GSMA warns some spectrum auctions artificially inflate prices

The industry association GSMA, representing interests of mobile operators worldwide, warns that artificially inflating prices in some 5G spectrum auction threatens quality and affordability of mobile services. To help governments and regulators guarantee affordable, high quality mobile connectivity from spectrum awards GSMA has published the Auction Best Practice paper.

As 5G spectrum auctions pick up pace globally, the GSMA raises concerns into some auctions’ design artificially inflating prices, or inefficiently distributing already scarce spectrum resources, which risk harming consumers.

“Auctions can and do fail when poorly designed,” said Brett Tarnutzer, Head of Spectrum, GSMA. “We’re seeing a worrying trend of badly run spectrum awards that could seriously impact the potential of 5G before we get started. It’s time for policymakers to work more closely with stakeholders to enable more timely, fair and effective awards.”

The GSMA’s paper ‘Auction Best Practice’ paper highlights some key concerns from recent LTE and 5G spectrum awards and offers recommendations. This includes addressing a trend towards governments making decisions that artificially inflate spectrum prices, which risk limiting subsequent network investment and thus harming consumers. These bad decisions include artificially restricting the amount of spectrum operators can access, through set-asides or by poorly chosen lot sizes, or by setting high reserve prices.

According to GSMA Intelligence, the socio-economic impact of 5G will be USD 2.2 trillion over the next 15 years, with key sectors such as manufacturing, utilities and professional/financial services benefiting the most from the new technology. By 2025, 5G is also forecast to account for around 30 percent of connections in markets such as China and Europe, and around half of the total in the US.

According to GSMA, timely, fair and effective spectrum awards are key to delivering the full potential of 5G. Early movers include Finland, Italy, Spain, South Korea, United Arab Emirates, and United Kingdom who became amongst the first to award 5G spectrum in 2018. The number of countries who have assigned vital 5G spectrum is rapidly increasing this year, with Austria, Canada, Denmark, Germany, Hong Kong, Japan, Saudi Arabia, Switzerland and the USA already completing awards.

More than 10 countries have announced further plans to assign spectrum in 2019 including France, India, Mexico, Greece and Romania.  

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