Effective Spectrum Pricing

Effective Spectrum Pricing

February 22, 2017

The GSMA has published ‘Effective Spectrum Pricing’, a research report on spectrum pricing, including the impact on consumers.

The report, developed in collaboration with NERA Economic Consulting, links high spectrum prices to more expensive, lower quality mobile broadband services. It also estimates that, due to the increased data prices, consumers lost out on economic benefits worth US$250 billion across selected markets.

Average final prices paid in auctions were found to have risen 250 per cent from 2008 to 2016 with the most exorbitant price tags often influenced by policy decisions.

The study found that although price outcomes for some spectrum awards remain moderate, the upward trend in average prices was driven by a growth in the number of exceptionally high price auction outcomes. Statistical evidence shows the impact on consumers and links high price outcomes with:

  • Lower quality and reduced take-up of mobile broadband services;
  • Higher consumer prices for mobile broadband data; and
  • Consumers losing out on economic benefits with a purchasing power of an estimated US$250 billion across 15 countries where spectrum was priced above the global median – equivalent to US$118 per person.

The report highlights four key pricing policy recommendations for countries that want to adopt spectrum policies that focus on maximising the benefits for society:

  1. Set modest reserve prices and annual fees and rely on the market to set prices;
  2. License spectrum as soon as it is needed, to avoid artificial spectrum scarcity;
  3. Avoid measures that increase risks for operators (e.g. that put the value of their company in jeopardy); and
  4. Publish long-term spectrum award plans that prioritise public welfare benefits over state revenues.

The full report in English can be downloaded here. A summary of the report is available in English, French and Spanish. The key issues are also presented in an infographic that can be downloaded here.