- Email: [email protected]
Spectrum use for mobile communications instead of television broadcasting?
Telecommunications Policy 1994 18 (4) 321-330
Spectrum use for mobile communications instead of television broadcasting? The Dutch case
Sven Maltha
Both mobile communications and television broadcasting are asking for more and more frequency space. By swltching television from air to cable the congestion In the radlo spectrum could be decreased and resources could become avallable to stlmulate the lucrative market for mobile communications. Inspired by Professor Negroponte and a osnetratlon rate for CAlV of 92% In thi Netherlands, research was lnltlated to lndlcate the posslbllltles and llmltatlons of using alternatlve Infrastructure Instead of terrestrlal televlslon broadcasting. Is the development of mobile markets really dependent on the release of more radio spectrum, and what Is the galn of a switch when the danger of Interference wlth televlslon channels of nelghbourlng countries remains? The author is economist and researcher at STB-TN0 Centre for Technology and Policy Studies, PO Box 541, 7300 AM Apeldoorn, The Netherlands (Tel: +31 55 493942; fax: +31 55 421458). The author wishes to acknowledge Thea Weijers and Dr Jos Leyten for their constructive comments. ‘Professor Nicholas P. Negroponte is Director of the Media Laboratory of MIT and published his idea in an article under the title ‘Products and services for computer networks’ in Scientific American, September 1991, pp 76-83.
0308-5961/94/040321-l
0 0
The radio spectrum has recently gained the special attention of mobile communications operators, mobile equipment manufacturers, television broadcasters, the military and other ‘official services’ and policy makers. This attention is the result of the scarcity of spectrum resources and new methods for optimizing allocation. Frequency spectrum is a scarce resource in both a physical and an economic sense: physical, because in itself it cannot be enlarged, although the intensity of use can be increased by new technologies and more efficient planning methods; and from an economic point of view, because the markets for communication services and equipment are growing rapidly worldwide and are therefore requiring more frequency space. Mobile cellular markets especially are turning out to be very lucrative. Moreover other developments in the field of communications, like private mobile radio (PMR), trunking, paging, mobile data, satellite communications, digital audio broadcasting (DAB), high-definition television (HDTV) and digital terrestrial television broadcasting (DTTB) are turning the spectrum into a valuable commodity. On the one hand we see traditionally wired communications like telephony becoming more and more wireless, increasing the pressure on the radio spectrum. On the other hand, television broadcasting, a use with a more or less fixed character, has traditionally been distributed by air. The distribution of television signals in particular makes very extensive use of spectrum resources, whereas a good alternative is available in the form of cable television (CATV). The general idea of switching television broadcasting to cable in order to relieve the frequency need and create space for mobile telephony applications was introduced in the Netherlands by Professor Nicholas P. Negroponte and since then has been known as the ‘Negroponte switch’.’
1994 Butterworth-Heinemann
Ltd
321
Spectrum use for mobile communications or television?
According to some, the widely recognized shortage of ether capacity would delay the development of mobile communications in the Netherlands. This hypothesis stimulated further research into alternative patterns of spectrum usage. Of importance in this context is the penetration rate of CATV (homes passed) in the Netherlands (92% in 1993). In this article the possibilities and effects of switching television to cable will be explored for the Dutch case.’ The main objective is to establish the influence on growth in mobile communications in the medium term, if television broadcasting frequencies were to become available for mobile applications.
Development
of spectrum need in the Netherlands
The radio spectrum can be regarded as a ‘universal natural resource’ which, unlike other natural resources, is instantly renewed after being used but its function as a medium is limited on technical grounds. Therefore efficient allocation for different categories of applications is desirable. This article focuses attention towards spectrum need on current developments in: l l
‘This article is mainly based on research performed by the STB-TN0 Centre for Technology and Policy Studies, commissioned by VECAI (the Dutch organization for cable operators). On grounds of confidentiality not all the data can be given in this article. Sven Maltha, Jos Leyten and Thea Weijers, Exploration of Possibilities and Effects of the ‘Negroponte Switch’ on the CATV Operators, STB-TNO, Apeldoorn, 1993 (in Dutch). 3Maximum caoacitv of ATF 1 had been reached in 19bS. 1; 1985 the ATF 2 network, based on the NMT 450 system with roaming possibilities within Benelux, had been opened. Because the coming of the new digital network had been delayed, introduction of the ATF 3 network (NMT 900) took place in 1989 in order to overcome capacity problems. 4PlT Telecom Annual Report, 1992. 5This is partly induced by the earlier introduction of the NMT system in the Nordic countries. %ource: PlT Telecom. 71n response to price dumping and spectrum pollution by illegal low-frequency cordless telephones of Southeast Asian origin, PlT Telecom and the Dutch public authorities recently chose a new standard (CT 0) around 40 MHz to offer to officially registered products in the very low price segments.
(land) mobile communications, television broadcasting.
and
First of all mobile communications is growing rapidly worldwide. Due to the demands of modern-day society, in which people expect to be able to be contacted without any limitations in terms of time or place, on-sight wired communications will become more and more mobile. This development can be illustrated by the increasing use of cordless telephones with a base station at the home or office, paging equipment, cellular (car) telephones and cordless telephones connected to a telepoint. Cellular
and cordless
telephony
The cellular market, which is already the most valuable in terms of service revenues, is expected to grow explosively when digital applications like GSM, PCN and DECT are adopted not only by business users but by consumers as well. The introduction of cellular car telephones in the Netherlands in 1980 was slow to take off. The first network was ATF 1 with a limited capacity of 2500 users. In the first eight years after the market introduction of the first car telephone only 33 000 mobiles were sold.3 Then in the 1990s the total number of subscribers rose to 166 000 in 1992.4 Despite this boost in mobile connections the Dutch cellular markets were unable to keep pace with developments in other European countries, eg the Scandinavian countries.5 In the year 2000 about 600 000 subscribers are expected for the Dutch GSM market.6 Cordless telephones are mainly used at the home and the office (CT 0, CT 1) or out of doors in combination with a Greenpoint (CT 2, Telepoint).’ Although Greenpoint telephones do not seem to be very successful as yet, the actual penetration for cordless telephones (mainly CT 0 and CT 1) has reached about half a million. New mobile networks are expected, implying in most cases extra pressure on the radio spectrum. In the Netherlands frequency bands have been assigned for cellular and cordless networks and television broadcasting as shown in Table 1. Current cellular and cordless systems are located in the 450 and 900 MHz band. Because of congestion in the lower parts of the radio
TELECOMMUNICATIONS
POLICY
May/June
1994
Spectrum use for mobile communications
or television?
