High spectrum prices keep 4bn people offline: GSMA


Wednesday, 18 July, 2018


High spectrum prices keep 4bn people offline: GSMA

Consumers in developing countries are hit hard by high spectrum prices, according to a new report by the GSMA.

The report ‘Spectrum Pricing in Developing Countries’ suggests that better spectrum pricing policies are needed in developing countries to improve the economic and social welfare of the billions of people that remain unconnected to mobile broadband services.

Spectrum prices in developing countries are, on average, more than three times higher than in developed countries, when income is taken into account. This high spectrum pricing is a major roadblock to increasing mobile penetration.

Authored by GSMA Intelligence, the study also found that governments are playing an active role in increasing spectrum prices to maximise state revenues from spectrum licensing. High spectrum prices are linked to countries with high levels of sovereign debt, and alarmingly 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 identifies 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.

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

“For far too long, the success of spectrum auctions has been judged on how much revenue can be raised rather than the economic and social benefits of connecting people. 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 1000 spectrum assignments across 102 countries (including 60 developing and 42 developed countries) from 2010 through 2017, making it the largest ever analysis into spectrum pricing in developing countries 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 — all markets where spectrum licensing is a priority.

Setting high final prices administratively, setting high auction starting 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.

GSMA Intelligence has also launched its latest Mobile Connectivity Index, which measures the performance of 163 countries (representing 99% of the world’s population) against key enablers of mobile internet adoption. The index highlights recent progress made on widening access to the mobile internet and explores key roadblocks to adoption, including spectrum policy.

At the end of 2017, 3.3 billion people (or 44% of the global population) were connected to the mobile internet, representing an increase of almost 300 million compared to the previous year. That still leaves more than 4 billion people offline and unable to realise the social and economic benefits that the mobile internet enables. The majority of people that remain unconnected — 3.9 billion — 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.

“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.

“Developing countries have the opportunity to catch up with the developed on mobile adoption; however, the investment case in some of these markets is being put at risk. Operators cannot keep paying significantly more for spectrum when consumer incomes and expected profits are much lower in these markets. This is making network investment challenging at a time when policies should encourage the development of the mobile sector to maximise the benefits it can bring to everyone.”

Image credit: ©iStockphoto.com/Baris Simsek

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