Ls Telcom Ag · XETR:LSX
Ls Telcom — SBR Juconomy Consulting — LS Summit 2013
26 slides from Ls Telcom's conference presentation, Jul 3, 2013
Slide 1: Spectrum Pricing – Theoretical Approaches and Practical Implementation
Spectrum Pricing – Theoretical Approaches and Practical Implementation LS Summit 2013 Lichtenau, 3. July 2013 Martin Lundborg Principal SBR Juconomy Consulting AG © 2013 bei SBR Juconomy Consulting AG
Slide 2: Introduction
Introduction Demand for radio spectrum is steadily increasing The responsible authorities have to provide a framework for an optimal use of spectrum. Questions for spectrum authorities are inter alia: Which are the pricing mechanisms for spectrum usage? How to overcome scarcity in a freque
Slide 3: Content
Content 1 Background 2 Pricing alternatives 3 International trends 4 Summary 3
Slide 4: General strategies available for spectrum authorities
General strategies avaible for spectrum authorities Large number of issues are relevant for the spectrum strategy, e.g. efficient usage, public and social benefits, innovation and growth, framework conditions, licensing regimes, etc. Various strategies available for setting the appropriate fees
Slide 5: The ecosystem for spectrum pricing
The ecosystem for spectrum pricing 5
Slide 6: Framework conditions for usage
Framework conditions for usage The usage conditions determine the economic value of the spectrum and therefore have an important impact on spectrum pricing policies. Trading and Creates a secondary market: allows spectrum users to trade their exclusively leasing assigned usage rights in the market
Slide 7: Spectrum trading and leasing
Spectrum trading and leasing Strengthening of market forces enabling an efficient allocation of the available spectrum. A precondition is that a competitive market for usage rights exists: Transparent offers and a sufficient degree of demand for spectrum Legal environment for a transfer of r
Slide 8: Spectrum sharing
Spectrum sharing Sharing allows to reuse spectrum in three dimensions: frequency, time, and location. Spatial spectrum sharing: The coexistence of several service providers in the same licensed frequency band can be allowed (also called “light licensing"). In this case, the coordination of acc
Slide 9: Content
Content 1 Background 2 Pricing alternatives 3 International trends 4 Summary 9
Slide 10: Four main generic price methodologies
Four main generic price methodologies There are four main generic pricing methodologies which can also be implemented in mixed forms: Incentive pricing Cost orientation Extracts the rent and promotes socio- Recovers the costs of the administration economic policy goals Pricing AIP AIP: Administered
Slide 11: Cost orientation
Cost orientation For the purpose of cost recovery, the fees for radio frequency licenses are set according to the costs associated with the management and administration of all related processes. May involve the cost of several administrative bodies, i.e., ministries and agencies. Related proc
Slide 12: Incentive pricing
Incentive pricing The fee is deemed to be an indirect approximation of the market value. In the context of spectrum pricing, incentive pricing is mainly related to extract the rent arising from the (public or private) use of a scarce common good. In pure incentive formulas one of the overall g
Slide 13: Incentive pricing
Incentive pricing The fee should impact spectrum users in several ways Preventing users from stockpiling spectrum that they do not really need. Encouraging users to utilize spectrum in an optimal way. Providing incentives to move to alternative (less congested) frequency bands (i.e. improve al
Slide 14: Incentive pricing
Incentive pricing Parameters typically used: Amount of spectrum (bandwidth) Geographic area Type of frequency band (modeled by a band factor) Population covered/population density Level of exclusivity Technology Number of terminals Financial coefficient Challenge in setting the r
Slide 15: Administered incentive pricing
Administered incentive pricing AIP applies the opportunity cost principles for deriving spectrum fees in order to promote efficient usage. Opportunity cost shall be set at the value of an asset or resource in the next best alternative that is foregone by virtue of its actual use. The UK is a f
Slide 16: Auctions
Auctions Market based approach where prices are set by potential licensees bidding for a given amount of spectrum. The problem is that auction design and other regulatory conditions may strongly influence the resulting price level. The market value of spectrum is not absolute (e.g. due to chan
Slide 17: Content
Content 1 Background 2 Pricing alternatives 3 International trends 4 Summary 17
Slide 18: International trends – policies
International trends – policies The efficient/optimal use of the spectrum is one of the major goals to be fulfilled. 1: Efficiency Public or social benefits are also prime policy goals. 2: Multiple Cost recovery is applied in almost all countries. methodologes Most countries deploy two or mo
Slide 19: Broadcast services
Broadcast services A number of countries do not request any fee for broadcasting spectrum at all. Distribution of media information at lowest cost for the social benefit. For those countries which have spectrum fees for broadcasting some charge per station and some charge per TV channel (thus:
Slide 20: Fixed services
Fixed services Countries use a large number of different factors and parameters in their pricing formulas for fixed services. It seems that the higher the demand for a certain (fixed) service is, the higher the prices. This is reflected by a so called band factor that allows to weigh the price
Slide 21: Mobile services
Mobile services The spectrum demand for mobile telephony and recently mobile data services has risen dramatically in the last two decades. Research results show that for public mobile services incentive pricing combined with auctions is the preferred method to allocate spectrum. We have found
Slide 22: Other services
Other services Services like radio determination, space operation, and earth exploration require a Satellite limited amount of bandwidth and are generally priced with flat fees. For satellite earth station hubs the fee depends generally on the amount of bandwidth used. Prices are either cost b
Slide 23: International trends - summary
International trends - summary 23
Slide 24: Content
Content 1 Background 2 Pricing alternatives 3 International trends 4 Summary 24
Slide 25: Key findings
Key findings 1. A dynamic view on scarcity 2. AIP is the exception, not the rule 3. Pricing is determined by national or regional characteristics 4. Compare with care 5. Service classification is not harmonized 6. Mobile broadband is the „hot topic“ 7. Public use of spectrum is often license exempt
Slide 26: Contact
Contact SBR Juconomy Consulting AG Nordstraße 116 Parkring 10/1/10 40477 Düsseldorf 1010 Vienna Germany Austria Tel: + 49 211 68 78 88 0 Tel: + 43 1 513 514 0 Fax: + 49 211 68 78 88 33 Fax: + 43 1 513 514 0 95 URL: www.sbr-net.com URL: www.sbr-net.com E-mail: lundborg@sbr-net.com E-mail: reichl@sbr-