Panama reduced the price of spectrum by more than 60%: what does it mean for users?

Last April, the Panamanian Cabinet Council approved the assignment of additional spectrum in AWS (1710-2170 MHz), a key band for 4G in the majority of Latin America. The body also authorised the National Public Services Authority (ASEP) to adjust the spectrum valuation methodology. As a result, 120 MHz of spectrum will be made available to the mobile industry at a third of the price set in previous auctions. With this decision, the government takes a step in the right direction to expand and improve mobile services for all citizens of Panama.

The price reduction by more than 60% reveals an accurate perception of the strategic role of this important resource: spectrum is an instrument to close the digital divide and leverage economic recovery. This decision will bring additional income via overall taxes and increased productivity. In recent years, with the pandemic, it has been proven that the telecommunications sector represents a crucial ally to governments in order to boost the economy and social welfare of their nations.

In this context, more than ever, spectrum – scarce and fundamental resource of mobile services – cannot be conceived as a means of government revenue. It should be seen as a tool for inclusion and development. ASEP was one of the first to materialise this vision during the pandemic, granting free temporary spectrum licenses to mobile operators to add capacity to their networks.

There is concrete evidence that high spectrum prices have a negative impact on the speed of network deployments, the quality of services and affordability, key factors in achieving digital inclusion. Spectrum assignments that seek to increase socioeconomic benefits lead to higher benefits than license fee income.

Spectrum does not have an intrinsic value: if underused or idle, it does not generate wealth, limiting all benefits it could bring to society. The newly assigned 120 MHz in the AWS band are important to help reverse the scarcity of spectrum in Panama, currently in 240 MHz and, at the revised price, allow coverage to be increased and the unconnected to be connected, boosting connectivity. The access to the right amount of spectrum, at the right time and at reasonable prices and conditions, is essential to expand and improve mobile broadband services, as well as to realise 5G capabilities. Panama’s decision can pave the way for countries in the region that are reviewing their price policies, such as Colombia or Ecuador. A strategic vision of spectrum requires long-term policies, in dialogue with the industry, and with the expansion of socioeconomic benefits as a priority.