1、The impact of spectrum prices on consumers September 2019 Copyright 2019 GSMA The GSMA represents the interests of mobile operators worldwide, uniting more than 750 operators with nearly 400 companies in the broader mobile ecosystem, including handset and device makers, software companies, equipment

2、 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. For more information, please visit the GSMA

3、 corporate website at . Follow the GSMA on Twitter: GSMA. We are grateful for comments provided by Dr Pantelis Koutroumpis, Dr Carlo Cambini and Dr Iigo Herguera, as well as participants at the CPR Latam conference 2019 on an earlier set of results. Their input significantly helped to improve this s

4、tudy. We would also like to thank Dennisa Nichiforov-Chang, Robert Wyrzykowski and Chiara Garbellini for analytical and expert support and insights. Lastly, we would like to thank Ookla for providing access to its data and expertise on network quality. GSMA Intelligence is the definitive source of g

5、lobal mobile operator data, analysis and forecasts, and publisher of authoritative industry reports and research. Our data covers every operator group, network and MVNO in every country worldwide from Afghanistan to Zimbabwe. It is the most accurate and complete set of industry metrics available, co

6、mprising tens of millions of individual data points, updated daily. GSMA Intelligence is relied on by leading operators, vendors, regulators, financial institutions and third-party industry players, to support strategic decision-making and long-term investment planning. The data is used as an indust

7、ry reference point and is frequently cited by the media and by the industry itself. Our team of analysts and experts produce regular thought- leading research reports across a range of industry topics. Authors: Pau Castells, Director of Economic Analysis Kalvin Bahia, Principal Economist THE IMPACT

8、OF SPECTRUM PRICES ON CONSUMERS Acknowledgements 1. Executive summary 2 2. Consumer benefits from mobile services 4 2.1 Improving mobile services 4 2.2 Differences in consumer benefits between countries 7 3. Spectrum prices and how they may impact consumer benefits 8 3.1 Comparing spectrum prices ar

9、ound the world 8 3.2 What drives spectrum prices? 11 3.3 How spectrum prices can impact consumers 13 4. Analysis and results 16 4.1 Approach 17 4.2 Key findings 18 4.3 Impact on consumer outcomes 19 5. Conclusions and recommendations 24 1 THE IMPACT OF SPECTRUM PRICES ON CONSUMERS Contents The radio

10、 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

11、 cause negative consumer outcomes, including lower coverage levels and slower data speeds. 1. Executive summary 2 THE IMPACT OF SPECTRUM PRICES ON CONSUMERS These findings have important ramifications for governments and regulators particularly those betting on 4G and 5G as enablers of growth and su

12、stainable development. The study concludes the following: 1. High spectrum costs lead to negative consumer outcomes by restricting the financial ability for network investment. 2. Maximising revenues from spectrum awards should no longer be a measure of success. Excessive spectrum prices can cause s

13、erious harm to consumers that outweigh any potential benefits obtained through higher auction revenues. 3. Auctions can and often do go wrong when poorly designed. But when well designed, auctions can be effective in allocating spectrum to those that can generate most value from it. 4. Artificially

14、limiting the supply of spectrum, including through set-asides, comes with great risks. When additional spectrum is instead made available for the benefit of all, consumers experience higher quality mobile services. 5. Spectrum should be released to the market as soon as there is a business case for

15、operators to use it. Early release of spectrum drives better consumer outcomes, which is important in markets where high coverage and affordable services are prioritised. 6. Policymakers should work with stakeholders to enable timely, fair and effective spectrum licensing to the benefit of society.

16、A coordinated approach to mobile sector regulation by different parts of government is essential if ambitious digital inclusion and industrial policy objectives are to be realised. 1. Spectrum pricing in developing markets, GSMA Intelligence, 2018; Effective Spectrum Pricing, GSMA and NERA, 2017; Th

17、e effects of spectrum allocation mechanisms on market outcomes, T. Kuroda and M. Forero, 2016. 2. By the end of the study period. 3 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 aff

18、ordable data. However, there are significant variations in these metrics between countries. This 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

19、into account when planning spectrum assignment approaches. While previous research1 has shown a link between high spectrum prices and negative consumer outcomes, more work has been needed to establish whether this is a causal relationship rather than a correlation. Meanwhile, some economists and spe

20、ctrum policy experts have argued that the cost of spectrum is sunk and so should not affect operators consumer pricing or investment decisions. 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. Th

21、e 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. Specifically, we find the following for the period

22、20102017: 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

23、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 operators 4G network would cover 7.

24、5% more of the population2 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

25、be 1116 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. 5. The amount of spectrum licensed to operators had a signifi

26、cant 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 IMPACT OF SPECTRUM PRICES ON CONSUMERS 2. Consumer benefits from mobile services 4 THE IMPACT OF

27、SPECTRUM PRICES ON CONSUMERS With more than 5 billion unique subscribers worldwide, mobile communications is a general-purpose technology vital to innovation in most industries and sectors. It can increase business competitiveness, drive productivity growth and help improve living standards more bro

28、adly. 2.1.1 Technology cycle evolution Mobile markets are characterised by frequent cycles of technology change, with new mobile services introduced regularly, that improve the quality of existing services. They have 2.1 Improving mobile services also revolutionised and drastically changed the defin

29、ition of the service itself. For example, the introduction of 4G delivered a completely new set of experiences and benefits to end users. Innovation also introduces cost savings for consumers. CHARACTERISTICS OF MOBILE TECHNOLOGY CYCLES 1G2G3G4G5G Commercialisation1980s1990s2000s2010s2020s Applicati

30、onsVoice calls Voice calls, SMS, MMS, browsing (limited) High-speed browsing, applications Video conferencing, mobile TV Multipurpose (Internet of Things, AR/VR, others) Typical speed14.4 kbps56115 kbps5.814.4 Mbps100300 Mbps1005,000 Mbps 0% 20% 40% 60% 80% 100% 2000162017 2G3G

