Spectrum Distribution

In the past few weeks the controversy over the government’s allocation of our broadcasting spectrum has intensified. In addition to the ten radio licences, some of which included up to five frequencies, there were also two cable licences given to individuals with close connections to the government and to the previous president: Vishok Persaud, son of recently departed PPP big-wig Reepu Daman Persaud and Brian Yong.
Even though most of the attention has been focused on the radio licences, this is simply a sign of our technological backwardness. But it is obvious that the powers that be kept a close eye on developments abroad. In the last few decades, there has been a revolution in communications brought about by new technologies, but sadly most of us have not kept up with the workings of that technology.
And it is because of that ignorance that the powers that be are not too concerned about the radio licences or the accompanying redundant frequencies. This is just smoke to cover the real action, which is in the two cable licences under the 2.5 GHz band. The new head of the Broadcasting Authority has already declared that she will be issuing ten additional radio licences. It is obviously hoped that this will reduce the furore.  But as we pointed out in our comment on the subject: “With a cable licence one can provide many radio and television channels, and also provide wireless internet and telephone services throughout the length and breadth of Guyana.”
It is not that radio or TV are old hat or passÉ but rather that the old modes of transmission are. The company that establishes a toehold in Guyana at this early stage of broadband broadcasting, when even radio-licencing is a novelty, is being given an opportunity that is priceless. The cable operators will leave the older technologies in the dust, like the car did with the horse and buggy.
This newspaper has been accused of pursuing its ‘self-interest” because its publisher was denied a radio licence. We will therefore quote from a ‘disinterested’ source on the benefits of ‘early entry’: the US Congressional Service: Spectrum Policy in the Age of Broadband. Firstly, the way to go about allocating the spectrum, which is a finite resource, is through auctions. “With the introduction of auctions for spectrum licenses in 1994, the United States began to shift away from assigning spectrum licenses based on regulatory decisions and toward competitive market mechanisms.”
While obviously there is a need for a certain amount of the spectrum for the public weal – as in the much touted ‘e-governance’ project – the government can always reserve a certain amount of bandwidth for this. India has also chosen to go the route of auctions to allocate bandwidth and their experience shows that even this process must have transparency. In widely circulated reports it was shown that several officials accepted bribes during their 2G auctions.
But returning to the importance of the headstart given to the two insiders, the US Congressional policy document notes: “In evaluating competition within an industry, economists and policy makers examine barriers to entry, among other factors. Barriers might come from high costs for market entry such as investment in infrastructure or there might be legal and regulatory barriers to entry. As part of its evaluation of competition for mobile services, the FCC has identified three factors that could constitute barriers to entry to the commercial mobile communications industry. These barriers affect not only competitiveness but also access to networks and investment in new technology.
The factors are “first-mover advantages, large sunk costs, and access to spectrum.” First-mover advantages have accrued primarily to the early entrants in the wireless industry. These early entrants, and the successor companies that acquired them and their licenses, have maintained their core customer base and benefit from early investments in infrastructure. Many first movers into the wireless market, therefore, acquired their market-leader status through regulatory decisions that provided them with spectrum licenses, not through market competition.”