Timing is everything - Releasing the value of spectrum

 

There will be significant awards of spectrum bandwidth over the next few years in a range of countries as regulators seek to promote the efficient use of spectrum. This spectrum is expected to be used by telecoms companies and broadcasters, and potentially others, to help facilitate the launch of new communications services including 4G mobile services, high speed wireless internet services and high definition television services.

 

But, the timing could not be more challenging. Tough financial conditions mean that companies face a difficult assessment of the benefits and costs of acquiring spectrum. It is therefore evermore important for potential bidders to think hard about the value of spectrum, in terms of the direct value from the delivery of new services, the opportunity cost of not acquiring spectrum and the impact on their overall competitive position.

 

We present a clear framework that helps companies make a robust decision on whether to bid for spectrum and how much to pay.

 

Using this framework, we estimate that spectrum released across Western and Eastern Europe has a value of some €40bn, or €50 per mobile subscriber in Europe. This is a significant sum in an economic environment that shortens time horizons for investments and constrains the capital required to fund bids.