There are two methods for pricing described in the articles which are commonly adopted for concession and network pricing and for spectrum usage. These two systems are briefly described below
Spectrum Use Management Value
Fees can be calculated on the base of costs on spectrum management possibly to present in the total functional form:
F = Di
F = f (Di, Li x I)
where:
F = fee, imposed on the spectrum authorisation licensee
Di = direct administrative costs on processing license applications;
Li = share of in additional administrative costs;
I = total additional costs.
System Performance Pricing
A universal approach to spectrum price determination based on system performance has been developed where the price can be built up from a number of separate elements based on any or all of various criteria such as the amount of spectrum used, number of channels or links used, degree of congestion, efficiency of radio equipment, transmitter power/coverage area, geographical location and so forth. The basic principle of this approach is to identify various technical parameters in order to measure the spectrum volume used or define the “pollution area” of a radio system as a common basis for establishing spectrum fees.
For example, the following universal formula may be considered:
where:
P = spectrum price;
V = volume of space or geometric area occupied;
M = useful results obtained from the radio equipment considered, for example the number of channels to be provided or users to be served;
Kf = coefficient reflecting specific characteristics of range used;
Ks = coefficient taking into account the region of the radio station installation;
Km = coefficient reflecting social benefit of radio system;
Cs = annual spectrum management costs;
Kp = coefficient reflecting the level of spectrum access demand in the band in question.
On one hand, the application of this method can stimulate more efficient spectrum utilization; on the other hand various problems with the practical use of such formulas remain to be resolved. One disadvantage of the above technique is the choice of coefficients designed to take into account specific features of service, spectrum demand, etc.