The regulator's role in spectrum reform

New technologies and increasing demand for spectrum are pushing regulators to redefine the way they do business.

Spectrum regulators all round the world face challenges as they work with industries that are both leading and undergoing significant technology change and disruption.

With 160,000 licences for radiocommunications services on issue, it might surprise you to learn that the ACMA’s staff spend little time poring over licence applications from would-be spectrum users; what we do is arrange things in ways that, as far as we are concerned, administer themselves.

We do this by making class licences, so spectrum users can do a whole lot of things without going anywhere near us, provided they use kit that complies with a few basic rules. We also license large blocks of spectrum to individual users — spectrum licences — and those users have considerable flexibility as to what they do in those spectrum blocks. So nowadays a lot of ‘re-farming’ is done without reference to us; for example, when mobile carriers move customers from 2G to 3G or 4G wireless broadband services.

For the many bands that are host to multiple, smaller users, this process is largely automated. The actual work of coordinating new licences with existing services in each band is mostly now undertaken by third parties, such as Peter Hilly (Spectrum Engineering Australia), who have obtained accreditation from ACMA to do that work.

This is a significant change from the days when coordination was exclusively undertaken by the regulator. The accreditation arrangements commenced in 1997. By 2008, approximately 70% of all coordination work was carried out by accredited persons. Currently, over 95% of all coordination work is by accredited persons. As a result, the ACMA’s direct role is mainly restricted to developing and keeping current the rules that accredited persons use for assigning new licences — rules that we call Radiocommunications Assignment and Licensing Instructions, or RALIs.

Technological and market changes in spectrum use can mean these arrangements we have made in bands are no longer optimal and are in fact hindering Australians from getting the best value out of spectrum. And the rate at which this is happening seems, if anything, to be speeding up.

The ongoing evolution and growth of the internet is a major culprit, manifesting as continuing soaring demand for wireless broadband connectivity and, now, the emergence of the Internet of Things (IoT). This is driving growing and changing demand for spectrum from Australia’s innovative satellite and space industry, from wireless broadband providers, eg, for 5G, from other existing spectrum users seeking to adapt and respond to all these changes, and from emerging new spectrum users, including utilities, the automotive industry, over-the-top service providers such as Facebook and start-ups.

As a regulator, the ACMA needs an accurate understanding of changes in technology and market demand, both for new and existing spectrum uses, to inform the way we plan and make spectrum available. For that, we rely heavily on spectrum users to keep us informed.

The ACMA’s spectrum management team knows a lot about spectrum planning, satellite coordination, diagnosis and investigation of interference, the conduct of online auctions and a whole lot of other stuff that comes with the ‘spectrum town planner’ role. But our knowledge of what spectrum users actually do with the spectrum is often limited or dated. We depend on the ongoing engagement we have with many of our spectrum users, equipment vendors and technology companies, who provide us with information about technology developments and their market environment.

Giles Tanner, General Manager, Communications Infrastructure Division, ACMA.

To give voice to spectrum requirements of SMEs, we get help from peak bodies — such as ARCIA — to tell us what is most relevant to our work. To be frank, our relationships are probably better with established spectrum users than with the start-up end of the business, and here we are helped by initiatives such as the Internet of Things Alliance Australia.

The information we obtain is vitally important to the ACMA to anticipate where changes may be needed to existing spectrum frameworks, and to identify where there are opportunities to achieve more efficient spectrum use.

Technology environment challenges

Spectrum planning has a very strong international dimension, with the ACMA and other regulators engaging with industry in ITU processes, such as the World Radiocommunication Conference, and regionally through the Asia–Pacific Telecommunity. Many of the biggest changes affecting Australia’s use of spectrum begin here.

In terms of domestic issues, however, a key way we inform ourselves about the changing technology environment affecting spectrum is through our Five Year Spectrum Outlook, or FYSO. We released a draft FYSO for consultation in May.

