In Business Model, Internet Access, Mobile, News, Spectrum, Spectrum Futures Conference

One underpinning philosophy of Spectrum Futures is that the whole ecosystem has to be aligned if we are to rapidly provide quality Internet access to “everyone across South Asia and Southeast Asia.” Among other things, alignment means that all the key parts of the value chain are priced in ways that make possible affordable end user prices, and affordable partner prices, where it comes to partners able to defray end user direct costs (advertising, for example). 

High spectrum costs, high taxes, burdensome regulation, high infrastructure prices and lack of competition in access markets are among the issues that the ecosystem has to find ways to overcome, ultimately. That never is easy, as one segment’s costs and another segment’s revenue. Consider spectrum costs.

Good news, bad news seems to be the story for spectrum auctions being planned for 2016 in India and the United States. In both cases, the good news–up to a point–is that lots of spectrum is going to be made available. The bad news–up to a point–is that the expected prices are high enough that neither auction now appears likely to be able to dispose of all the inventory.

The Federal Communications Commission reportedly has been able to clear about $84 billion worth of TV frequencies for auction, as part of its 600-MHz spectrum auction. The problem is that many observers think it unlikely all the bidders together are willing and able to spend more than perhaps $30 billion.

In India, regulators face a similar “problem.”  By coincidence, the Indian government has set minimum prices that would generate, if all inventory will sold, of about $83 billion, about the same amount the FCC has been notified the U.S. TV broadcasters are willing to sell.

The Indian auction of 700 MHz, 800 MHz, 1800 MHz, 2300 MHz and 2500 MHz bands for 4G, and 2100 MHz for 3G, though, is not expected to produce anywhere near that amount of actual buying.

Some industry analysts expect far less spending than that. In fact, some estimate the spectrum sale could generate only $10 billion to $12 billion, leaving much of the spectrum unsold.

In both sets of auctions, the problem seems to be that price expectations are too high, on the part of Indian regulators, the FCC itself and spectrum sellers.

So the likely outcome is that far less spectrum actually will be sold than is offered.

Some would argue such issues are a compelling reason for allocating more unlicensed spectrum, and for making more efficient use of all available licensed spectrum, where technology allows protection of incumbent licensing rights, but also permits more-efficient use of available unused or lightly used spectrum.

Start typing and press Enter to search