Communications spectrum often is said to be “beachfront property,” the notion being that location determines value and therefore price. But supply and demand also influence perceptions of value, and hence, price.
Millimeter wave commercialization means “we are making more beach.” So vastly increased supply should have a big impact on value and price in coming years. On the other hand, lower-frequency spectrum is considered more valuable beach because of better signal propagation.
This matters especially in countries where licenses are renewable every decade or so; less important in markets where license use is virtually perpetual. In the former case, service providers have to keep repurchasing spectrum they already use; in the latter cases, purchase is “one and done.”
By definition, the latter case (perpetual use) allows lower long-term operating and capex cost profiles, since spectrum, once acquired, essentially is a purchase, not a lease.
Millimeter wave spectrum, ability to use unlicensed spectrum, spectrum aggregation and spectrum sharing all work to increase supply, which should have a restraining effect on spectrum prices.
Also, at particular points in time, contestants have greater or lesser need for certain allocations of spectrum, and might be compelled to bid more or less, accordingly. That also affects the supply-demand curve.
Sometimes other developments occur. The 2008 introduction of the Apple iPhone immediately increased the value and cost of spectrum, since iPhone users began to use much more data. The iPhone, in other words, changed the demand curve for spectrum.
But other supply issues, such as offloading to Wi-Fi, greater use of small cells and additional spectrum auctions, also changed after 2008.
Small cell architectures–whether as cause or effect–also work to intensify use of any existing amount of spectrum, and thus represent an alternate approach to creating more capacity on a mobile network.
Reducing cell size always has been a principal method for intensifying the use of any given amount of spectrum, and arguably has accounted for most of the capacity gains by mobile operators in past years, compared to the alternative of acquiring new spectrum. In that sense, small cells are a “cause” of spectrum increase by architecture changes.
Millimeter waves, because of their signal propagation characteristics, require the use of small cells, and in that sense are an “effect” of using higher-frequency spectrum.
The other angle is pressure on mobile operator business models, which will work to constrain the amount of money that can be spent on spectrum and yet still underpin a positive business model.
The point is that there are lots of good reasons for thinking spectrum prices will be constrained in the millimeter wave era.