The impact of spectrum prices on consumers
The radio spectrum that governments license to operators is central to the quality and affordability of mobile broadband services. However, some government policies – inadvertently or not – result in high prices being paid to access spectrum. This study presents strong, new evidence that high spectrum prices can cause negative consumer outcomes, including lower coverage levels and slower data speeds.
Mobile networks are regularly upgraded to offer improved benefits to consumers in terms of service quality and cost – for example, better coverage and faster and more affordable data. However, there are significant variations in these metrics between countries. The report assesses whether high spectrum prices, and other aspects of spectrum management, can be a cause of such differences in service quality and cost. Governments and regulators can therefore take this into account when planning spectrum assignment approaches.
This study is, to our knowledge, the first that uses econometric models to consider the impact of spectrum pricing on a broad range of consumer outcomes. The analysis is applied to both developed and developing countries. The results show there is significant evidence to suggest a causal link between high spectrum prices, and certain other spectrum management decisions, and negative consumer outcomes.
The findings have important ramifications for governments and regulators – particularly those betting on 4G and 5G as enablers of growth and sustainable development.