Table 1. Frequency table for the Netherlands. Cellular and cordless networks
Frequency (MHz)
ATF 1
148-149
CT0 CT 1 CT 2 (T&point)
153-154 uplink 451458 481468 uplink 880-888 926-933 uplink 890-914 935959 uplink 31 and 40 914 and 959 884-868
Future networks: DCS 1800 (PCN) DECT FPLMTS (UMTS) (year 2000)
1805-l 880 1880-l 900 1900-2025
ATF 2 (NMT 450) ATF 3 (NMT 900) ATF 4 (GSM)
Televlslon broadcastlng
Nl N 2 (47-790 MHz) N 3 (VHF and UHF)
spectrum, new systems like DECT, PCN and FPLMTS are located in higher frequency bands. This lack of space in the lower regions is regarded as an obstacle standing in the way of the rapid development of less expensive mobile communication systems. The higher the frequencies used, the more advanced and expensive technology is required for geographical and propagation reasons. Whether the cost of technology is an important parameter for the market price of equipment will be dealt with later in this article. Public mobile radio
Besides public wireless telephony we can also distinguish private mobile radio (PMR). Conventional closed land-mobile communication systems are essential to industry (oil refineries), transport (public transport, taxis, airports) and emergency services (police, fire-fighting vehicles, ambulances). Spectrum used for these applications is mainly concentrated around 200 and 400 MHz. These regions are so crowded that interference between systems often hinders communication. New trunking technologies offers some relief. In the Netherlands PTT Telecom started a new trunked public access mobile radio (PAMR) service under the name Traxys in 1991. Spectrum use is limited to connecting terminals with base stations in the terrestrial network. Most of the communication signals are distributed via trunk lines. Separated channel assignment for every single user means more efficient use of frequencies than by conventional PMR. Besides trunking, digitalization offers even more opportunities for increased efficiency in the future. This can be achieved not only by using less spectrum, but also by presenting multiple applications per system. The question is whether there is sufficient space to accommodate new systems (eg Tetra8) and, if not, how much is needed. Other mobile applications
*Tetra stands for Trans European Trunked Radio system and should become the GSM under the PMRs. A digital network for voice and data, Tetra supports applications such as file transfer, mobile facsimile, still video, voice and/or data security, fleet management,access to databases, etc.
TELECOMMUNICATIONS
Paging and especially mobile data services are still growing. Yet these applications do not require as much spectrum as is required to transport voice or video. Paging signals can be distributed together with voice signals by cellular systems in the same frequency band. One MHz is sufficient to operate a complete paging service. Therefore real capacity problems are not anticipated for the near future. For transporting data by radio waves (wireless facsimile, notebooks connected to base stations by radio, dedicated data) relatively little spectrum is needed. In
POLICY May/June
1994
323
Spectrum use for mobile communications
or television?
addition, mobile data can be supported by different mobile communication systems like GSM, Traxys and Tetra, making it even more spectrum-efficient. Although the demand for mobile data will increase strongly over the next few years, frequency scarcity is not expected to delay market development. Future applications of all kinds of mobile satellite communications like LEOs, sky-phone, etc, are beyond the scope of this article.
Public television broadcasting In the same part of the spectrum we find television broadcasting next to mobile communications. In the Netherlands three public stations distribute their programmes through the spectrum. More than 350 MHz in the range 47-790 MHz is used by 15 transmitters for television broadcasting. The used channels have a bandwidth of 7-8 MHz, not always closely linked and spread over the 700 MHz spectrum. Foreign broadcasting stations (Belgian, German, UK and French) can be received in the same bands. To date, terrestrial ether distribution has been legally limited to public broadcasting; commercial stations have to make use of cable or satellite distribution.’ Reasons for extra spectrum demand include: l
l
l l
new broadcasting applications and services (datacasting, pay-TV, company television, paging services combined with television distribution); the appearance of new commercial players in the field of terrestrial broadcasting in the future; the introduction of new television standards (HDTV); the increasing supply of local or regional broadcasting stations.
While no new spectrum can be discovered, there are some developments towards the more efficient use of frequencies. Firstly, data compression techniques and digital technology are enabling spectrum users to be more conservative in their usage requirements. For instance, Digital Terrestrial Television Broadcasting will make the transmission of eight stations possible using the same amount of frequency as is needed to distribute the three stations at the present time. Secondly, there are moves to reallocate spectrum from government/military use to commercial use. Even advanced planning methods can reduce the unused spots in existing spectrum assignments. Yet there would still seem to be a more radical alternative available: switching television to cable to relieve the spectrum need for mobile communications, especially cellular and PMR in the lower frequencies. Whether or not this is a realistic scenario is debatable.
Alternative distribution of television signals In the Netherlands have already taken
we observe place:
that
parts
of the ‘Negroponte
switch’
The greater part of the Dutch population receive their television signals from CATV, not via terrestrial broadcasting. l Only a few television channels can be received with home antennas (the three public channels and some foreign stations in the border region). 0 Some television services, like cable information or local TV, do not make use of spectrum at all. l
9Almost all Dutch-orientated satellite broadcasting is received by cable operators and relayed to their subscribers.
324
TELECOMMUNICATIONS
POLICY
May/June 1994
Spectrum
use for mobile communications
or television?
increasing share of CATV in television distribution has led to a penetration level of 92% homes passed (actual subscribers 86%) in 1993. Therefore a complete switch to CATV should be seen as a possibility to relieve pressure on the radio spectrum. To realize such a switch, a complete nationwide network is needed in order to provide total coverage for public broadcasting. We can distinguish different alternatives to establish 100% coverage: The
. 100% CATV; l CATV plus satellite; . CATV plus MVDS.
‘“Source: VECAIISTB-TNO. “Of the households without a CATV connection, 100 000 already have a satellite dish. “Based on the current subscriber tariffs VECAI expects the penetration level of homes passed to increase to 97% within five years. The last 3% of the households, located outside the licensed regions, cannot be provided with public channels on a profitable basis without increasing the price. Whether this is socially desirable or not is a political issue.
