Pakistan National ICT Industry Development whitepaper has suggested the Government of Pakistan should reduce the cost of spectrum. The whitepaper recommended that the government take measures to increase the affordability of the spectrum for the operators. According to the document the costs of the spectrum are high for operators in Pakistan. Lower spectrum auction price and longer spectrum length will improve network coverage a wider choice of services, better take-up, and healthier competition.
The whitepaper was released a day ago and ProPakistani has further examined and learned these details.
According to the whitepaper, the high spectrum costs lead to negative consumer outcomes by restricting the financial ability for network investment. Many countries around the world have introduced measures like annual payment and deferred payment, etc., to reduce the cost burden of operators, particularly in the first years of network roll-out.
Countries with low spectrum auction prices and long spectrum license lengths tend to have better network coverage, a wider choice of services, better take-up, and healthier competition. An econometric study by the GSMA found that high spectrum costs lead to negative consumer outcomes by restricting the financial ability for network investment.
According to the whitepaper, the spectrum costs are declining globally. The white paper mentions a study by Coleago Consulting Ltd., which computed the spectrum price index (SPI), i.e., total spectrum cost divided by monthly mobile revenue. The Spectrum Price Index is 6 for 3G, 4 for 4G, and 2 for 5G. This equals an annualized spectrum cost at 3 percent of revenue for 3G, 2 percent for 4G, and 1 percent for 5G. In countries such as China, the UAE, Saudi Arabia, and Kuwait, the number is below 1 percent.
According to the Coleago study, when the cost of spectrum amounts to 10 percent of mobile revenue, operators may hit budget constraints, i.e. investment in mobile broadband and 5G is likely to be slower than it otherwise would be. A cost of spectrum above 10 percent of revenue presents a threat to the development of 5G
In Pakistan, three out of four Mobile Network Operators (MNOs) expenses on the spectrum are above 10 percent of their revenues. The high spectrum cost may jeopardize operators’ ability to invest and support affordable services, resulting in the slower deployment of MBB networks and more expensive, lower-quality MBB services.
