EcInfCom: Oniki / Publication 200408

"Reallocation of Radiowave Spectrum with a Price Mechanism: Proposal of a System of Insurance and Compensation," Osaka-Gakuin Review of Economics, 21(2), December 2007, pp.55-109. Paper also presented at the 32nd Research Conference on Communication, Information and Internet Policy (Telecommunications Policy Research Conference 2004) held at the Tech Center, George Mason University, U.S.A, October 1-3, 2004. An earlier version of the paper was presented at SNU Center for Law & Technology's 2004 International Symposium in Seoul: Beyond Property v. Commons Dimension for a New Spectrum Management System, held in Seoul,Korea August 16, 2004.

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[Keywords]
[Table of Contents]
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[Links to TPRC 2004]
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[Abstract]

The use of radiowave spectrum is managed in two steps: allocation and assignment. Allocation specifies for what purposes a band of spectrum is used, and assignment specifies who is entitled to use each block of a spectrum band. For efficient use of spectrum, it is necessary to adjust allocation and assignment from time to time. Yet, because of vested interests of incumbent users, it is difficult to do this under command and control by a national government or through negotiations in ITU.

The objective of this paper is to propose a mechanism for adjusting allocation, as distinct from assignment, by means of insurance, compensation, and supply-price revelation; in short, it is a price mechanism for spectrum reallocation. The mechanism can reallocate spectrum in such a way that the band currently used with the lowest efficiency is released for a new use with higher efficiency; the users of the reallocated band are compensated properly.

The proposed mechanism can work with various assignment systems, including market-oriented systems, command-and-control assignment, and systems in commons mode. The paper proposes a way in which end users (consumers) are compensated when spectrum-dependent services (such as mobile telephony) are terminated because of reallocation. Further, the paper considers a way to extend the proposed mechanism to international spectrum allocation.

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[Keywords]

radio spectrum, frequencies, reallocation, international reallocation, insurance and compensation, price mechanism

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[Table of Contents]

Introduction and Background

Reallocation of Spectrum with Insurance and Compensation (RIC)

A. Outline
B. Selection of spectrum bands to be reallocated
C. Determination of the rate of compensation premiums
D. Implications of RIC as an insurance
E. The amount of compensation declared and the supply price of spectrum
F. Implications of RIC to income distribution
G. On implementing RIC

RIC and Alternative Ways for Spectrum Assignment
- A. Club or commons
  B. Market mechanism
  C. Command and control
  D. RIC and end users of spectrum
Decisions by Government and the Behavior of Users with RIC
- A. Outline
  B. Decision by government on the size of spectrum bands to be allocated for new objectives
  C. Possibility of speculative behavior by users
  D. Decisions by government on the selection of spectrum bands to be reallocated
  E. Determination of the amount of compensation by users
Extensions of RIC
- A. Introduction of multiple reallocation periods
  B. Introduction of compensation in kind
RIC for International Reallocation of Spectrum (IRIC)
- A. International reallocation of spectrum
  B. Outline of IRIC
  C. ITU and member-countries (1/3)
  D. ITU and member-countries (2/3)
  E. ITU and member-countries (3/3)
Conclusions