Governments and national regulators that manage spectrum are increasingly under pressure to respond to a huge amount of interest and demand from a wide variety of use cases. Getting spectrum assignments right delivers big rewards: better mobile coverage, higher throughput, and increased socio-economic benefits.
5G services are undoubtedly among the most innovative users of spectrum. Ensuring that they get the right amount of spectrum is paramount to guarantee that the full socio-economic benefits they promise will be realised. Governments are facing difficult decisions in this context such as the benefits of assigning the 6 GHz band to licensed 5G versus Wi-Fi, of setting aside spectrum for new entrants versus a market-driven approach, or of setting aside spectrum for local vertical use versus encouraging spectrum leasing or spectrum sharing.
To help guide these crucial decisions, GSMA Intelligence and the GSMA have published a best-practice guide and framework to provide practical guidance in analysing the potential trade-offs for any frequency. This guidance on the development of cost-benefit analyses (CBAs) identifies the drivers of this decision-making process.
What should guide decisions?
Clearly, the overarching principle of spectrum management is that it should be assigned to the use case that maximises socio-economic benefits at the least cost. As much as that sounds easy, there are clear trade-offs that need to be examined in detail before taking long-lasting decisions that will influence economic growth and prosperity in any given country.
In our guide we provide a flexible framework that can be adapted to weigh any spectrum assignment trade-off in the context of 5G. This involves understanding the nature of the spectrum policy problem, identifying the stakeholders that would be affected by possible options and assessing the impact of each option on these stakeholders.
Maximising socio-economic benefits of a public resource such as spectrum means assigning it to the users that value it the most. Market-based assignments in the form of auctions normally ensure that. In some cases, however, auctions may not deliver the best outcome to society overall and different options may need to be explored.
We argue that whenever governments and regulators are concerned that spectrum auctions for a particular frequency or band may not deliver the best outcome to society, they should conduct a Regulatory Impact Assessment (RIA) to weigh spectrum assignment trade-offs. The OECD and the ITU , among others, have recommended this. The objective of RIAs is to identify the best option for spectrum assignments: the option that stimulates social and economic progress and makes efficient and effective use of spectrum for consumers, firms, and society as a whole.
A best-practice checklist
Since spectrum assignment policies have measurable costs and benefits, policy makers should carry out a quantitative CBA to quantitatively measure spectrum allocation trade-offs and ultimately identify the best option.
To help, we provide a best-practice checklist. We also illustrate the underlying theory, and put it into practice with two relevant 5G case studies:
- Should set-asides for local users be made in prime 5G bands?
- Are set-asides for new entrants justified?
The illustrative results from carrying out a CBA on these two case studies indicate that, with today’s standard market conditions, the costs of departing from auction-based assignments are larger than the benefits. They show that setting aside 100 MHz of mid-band spectrum for local use licenses or for a new entrant in the 5G services market would have a net negative impact on society and so would not make an efficient and effective use of mid-band spectrum.
Our flexible framework allows policy makers to assess spectrum assignment trade-offs in their markets. If they are concerned that auctions may not lead to the best possible outcome, our guide provides useful, practical steps and considerations that they should take account, which can be summarised in four steps:
- Develop an RIA and follow RIA best practice to determine the reasons that could justify deviations from market-based allocations and identify potential policy alternatives.
- Carry out ex-ante CBA to explore the net impact on society of different policy alternatives, to identify the option maximises benefits at least cost.
- Monitor market developments to ensure that the chosen policy is delivering its expected outcomes.
- Be prepared to intervene whenever the chosen policy is not delivering its expected outcomes.
To learn more, download the full report here.