GSMA establishes that developing countries are hard hit by high spectrum prices


Spectrum prices in developing countries are on average more than three times higher compared to developed countries, when income is taken into account according to a new report, ‘Spectrum Pricing in Developing Countries’, released by the GSMA at the Mobile 360 – Africa conference in Kigali.

This high spectrum pricing is a major roadblock to increasing mobile penetration. 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.

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. The 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 1,000 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 or setting high auction starting prices (e.g. reserve 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.

Kenya’s spectrum management on right track

Governments and regulators play a role in increasing spectrum prices through policy decisions. In Kenya the Communications Authority of Kenya (CA) is the agency mandated with the task of allocating and assigning radio frequencies to the various service providers.

Up to 65 per cent of the Sh8.7 billion (US $ 87million) that CA generated in revenue in the 2015-2016 financial year came from spectrum fees as three mobile service providers acquired various 4G and 3G licences.

“Although high proceeds from spectrum assignments increase public funds to help ease short–term public sector fiscal pressures, there can be significant adverse effects for the mobile. For example, auction formats that limit price discovery market, with slower deployment of LTE networks and more expensive, lower quality mobile broadband services. This cripple the development of the mobile market and prevents societies from fully using mobile technology to accelerate social and economic development,” said GSMA in its report.

The CA has been taking strides towards better spectrum management as reflected in 2016, when the authority unveiled a state-of-the-art Spectrum Management and Monitoring System (SMMS) aiming to enhance efficiency in the management of radio frequency spectrum.

The system, commissioned by the Kenya’s ICT Cabinet Secretary, Joe Mucheru, allows the Authority to seamlessly prevent, detect and ultimately eliminate interference in radio communications services. It has the capacity to monitor the electromagnetic spectrum and locating sources of suspect signals to facilitate undisturbed reception of radio services such as broadcast radio, TV and wireless communications.

Mucheru said the system would be a critical regulatory tool that will facilitate efficient planning and utilisation of the country’s frequency spectrum resource in view of the increasing demand. ‘‘The higher demand between fixed and mobile services and between telecommunications and broadcasting, and the necessity for greater bandwidth mean that access to spectrum is becoming increasingly important,’’ said Mucheru.

in 2017 Kenya’s Ministry of Information, Communications and Technology released a Draft Wireless Broadband Spectrum Policy Guidelines. According to the Ministry, the new policy framework proposes a comprehensive review of frequency management practices to ensure efficient and transparent assignment and use of spectrum, in order to encourage the development of new and innovative wireless services. It also aims to promote technology and service neutrality, where appropriate.

The ‘Spectrum Pricing in Developing Countries’ report is available here


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