Effective spectrum pricing helps boost mobile services

22 February 2017

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

NERA Economic Consulting helped develop the report. It 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 US$250 billion across selected markets.

Average final prices paid in auctions rose 250 per cent from 2008 to 2016 with the most exorbitant price tags often influenced by policy decisions. This isn’t ideal. However, it leaves room for improvement.

The study details that although price outcomes for some spectrum awards remain moderate, there is an upward trend in average prices. Also, there is statistical evidence that highlights the impact on consumers. It links high price outcomes with:

– Lower quality and reduced take-up of mobile broadband services;

– Higher consumer prices for mobile broadband data; and

– Consumers lost 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.

Four key recommendations

The report highlights four key pricing policy recommendations. They are 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 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.

The full report on spectrum pricing 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.

There is also an interview with NERA’s spectrum expert Richard Marsden. Watch the video here.