Ofcom is planning the biggest shake-up in telecoms regulation since it began 100 years ago. For most of the radio spectrum, users currently hold pre-defined licences to operate specific technologies. Now, Ofcom has decided that market forces can do a better job: by 2010, companies will be able to trade spectrum without reference to Ofcom, and also change the use of that spectrum as they please.

"Currently, Ofcom manages 94 percent of its radio spectrum in a 'command and control' manner. We want to reduce that to 21 percent by 2010," said William Webb, head of research and development at Ofcom and author of the Spectrum Framework Review published today (read the press release here).

Regulating itself out of a job?
From the early days of radio, Ofcom's predecessors have issued licences for specific uses in given frequency bands, more recently charging money for them in auctions, which have had variable results. Either prices shot through the roof (3G) or no-one bid (wireless local loop).

Thirty percent of the whole radio spectrum is currently owned by the military. Ofcom manages the rest, and has decided that market forces will do a better job than it can.

Twenty-one percent of Ofcom's holding will still be directly controlled: "This is spectrum with strong international issues," said Webb. It includes satellite communications, radar and some maritime and aeronautical communications.

But that is a small part of the spectrum. Over the next six years, 72 percent of the radio spectrum Ofcom does manage will become subject to market forces, so licences will be bought and sold by the holders, who can also change the use of that spectrum.

How do we get there?
The exact steps to get to that situation will be set out in an implementation plan, due in a few weeks' time.

In the meantime, some steps are already happening: from this month, the regulator will begin to allow spectrum trading, where certain licences can be bought and sold without reference to Ofcom. Ofcom's ideas are set out here.

"Liberalisation", where the licence holders can change the use of that spectrum will also begin this month. In the early stages, Ofcom will have to approve the change of use. "For the next few years, they need to apply to us, and we'll adjudicate," said Webb. Ofcom's ideas on liberalisation are set out here.

"It is very novel to allow people to change the use in this way," he said. "It will be the first time in the world that a technology neutral approach has been taken." Eventually, licence holders will only be subject to limitations on emitted power, to prevent licence holders stepping on other users' toes.

Within the next three years, some licence holders will have technology neutral spectrum and will be able to use it how they please.

This is expected to be particularly useful for fixed wireless links, and wireless local loop, where a range of different technologies including Wi-Fi and WiMax are suggested. At present, the regime for fixed wireless links is so complex that little has been implemented: "The amount of spectrum for fixed wireless will open up substantially," said Webb.

Unlicensed spectrum stays small
Perhaps the biggest surprise in the document is the proposal to increase the amount of unlicensed spectrum by a small amount, to 7% of the total.

"A number of people say this is the key area for innovation," said Webb, but apparently the innovation does not need more spectrum just yet. The 5GHz band has only been opened up for a few years, but is still pretty much unused.

"If we want to make available enough licence-exempt spectrum for everyone in the country to have 100 Mbit/s in their home and office, only 7 percent is enough," he said. Given the DSL bottleneck behind these networks, he thinks it will be 2010 before people need more than that.

More interestingly, the Review suggests that it would be a good idea to allow some people to increase the broadcast power in the unlicensed bands, to allow longer-range links in rural areas. The problem, he acknowledged, was how to define what areas ARE rural, and how the devices will now whether they are in a rural area: "We're about to kick off a research program, on how best to do this in a practical sense."

UWB still waiting...
Ultrawideband gets mentioned in passing, but will be covered in a separate consultation document (the Ofocom-commissioned report due last Monday has been delayed due to last-minute editing issues, apparently).

The international angle
Ofcom is able to consider a more radical vision than other national regulators, because it has the benefit of a newer constitution, said Webb.

The US FCC has begun to allow a "clumsy" form of spectrum trading, in which a licence holder has to apply to have its licence revoked, and the FCC then issues the licence to the purchaser.

"The FCC is more constrained by the legal framework, while we have a brand new legal framework, in the 2000 Communications Act," said Webb. "The FCC has a framework that dates back many years, and is difficult to change because of the way the US legal system is set up."

Ofcom is keen to keep in line with Europe, however, especially since Europe - guided by the CEPT group of regulators - can issue directives which would impinge on Ofcom's moves to liberalise. "The European Union understands where we are coming from. It is going fairly well," said Webb. The EU has produced a favourable report which said spectrum trading and liberalisation could gain Europe €9 billion a year.

Conclusion: licences catch up with technology
Overall, the moves represent a move for the licensing regime to catch up with increasing sophistication of radio technology.

Up-to-date radio systems broadcast less energy, and are less likely to be tied to a particular frequency. New technologies (like WiMax and UWB) are arriving as fast as the regulators can handle them.

Ofcom has decided that its role is not to lay down the law about specific technologies, but only about their effect on other users. Spectrum management in the UK will never be the same.

Pedant's corner - how do you work out a percentage of a frequency band?
We know you've been wondering this: frequencies are normally illustrated on a logarithmic scale, so how does Ofcom work out those simple sounding percentages?

The answer is simple: to get a normalised idea of the size of a frequency band, take the range, divided by the centre frequency, so 95MHz to 105Mhz would be the same percentage as a 100MHz range at 1GHz.