The design of some 5G auctions is artificially inflating prices or inefficiently distributing already scarce spectrum resources, industry association GSMA said in a release.
“Auctions can and do fail when poorly designed,” said Brett Tarnutzer, head of spectrum for the GSMA. “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.”
The GSMA published an “Auction Best Practice” paper with the aim of highlighting some key concerns from recent 4G and 5G spectrum awards and offering recommendations. This includes addressing a trend towards governments making decisions that artificially inflate spectrum prices, which risk limiting subsequent network investment and thus harming consumers. These “bad decisions” include artificially restricting the amount of spectrum operators can access, through set-asides or by poorly chosen lot sizes, or by setting high reserve prices.
According to the GSMA, the top priority for spectrum auctions should be to support affordable, high quality mobile services and not to maximize revenues.
The paper also recommended that governments assign a sufficiently large amount of spectrum and publish roadmaps to support high quality mobile services.
The industry body also said that reserving spectrum for vertical sectors or new entrants may threaten how much operators can access and also risk inflating spectrum prices.
The paper also highlighted that the auction design “should not create unnecessary risk and uncertainty for bidders.”
According to GSMA Intelligence, the socio-economic impact of 5G will be $2.2 trillion over the next 15 years, with key sectors such as manufacturing, utilities and professional/financial services benefiting the most from the new technology. By 2025, 5G is also forecast to account for around 30% of connections in markets such as China and Europe, and around half of the total in the US.
Early movers in terms of 5G spectrum allocation include Finland, Italy, Spain, South Korea, United Arab Emirates, and United Kingdom.. The number of countries who have assigned vital 5G spectrum is rapidly increasing this year, with Austria, Canada, Denmark, Germany, Hong Kong, Japan, Saudi Arabia, Switzerland and the USA already completing awards. More than 10 countries have announced further plans to assign spectrum in 2019 including France, India, Mexico, Greece and Romania, GSMA said.
“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,” Tarnutzer added.
