Trading in RF spectrum

Once the 700-MHz band now being auctioned off by the Federal Communications Commission is licensed to new owners, the last major chunk of available radio frequency spectrum in the United States will be gone. But demand for this limited resource is likely to grow as new wireless communications applications continue to come online.

A start-up company hopes to take advantage of this scarcity by creating a marketplace for secondary spectrum licensing.

'We're going to create the first online dynamic exchange for trading wireless spectrum,' said Rick Rotondo, chief marketing officer at Spectrum Bridge.

The site would bring together license holders who have excess capacity and potential users who are looking for access to the airwaves. The site would contain a suite of tools to enable the process, including engines to translate information technology application needs to spectrum requirements, match those requirements with available spectrum at prices set by supply and demand, provide lists of vendors offering equipment working in the appropriate frequencies, and file appropriate paperwork and fees with the FCC.

'The whole goal is to create a marketplace,' that would not only encourage the trading and leasing of licenses, but create a market for equipment that works in a wider variety of licensed and unlicensed bands, said Engineering Vice President Joe Hamilla.

It makes sense; why hasn't it been done before?

'The question is what can you do with unused licensed spectrum?' Rotondo said. 'Until recently the answer was not much.'

The result is that although the radio spectrum is almost completely allocated, studies have found that as much as 70 percent to 80 percent of it is going unused at any given time. This does not mean that no one wants it, just that it is not being used efficiently. If it could be broken up, subdivided and sublet, it might be able to accommodate more carriers, users and applications.

In 2000 the FCC began rethinking its policies on the exchange of licensee rights. In a policy statement issued in 2000, titled 'Principles for Promoting the Efficient Use of Spectrum by Encouraging the Development of Secondary Markets,' the agency said that 'an effectively functioning system of secondary markets would encourage licensees to be more spectrum efficient by freely trading their rights to unused spectrum capacity, either leasing it temporarily, or on a longer-term basis, or selling their rights to unused frequencies.'

This was followed by spectrum policy task force reports in 2003 and 2004 that proposed more flexibility in license trading and leasing without prior FCC approval in some cases, or with minimal FCC notice of 10 or 21 days prior to operations. The reports also looked favorably on 'smart' or 'opportunistic' technology for dynamic leasing arrangements that could enable on-the-fly sharing to better use the limited resource.

Has the FCC given its blessing to Spectrum Bridge? Not necessarily. But, the company says in a white paper, 'it is reasonable to conclude that FCC will not hinder, and could plausibly support, the business model and technology envisioned by Spectrum Bridge.'

Hamilla hopes to get the business model and technology up and running later this year, with the spectrum exchange tool going online in the third quarter and the spectrum management application going online in the fourth quarter. The tools would let license holders break up, or disaggregate, their licensed spectrum by any combination of three factors: Frequency, coverage area and time. That means that users could get access to an unused channel, in a specific area, at specific times of day or for a specific period.

End users would be enterprises, institutions and government agencies that need to expand their wireless options beyond what is feasible in unlicensed technology such as Wi-Fi or WiMax, but that do not hold FCC licenses.

So far, no license holders have signed on to the exchange, Rotondo said, although there is interest in the scheme by potential users, equipment manufacturers and integrators.

'It's going to take a little while to get these guys onboard,' he said.

About the Author

William Jackson is a Maryland-based freelance writer.

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