By 2021, demand for mobile broadband is projected to increase by more than 10 times. Mobile operators, however, have only few remaining options to expand their spectrum holdings in the traditional frequency ranges below 3GHz to increase their capacity. They are, therefore, looking at expanding their spectrum holdings into higher bands. Yet, these higher bands are often already encumbered, which would make it very costly—and in some cases even impossible—to clear these bands for exclusive mobile use. There are many ways of sharing spectrum in these bands. One of the most promising approaches is Licensed-Shared Access (LSA). In an LSA arrangement, the incumbent grants access to spectrum in its band to a secondary user on an exclusive basis. LSA has the benefit of being relatively simple to implement, as access to spectrum is only shared between two parties, while also providing mobile operators with certainty over availability of spectrum capacity. So far, LSA is not widely established, and regulators seem to prefer a hands-off approach, hoping that incumbents and mobile operators will be able to come together and agree to mutually beneficial LSA arrangements independently.
In a paper prepared for the 21st Biennial Conference of the International Telecommunications Society, held in Taipei from 26 to 29 June 2016, NERA Senior Vice President Richard Marsden and Senior Consultant Hans-Martin Ihle show that a hands-off approach will not deliver the potential gains from sharing and is unlikely to enable all efficient LSA arrangements to materialize. The authors propose an auction for LSA licenses to address these issues.