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Assessment of spectrum value: The case of a second digital dividend in Europe

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  • Frias, Zoraida
  • González-Valderrama, Carlos
  • Pérez Martínez, Jorge

Abstract

This work assesses the perceived value of 700MHz according to the impact that this spectrum could have in decreasing rollout costs. 700MHz spectrum, recently allocated to mobile network operators (MNOs), could help increase coverage in rural area, as well as aid capacity-constrained networks. In both cases, the use of this spectrum could reduce the rollout costs of a Radio Access Network (RAN) based on Long Term Evolution (LTE) technology. The perceived value of 700MHz is presented in this article as the difference in the Total Cost of Ownership (TCO) of deploying the network with and without this spectrum. However, the rollout costs can differ greatly among MNOs if they previously hold different spectrum portfolios that may or may not include sub-1GHz frequencies. The results of this study reveal that an MNO not holding the additional 2×10MHz at 800MHz, would perceive 62% more value of 2×10MHz at 700MHz, than an MNO that does hold 2×10MHz at 800MHz. In addition, the value of this spectrum comes largely from urban areas, where networks are strongly capacity-constrained. This leads to the conclusion that under current demand forecasts, low-frequency spectrum starts being more valuable for simply being spectrum, rather than for being low frequency. Indeed, the results prove that adding spectrum with similar propagation characteristics to a coverage-constrained network is of no value.

Suggested Citation

  • Frias, Zoraida & González-Valderrama, Carlos & Pérez Martínez, Jorge, 2017. "Assessment of spectrum value: The case of a second digital dividend in Europe," Telecommunications Policy, Elsevier, vol. 41(5), pages 518-532.
    • Handle: RePEc:eee:telpol:v:41:y:2017:i:5:p:518-532
    DOI: 10.1016/j.telpol.2016.12.008
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    References listed on IDEAS

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    1. Mölleryd, Bengt G. & Markendahl, Jan, 2014. "Analysis of spectrum auctions in India—An application of the opportunity cost approach to explain large variations in spectrum prices," Telecommunications Policy, Elsevier, vol. 38(3), pages 236-247.
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    4. Cambini, Carlo & Garelli, Nicola, 2011. "Evaluation of the opportunity cost of the spectrum: Application to the digital dividend," Telecommunications Policy, Elsevier, vol. 35(7), pages 633-649, August.
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    Cited by:

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    3. Oughton, Edward J. & Frias, Zoraida, 2018. "The cost, coverage and rollout implications of 5G infrastructure in Britain," Telecommunications Policy, Elsevier, vol. 42(8), pages 636-652.

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