The reasons for valuing spectrum are abundantly clear. Radio spectrum is an extremely valuable and often scarce natural resource (especially below 1 GHz) with a multitude of uses with major contributions to economic and social development, while helping to ensure national and civil security. To suggest that modern economies depend on fully developed and robust wireless communications capability is not an exaggeration.
In general, for any resource, including radio spectrum, the primary economic objective is to maximize the net benefits generated from the resource enabling an efficient distribution with maximum benefits to society. Spectrum values and spectrum prices are mechanisms used to ensure that spectrum resources are used efficiently by users.
- Appropriate spectrum values and price promote spectrum efficiency. Spectrum is a vital natural resource and spectrum prices should be sufficient enough to ensure it is valued and used wisely.
- Using the spectrum resource drives considerable economic benefit, which should be maximized.
- Spectrum management costs money and these costs can be recovered from those who benefit from these activities through spectrum prices.
- Finally, important social and cultural objectives can be advanced by using spectrum and spectrum pricing mechanisms should facilitate the achievement of government’s social and cultural objectives.
Spectrum values are therefore reflected in spectrum prices and help to promote both economic and technical efficiency in the use of radio resources. Spectrum values can also be significant and help raise significant revenues for the government, which, in turn, recovers the costs of managing spectrum.
The Digital Dividend provides an example of significant spectrum values which are presented in Table 5.2.1.
Economic Value of the Digital Dividend - An EU Example
The European Commission refers to an estimate in the value of the Digital Dividend that exceeds EUR 150 billion, which is about 2.2 per cent of the annual European GDP for the total value of electronic communications services that depend on use of radio spectrum in the EU. Radio spectrum has an essential role as an enabler for growth, as was pointed out in the i2010 initiative. Significant estimates of the economic value of the Digital Dividend in the EU have been made and are provided below.
Table 5.2.1 EU Estimates in Value for the Digital Dividend
|Digital Terrestrial Television
||Six DTT multiplexes in each Member State requiring 48 MHz when using National SFN's (8 MHz channels per SFN) and 384 MHz when using MFN's (64 MHz spectrum channels per multiplex).
||Between EUR 130 Billion and EUR 370 Billion discounted over 15 yrs.|
||One multiplex using either 8 MHz per SFN or approximately 48 MHz for an MFN.
||Between EUR 2.5 Billion and EUR 25 Billion discounted over 15 yrs.|
||Use of a 72 MHz sub-band within the 470-862 MHz band for wireless broadband services.
||Between EUR 50 Billion and EUR 190 Billion discounted over 15 yrs.|
||Between EUR 182.5 Billion and EUR 585 Billion discounted over 15 yrs.|
Source: Exploiting the Digital Dividend – a European Approach, Analysis Mason, DotEcon, Hogan & Hartson, 2009.
The question of how to measure spectrum values is explored in more detail in Section 5.2.1.