TELECOMMUNICATIONS
In 1993 almost 5.75 million households will be able to receive CATV. Households which are not yet connected to CATV can be divided into two groups: (1) 300 000 households inside the licensed regions of the CATV operators; (2) 200 000 households outside the CATV licensed regions. Outside the licensed regions, in rural areas for instance, the average connection cost must be multiplied by a factor 10 compared to the average connection cost of the first group. The total cost of 100% cable distribution has been estimated in the region of US$1200 million. lo Especially wiring the last 3% is the most expensive. A less expensive solution would be to wire 97%) which would still be profitable for the CATV operators and provide additional coverage by satellite. In that case transponders on one of the television satellites should be hired and dishes provided to those who do not yet have one, in order to fulfil any demand for reception of all the public channels.” Another alternative to realize 100% coverage is the combination of CATV and a microwave video distribution system (MVDS). Beam connections between terrestrial transmitters and MVDS dishes would be needed to connect unwired households with the CATV network. According to this scenario there would be no need to hire satellite transponders and the cost of an installed dish would be about the same as for satellite. Nevertheless, the cost of the transmitters required would be very high. The use of microwave limits the range, so that a very large number of transmitters would be required to cover all the remote areas. This solution would be much more expensive than the satellite option. Plans for a local MVDS in the Netherlands were dropped at an early stage because the relevant authorities refused to assign frequency space in the 12 GHz band for this particular application. Neither complete coverage by cable nor by a combination of CATV and satellite would be profitable for the CATV operators under the current tariffs. ‘* They will increase their revenues in the future by providing new tele-information services. To achieve this goal the local operators should interconnect their networks rather than try to accomplish full coverage. So we can assume that if a switch was desirable for spectrum efficiency reasons, market intervention would be needed in the form of financial aid for investments in extra infrastructure. The desirability of such a switch mainly depends on the actual benefits for the development of mobile communications and the practical and institutional limitations involved. The latter will be considered next.
The limiting aspects of a switch Switching over-the-air television to cable not only requires physical and regulatory adjustment but would result in limitations on certain other
POLICY May/June
1994
325
Spectrum
use for mobile communications
or television? Table 2. Penetration
Sources: OECDIVECAI.
Homes passed Subscription
rates (%) of CATV. West Germany 1991
UK 1991
Belgium 1999
France 1999
Netherlands 1990 1993
63 34
13 3
92
6 2
60
applications as well. Before analysing the UHF and VHF bands in favour important issues should be discussed: l l
92 66
the real benefits of reallocating of mobile communcations, two
the international aspects; portable use of television.
International aspects
‘%ommittee of Experts on Basic Frequency Regulation Matters in Civil Telecomrrhnications, Frequency Regulation in the Federal Republic of Germany, Federal Minister of Posts and Telecommunications, Bonn, June 1991, p 22.
326
Because the interference and propagation aspects of radio waves are not restricted to national borders, international harmonization is essential. For this purpose national representatives from all over the world meet on a regular basis in the World Administrative Radio Conference (WARC). In this conference agreements are made on assigning frequency bands to the various categories of applications. Within this institutional framework, national authorities have a certain freedom to draw up their own frequency policy. Especially with respect to television broadcasting in the border regions, coordination with at least one neighbouring administration is necessary in order to avoid interference.13 Because of the small size of the country and common use of the same broadcasting frequencies by neighbouring countries, alternative uses of this part of the radio spectrum in the Netherlands (eg usage for mobile communications) will be limited mainly to local or regional applications. Therefore efficient reallocation of the spectrum in terms of switching terrestrial broadcasting to cable must be seen in an international/European context. To accomplish optimal use of a switch, it is necessary that surrounding countries whose television broadcasting can be received in the Netherlands over the air also turn to alternative distribution. In this respect cable penetration in these countries is a crucial point. Table 2 shows a very high CATV penetration in Belgium and the Netherlands. This is not the case in Germany, where the situation changed as a result of reunification. Although 63% of households in the western part are connected to CATV networks, actual acceptance (subscription) is relatively low. For ‘united Germany’ the penetration levels are even lower because of the minimal development of CATV in the former GDR. Even in the light of the recent increase in the cable infrastructure it is doubtful whether the German authorities will consider a complete switch in the medium to long term. Due to topographical characteristics the average cost of new connections is much higher than in the Netherlands. In the UK and France CATV penetration is so low that it cannot be seen as a fully fledged alternative to replace terrestrial television broadcasting completely. The important role terrestrial broadcasting plays in Europe can be illustrated by the following quotation: If cable and satellite have often been thought to play a major part in the profound changes which come about in the European audiovisual system, it nonetheless must be said that, up to the present time, the major developments
TELECOMMUNICATIONS
POLICY
May/June 1994
Spectrum
use for mobile communications
or television?
which have occurred are due to the increase in the potential for terrestrial broadcasting. The emergence of national networks in Italy owned by Sylvio
Berlusconi, the setting-up of Channel Four in the United Kingdom, of Canal Plus and of La Cinq and M6 in France, and the development of RTL Plus in Germany are first and foremost the result of an increase or reconfiguration of the capacity of terrestrial broadcasting.r4 Portable use of television
The need for more flexible use of television is increasing.‘* Flexible use not only depends on the portability of the television equipment, but mainly on the distribution medium. Abolishing terrestrial broadcasting would have far-reaching consequences for all kinds of portable usage (eg on boats, at campsites, in cars, trains, aircraft). In some cases satellite television could be the solution, but not in all. A switch would also have consequences for the market development of so-called ‘plug-free TV’ (pocket-sized LCD televisions working on batteries without an external antenna). Although their numbers are on the increase, the group of portable users whose interests would be harmed in the event of a switch to CATV is still very small. Whether the interests of this minority should be respected is a political choice.
Influence of extra spectrum on market development of mobile communications So far in this article we have noted the following: l There is a scarcity of spectrum in the Netherlands, especially in the lower part of the spectrum, but the demand for frequencies is differentiated in size for specific types of applications. l There is an alternative to terrestrial broadcasting in the Netherlands in the form of CATV (possibly in combination with satellite or MVDS), but this is very costly and not without its limitations. The question is now: What would be the effect on the market development of mobile communications if UHF and VHF television bands (used for transmission of the three public stations) become available for mobile applications, especially cellular mobile and PMR? Cellular market
‘%onvergence between Communications Technologies: Case Studies from North America and Western Europe, ICCP 28, OECD, Paris, 1992. 15NOS Kijk- en Luisteronderzoek, November 1992. Research on second and third television sets within one household showed increasing usage at different locations.
TELECOMMUNICATIONS
Whether extra spectrum will stimulate the market development of mobile applications not only depends on the demand side but first and foremost on the supply side of the market. Is off-the-shelf equipment available that can be used in the released frequencies? If not, complete new telephones and networks will have to be developed. Is there a real need for new low-frequency cellular networks? The most important question is: Do we need competing systems in different spectrum areas, or more competition within existing standards to increase the market penetration of mobile cellular? Use of higher frequencies for mobile telephony not only affects the cost of the required technology, but also the functionality of the equipment. The higher the frequency, the shorter the range but the higher the capacity. This means smaller cells with higher traffic density. Therefor DCS 1800 (PCN) is very effective in urban areas and can be seen as complementary to GSM. In order to reach mass markets, high-frequency standards are in fact essential.
POLICY May/June
1994
Spectrum
use for mobile communications
or television? Table 3. Equipment and service costs of ATF 3.
a 1 DFL = US$O.528 at 25 August 1993. b Estimate of sold the average price. Handheld telephones were for approximately DFL 2000 in 1993, but there were fixed car telephones available for DFL 999.