31、4G DEVELOPING COUNTRIES 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2010 2011 2012 2013 2014 2015 2016 2017 Population Coverage (%) Developed - 3G Developing - 3G Developed - 4G Developing - 4G 0% 20% 40% 60% 80% 100% 2010 2011 2012 2013 2014 2015 2016 2017 2G3G4G DEVELOPED COUNTRIES 0% 20% 40% 60%

32、80% 100% 2000162017 2G3G4G DEVELOPING COUNTRIES 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2010 2011 2012 2013 2014 2015 2016 2017 Population Coverage (%) Developed - 3G Developing - 3G Developed - 4G Developing - 4G 5 3. Countries were categorised by income according to the W

33、orld Bank classifications in 2017, with high-income countries defined as developed and low- and middle-income countries defined as developing Source. GSMA Intelligence THE IMPACT OF SPECTRUM PRICES ON CONSUMERS In this report, we evaluate the impact of spectrum prices, as well as a variety of other

34、factors, on key consumer outcomes over the period 20102017. 4G became the dominant technology in developed countries3 by the end of the period. In developing countries, the majority of consumers were still using 2G and 3G, though by the end of 2017 4G had grown to account for almost a third of conne

35、ctions. FIGURE 1 MOBILE CONNECTIONS BY TECHNOLOGY 6 2.1.2 Mobile service quality improvements Mobile markets delivered significantly improved consumer outcomes across all relevant metrics over the period of study. In developed countries, 4G networks were rolled out and covered more than 95% of the p

36、opulation by 2017. In developing countries, 3G networks covered almost 90% of the population by 2017. At the same time more than 70% lived within a 4G footprint. Network quality also saw continuous improvements globally, with consumers benefitting from faster speeds and lower latencies. THE IMPACT O

37、F SPECTRUM PRICES ON CONSUMERS 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2010 2011 2012 2013 2014 2015 2016 2017 Population Coverage (%) Developed - 3G Developing - 3G Developed - 4G Developing - 4G 0 5 10 15 20 25 30 35 40 2011 2013 2015 2017 Average download speeds (Mbps) DevelopingDeveloped Ave

38、rage upload speeds (Mbps) 2011 2013 2015 2017 0 2 4 6 8 10 12 14 16 2011 2013 2015 2017 0 50 100 150 200 250 300 350 400 450 500 Average latencies (ms) MOBILE DOWNLOAD SPEED IMPROVEMENTS, 20112017 MOBILE UPLOAD SPEED IMPROVEMENTS, 20112017 LATENCY IMPROVEMENTS, 20112017 Source. GSMA Intelligence Sou

39、rce: GSMA Intelligence calculations based on data provided by Ookla Speedtest Intelligence. Average speeds and latencies for each country were calculated based on the mean average of all tests performed by consumers in a given year (including on 2G, 3G and 4G networks). We then took the averages for

40、 developed and developing countries to produce the trends, with developed countries those classified as “high income” by the World Bank Income Classifications and developing countries those classified as “lower”, “lower-middle” and “upper-middle” income countries. FIGURE 2 MOBILE COVERAGE IMPROVEMEN

41、TS, 20102017 FIGURE 3 7 2.1.3 Falling data package prices Consumers also benefitted from lower mobile voice and data prices over the period. This trend is consistent with declining operator ARPU. Figure 4 shows declining trends in two pricing baskets tracked by the International Telecommunications U

42、nion (ITU): A mobile-cellular sub-basket or voice basket of 30 outgoing calls per month and 100 SMS messages A mobile broadband basket of 500 MB per month (based on prepaid tariffs) THE IMPACT OF SPECTRUM PRICES ON CONSUMERS Despite consumer outcomes generally improving over the period studied, ther

43、e were significant differences as to the extent of these improvements across countries. For example, in 2017 almost 1 billion people were not covered by a 3G or 4G network, and 3.9 billion people in developing countries (more than 60% of the population) did not have a mobile internet connection.4 Ma

44、ny factors are likely to be at play, given the wide variations across countries in both demand- and supply-side factors such as disposable income, competition, upgrades in equipment and phone technologies, and geographic characteristics that impact the cost of rolling out networks. Different policy

45、environments across countries, including spectrum management, may also have played an important role. For example, markets where more spectrum has been assigned to mobile operators are likely to face lower network costs and therefore are more likely to see networks rolled out quickly and with better

46、 quality. Spectrum prices can also play a significant role by influencing investment and pricing decisions. High spectrum prices can impact the mobile sector by reducing the funds available to undertake investments and generating upward pressure on consumer tariffs. The following section discusses i

47、n more detail how spectrum prices evolved over this period. Price ( $PPP) 10 15 20 25 30 35 40 45 50 2011 2012 2013 2014 2015 2016 2017 Developing - Cellular Basket Developing - 500MB Basket Developed - Cellular Basket Developed - 500MB Basket Source: GSMA Intelligence calculations based on ITU pric

48、ing data. Definition of baskets and methods of data collection can be found in the ITUs annual Measuring Information Society Reports. Developed and developing pricing data is calculated by taking the mean average of high-income and non-high-income countries respectively (based on World Bank Income C

49、lassifications). 2.2 Differences in consumer benefits between countries 4. Source: GSMA Intelligence FIGURE 4 AVERAGE PRICE TRENDS, 20112017 8 THE IMPACT OF SPECTRUM PRICES ON CONSUMERS 3. Spectrum prices and how they may impact consumer benefits Spectrum costs typically comprise upfront costs, annual fees and other licence obligations.5 This study focuses solely on upfront spectrum fees as they are usually the most significant cost a