Spectrum Flexibility and Mobile Development

Abstract

In this paper we study the effects on mobile market outcomes from three specific attributes linked to a flexible spectrum policy: the presence of a secondary market for spectrum trading, a technological neutrality approach, and the possibility of conducting sharing agreements among operators. In terms of market outcomes, we identify four possible variables: capital investment, network coverage, service pricing, and adoption. After designing a precise causal approach linking the above-mentioned variables, we were able to identify a significant impact on the four independent variables from the spectrum policies. When those three policies are jointly adopted, mobile capital investment is 35.9% larger than when that is not the case. In addition, promoting these policies can increase network coverage by 9.8% after two years, bring down mobile broadband prices by -5.8%, and increase mobile broadband unique subscribers’ penetration by 0.9%. When we consider a wider period of 5-years, dynamic effects take over, resulting in mobile broadband prices being reduced in -14.3% and mobile broadband unique subscribers’ penetration potentially increasing in 2.4%. These results were verified to be robust after the addition of control variables and when controlling for potential endogeneities associated to these causal frameworks. In sum, we believe, based on this evidence, that a flexible approach towards spectrum management that allows for secondary trading, technological neutrality and network sharing can contribute significantly to the development of the mobile sector, thereby maximizing socioeconomic welfare.