Spectrum price surges 250% from 2008 to 2016, says GSMA

The average price of spectrum during auctions have increased 250 percent from 2008 to 2016 — primarily due to policy decisions, said GSMA.

The study, developed in association with NERA Economic Consulting, links high spectrum prices to more expensive, lower quality mobile broadband services. GSMA said mobile consumers lost out on economic benefits worth $250 billion across selected markets due to the increased data prices.

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“The era of judging the success of auctions based on headline-generating revenue figures is over,” said Brett Tarnutzer, head of Spectrum at GSMA. “The damage done to consumers –and the wider digital economy – by policies that artificially inflate spectrum prices has been too great.”

GSMA suggests that telecom regulators should adopt spectrum policies that focus on maximizing the benefits for society, rather than driving up the cost of spectrum.

Though price outcomes for some spectrum awards remain moderate, the upward trend in average prices was driven by a growth in the number of exceptionally high price auction outcomes.

Consumers lost out on economic benefits with a purchasing power of an estimated $250 billion across 15 countries where spectrum was priced above the global median – equivalent to $118 per person.

GSMA recommendations on spectrum

# Set modest reserve prices and annual fees and rely on the market to set prices

# License spectrum as soon as it is needed, so as to avoid artificial spectrum scarcity

# Avoid measures that increase risks for operators

# Publish long-term spectrum award plans that prioritize public welfare benefits over state revenues

Telecom operators are in the process of deploying advanced 4G networks. Mobile operators are also planning their 5G technology strategy.

Because both LTE Advanced and 5G requires spectrum, countries that inflate prices of spectrum are damaging their broadband future and holding back their digital economies.

GSMA said the mobile industry, directly and as an enabler of adjacent sectors and services, contributed $3.1 trillion to global GDP, or 4.2 percent of GDP, in 2015.