The FYSO contains a draft Annual Work Program for each coming financial year. From this year onwards, ACMA intends to consult with industry on a draft of each year’s update before it finalises the Annual Work Program. Once the Radiocommunications Bill passes into law, this will become a legal requirement. Settling our work program in consultation with industry should help us to manage the many competing demands on our attention, and set priorities for our work, in a way that is open and accountable to spectrum users.

A second use of the FYSO is to provide band-by-band information to industry about any domestic or international pressures that may be building up on existing regulatory arrangements in a band. So in this year’s FYSO you can read, for example, that ACMA is monitoring international developments on the 600 MHz band that is currently used locally, and in many other countries, for UHF television. This follows moves in the United States to clear television services from 84 MHz of the 600 MHz band to make way for a 5G wireless broadband coverage layer.

The FYSO also notes there are no plans for TV to move (which would be a pretty massive operation), but that the federal government — which happens to use or, in some cases, not use, 50% of the TV bands — might one day be a seller of some of its share.

By recognising that arrangements sometimes come under pressure to change, this is one way we hope to build confidence in spectrum access arrangements, noting that many licences — though not, as it happens, TV licences — are actually renewed on only a year-by-year basis.

The draft FYSO and Annual Work Program outlines our response to these various spectrum demand pressures as it affects the ACMA’s day-to-day job of spectrum management. We have further divided our planning activities into two main streams of work:

• Major band (re)planning activities to support the establishment of new spectrum uses. This may require the re-farming and reallocation of spectrum from an existing use and users to different a use and users.
• Optimising established planning frameworks for existing spectrum use through updating technical coordination arrangements. This can include addressing sharing demands, defragmentation and optimising planning configurations.

Legislative and policy challenges

We are in the midst of a legislative reform process being managed by the Department of Communications and the Arts, which will deliver a modernised radiocommunications act.

The Bill being developed by the Department will provide the ACMA with broad discretion on the detailed work of designing and implementing many aspects of the new arrangements.

These reforms signal an important shift away from prescriptive primary legislation. The new legislation will replace the detailed black letter law in the Radiocommunications Act 1992 with powers that are broad, flexible and high level. It will also clarify the respective roles of the Minister for Communications (who will be responsible for policy and strategic direction-setting) and the role of the ACMA, which will be responsible for policy implementation and delivery.

The replacement legislation is expected to shift the centre of regulatory gravity away from the regulator and towards users of spectrum and people and organisations outside of the ACMA. It supports opportunities for greater user involvement in spectrum management and for simplifying regulatory structures and streamlining operational processes.

The reform directions should also support greater market-based activity. Hopefully this should limit the extent to which further direct intervention becomes necessary over time. It should also mean the spectrum demand can be filled more quickly allowing speedier release of communications products to market.

Or that’s the underlying vision. To achieve all this, the new draft law will provide the government and the ACMA with a whole new regulatory ‘toolkit’ to design and implement spectrum management arrangements, including the design of the licensing and spectrum planning system, pricing, equipment regulation and interference management arrangements.

A centrepiece is a single new licence type — called simply a radiocommunications licence — which will eventually replace all apparatus and spectrum licences. We are hoping this will allow us to mix and match the best features of both existing licence types — for example, we could combine the very long tenure and greater tradability of a spectrum licence with the simplicity, variety and ease of creation of today’s apparatus licence types.

It will be a shared challenge for all of us to give life to the promise of spectrum reform that lies within the Radiocommunications Bill.

Our vision, and the challenge we have set for ourselves, is to give spectrum users greater freedom, confidence and incentive to maximise the value they get from spectrum.

Implementation of the new radiocommunications legislation throws up a number of challenges for the ACMA, including reform challenges, regulatory design challenges, and implementation and transition challenges.

For spectrum users, the challenges are related but separate. At this early stage of the process, a key one is simply trying to work out what these changes mean in practical terms for them.

I’ve already mentioned that the new legislation is broad, flexible and high level. I fully expect that many in industry will want to reserve judgement on aspects of the Bill until they have a clearer idea what the ACMA might do with its very broad and high-level new powers.

