Are spectrum auctions good business for society?

In 2000, many politicians saw great possibilities in auctioning off 3G licenses and a number of the world's largest mobile operators spent fortunes on licenses in the hope that this new technology would make ARPU explode. Experience shows that 3G has not helped increase revenue - in fact ARPU has decreased in many countries.

During the coming years, society needs to decide how to handle the spectrum it administers – the renewal of 900 MHz licenses in a number of countries, the digital dividend spectrum (that lies between 790-862 MHz in Europe and between 690-806 MHz in Asia) and the spectrum around 2600 MHz that many operators will use for LTE.

The 3G auctions, gave many governments enormous, instant revenue, but the slow-down in the mobile industry (2000-2003) aside, high license fees resulted the slower roll-out of 3G in the countries where operators paid most for their licenses.

We believe that the value of selling a mobile license is minimal compared to the economic and social value of having a national mobile broadband network and that the Brazilian government set a fine example in how best to achieve this.

The administration decided to force operators bidding for 3G licenses to work together to build network infrastructure in remote areas and partly refunded those that achieved better than required coverage under the license terms.

Strand Consult 

 

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