users to transmit on the same frequencies without the licensees’ authorization, provided they do not interfere with the licensees’ services (Faulhaber et al. 2002).<sup>52</sup> This variant addresses the high transaction costs that otherwise would be incurred by users of several new technologies now coming to market (e.g. ultra wide band, software-defined radios) that have considerable spectrum-saving potential and network development advantages but need broad access to the spectrum.<sup>53</sup> Easements could also address high transaction costs for users that need immediate but short-term access to certain portions of the spectrum (e.g. public safety agencies) or global access to spectrum under harmonized rules (e.g. satellite operators) (FCC 2002).<sup>54</sup> Ways have been outlined to make a rapid transition between approaches, for example from administration to property rights (Kwerel 2002).<sup>55</sup> In most countries, however, the regime is likely to be adjusted only gradually. It may be necessary and possible to 10
experiment with property rights and commons in a scale large enough to achieve effective results, yet retain the option of later choosing one or the other solution (Benkler 2002).

In most realistic scenarios for migrating from spectrum administration to property rights or commons approaches, administration will continue to play a significant, if declining, role.<sup>56</sup> This recognizes the existence of large vested interests and sunken costs associated with the outcomes of each approach. Also, some government intervention and regulation will be unavoidable to reconcile diverse public policy objectives, deal with market imperfections and with harmful interference when it occurs, and ensure that international obligations are respected. In particular, each country’s ability to contain anti-competitive behavior, including strategic behavior of firms in spectrum markets, will condition the pace at which spectrum management can be overhauled. Improvements are possible in current spectrum administration practice. For example, where the major demand for a particular service is limited to areas of high population density, other services could use the same frequencies outside these areas. Frequencies used by military installations in remote parts of the country can be shared by civilian applications elsewhere (RA 2002). Most developing countries have considerable potential for bringing spectrum administration up to current best practice.<sup>57</sup> Changes in spectrum management at the national level will be conditioned by related progress at the international level. Given the propagation characteristics of radio signals, there needs to be some degree of coordination, if not of harmonization, of the different spectrum arrangements in order to avoid interference. Also, in the interest of consumers, it is desirable to maintain some level of international uniformity to support economies of scale in device production and global circulation, such as in roaming. In debating the direction and pace of change of national spectrum management, governments would do well to also reflect on how to best use regional frameworks for coordination, harmonization, and debate at the international level.<sup>58</sup> 11
# **4. Why does all this matter to developing countries?**

This debate on spectrum management reform is deeply relevant to developing countries. It could be argued that the debate arises out of the circumstances that prevail in highincome countries: acute scarcity of spectrum coexisting with widespread underutilization, intense pressure of a large manufacturing sector to develop markets for new technologies, a dynamic private sector interested in developing new business opportunities and capable of mobilizing the necessary skills and financial resources, and mature institutions capable of dealing with complex issues and enforcing sectoral and general competition laws and rules. These are not the typical conditions prevailing in low- and middle-income countries. Yet the significance of the changes underway is global. Below are some reasons why this is the case in developing countries.

- Spectrum management typically lags way behind sector reforms leading to competitive, private led telecommunications markets. This poses growing obstacles to further sector development. Improving spectrum administration would yield significant benefits, but governments may wish to consider moving straight into property rights or commons approaches. Developing countries at an early stage of building up spectrum management capacity may benefit from adopting new solutions from the start.<sup>59</sup> These may be especially well suited for low- and middle-income countries.<sup>60</sup>

- Wireless has become the technology of choice for developing existing and new networks. Developing countries have the opportunity to import new technologies at marginal cost. In turn, they add scale to global production further reducing costs and accelerating innovation.<sup>61</sup> Developing countries also can become fertile testing grounds in the early stages of commercial deployment. Thus, although emerging economies (not even the largest ones, such as China or India) are not yet in a position to take technological leads that diverge from major industrial markets, they play an active role in technological innovation.<sup>62</sup>

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- Governments seeking to benefit from the new technologies must remove impediments to their adoption. This requires being aware of the new opportunities and challenges, identifying aspects of the legal and regulatory framework that pose obstacles to early adoption, and strengthening capacity to implement modern solutions in a fast-changing global environment.

- New spectrum solutions cannot be adopted without careful examination of their relative merits in specific contexts. Not all developing countries would do well by replicating best practices from high-income countries. While the broad drivers and principles of change are likely to be similar across a wide range of countries, the specific solutions may need to be designed with an open mind, and the path of change calibrated case by case.

- Developing countries can add global momentum to spectrum reform. Solutions that prove themselves in a few high-income countries may catch the attention of innovators in some developing countries. Initial successes could diffuse quickly throughout the developing world, as has occurred with telecommunications sector reforms.<sup>63</sup>

- Developing countries play a significant role in international governance of the spectrum. Most countries are active members of the ITU. A growing number subscribe to trade agreements that deal with telecommunications. It is to their advantage to participate effectively in the process of changing the global and regional frameworks for spectrum management, but shortage of funding is a pervasive constraint.

# **5. Conclusion**

The debate underway on alternatives to traditional government administration of the spectrum is relevant to all countries. Although the debate is mainly taking place in high-income countries, it can usefully inform policy decisions in a much wider range of economies. A systematic assessment of the relative merits of each approach under given 13
country conditions remains to be undertaken, and solutions will vary among countries, but some broadly relevant questions can already be raised:

- How would the various approaches to spectrum management fare in low-income countries? These countries often have weak governance, incomplete infrastructure networks, large rural populations with minimal service, fast growth, and persistence of legacy equipment.<sup>64</sup> Given that in the past many have had difficulty establishing and enforcing sector rules, can they be expected to perform better under alternative spectrum models? Would they have sufficient institutional capacity and expertise to undertake regime changes?<sup>65</sup>

- How much effort should be invested in improving government administration of the spectrum? There is ample opportunity to improve existing arrangements, but how far should the governments go building up a system that is expected to have a declining role? What would happen if developing countries maintained their current spectrum policies? What should prompt them to change, and when? Rather than move to a different model, would some developing countries not be better off by cleaning up, assigning, and more effectively policing spectrum use under better government administration?

- What agencies could deal with harmful interference and resolve disputes? In the context of weak sector regulation and often non-existing competition law and enforcement, can this function be outsourced? A commons approach presumes some self-regulation among users. Can this be expected in emerging markets?

- Are market approaches to spectrum management sufficiently participatory, or is there a danger that spectrum will be cornered by a few influential players? How can strategic behavior of incumbents be contained? How much spectrum should governments place on the market?

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- Who would pay for the cost of spectrum regulation as larger segments are released for unlicensed use? How can government treasuries be weaned from the large rents they have grown accustomed to exact from spectrum licensees?

- How can spectrum policies be better integrated with telecommunications and broadcasting sector reforms and economic policy generally? How can the interests of diverse stakeholders be reconciled? What are viable institutional solutions to achieve this? How serious is the problem of spectrum assigned to the military and security forces?

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