The study covers the spectrum auctions conditions and provides recommendations to increase investment and mobile broadband adoption
The Centro de Estudios de Telecomunicaciones de América Latina (cet.la) and the GSMA launched today the study “Key Considerations in Mobile Spectrum Bids”, developed by independent consultant OVUM. The analysis illustrates that the spectrum assigned to mobile services is the facilitator for the development of networks and broadband services, key cornerstone for economic development, general welfare and reduction of the digital divide in Latin American countries.
The OVUM report reveals how regulatory decisions and each element of public policy considered when designing a spectrum bid for mobile services, impacts on investors’ behaviour, competitive dynamics, the level of adoption of service, affordability, among other factors, which affect the general welfare.
Among the principal results, the study reveals:
- Each additional requirement listed in the bid’s specifications implies a higher cost of service, which usually leads to a price increase to consumers: this heads to a lower broadband adoption and impacts the economy as a whole, thus, it hampers the aim of bridging the digital divide, and the socio-economic impact derived from wide spreading the use of services.
- Licenses under 20 years would not allow the required return on investment: Affecting the network deployment needed to bridge the digital divide.
- Frequency band selection has a key impact on the deployment cost: low bands being essential for purposes of coverage and affordability.
The analysis set out reveals how each regulator’s decision with regards to spectrum bid design has a particular impact and should be evaluated. Every objective is desirable, but the challenge posed is to align the bidding process with public policy objectives, using market forces through transparent mechanisms.
The objectives of public policy should focus around the widespread growth of services and the promotion of digital divide bridging, which will require the promotion of propitious environment conditions as to enable network deployment investment to be carried forward.
“Accomplishing the widespread of mobile broadband to all Latin-Americans requires policy makers to promote a regulatory framework that stimulates investment and maximises network deployment”, said Sebastián Cabello, Head of GSMA Latin America.
Also, the Executive Director of cet.la, Pablo Bello, added that “the social value of radio electric spectrum does not lie in government’s collection resulting from spectrum bids. It is the positive impact of connectivity in the generation of overall opportunities for development, broader access to knowledge and culture, further economic development, better democracies. Public Policies about assignment and use of spectrum must privilege bridging the digital gap and investments in broader network deployment and implementation of newer technologies, in a competitive environment, so that Latin America can grow faster towards development.”
The Ovum analysis concludes, that the spectrum is not inherently valuable, its value lies in its potential to generate a high impact on society as a whole.
To access the full report, click here.