Mobile Broadband, Competition and Spectrum Caps

June 21, 2012

Author: Arthur D. Little.

Spectrum caps have been introduced in several countries at various times as one ex ante means to implement competition policy in mobile communications markets. They have been applied to help ensure that no single mobile operator, or a very small number, can acquire all or almost all spectrum on offer either at the time of initial spectrum awards or in subsequent mergers of, or deals between operators. The goal is to prevent operators from gaining positions through large holdings of a scarce resource, i.e. spectrum, which they might then exploit anti-competitively so as to cause market failures with deleterious effects for customers and overall economic welfare. In contrast some countries have relied on other means than spectrum caps to ensure entry into the mobile market by multiple operators, such as issuing multiple separate licenses and setting aside spectrum for entrants in individual spectrum auctions. These other measures have the practical effect of capping the amount of spectrum which various operators can acquire, but in a way that does not fix the same level and form of cap for all operators over an extended period of time.

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