Price (DFL)*
1989
1993
Change (%)
ATF 3 terminal (selling price)b Subscription charges (per month) Peak call charges (per minute)
7000 85 1.05
1800 80 0.90
-74.3 -5.8 -4.3
Reallocation of television spectrum in the Netherlands necessarily result in new cellular networks for two reasons: l
l
will
not
It took many years to reach agreement on a European level about standards like GSM, PCN and DECT. Now that the industry is focusing on these standards and has made commitments in terms of development, production facilities and marketing, it is unlikely that international equipment manufacturers will switch to production of low-frequency systems. The minimum optimal scale for developing a new cellular system is many times larger than the Dutch market. No attempt will turn out to be profitable if the system cannot be sold in other countries as well. The European market is often regarded as the minimum for efficient production.
Finally, the market price for mobile terminals will depend more on the scale of production than on the cost of the technology deployed. Therefore the argument to use low-frequency technology in order to stimulate market development would seem to be invalid. When we look at the demand side, growth lagged behind the developments in other European countries. According to the mobile industry frequency need is not the reason for this. Current capacity is adequate and spectrum has been assigned internationally for future generation cellular systems. To date, the demand has been dominated by business users. Consumers are still waiting for prices to decline. The markets for terminals are competitive and have seen significant price cuts in the last few years. The average price of an ATF 3 telephone in 1993 now stands at a quarter of the 1989 price (see Table 3).16 The PTT tariffs failed to follow this decrease over the same period. The total average cost of a telephone (subscription and call charges) has been estimated at DFL 4000 per connection per year.17 This is two to four times the selling price of a terminal. In order to stimulate the penetration of cellular mobiles, competition should be enhanced in services markets, rather than in equipment markets. So there seems to be little reason to free up spectrum for low-frequency systems in order to increase demand for cellular mobiles. From a spectrum point of view, it would be inefficient to use double standards to increase competition, whereas equipment and service suppliers can compete within the same standard (GSM) as long as capacity is sufficient. Although the use of lower frequency bands for cellular mobiles can reduce the cost of the required technology, a newly developed terminal will probably not be competitive with ATF 3 and GSM in terms of price due to limited production scale, and certainly not in terms of functionality, due to propagation characteristics. Therefore the author does not expect much influence from extra spectrum on the market growth of mobile cellular communications in the short and medium term. ‘%ource: Siemens Nederland NV. 17F. Krijnen, ‘Tele-tic’, Management Team, 19 April 1993, p 140.
328
PMR market The
market
for conventional
closed
land-mobile
TELECOMMUNICATIONS
communication
POLICY
sys-
May/June 1994
Spectrum
use for mobile communications
or television?
terns has seen a stable growth of approximately 10% over the last few years. Although the congestion in the frequency bands used for PMR is much greater than for cellular and cordless mobile telephone systems, there seems to have been no real limitation on market development up to now. But this may change in the future. Trunked and digital versions of PMR may offer some relief by enhancing quality, multifunctionality and speed of communication. However, for every new standard extra space will be needed. Especially considering the development of Tetra, it seems unclear which bands can be assigned for commercial applications. Recently some European countries signed a Memorandum of Understanding to free up parts of the 380-400 MHz band for Tetra, intended for public order and emergency services. Extra frequencies are required for commercial purposes. The release of 20 MHz of the television bands (eg around 470 MHz) would undoubtedly contribute to the development of commercial Tetra services. Especially for systems with roaming facilities, international harmonization remains essential. Many conventional PMR systems used by industry, health and emergency services have a local or regional application. For this reason frequency sharing is possible. An example is television channel 5 (174-181 MHz) which is used both for broadcasting in the eastern part of the Netherlands (Roermond transmitter) and for mobile applications in the western part. More research on the dual use of frequencies for different applications is needed to achieve a higher degree of spectrum efficiency. This leaves the same problem as mentioned for cellular markets, that in the case of extra frequencies existing equipment should be applicable with only slight adjustments. The development and production of new equipment would in many cases be far too costly.18 It is clear that extra frequencies directly alongside the assigned spectrum for PMR or cellular applications will reduce the congestion. But the STB-TN0 study indicates that extreme expectations about extra market growth are not realistic.” The first 20-30 MHz that would be reallocated could be a stimulus for the further development of both cellular and PMR markets. But the idea that 300 MHz, which would become available in the event of exclusive television distribution by cable, would open the door for six new, very lucrative cellular networks, each of 50 MHz bandwidth, is the wishful thinking of some policy makers and is not in line with the market reality of the Dutch mobile industry. Digital distribution, signal compression and new planning methods will lead in the future to fewer spectrum requirements for terrestrial television broadcasting. These developments give good hope for more efficient spectrum use for television broadcasting, which could lead to the release of frequencies for mobile communications. We could think about the older VHF television channels (band III).*’ Thus an international discussion on freeing band III VHF would seem to be more fruitful than discussion of a complete switch from spectrum to cable. “Motorola raised objections against the development of new equipment for other frequency bands to be used in the Rotterdam port area. This local market would be too small for profitable production of new or adjusted equipment. lg.See Fief 2. 201n the UK parts of the 200 MHz band were released for PAMR.
If we could start from scratch and the world was, in terms of topography, more like the Netherlands, CATV would be the most efficient transmission medium for television broadcasting. The spectrum could be used solely for all kinds of fixed, mobile and satellite services. However, we cannot change the past. The high levels of penetration in
TELECOMMUNICATIONS
May/June
POLICY
Concluding remarks
1994
Spectrum
use for mobile communications
or television?
the Netherlands and Belgium are unique in Europe. This implies that in the event of the Dutch choosing the exclusive distribution of television by cable, the possibilities of the released spectrum being exploited for mobile applications would be limited to local or regional use in order to avoid interference in the border regions. Besides interference, there is also a financial problem. Full coverage by CATV (or complemented by satellite) cannot be achieved profitably without increasing the current tariffs. Whether this is socially desirable is a political issue. Although spectrum use becomes more and more intensive, a real urgent need for extra frequencies in the Netherlands remains mainly limited to PMR/PAMR applications. For the time being frequency scarcity cannot be seen as an obstacle standing in the way of development of cellular and cordless markets. In the short and medium term the STB-TN0 study does not foresee high marginal revenues in the event of extra frequency space being made available for mobile communications, the main reason being the absence of scale economies. Digitalization and data compression techniques contribute to more efficient spectrum use. As 20-30 MHz extra can considerably reduce congestion in certain frequency bands, more research on planning methods and techniques to increase efficiency is desirable. Sharing and multiple applications would seem to be options for resolving the current problems. Therefore a complete switch to cable would at the present time not be necessary or effective on the limited Dutch scale. In the future more efficiency gains can be expected from digital terrestrial television broadcasting. Considering actual developments in telecommunications and broadcasting a definite choice for a single television infrastructure would seem to be premature.
