PolicyTracker study shows new generation of mobile spectrum is better value Friday 17 June 2011 PDF Print A study of over 200 auctions of individual mobile licences since 2000, carried out by PolicyTracker using data from the Global Spectrum Database indicates that the spectrum being released over the next few years is much better value than the 3G bands which have been auctioned over the past decade. The Global Spectrum Database (https://www.policytracker.com/global-spectrum-database) covers spectrum usage and allocation in 90 major economies and is updated four times a year. It has information on 1500 licences and 800 operators. The bands being released over the next few years – principally 700/800 MHz and 2.6 GHz – are likely to be used for 4G services, offering much higher data rates and spectrum efficiency through technologies like LTE. The propagation characteristics of 700/800 MHz means that far fewer base stations need to be built, again offering huge savings over 2GHz, the predominant band for 3G. The new bands offer much more, but they do not command higher values at auction. In fact where 700/800 MHz and 2.6 GHz have been sold so far they have proved cheaper than 2GHz, or about the same price. It's a case of more for less, or more for about the same amount! 4G spectrum is a better deal The average price for 2 GHz licences auctioned since 2000 is $1.33/Mhz/pop but the 700 and 800 MHz spectrum released by the switchover to digital TV has gone for less than 70% of this price. So far 700 and 800 MHz have only been sold in the US, Sweden and Germany and the average price was $0.905/Mhz/pop. Of course 2 GHz was famous for generating the bubble valuations of the dotcom boom. But even if you ignore the prices from 2000 ($2.88/Mhz/pop!) the average value of a 2 GHz licence over the past ten years has still been $0.90 Mhz/pop: about the same price as the digital dividend bands, despite inflation and the superior properties of the 700 and 800 MHz bands. The contrast with 2.6 GHz is even more marked. Since 2005 the average auction price for this band is $0.073/Mhz/pop, only 8% of the 2 GHz average. Explanation So why is this new spectrum proportionately much better value? There seem to be three explanations: Firstly, there is more spectrum available. Single bands like 2 GHz are no longer seen as the only option for new services, and as more alternatives become available so operators are less willing to pay high prices for specific bands. Secondly operators have greater certainty about business models, customer habits and spending patterns. Unlike ten years ago, auction bidding is no longer a shot in the dark on which the future of the business may depend. Thirdly the mobile industry is consolidating, making it less likely that new entrants will try to break into markets so pushing up spectrum prices. The calculations in this survey are based on data in the June edition of the Global Spectrum Database, which contains over 80 modifications and new entries. Licence details include auction prices, annual fees, expiry dates, technologies and technical specifications. It has been collated over the past five years by the spectrum engineering consultancy Aegis Systems and includes information on subscriber numbers from www.wirelessintelligence.com. The Global Spectrum Database is now available for purchase: see http://www.policytracker.com/GSD for more information. /ends Notes $/Mhz/pop stands for US dollars paid for each MHz per head of population. It is the standard measure for comparing spectrum prices. 2GHz $/Mhz/pop calculations are based on historic exchange rates to prevent distortion caused by the depreciation in the value of the US dollar since 2000 Auction dates for the sale of 700 and 800 MHz were US: 2008, Germany 2010 and Sweden 2011. About PolicyTracker PolicyTracker (http://www.policytracker.com) is the only business to business newsletter devoted to spectrum management. We also organise training courses and conferences. Our next training course is at Merton College, Oxford in September https://www.policytracker.com/training/understanding-modern-... and our next conference is in Mexico City, also in September https://www.policytracker.com/LASC. Contact: Martin Sims, Managing Editor, PolicyTracker +44 (0)207 100 2875 email@example.com This press release was distributed by ResponseSource Press Release Wire on behalf of PT Publishing Ltd in the following categories: Business & Finance, Computing & Telecoms, for more information visit https://pressreleasewire.responsesource.com/about.