Volume 15, Number 4 Article by Hemant K Sabat December, 2003
The Economics of Mobile Wireless Spectrum: Ownership, Distribution and Regulation :
Hemant K Sabat discusses the philosophical issue of who should own, distribute and regulate mobile wireless spectrum, and provides a theory to account for why different countries adopt different spectrum distribution and regulation regimes, and empirically validates it. In the mobile wireless industry, the key industry and business drivers are the investments made by network operators. Acquisition of spectrum is a one-time investment of enormous magnitude which impacts an operator`s ability to run a sustainable business. At the same time, the total spectrum bandwidth available for wireless use is fixed. Wireless spectrum is a scarce commodity and like any other public resource, must be utilised for the greater good. As the guardian of spectrum, the approach of national governments to spectrum ownership, distribution and regulation depends on whether they view spectrum as a commons or property. Whereas private ownership makes spectrum `flexible, plentiful and cheap`, a pure commons approach creates scarcity of spectrum, raising the price and ensuring government involvement and inefficiency in allocation. The best approach would be a combination of the two views, says Sabat. A country chooses a spectrum distribution and regulation method depending on the extent of the development of free market economics in the country and in the spectrum industry, as well as the infrastructure available to distribute and regulate spectrum.
By analysing wireless spectrum distribution mechanisms and spectrum regulatory instruments implemented in various countries in the last decade, including Europe`s 3G auctions and the US FCC`s policy, this paper describes how national and international regulatory bodies along with national governments play an important role in shaping spectrum dynamics of the industry. The wireless industry`s stakeholders who would benefit from this analysis include researchers, investors, managers and regulators.
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