In Business Model, Internet Access, Mobile, Spectrum

Proposed minimum mobile spectrum prices are an issue in Pakistan, according to consultant Parvez Iftikhar. High prices, he argues, are a key reason that authorized mobile spectrum is not fully in commercial use.

As everywhere in the Internet and mobile ecosystems, one segment’s revenue is another segment’s cost. And high spectrum prices–seen as beneficial from the government treasury point of view–are a negative from the point of view of Internet service providers.

That, in turn, means higher retail prices for Internet users. Conversely, lower spectrum costs would lead to lower retail prices, faster speeds and wider availability of access networks, all other things being equal.

In the recent April 2014 spectrum auction, only 57.38 MHz was offered (7.38MHz in 850 band + 20 MHz in 1800 band + 30MHz in 2100 band), says Iftikhar.

About 40 MHz actually was sold, in large part because of high reserve prices, Iftikhar argues. Out of a total available potential available mobile spectrum of 315 MHz, only 118 MHz has been released so far, about 37 percent of potential.

Indeed, many could argue that spectrum is deliberately being withheld at the moment because the government does not believe it can fetch the highest-possible price. In other words, potential buyers are resisting paying such prices.

“Therefore, government’s intention seems to be to bring the minimum amount of spectrum in the market, till the time the telcos are ready to pay that higher price,” he argues.

Some might argue that high spectrum prices are a clear net negative, where it comes to increasing the availability and affordability of Internet access.

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