Effective spectrum management is pivotal to the growth of digital economy. Nonetheless, there has been a steady increase in the cost of spectrum, impacting the quality and affordability of mobile services. To address this important issue, the GSMA has published Effective Spectrum Pricing, an in-depth report on spectrum pricing and its impact on consumers.
The study found that the average final prices paid in auctions have risen 250% during the 4G era, following growth in the number of auctions resulting in exceptionally high prices.
Moreover, the report found that many policymakers view very high spectrum prices as a risk-free means of maximising state revenue with no downside for consumers – a misconception that does not take into account that higher prices entail more expensive and lower quality mobile broadband, as well as irrecoverable losses in consumer welfare.
Indeed, the study found empirical evidence linking high spectrum prices with lower quality mobile broadband services and reduced take-up of those services; higher consumer prices for mobile broadband data; and lost consumer welfare equivalent to purchasing power of US$250 billion across the group of countries where spectrum was priced above the global median. The resulting negative impact is equivalent to $118 per person.
The report urges governments and regulators to take a forward-looking view of their spectrum management and the digital economy. In particular, it recommends policymakers set modest reserve prices and annual fees; license spectrum as soon as it is needed; avoid measures that increase risks for operators and publish long-term spectrum award plans that prioritise welfare benefits over state revenues.
The full report can be downloaded here. The key issues are also presented in an infographic that can be downloaded here.