The Impact of Spectrum Prices on Consumers
55 Pages Posted: 29 Jul 2019
Date Written: July 26, 2019
The radio spectrum that governments license to mobile 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 empirical study assesses whether high spectrum prices, and other aspects of spectrum management, had an impact on consumer welfare in 64 countries during the 2010-2017 period. Our empirical strategy isolates the impact of spectrum pricing on consumer outcomes by applying an instrumental variable model and also by considering the ‘affordability’ of spectrum as a percentage of operator revenues. We find strong evidence that higher spectrum prices cause negative consumer outcomes, including lower coverage levels and slower data speeds. These findings have important ramifications for governments and regulators – particularly those betting on 4G and 5G as enablers of economic growth and sustainable development.
Keywords: spectrum, mobile communications, auction
JEL Classification: L96, L51, D44
Suggested Citation: Suggested Citation