Resources: August 2018

Mobile Licensing Renewal – A Challenging Time for Governments, Regulators and Operators

August 2018

Overview

 

The 2019 commercial deployment forecast of 5G and the critical role of 4G in realising the IMT-2020 vision have created a challenging time for regulators and an anxious time for operators whose licences are due for renewal. The development of a solid renewal framework is critical to enabling the investment required to pave way for available and affordable access for mass consumers and realisation of services over and above mobile broadband (the only theme of the licences renewals in the last decade).

 

The figure below represents the countries where renewals have already taken place or will soon be progressed. Majority of those due for renewals are based on licence conditions that were influenced by 2G/3G underlying technologies and services attributes. This poses several challenges in developing a renewal framework since the bands under consideration are not only being used/considered for 4G deployment but also will play a critical role in effective roll out of 5G (See May 2018 Digest). In addition, rationalisation including potential defragmentation for more efficient use of spectrum and flexible deployment of different 4G/5G use cases (5G offers much greater flexibility due to flexible numerology and network slicing) is a crucial consideration in the process. Finally, and arguably most importantly, government/regulators should form an informed view of spectrum supply roadmap including authorisation around unlicensed bands, both technically and commercially (pricing –  Hong Kong Government has recently announced its intention of not to charge operators for 26/28 GHz to facilitate faster 5G roll out).  

 

In this digest, we explore some of the traditional principles and challenges behind the mobile licence renewal framework and some new derivers that will make its development more involved than the previous ones.

Source: GSMA

Renewal Approach

When a mobile cellular licence is nearing the end of its term, successful reassignment of the spectrum relies heavily upon the regulator choosing a suitable instrument governed by the prevailing telecommunications policy. International best-practice recognises several possibilities:  presumption to re-issue, clean slate or some hybrid approach.

Presumption of Re-issue

Under this approach, it is presumed that the service licence and some or all the spectrum granted with that licence will simply be extended/reissued to the current holder(s), barring specific reasons for not doing so. It may be based on a presumption in favour of renewal in the licence document or be determined by the regulator, even where no qualified “right” of the licensee to renewal exists. 

The most profound criticism of this method is the adverse effect upon new entrants.  The degree to which this concern applies depends, to a considerable extent, on the regulator’s long-term spectrum release plan and its ability to ensure opportunities for new competitive entry with access to the requisite spectrum.

 

Clean Slate - Hybrid

Since 5G should, in theory, open up countless number of services opportunities in various verticals, governments should develop level playing field policies encouraging new entrants into the market. Therefore, regulators may re-assign the spectrum in a process open to all interested parties within the regulatory parameters for its use.  The incumbent holder of the assignment is expected to compete with any other competing applicant.  As a result, this method of spectrum assignment can encompass the full range of administrative and market-based methods, including auction.

The ability of the regulator to recover and re-assign the spectrum without having to worry about an incumbent user and its present services has substantial implications in terms of spectrum planning. This approach or a hybrid variant should be progressed cooperatively with the industry lending itself to a longer period of consultation and discussion before the licences expiry dates.

 

Rationalisation

 

Rationalisation requirement is generally aimed at devising band plans in alignment with technologies services/use cases bandwidth requirements. The determination of minimum block size is by no means a simple matter. As shown in the diagram below, there are a host of challenging issues that should be considered collectively in developing a long-term future proof rationalisation plan. The issues highlighted have different weights in different countries and there may be other national or regional factors that may have to be considered in the development process, e.g. cross border interference.

 

Renewal Fees

 

The determination of renewal fees is driven by several factors including those shown in the diagram below. Apart from the first principles (those in blue) used in determining the fees structure, there are other key drivers in the process (those in red) including governments’ telecom policies and ministry of finance revenue expectations. Recent renewal data in some countries indicate the drivers other than those falling into the first principles category play a significant role in the imposed renewal fees structure.