Volume 18, Number 1 Article by Hemant K Sabat March, 2006
Why Different Carriers Opt to Acquire Spectrum from Different Types of Spectrum Markets :
Spectrum availability has been one of the key factors driving the growth of the mobile wireless industry. The strategic importance of spectrum in the sustainability of a carrier’s business leads to various customised spectrum market strategies on the part of carriers, in terms of acquiring mobile wireless spectrum from different types of spectrum markets. Based on the findings of a study to understand operators’ spectrum market strategies, this article is an attempt to develop a theory to account for why different operators opt to acquire spectrum from different types of spectrum markets.
The key drivers of spectrum investment and operators’ spectrum market strategies are the carriers’ business drivers, type of network and radio interface technology, the mode of spectrum utilisation, the spectrum market environment and the spectrum market ownership structure. Depending on these conditions and its amount and type of spectrum requirements, a carrier acquires spectrum licenses from one or more of the three types of spectrum markets. Primary markets, devoid of any special spectrum regulatory constraints, are very competitive and carriers would not opt to buy spectrum from primary markets unless strongly driven by business needs. Secondary markets cater to companies that do not win licence in a competitive bidding process or do not have the necessary capital to buy spectrum, late entrants into the wireless industry or particular markets, or spectrum owners on the look out to fill the gaps in non-contiguous markets. Designated regions form the third type of market, where national governments may enforce regulations to develop cellular services in certain regions, or to maintain fair market conditions. Being relatively remote with poor telecommunications infrastructure, the capital investments needed to offer services are smaller, spectrum is available in plenty, and the market is less competitive and offers relatively steady revenue streams.
Reprint No 06104
