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Mobile broadband expansion calls for more spectrum or more base stations: analysis of the value of spectrum and the role of spectrum aggregation

Author

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  • Jan Markendahl
  • Bengt G. Mölleryd

Abstract

This paper analyses the marginal value of spectrum which includes engineering and strategic value. The analysis of the engineering value shows that operators that are able to obtain more spectrum than their competitors, and pursue network sharing and spectrum aggregation have a competitive advantage as they have the lowest production cost, highest margin and highest capacity when usage takes off. The analysis of the strategic value shows that the level of offered data rates is pivotal for operators' marketing of mobile broadband services and that network sharing in combination with spectrum aggregation has a positive impact on the strategic value. Altogether, the willingness to pay for spectrum in recent auctions has been lower than the estimated marginal value in this analysis. However, it is likely to increase when a broad range of smart mobile devices and mobile broadband are ubiquitously used as this will put unprecedented pressure on mobile networks increasing the demand for spectrum.

Suggested Citation

  • Jan Markendahl & Bengt G. Mölleryd, 2011. "Mobile broadband expansion calls for more spectrum or more base stations: analysis of the value of spectrum and the role of spectrum aggregation," International Journal of Management and Network Economics, Inderscience Enterprises Ltd, vol. 2(2), pages 115-134.
  • Handle: RePEc:ids:ijmnec:v:2:y:2011:i:2:p:115-134
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