High spectrum prices hit developing countries, says report
Better spectrum pricing policies are needed in developing countries to improve the economic and social welfare of the billions of people that remain unconnected to mobile broadband services, according to a new report, ‘Spectrum Pricing in Developing Countries’, released by the GSMA at the Mobile 360 – Africa conference in Kigali.
The study reveals that spectrum prices in developing countries are, on average, more than three times higher than in developed countries, when income is taken into account. This high spectrum pricing is a major roadblock to increasing mobile penetration.
Authored by GSMA Intelligence, the study also found that governments are playing an active role in increasing spectrum prices to maximise state revenues from spectrum licensing.
High spectrum prices are linked to countries with high levels of sovereign debt, and alarmingly average reserve prices in spectrum auctions are more than five times higher in developing countries than in developed, once income is accounted for.
The report also identifies a link between high spectrum prices and poorer coverage, as well as more expensive and lower quality mobile broadband services, all of which hinder the take-up of services by consumers.
“Connecting everyone becomes impossible without better policy decisions on spectrum,” said Brett Tarnutzer, Head of Spectrum, GSMA. “For far too long, the success of spectrum auctions has been judged on how much revenue can be raised rather than the economic and social benefits of connecting people.
Spectrum policies that inflate prices and focus on short-term gains are incompatible with our shared goals of delivering better and more affordable mobile broadband services.
These pricing policies will only limit the growth of the digital economy and make it harder to eradicate poverty, deliver better healthcare and education, and achieve financial inclusion and gender equality.”
The GSMA study assessed over 1,000 spectrum assignments across 102 countries (including 60 developing and 42 developed countries) from 2010 through 2017, making it the largest-ever analysis into spectrum pricing in developing countries, as well as the drivers and their potential impacts of spectrum pricing on consumers.
Among the countries included in the analysis are Algeria, Bangladesh, Brazil, Colombia, Egypt, Ghana, India, Jordan, Mexico, Myanmar and Thailand – all markets where spectrum licensing is a priority.
Setting high final prices administratively or setting high auction starting prices (e.g. reserve prices), artificially limiting the amount of licensed spectrum available, not sharing a clear spectrum roadmap, and setting poor auction rules are some of the policy decisions highlighted in the report that are driving high spectrum prices in developing countries.
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