Government advised to allow radio spectrum trading

The government has been advised to bring in radical changes in the way it manages the radio spectrum. If implemented, this could mean that companies would be able to trade the ownership of spectrum bands.

Professor Martin Cave, who was commissioned by the Department of Trade and Industry and the Treasury to review radio spectrum management, presented his recommendations on Wednesday. He believes that a market-led approach is needed, and would result in more efficient and innovative use of the spectrum.

Professor Cave has recommended that new spectrum should be auctioned when it becomes available.

Spectrum auctions have received a bad press recently, in the light of the massive sums spent by mobile network operators on 3G licences in April 2000. Professor Cave denied that the 3G auction is proof that such bidding processes don't work, but he believes that the technology sector would benefit from the changes he is suggesting.

"In the case of the 3G auction, one of the reasons that so much money was spent was because the companies involved only had one chance to obtain a licence. Spectrum trading would mean that companies could sit back and wait," Professor Cave suggested.

The 3G auction, which took place in the latter stages of the dot-com boom, raised £22.5bn, so the Treasury may not be as keen as the private sector on spectrum trading.

Professor Cave has also recommended that broadcasters, such as the BBC, should pay a fee for the use of their "prime spectrum" -- although this would not be possible under their existing licences. They would also be able to trade some of their spectrum with other companies, he predicts -- which would have the effect of making the use of the spectrum more efficient.

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