Fixed links – radio spectrum connections between two points (point-to-point) or one hub and several end points (point-to-multipoint) – are used extensively in the provision of communication services, e.g. for mobile backhaul, fixed wireless access, broadcast distribution, links in core networks and a range of other use cases. Fibre can often be used to achieve similar goals, but fixed links can reach spots where a fibre connection is not viable and can also serve as a backup solution where fibre is installed. Fixed links for this use case need a high capacity to support the underlying data rates. Other use cases prioritise reliability and the ability to cover long distances over bandwidth. It is down to the licensing regime to provide the right incentives for the efficient use of fixed link spectrum to meet these varying requirements.
We have been asked by the Irish telecoms regulator, ComReg, to review its fixed links licensing framework. There are thousands of individually licensed fixed links in Ireland using twenty frequency bands. They differ in their suitability for specific use cases, given the underlying requirements. Higher frequencies where ample bandwidth is available are well suited to support high capacity links over short hops. Links where reliability is the main concer may be better placed lower down in the frequency range. However, for any given use case there is no single ‘right’ band with a sharp cut-off either side. Rather they form a chain of substitutes and many operators could use one of a number of neighbouring bands.
In some of these bands, spectrum is already scarce in Dublin and it may well become scarce in other bands and locations. To provide incentives for efficient use, operators should to pay the opportunity cost of their fixed links – the value that the next best user might place on the spectrum – where spectrum is scarce. However, as congestion may be very localised and modelling the opportunity cost of each individual link would neither be practical for ComReg nor provide operators with a predictable fee structure, an alternative framework is needed.
We constructed a formula that proxies opportunity costs of different uses, reflecting their general structure rather than aiming to calculate opportunity costs on a link by link basis. Drawing on stakeholder input from interviews and several rounds of formal consultation, ComReg’s licence data and comparisons with international best practice, we
- provided recommendations on the range of bands open to fixed links, the channel sizes available in each band, the technical conditions on licences and the information available to licence applicants, to align these with international best practice and support licensees in making efficient use of fixed links spectrum; and
- developed a new fee formula to incentivise efficient use of this spectrum.
The new fee formula means that per MHz fees:
- are greater for lower bandwidth links in a given band, because of the risk of denying additional spectrum to a larger user;
- decrease smoothly as the band frequency increases, reflecting the lower potential for scarcity in higher bands with greater amounts of spectrum available; and are
- subject to a surcharge in bands and geographic areas where congestion has already arisen.
Our recommendations are set out in a series of reports covering our preliminary views and assessment of the fixed links market, followed by detailed recommendations in our second, third and final reports. Further information about ComReg’s decisions can be found on their website.