330
TELECOMMUNICATIONS
POLICY May/June 1994
Spectrum use for mobile communications instead of television broadcasting? The Dutch case
Sven Maltha
Both mobile communications and television broadcasting are asking for more and more frequency space. By swltching television from air to cable the congestion In the radlo spectrum could be decreased and resources could become avallable to stlmulate the lucrative market for mobile communications. Inspired by Professor Negroponte and a osnetratlon rate for CAlV of 92% In thi Netherlands, research was lnltlated to lndlcate the posslbllltles and llmltatlons of using alternatlve Infrastructure Instead of terrestrlal televlslon broadcasting. Is the development of mobile markets really dependent on the release of more radio spectrum, and what Is the galn of a switch when the danger of Interference wlth televlslon channels of nelghbourlng countries remains? The author is economist and researcher at STB-TN0 Centre for Technology and Policy Studies, PO Box 541, 7300 AM Apeldoorn, The Netherlands (Tel: +31 55 493942; fax: +31 55 421458). The author wishes to acknowledge Thea Weijers and Dr Jos Leyten for their constructive comments. ‘Professor Nicholas P. Negroponte is Director of the Media Laboratory of MIT and published his idea in an article under the title ‘Products and services for computer networks’ in Scientific American, September 1991, pp 76-83.
0308-5961/94/040321-l
0 0
The radio spectrum has recently gained the special attention of mobile communications operators, mobile equipment manufacturers, television broadcasters, the military and other ‘official services’ and policy makers. This attention is the result of the scarcity of spectrum resources and new methods for optimizing allocation. Frequency spectrum is a scarce resource in both a physical and an economic sense: physical, because in itself it cannot be enlarged, although the intensity of use can be increased by new technologies and more efficient planning methods; and from an economic point of view, because the markets for communication services and equipment are growing rapidly worldwide and are therefore requiring more frequency space. Mobile cellular markets especially are turning out to be very lucrative. Moreover other developments in the field of communications, like private mobile radio (PMR), trunking, paging, mobile data, satellite communications, digital audio broadcasting (DAB), high-definition television (HDTV) and digital terrestrial television broadcasting (DTTB) are turning the spectrum into a valuable commodity. On the one hand we see traditionally wired communications like telephony becoming more and more wireless, increasing the pressure on the radio spectrum. On the other hand, television broadcasting, a use with a more or less fixed character, has traditionally been distributed by air. The distribution of television signals in particular makes very extensive use of spectrum resources, whereas a good alternative is available in the form of cable television (CATV). The general idea of switching television broadcasting to cable in order to relieve the frequency need and create space for mobile telephony applications was introduced in the Netherlands by Professor Nicholas P. Negroponte and since then has been known as the ‘Negroponte switch’.’
1994 Butterworth-Heinemann
Ltd
321
Spectrum use for mobile communications or television?
According to some, the widely recognized shortage of ether capacity would delay the development of mobile communications in the Netherlands. This hypothesis stimulated further research into alternative patterns of spectrum usage. Of importance in this context is the penetration rate of CATV (homes passed) in the Netherlands (92% in 1993). In this article the possibilities and effects of switching television to cable will be explored for the Dutch case.’ The main objective is to establish the influence on growth in mobile communications in the medium term, if television broadcasting frequencies were to become available for mobile applications.
Development
of spectrum need in the Netherlands
The radio spectrum can be regarded as a ‘universal natural resource’ which, unlike other natural resources, is instantly renewed after being used but its function as a medium is limited on technical grounds. Therefore efficient allocation for different categories of applications is desirable. This article focuses attention towards spectrum need on current developments in: l l
‘This article is mainly based on research performed by the STB-TN0 Centre for Technology and Policy Studies, commissioned by VECAI (the Dutch organization for cable operators). On grounds of confidentiality not all the data can be given in this article. Sven Maltha, Jos Leyten and Thea Weijers, Exploration of Possibilities and Effects of the ‘Negroponte Switch’ on the CATV Operators, STB-TNO, Apeldoorn, 1993 (in Dutch). 3Maximum caoacitv of ATF 1 had been reached in 19bS. 1; 1985 the ATF 2 network, based on the NMT 450 system with roaming possibilities within Benelux, had been opened. Because the coming of the new digital network had been delayed, introduction of the ATF 3 network (NMT 900) took place in 1989 in order to overcome capacity problems. 4PlT Telecom Annual Report, 1992. 5This is partly induced by the earlier introduction of the NMT system in the Nordic countries. %ource: PlT Telecom. 71n response to price dumping and spectrum pollution by illegal low-frequency cordless telephones of Southeast Asian origin, PlT Telecom and the Dutch public authorities recently chose a new standard (CT 0) around 40 MHz to offer to officially registered products in the very low price segments.
(land) mobile communications, television broadcasting.
and
First of all mobile communications is growing rapidly worldwide. Due to the demands of modern-day society, in which people expect to be able to be contacted without any limitations in terms of time or place, on-sight wired communications will become more and more mobile. This development can be illustrated by the increasing use of cordless telephones with a base station at the home or office, paging equipment, cellular (car) telephones and cordless telephones connected to a telepoint. Cellular
and cordless
telephony
The cellular market, which is already the most valuable in terms of service revenues, is expected to grow explosively when digital applications like GSM, PCN and DECT are adopted not only by business users but by consumers as well. The introduction of cellular car telephones in the Netherlands in 1980 was slow to take off. The first network was ATF 1 with a limited capacity of 2500 users. In the first eight years after the market introduction of the first car telephone only 33 000 mobiles were sold.3 Then in the 1990s the total number of subscribers rose to 166 000 in 1992.4 Despite this boost in mobile connections the Dutch cellular markets were unable to keep pace with developments in other European countries, eg the Scandinavian countries.5 In the year 2000 about 600 000 subscribers are expected for the Dutch GSM market.6 Cordless telephones are mainly used at the home and the office (CT 0, CT 1) or out of doors in combination with a Greenpoint (CT 2, Telepoint).’ Although Greenpoint telephones do not seem to be very successful as yet, the actual penetration for cordless telephones (mainly CT 0 and CT 1) has reached about half a million. New mobile networks are expected, implying in most cases extra pressure on the radio spectrum. In the Netherlands frequency bands have been assigned for cellular and cordless networks and television broadcasting as shown in Table 1. Current cellular and cordless systems are located in the 450 and 900 MHz band. Because of congestion in the lower parts of the radio
TELECOMMUNICATIONS
POLICY
May/June
1994
Spectrum use for mobile communications
or television?
