Effective spectrum pricing helps boost mobile services
The GSMA’s spectrum team has along with GSMA Intelligence and NERA Economic Consulting done extensive analysis linking excessive spectrum prices with lower quality mobile services and higher prices.
A global report alongside deep dives in Latin America, Europe and developing countries all show the negative impact.
In the past, industry observers have suggested that the amount of money that operators spend on spectrum should have no impact on the development of mobile services. The GSMA’s pricing research firmly rejects this viewpoint by demonstrating that high costs negatively impact consumers. Also, efforts to maximise revenues from auctions can damage the wider economy.
The former stance has, for example, led to a 250 per cent increase in global prices from 2008 to 2016. And in developing countries spectrum prices are more than three times higher than in developed countries, when income differences are accounted for. Here high spectrum prices are a major roadblock to increasing mobile penetration. The conclusion is simple; policies that inflate prices and focus on short-term gains are incompatible with better and more affordable mobile broadband services.
Instead, to deliver affordable, high quality mobile broadband services, operators require fair access to sufficient radio spectrum. Having, for example, a spectrum roadmap in place is also important. The four reports and the associated position paper delve deeper into all these issues.
The global report
The global report links high spectrum prices to more expensive, lower quality mobile broadband services. The report also estimates that, due to the increased data prices, consumers lost out on economic benefits worth $250 billion across selected markets.
There is also an interview with NERA’s spectrum expert Richard Marsden. Watch the video here.
Report & Summary
The report shows that consumers in these parts of the world are especially hard hit by high prices. It too identifies a link between high spectrum prices and poorer coverage, as well as more expensive and lower quality mobile broadband services. In the end, better spectrum pricing policies are needed in developing countries to improve the lives of the billions that remain unconnected.
This report takes a closer look at spectrum policies in Latin America. How they are impacting the delivery of mobile services to consumers and businesses in the region. Just like the others, the report underscores how decisions made by governments and regulators can have a negative impact on the quality and cost of mobile broadband services.
The European report looks at the 28 EU member states plus Switzerland and Norway in more detail. As with the global study, the observation is that average spectrum prices have trended upwards. Again, there is a link between high prices and more expensive, lower quality mobile broadband services.
Europe Full Report
For countries that want to adopt spectrum policies that focus on setting the stage for the best possible mobile services, the first steps are to:
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 as this helps 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.
These points are further developed in the GSMA’s policy position paper on spectrum pricing. At the end of the day, the main goal of governments around the world should be to get the most out of its mobile spectrum resources. And that is not the highest possible prices.