To this end, the ACMA developed a series of papers that accompanied the first exposure draft of the Bill, which was released for comment last year. Our papers explained in general terms how the ACMA expected to address several key parts of the new arrangements, including the design of the new licensing scheme and how existing services might transition to it.

In relation to licensing, our overarching message was this: we expect transition to take place in an orderly and predictable way, allowing enough time for industry to work with the ACMA on the design of the new licensing scheme and the prioritisation of the transition process. Transition of apparatus licences will take place over an extended period — five years from commencement of the legislation — with all existing licensees receiving ample advance notice of the details of any arrangements that will apply to them.

In framing this approach, we were mindful of the old adage, ‘first do no harm’. When moving to arrangements designed to increase the confidence of spectrum users, we need to take special care that we don’t inadvertently reduce the confidence that already exists.

The next step in development of the new legislation is the release of a second exposure draft of the Bill, expected later this year. This will be important not only for any changes in approach since the first draft, but because we expect it to include details of transitional arrangements, including transition processes for current spectrum and apparatus licences, also the accompanying taxation Bill, and a few other details missing from the first draft, notably the new licensing arrangements for radio and TV broadcasters.

As with the first exposure draft, our intention is to publish shortly after release of the second exposure draft, detailed material for consultation on how the ACMA envisages using its new regulatory toolkit. The additional detail should assist spectrum users to engage with the Department about the eventual shape of the primary legislation. But also, vitally for us, it should allow ACMA to advance its preparations for passage of the legislation, as we will have a lot to do, and are keen to minimise any impact on our business as usual work, as set out in the draft FYSO.

Industry consultation

With the release of a second exposure draft of the Bill, I envisage a very busy period of engagement with industry operators in the design and implementation of new spectrum management arrangements.

In terms of what is coming up and how industry can be involved, in the FYSO we have provided an indication of the key areas of Spectrum Review implementation activity where we are expecting to release information for consultation. This information and the consultation will support our first phase of information.

We expect to release consultation materials dealing with the following parts of spectrum management reforms:

Planning and licensing: The ACMA intends to issue for consultation information about the design of the new licensing system and replacement licences. We also expect to outline approaches to the transition of existing licences during the five-year period of transition.

Discussion of licences to use spectrum without an understanding of the surrounding planning framework is pointless. Much of the value of a licence resides not on its face, but in the planning rules applicable to that band. So the ACMA intends to consult simultaneously on design options for the spectrum planning technical framework under the Bill.

Pricing: To implement recommendations of the government’s Spectrum Pricing Review, the ACMA intends to initiate three programs of work:

• Development of Spectrum Pricing Guidelines to provide better transparency and help licensees better understand how the ACMA approaches spectrum pricing.
• A review of how the ACMA administratively prices spectrum and the formula used to set many of the current apparatus licence taxes (recommendation 7).
• Simplifying industry cost recovery arrangements by combining separate taxes into a single radiocommunications licence tax. This is intended to occur in conjunction with the administrative pricing arrangements.

Information will be made available with licensing and planning design options about how the ACMA will approach pricing under the new arrangements.

Equipment rules: We expect to report back to industry on the outcomes of earlier consultations on the new concepts and design principles for equipment rules.

Accreditation arrangements: Opportunities for user involvement will be explored further in the design and development of new accreditation rules, also intended for consultation.

If I can summarise the aim of all this work at its very broadest, it’s to enhance market-based activity, encourage increased user and third-party management of spectrum, and improve the efficiency of regulatory arrangements, without inadvertently reducing the spectrum user confidence that already exists — that is, first do no harm in our redesign and implementation.

This last principle is informing a lot of our thinking about how we design new planning and licensing arrangements that give life to the vision of spectrum reforms, but which make sure that you can continue to get a licence that remains fit for your business purposes.

Giles Tanner is General Manager of the ACMA’s Communications Infrastructure Division. This is an edited version of his Comms Connect Sydney plenary address.

Images courtesy ACMA.

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