The rollout of 5G is off to a flying start with 159 mobile operators launching services in more than 60 countries, as of end of Q1. However, the cost of and availability of spectrum, in the short- and long-term, is a concern as mobile operators look to build strong and reliable networks.

The success of 5G is heavily reliant on national governments and regulators. The speed, reach and quality of 5G services depend on support for timely access to the right amount and type of affordable spectrum, under the right conditions. The first ingredients in the recipe for 5G success is still an immediate access to 80-100 MHz of contiguous spectrum per operator in prime 5G mid-bands (e.g. 3.5 GHz) and around 1 GHz per operator in high-bands (e.g. mmWave spectrum) for initial rollouts, while spectrum needs grows.

Unfortunately, we are already seeing a significant variation in the amount of spectrum assigned, and the prices paid at auctions, which means the potential of 5G services will vary between countries. This, in turn, directly impacts the monthly bill for mobile services -as well as the socio-economic benefits of 5G and the competitiveness of national economies.

In-depth spectrum pricing analysis

The GSMA’s spectrum team, along with GSMA Intelligence, have done in-depth analysis that provides strong evidence to directly link spectrum prices with slow network rollouts, reduced network quality and poorer mobile coverage.

The ‘Impact of Spectrum Prices on Consumers’ report confirms that countries with poor spectrum policies – which either inflate spectrum prices or delay spectrum assignments – are leading to millions of people being left unable to access mobile broadband services or experiencing reduced network quality. The report is based on the most detailed econometric study ever conducted into spectrum pricing as it considers more countries than previous studies, more consumer outcomes, and controls for a wider range of other potential explanations for these outcomes.

So why does spectrum end up being excessively expensive? Several spectrum auctions have failed because governments set starting prices (aka. reserve prices) so high that operators couldn’t even afford to participate.

As governments are now auctioning spectrum in the key 3.5 GHz range, the amount of spectrum available has also come under increasing scrutiny. Governments can inflate prices by limiting how much spectrum is made available. In some cases, far less than 80-100 MHz.

Fewer (or smaller) licenses can force mobile operators to bid aggressively for this essential fuel for mobile networks. While it might push operators to pay a lot for spectrum, which, again, has its own bad consequences for mobile services, limiting the amount of spectrum on offer also means operators have access to less of the airwaves to maximise 5G’s potential.

More than auction costs

At the same time, it is important to recognise that the initial auction cost doesn’t tell the whole story. Other factors also impact the cost of spectrum, and, consequently, the quality of mobile networks. They include:

• Additional fees ( e.g. annual fees);
• Taxes;
• License duration and obligations; and
• An expectation of license renewals.

While much of the licensing of 5G spectrum currently focuses on the 3.5 GHz range, governments and regulators also need to plan for what comes next. They should support new harmonised bands on the international stage to help 5G services grow over the longer term. This too has an impact on the cost of spectrum today. If there is little hope for new mid-band spectrum in the future, unreasonable pressure is put on operators.

Looking to the future, the 6 GHz range in some parts of the world is the only real option in mid-bands. The GSMA supports licensing the range for mobile 5G. This would see 6425-7125 MHz used for 5G and a balanced approach to 5925-6425 MHz that looks at either 5G or other technologies (e.g. Wi-Fi or 5G NR-U) depending on regional spectrum needs.

Mobile operators have a history of maximising the impact of our spectrum resources and no one else has done more to transform spectrum allocations into services that are changing people’s lives all over the world.

The integration of 5G into our lives and work impacts communities and economies even more than previous generations. However, not all 5G networks are equal. It is up governments and regulators to put in place policies that help make the most of them.

Download the updated position paper here. Also, learn more about spectrum pricing by visiting the GSMA’s dedicated website.