Spectrum prices are still ruining cellcos and their customers: GSMA report

GSMA
Image credit: Ivan Marc / Shutterstock.com

A new study from the GSMA says that spectrum prices in developing countries are, on average, more than three times higher than in developed countries, which is hindering mobile penetration.

The new report from GSMA Intelligence – released at the Mobile 360 – Africa conference in Kigali – says that 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 says governments are playing an active role in increasing spectrum prices to maximize state revenues from spectrum licensing. The GSMA also claims 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.

For good measure, the report also claims it has established a link between high spectrum prices and high levels of sovereign debt.

“Connecting everyone becomes impossible without better policy decisions on spectrum,” said Brett Tarnutzer, head of spectrum at GSMA. “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, 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.

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.

Meanwhile, GSMA Intelligence also launched its latest Mobile Connectivity Index, which measures the performance of 163 countries against key enablers of mobile internet adoption.

The index estimates that 3.3 billion people (or 44% of the global population) were connected to the mobile internet at the end of 2017, representing an increase of almost 300 million compared to the previous year. That still leaves more than 4 billion people offline – most of whom live in developing countries.

Mobile broadband networks still do not cover 1 billion people globally, and approximately 3 billion people who live within the footprint of a network are not currently accessing mobile internet services. In low-income countries, around two thirds of rural populations are not covered by 3G networks.

Coming full circle, the GSMA argues that overpriced spectrum will not help narrow that gap.

“If mobile operators don’t get affordable and predictable access to spectrum, it will be consumers who will suffer the most,” said Pau Castells, director of Economic Analysis at GSMA Intelligence. “Operators cannot keep paying significantly more for spectrum when consumer incomes and expected profits are much lower in these markets.”

The ‘Spectrum Pricing in Developing Countries’ report is available here and its key findings here as an infographic.

The latest Mobile Connectivity Index is available here.

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