Table 1. Frequency table for the Netherlands. Cellular and cordless networks
Frequency (MHz)
ATF 1
148-149
CT0 CT 1 CT 2 (T&point)
153-154 uplink 451458 481468 uplink 880-888 926-933 uplink 890-914 935959 uplink 31 and 40 914 and 959 884-868
Future networks: DCS 1800 (PCN) DECT FPLMTS (UMTS) (year 2000)
1805-l 880 1880-l 900 1900-2025
ATF 2 (NMT 450) ATF 3 (NMT 900) ATF 4 (GSM)
Televlslon broadcastlng
Nl N 2 (47-790 MHz) N 3 (VHF and UHF)
spectrum, new systems like DECT, PCN and FPLMTS are located in higher frequency bands. This lack of space in the lower regions is regarded as an obstacle standing in the way of the rapid development of less expensive mobile communication systems. The higher the frequencies used, the more advanced and expensive technology is required for geographical and propagation reasons. Whether the cost of technology is an important parameter for the market price of equipment will be dealt with later in this article. Public mobile radio
Besides public wireless telephony we can also distinguish private mobile radio (PMR). Conventional closed land-mobile communication systems are essential to industry (oil refineries), transport (public transport, taxis, airports) and emergency services (police, fire-fighting vehicles, ambulances). Spectrum used for these applications is mainly concentrated around 200 and 400 MHz. These regions are so crowded that interference between systems often hinders communication. New trunking technologies offers some relief. In the Netherlands PTT Telecom started a new trunked public access mobile radio (PAMR) service under the name Traxys in 1991. Spectrum use is limited to connecting terminals with base stations in the terrestrial network. Most of the communication signals are distributed via trunk lines. Separated channel assignment for every single user means more efficient use of frequencies than by conventional PMR. Besides trunking, digitalization offers even more opportunities for increased efficiency in the future. This can be achieved not only by using less spectrum, but also by presenting multiple applications per system. The question is whether there is sufficient space to accommodate new systems (eg Tetra8) and, if not, how much is needed. Other mobile applications
*Tetra stands for Trans European Trunked Radio system and should become the GSM under the PMRs. A digital network for voice and data, Tetra supports applications such as file transfer, mobile facsimile, still video, voice and/or data security, fleet management,access to databases, etc.
TELECOMMUNICATIONS
Paging and especially mobile data services are still growing. Yet these applications do not require as much spectrum as is required to transport voice or video. Paging signals can be distributed together with voice signals by cellular systems in the same frequency band. One MHz is sufficient to operate a complete paging service. Therefore real capacity problems are not anticipated for the near future. For transporting data by radio waves (wireless facsimile, notebooks connected to base stations by radio, dedicated data) relatively little spectrum is needed. In
POLICY May/June
1994
323
Spectrum use for mobile communications
or television?
addition, mobile data can be supported by different mobile communication systems like GSM, Traxys and Tetra, making it even more spectrum-efficient. Although the demand for mobile data will increase strongly over the next few years, frequency scarcity is not expected to delay market development. Future applications of all kinds of mobile satellite communications like LEOs, sky-phone, etc, are beyond the scope of this article.
Public television broadcasting In the same part of the spectrum we find television broadcasting next to mobile communications. In the Netherlands three public stations distribute their programmes through the spectrum. More than 350 MHz in the range 47-790 MHz is used by 15 transmitters for television broadcasting. The used channels have a bandwidth of 7-8 MHz, not always closely linked and spread over the 700 MHz spectrum. Foreign broadcasting stations (Belgian, German, UK and French) can be received in the same bands. To date, terrestrial ether distribution has been legally limited to public broadcasting; commercial stations have to make use of cable or satellite distribution.’ Reasons for extra spectrum demand include: l
l
l l
new broadcasting applications and services (datacasting, pay-TV, company television, paging services combined with television distribution); the appearance of new commercial players in the field of terrestrial broadcasting in the future; the introduction of new television standards (HDTV); the increasing supply of local or regional broadcasting stations.
While no new spectrum can be discovered, there are some developments towards the more efficient use of frequencies. Firstly, data compression techniques and digital technology are enabling spectrum users to be more conservative in their usage requirements. For instance, Digital Terrestrial Television Broadcasting will make the transmission of eight stations possible using the same amount of frequency as is needed to distribute the three stations at the present time. Secondly, there are moves to reallocate spectrum from government/military use to commercial use. Even advanced planning methods can reduce the unused spots in existing spectrum assignments. Yet there would still seem to be a more radical alternative available: switching television to cable to relieve the spectrum need for mobile communications, especially cellular and PMR in the lower frequencies. Whether or not this is a realistic scenario is debatable.
Alternative distribution of television signals In the Netherlands have already taken
we observe place:
that
parts
of the ‘Negroponte
switch’
The greater part of the Dutch population receive their television signals from CATV, not via terrestrial broadcasting. l Only a few television channels can be received with home antennas (the three public channels and some foreign stations in the border region). 0 Some television services, like cable information or local TV, do not make use of spectrum at all. l
9Almost all Dutch-orientated satellite broadcasting is received by cable operators and relayed to their subscribers.
324
TELECOMMUNICATIONS
POLICY
May/June 1994
Spectrum
use for mobile communications
or television?
increasing share of CATV in television distribution has led to a penetration level of 92% homes passed (actual subscribers 86%) in 1993. Therefore a complete switch to CATV should be seen as a possibility to relieve pressure on the radio spectrum. To realize such a switch, a complete nationwide network is needed in order to provide total coverage for public broadcasting. We can distinguish different alternatives to establish 100% coverage: The
. 100% CATV; l CATV plus satellite; . CATV plus MVDS.
‘“Source: VECAIISTB-TNO. “Of the households without a CATV connection, 100 000 already have a satellite dish. “Based on the current subscriber tariffs VECAI expects the penetration level of homes passed to increase to 97% within five years. The last 3% of the households, located outside the licensed regions, cannot be provided with public channels on a profitable basis without increasing the price. Whether this is socially desirable or not is a political issue.
TELECOMMUNICATIONS
In 1993 almost 5.75 million households will be able to receive CATV. Households which are not yet connected to CATV can be divided into two groups: (1) 300 000 households inside the licensed regions of the CATV operators; (2) 200 000 households outside the CATV licensed regions. Outside the licensed regions, in rural areas for instance, the average connection cost must be multiplied by a factor 10 compared to the average connection cost of the first group. The total cost of 100% cable distribution has been estimated in the region of US$1200 million. lo Especially wiring the last 3% is the most expensive. A less expensive solution would be to wire 97%) which would still be profitable for the CATV operators and provide additional coverage by satellite. In that case transponders on one of the television satellites should be hired and dishes provided to those who do not yet have one, in order to fulfil any demand for reception of all the public channels.” Another alternative to realize 100% coverage is the combination of CATV and a microwave video distribution system (MVDS). Beam connections between terrestrial transmitters and MVDS dishes would be needed to connect unwired households with the CATV network. According to this scenario there would be no need to hire satellite transponders and the cost of an installed dish would be about the same as for satellite. Nevertheless, the cost of the transmitters required would be very high. The use of microwave limits the range, so that a very large number of transmitters would be required to cover all the remote areas. This solution would be much more expensive than the satellite option. Plans for a local MVDS in the Netherlands were dropped at an early stage because the relevant authorities refused to assign frequency space in the 12 GHz band for this particular application. Neither complete coverage by cable nor by a combination of CATV and satellite would be profitable for the CATV operators under the current tariffs. ‘* They will increase their revenues in the future by providing new tele-information services. To achieve this goal the local operators should interconnect their networks rather than try to accomplish full coverage. So we can assume that if a switch was desirable for spectrum efficiency reasons, market intervention would be needed in the form of financial aid for investments in extra infrastructure. The desirability of such a switch mainly depends on the actual benefits for the development of mobile communications and the practical and institutional limitations involved. The latter will be considered next.
