High Spectrum Prices Leave Millions Unconnected: GSMA Report

By Chike Onwuegbuchi

The negative impacts of high spectrum prices on consumers can no longer be disputed, according to a new report released by the GSMA at ITU Telecom World 2019. The GSMA report titled, ‘The Impact of Spectrum Prices on Consumers’ confirms that countries with poor spectrum policies – which either inflate spectrum or delay spectrum assignments – are leading to millions of people being left unable to access mobile broadband services or experiencing reduced network quality.

“Spectrum auctions can’t be viewed as cash cows anymore,” said Brett Tarnutzer, Head of Spectrum, GSMA. “Any government that prices spectrum to maximise revenue now does so with full knowledge that its actions will have negative repercussions on citizens and the development of mobile services. We now have clear evidence that shows by restricting the financial ability of operators to invest in mobile networks millions of consumers are suffering.”

The GSMA study is the first to provide strong evidence to directly link high spectrum prices, and certain other spectrum management practices, to negative consumer outcomes, such as slow network rollout, reduced quality of service and poor mobile coverage. The key findings for the period analysed from 2010 to 2017 in both developed and developing countries are highlighted below:

In developed countries, high spectrum costs played a significant role in slowing the rollout of 4G networks and drove a long-term reduction in 4G network quality;

In developing countries, spectrum prices were, on average, almost three times more expensive than in developed countries in relation to expected revenues. In these countries, high spectrum costs slowed down the rollout of both 3G and 4G networks and drove long-term reductions in overall network quality;

In the countries studied with the highest spectrum prices, the average mobile operator’s 4G network would cover 7.5% more of the population if they had acquired spectrum at the median spectrum price;

The timing of spectrum awards has a significant impact on mobile coverage. For example, if an operator was assigned 4G spectrum at least two years earlier, their 4G network population coverage would on average be 11–16 percentage points higher (all else being equal). The rollout of 3G networks was also significantly delayed in markets that licensed spectrum late, with 3G coverage levels up to 12% lower during the rollout period in those markets; and

The amount of spectrum licensed to operators had a significant impact on network quality. Over the period of analysis, an additional 20 MHz of 4G spectrum increased average download speeds by between 1 and 2.5 Mbps (equivalent to an increase of up to 15%).

“These findings have important ramifications for governments and regulators – particularly those betting on 4G and 5G as enablers of economic growth and sustainable development,” added Brett Tarnutzer. “It’s clear that unless we reverse the alarming trend of expensive auctions, this will have damaging consequences for consumers and the development of the digital economy.”

Source: Nigeria Communications Week