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6 - Spectrum trading: secondary markets

Published online by Cambridge University Press:  13 August 2009

Martin Cave
Affiliation:
University of Warwick
Chris Doyle
Affiliation:
University of Warwick
William Webb
Affiliation:
Ofcom, London
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Summary

Introduction

Following the initial assignment of spectrum rights and obligations to users, whether by auction or other means, circumstances may change causing initial licence holders to want to trade their rights and obligations with others. Today this is not possible in many countries. However, in a few countries secondary trading – the trading of spectrum rights after the primary assignment – is possible. The possibility to trade radio spectrum is argued by many commentators to be a critical factor in the promotion of more efficient radio spectrum use. Furthermore, it is increasingly recognised that the flexibility afforded by trading is helpful for innovation and competitiveness.

Spectrum trading is a powerful way of allowing market forces to manage the assignment of radio spectrum rights and associated obligations and it is a significant step towards a market-based spectrum management regime. The trading of radio spectrum rights has been discussed as a policy option for many years and dates back to the seminal contribution of Coase [1]. It is widely accepted by economists and increasingly by spectrum policy makers that appropriately supervised market forces can be superior to the widely used but more inflexible command-and-control methods.

Trading of spectrum is made much more powerful when it is combined with policies aimed at promoting liberalisation in use; that is allowing users to choose the use to which a frequency band is put – subject perhaps to some constraints regarding the interference that can be caused (see Chapter 7).

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Chapter
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Publisher: Cambridge University Press
Print publication year: 2007

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References

Coase, R. H., “The Federal Communications Commission”, Journal of Law and Economics, 2, 1–40, 1959.CrossRefGoogle Scholar
M. Cave, “Review of Radio Spectrum Management”, Department of Trade and Industry and HM Treasury, UK, 2002.
International Telecommunications Union, “Spectrum Management For A Converging World”, 2004, available at http://www.itu.int/osg/spu/ni/spectrum/RSMBG.doc
Australian Communications Authority, “From DC to Daylight – Accounting for Use of the Spectrum in Australia”, Melbourne, September 2004.
European Commission, Decision No. 676/2002/European Commission of 7 March 2002 “On a regulatory framework for radio spectrum policy in the European Community” and Directive 2002/21/European Commission of the European Parliament and of the Council of 7 March 2002 “On a common regulatory framework for electronic communications networks and services” (Framework Directive).
European Commission, “A market-based approach to spectrum management in the European Union”, COM(2005)400, 14 September 2005.
European Commission, “Communication on the Review of the EU Regulatory Framework from electronic communications networks and services”, COM(2006)334, 29 June 2006.

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