The limiting aspects of a switch Switching over-the-air television to cable not only requires physical and regulatory adjustment but would result in limitations on certain other
POLICY May/June
1994
325
Spectrum
use for mobile communications
or television? Table 2. Penetration
Sources: OECDIVECAI.
Homes passed Subscription
rates (%) of CATV. West Germany 1991
UK 1991
Belgium 1999
France 1999
Netherlands 1990 1993
63 34
13 3
92
6 2
60
applications as well. Before analysing the UHF and VHF bands in favour important issues should be discussed: l l
92 66
the real benefits of reallocating of mobile communcations, two
the international aspects; portable use of television.
International aspects
‘%ommittee of Experts on Basic Frequency Regulation Matters in Civil Telecomrrhnications, Frequency Regulation in the Federal Republic of Germany, Federal Minister of Posts and Telecommunications, Bonn, June 1991, p 22.
326
Because the interference and propagation aspects of radio waves are not restricted to national borders, international harmonization is essential. For this purpose national representatives from all over the world meet on a regular basis in the World Administrative Radio Conference (WARC). In this conference agreements are made on assigning frequency bands to the various categories of applications. Within this institutional framework, national authorities have a certain freedom to draw up their own frequency policy. Especially with respect to television broadcasting in the border regions, coordination with at least one neighbouring administration is necessary in order to avoid interference.13 Because of the small size of the country and common use of the same broadcasting frequencies by neighbouring countries, alternative uses of this part of the radio spectrum in the Netherlands (eg usage for mobile communications) will be limited mainly to local or regional applications. Therefore efficient reallocation of the spectrum in terms of switching terrestrial broadcasting to cable must be seen in an international/European context. To accomplish optimal use of a switch, it is necessary that surrounding countries whose television broadcasting can be received in the Netherlands over the air also turn to alternative distribution. In this respect cable penetration in these countries is a crucial point. Table 2 shows a very high CATV penetration in Belgium and the Netherlands. This is not the case in Germany, where the situation changed as a result of reunification. Although 63% of households in the western part are connected to CATV networks, actual acceptance (subscription) is relatively low. For ‘united Germany’ the penetration levels are even lower because of the minimal development of CATV in the former GDR. Even in the light of the recent increase in the cable infrastructure it is doubtful whether the German authorities will consider a complete switch in the medium to long term. Due to topographical characteristics the average cost of new connections is much higher than in the Netherlands. In the UK and France CATV penetration is so low that it cannot be seen as a fully fledged alternative to replace terrestrial television broadcasting completely. The important role terrestrial broadcasting plays in Europe can be illustrated by the following quotation: If cable and satellite have often been thought to play a major part in the profound changes which come about in the European audiovisual system, it nonetheless must be said that, up to the present time, the major developments
TELECOMMUNICATIONS
POLICY
May/June 1994
Spectrum
use for mobile communications
or television?
which have occurred are due to the increase in the potential for terrestrial broadcasting. The emergence of national networks in Italy owned by Sylvio
Berlusconi, the setting-up of Channel Four in the United Kingdom, of Canal Plus and of La Cinq and M6 in France, and the development of RTL Plus in Germany are first and foremost the result of an increase or reconfiguration of the capacity of terrestrial broadcasting.r4 Portable use of television
The need for more flexible use of television is increasing.‘* Flexible use not only depends on the portability of the television equipment, but mainly on the distribution medium. Abolishing terrestrial broadcasting would have far-reaching consequences for all kinds of portable usage (eg on boats, at campsites, in cars, trains, aircraft). In some cases satellite television could be the solution, but not in all. A switch would also have consequences for the market development of so-called ‘plug-free TV’ (pocket-sized LCD televisions working on batteries without an external antenna). Although their numbers are on the increase, the group of portable users whose interests would be harmed in the event of a switch to CATV is still very small. Whether the interests of this minority should be respected is a political choice.
Influence of extra spectrum on market development of mobile communications So far in this article we have noted the following: l There is a scarcity of spectrum in the Netherlands, especially in the lower part of the spectrum, but the demand for frequencies is differentiated in size for specific types of applications. l There is an alternative to terrestrial broadcasting in the Netherlands in the form of CATV (possibly in combination with satellite or MVDS), but this is very costly and not without its limitations. The question is now: What would be the effect on the market development of mobile communications if UHF and VHF television bands (used for transmission of the three public stations) become available for mobile applications, especially cellular mobile and PMR? Cellular market
‘%onvergence between Communications Technologies: Case Studies from North America and Western Europe, ICCP 28, OECD, Paris, 1992. 15NOS Kijk- en Luisteronderzoek, November 1992. Research on second and third television sets within one household showed increasing usage at different locations.
TELECOMMUNICATIONS
Whether extra spectrum will stimulate the market development of mobile applications not only depends on the demand side but first and foremost on the supply side of the market. Is off-the-shelf equipment available that can be used in the released frequencies? If not, complete new telephones and networks will have to be developed. Is there a real need for new low-frequency cellular networks? The most important question is: Do we need competing systems in different spectrum areas, or more competition within existing standards to increase the market penetration of mobile cellular? Use of higher frequencies for mobile telephony not only affects the cost of the required technology, but also the functionality of the equipment. The higher the frequency, the shorter the range but the higher the capacity. This means smaller cells with higher traffic density. Therefor DCS 1800 (PCN) is very effective in urban areas and can be seen as complementary to GSM. In order to reach mass markets, high-frequency standards are in fact essential.
POLICY May/June
1994
Spectrum
use for mobile communications
or television? Table 3. Equipment and service costs of ATF 3.
a 1 DFL = US$O.528 at 25 August 1993. b Estimate of sold the average price. Handheld telephones were for approximately DFL 2000 in 1993, but there were fixed car telephones available for DFL 999.
