Flexible spectrum and future business models for the mobile industry Pieter Ballon * , Simon Delaere IBBT-SMIT, Vrije Universiteit Brussel, Pleinlaan 9, 1050 Brussels, Belgium article info Keywords: Mobile communications Spectrum policy Spectrum management Cognitive pilot channel abstract The concept of flexible spectrum is often considered as a medium-to-long-term solution to overcome some of the current inefficiencies and high entry barriers plaguing the mobile industry. Increasingly, a cognitive pilot channel (CPC) is regarded as a central enabler for flexible spectrum. This paper outlines the CPC concept from a business point of view and clarifies its current status in the standardization and regulation fields. The idea of a world- wide CPC will be under consideration by the World Radio Conference in 2011. Based on several potential CPC implementations, the paper identifies a number of flexible spectrum business configurations and revenue sharing models. It also performs an initial forward- looking evaluation of these models using a business model scorecard approach, and finds that while the scope appears to be limited for a fully competitive, cross-operator spectrum market, several platform models (e.g. association or consortium models) stand out as fea- sible options. Ó 2008 Elsevier Ltd. All rights reserved. 1. Introduction While it has been asserted that the ubiquity of wireless technologies and the possibilities of multimodal communication are effectuating a transformation to a pervasive ‘mobile network society’ (Castells et al., 2006), the mobile telecommunica- tions industry is still plagued by significant inefficiencies and by high barriers to entry. For a large part, these inefficiencies and barriers are being attributed to the current regulatory practice of exclusive, long-term licensing of spectrum bands to mo- bile network operators, and the resulting, relatively closed, market structure. At present, this regulatory practice is justified by the necessity to minimize interference and to ensure an economically viable exploitation of spectrum as a scarce resource. However, several scholars have qualified slow and exclusive allocation processes and strict non-interference guarantees as ‘‘fatal” when it comes to the efficient utilization of spectrum. In fact, current spectrum utilization is estimated at best 17% in urban areas and 5% elsewhere (Berggren et al., 2004; ABI Research, 2007). Some regulators, from their part, are now insist- ing that exclusive long-term licensing creates overly high entry barriers and stifles innovation. They argue that this regime results in users being tied to specific networks and to specific network operator contracts, instead of being able to freely choose between mobile services offered over a multitude of mobile and wireless networks, thereby hindering competition and severely decreasing end user value (Ofcom, 2006). In addition, current spectrum allocation frameworks and the resulting mobile industry set-up are being challenged by increasing technological heterogeneity and by the impending reallocation of electromagnetic spectrum. While technological harmonization is bound to remain a political and strategic priority for achieving European-wide economies of scale, the co-existence of radio access technologies (RATs) such as GSM, GPRS, EDGE, UMTS, HSPA, LTE, WiFi (IEEE 802.11a/b/g/n), Wi- MAX (IEEE 802.16d/e), IEEE 802.20, DVB-H and others is expected to be a lasting characteristic of the so-called Beyond3G landscape and to deeply influence network operators’ business models (Ballon, 2007b). Finally, the impending reallocation 0736-5853/$ - see front matter Ó 2008 Elsevier Ltd. All rights reserved. doi:10.1016/j.tele.2008.11.006 * Corresponding author. E-mail address: Pieter.Ballon@vub.ac.be (P. Ballon). Telematics and Informatics 26 (2009) 249–258 Contents lists available at ScienceDirect Telematics and Informatics journal homepage: www.elsevier.com/locate/tele