New study links high prices to slow network rollouts, reduced network quality and poor mobile coverage

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 company said.

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 to millions of people being left unable to access mobile broadband services or experiencing reduced network quality.

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:

1. 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;

2. 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;

3. 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;

4. 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

5. 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%).

The study conducted by GSMA Intelligence is the most detailed econometric study ever conducted into spectrum pricing as it considers more countries than previous studies (i.e. 64 including developed and developing), more consumer outcomes (i.e. cost, quality and reach of mobile services) and controls for a wider range of other potential explanations for these outcomes (e.g. market competition, population density, timing of spectrum awards and others).
About the GSMA

The GSMA represents the interests of mobile operators worldwide, uniting more than 750 operators and nearly 400 companies in the broader mobile ecosystem, including handset and device makers, software companies, equipment providers and Internet companies, as well as organisations in adjacent industry sectors. The GSMA also produces the industry-leading MWC events held annually in Barcelona, Los Angeles and Shanghai, as well as the Mobile 360 Series of regional conferences.