Price (DFL)*
1989
1993
Change (%)
ATF 3 terminal (selling price)b Subscription charges (per month) Peak call charges (per minute)
7000 85 1.05
1800 80 0.90
-74.3 -5.8 -4.3
Reallocation of television spectrum in the Netherlands necessarily result in new cellular networks for two reasons: l
l
will
not
It took many years to reach agreement on a European level about standards like GSM, PCN and DECT. Now that the industry is focusing on these standards and has made commitments in terms of development, production facilities and marketing, it is unlikely that international equipment manufacturers will switch to production of low-frequency systems. The minimum optimal scale for developing a new cellular system is many times larger than the Dutch market. No attempt will turn out to be profitable if the system cannot be sold in other countries as well. The European market is often regarded as the minimum for efficient production.
Finally, the market price for mobile terminals will depend more on the scale of production than on the cost of the technology deployed. Therefore the argument to use low-frequency technology in order to stimulate market development would seem to be invalid. When we look at the demand side, growth lagged behind the developments in other European countries. According to the mobile industry frequency need is not the reason for this. Current capacity is adequate and spectrum has been assigned internationally for future generation cellular systems. To date, the demand has been dominated by business users. Consumers are still waiting for prices to decline. The markets for terminals are competitive and have seen significant price cuts in the last few years. The average price of an ATF 3 telephone in 1993 now stands at a quarter of the 1989 price (see Table 3).16 The PTT tariffs failed to follow this decrease over the same period. The total average cost of a telephone (subscription and call charges) has been estimated at DFL 4000 per connection per year.17 This is two to four times the selling price of a terminal. In order to stimulate the penetration of cellular mobiles, competition should be enhanced in services markets, rather than in equipment markets. So there seems to be little reason to free up spectrum for low-frequency systems in order to increase demand for cellular mobiles. From a spectrum point of view, it would be inefficient to use double standards to increase competition, whereas equipment and service suppliers can compete within the same standard (GSM) as long as capacity is sufficient. Although the use of lower frequency bands for cellular mobiles can reduce the cost of the required technology, a newly developed terminal will probably not be competitive with ATF 3 and GSM in terms of price due to limited production scale, and certainly not in terms of functionality, due to propagation characteristics. Therefore the author does not expect much influence from extra spectrum on the market growth of mobile cellular communications in the short and medium term. ‘%ource: Siemens Nederland NV. 17F. Krijnen, ‘Tele-tic’, Management Team, 19 April 1993, p 140.
328
PMR market The
market
for conventional
closed
land-mobile
TELECOMMUNICATIONS
communication
POLICY
sys-
May/June 1994
Spectrum
use for mobile communications
or television?
terns has seen a stable growth of approximately 10% over the last few years. Although the congestion in the frequency bands used for PMR is much greater than for cellular and cordless mobile telephone systems, there seems to have been no real limitation on market development up to now. But this may change in the future. Trunked and digital versions of PMR may offer some relief by enhancing quality, multifunctionality and speed of communication. However, for every new standard extra space will be needed. Especially considering the development of Tetra, it seems unclear which bands can be assigned for commercial applications. Recently some European countries signed a Memorandum of Understanding to free up parts of the 380-400 MHz band for Tetra, intended for public order and emergency services. Extra frequencies are required for commercial purposes. The release of 20 MHz of the television bands (eg around 470 MHz) would undoubtedly contribute to the development of commercial Tetra services. Especially for systems with roaming facilities, international harmonization remains essential. Many conventional PMR systems used by industry, health and emergency services have a local or regional application. For this reason frequency sharing is possible. An example is television channel 5 (174-181 MHz) which is used both for broadcasting in the eastern part of the Netherlands (Roermond transmitter) and for mobile applications in the western part. More research on the dual use of frequencies for different applications is needed to achieve a higher degree of spectrum efficiency. This leaves the same problem as mentioned for cellular markets, that in the case of extra frequencies existing equipment should be applicable with only slight adjustments. The development and production of new equipment would in many cases be far too costly.18 It is clear that extra frequencies directly alongside the assigned spectrum for PMR or cellular applications will reduce the congestion. But the STB-TN0 study indicates that extreme expectations about extra market growth are not realistic.” The first 20-30 MHz that would be reallocated could be a stimulus for the further development of both cellular and PMR markets. But the idea that 300 MHz, which would become available in the event of exclusive television distribution by cable, would open the door for six new, very lucrative cellular networks, each of 50 MHz bandwidth, is the wishful thinking of some policy makers and is not in line with the market reality of the Dutch mobile industry. Digital distribution, signal compression and new planning methods will lead in the future to fewer spectrum requirements for terrestrial television broadcasting. These developments give good hope for more efficient spectrum use for television broadcasting, which could lead to the release of frequencies for mobile communications. We could think about the older VHF television channels (band III).*’ Thus an international discussion on freeing band III VHF would seem to be more fruitful than discussion of a complete switch from spectrum to cable. “Motorola raised objections against the development of new equipment for other frequency bands to be used in the Rotterdam port area. This local market would be too small for profitable production of new or adjusted equipment. lg.See Fief 2. 201n the UK parts of the 200 MHz band were released for PAMR.
If we could start from scratch and the world was, in terms of topography, more like the Netherlands, CATV would be the most efficient transmission medium for television broadcasting. The spectrum could be used solely for all kinds of fixed, mobile and satellite services. However, we cannot change the past. The high levels of penetration in
TELECOMMUNICATIONS
May/June
POLICY
Concluding remarks
1994
Spectrum
use for mobile communications
or television?
the Netherlands and Belgium are unique in Europe. This implies that in the event of the Dutch choosing the exclusive distribution of television by cable, the possibilities of the released spectrum being exploited for mobile applications would be limited to local or regional use in order to avoid interference in the border regions. Besides interference, there is also a financial problem. Full coverage by CATV (or complemented by satellite) cannot be achieved profitably without increasing the current tariffs. Whether this is socially desirable is a political issue. Although spectrum use becomes more and more intensive, a real urgent need for extra frequencies in the Netherlands remains mainly limited to PMR/PAMR applications. For the time being frequency scarcity cannot be seen as an obstacle standing in the way of development of cellular and cordless markets. In the short and medium term the STB-TN0 study does not foresee high marginal revenues in the event of extra frequency space being made available for mobile communications, the main reason being the absence of scale economies. Digitalization and data compression techniques contribute to more efficient spectrum use. As 20-30 MHz extra can considerably reduce congestion in certain frequency bands, more research on planning methods and techniques to increase efficiency is desirable. Sharing and multiple applications would seem to be options for resolving the current problems. Therefore a complete switch to cable would at the present time not be necessary or effective on the limited Dutch scale. In the future more efficiency gains can be expected from digital terrestrial television broadcasting. Considering actual developments in telecommunications and broadcasting a definite choice for a single television infrastructure would seem to be premature.
330
TELECOMMUNICATIONS
POLICY May/June 1994