GSMA weighs in on 5G spectrum auction design
Written by: Sam Fenwick | Published:
Credit: Gerd Altmann/Pixabay

The GSMA, which represents the worldwide interests of mobile network operators (MNOs), has published a paper that sets out best practice for spectrum auctions due to concerns that the design of some 5G auctions is leading to artificial price inflation or inefficient allocation of scarce spectrum resources.

The paper takes aim at such practices as artificially restricting the amount of spectrum operators can access, through set-asides or by poorly chosen lot sizes, or by setting high reserve prices.

It argues that the top priority for spectrum auctions should be to support affordable, high quality mobile services, rather than maximising revenues and that auctions shouldn’t be the only award process considered, as they are not always suitable. The paper also recommends that spectrum regulators assign a sufficiently large amount of spectrum and publish roadmaps to support high quality mobile services and warns that set-asides for vertical sectors or new entrants may threaten how much operators can access and also risk inflating spectrum prices. It also recommends that auction designs should not create unnecessary risk and uncertainty for bidders.

The paper also discusses the impact of licence obligations and conditions on the value of spectrum and warns that uncertainty in licence terms and conditions in terms of coverage obligations will jeopardise investment. It also says that these should be recognised when setting spectrum prices and that “It should also be recognised when setting spectrum prices, that the incremental value of additional spectrum is becoming increasingly marginal while the cost of meeting coverage obligations is rising.”

“Auctions can and do fail when poorly designed,” said Brett Tarnutzer, the GSMA’s head of spectrum. “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.”

“This is crucial time in the development of 5G,” he added. “Spectrum is essential fuel for mobile networks and its ineffective use will only lead to bad consequences for consumers. The most important objective of awarding frequencies should not be about making the most money, but rather about ensuring consumers benefit from the best mobile connectivity.”

The GSMA notes that Finland, Italy, Spain, South Korea, United Arab Emirates, and the UK were among the those who awarded 5G spectrum in 2018. In 2019, Austria, Canada, Denmark, Germany, Hong Kong, Japan, Saudi Arabia, Switzerland and the USA have already done so, and more than 10 other countries have plans to assign spectrum including France, India, Mexico, Greece and Romania.

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