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Report: How Does The Cost Of
WiMAX Spectrum Compare To The Cost Of 3G Spectrum?
Other topics: Mobile WiMAX
Amplifier, WiMAX Product Development
Research and Markets
March 5, 2007
Dublin, Ireland -- Research and Markets has announced the addition of
the Pyramid Research, Inc report: Deciphering the Cost of WiMAX Licenses
- The Cost of WiMAX Spectrum, Why it is Cheaper Than 3G Spectrum, and
Why it is About to Become More Expensive to their offering.
Over the past ten years, regulators around the globe have issued
spectrum for broadband wireless access (BWA). With the recent
standardization of both fixed and mobile WiMAX, more regulators are
auctioning WiMAX spectrum. Still, the patterns are not always uniform,
and spectrum pricing varies from market to market. This report takes an
in-depth look at the drivers of WiMAX spectrum pricing. We also ran a
benchmark analysis of more than 1,000 licenses awarded in more than 20
markets across the world, as well as a correlation analysis of WiMAX
costs against a number of key indicators, including GDP per capita,
mobile and broadband penetration, urban vs. rural areas, etc. We analyze
the results of those correlations in this report, and provide an
assessment of the trending of WiMAX spectrum costs at a time when such
key markets as India, the UK, and Malaysia are readying to award more
spectrum. |
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The data used in our
analysis has the following characteristics and constraints:
- We looked at the licensing of 2.3 GHz, 2.5 GHz, and 3.5 GHz spectrum
in more than 20 countries located on six continents.
- Most countries award spectrum through auctions. A minority goes for
beauty contests, where the frequency is allocated to the operator with
the best weighted sum of credentials. Therefore, (and although we did
include a few markets with beauty contests), our data is largely
influenced by licenses sold in 17 countries through an auction process.
- Variations exist in the data used to calculate the price per MHz per
population (PMP). For example, the estimate for Australia is based on a
single license. Where multiple licenses have been awarded, we either use
individual licenses or a country average of all the licenses. South
America data includes Brazil only.
- The US auctions of 2.3 GHz and 2.5 GHz occurred in 1997 and 1996,
respectively. Mobile penetration, broadband penetration, GDP per capita
and exchange rates used represent values at the time of each auction in
a particular country.
- It should be noted that the bidding behavior of auction participants
is often random, spontaneous, and subjective, leading to winning bids
which may not always be correlated with factors which should affect the
market price of spectrum under normal conditions.
Our benchmark analysis is based on comparisons of price per MHz per
population (referred to as “PMP” throughout this report). PMP equals the
price paid for the license divided by the amount of spectrum in MHz in a
given frequency band divided by the population covered by the license.
PMP enables an apples-to-apples comparison of license costs. License
fees are the result of an assessment of a number of factors, including
the size of the spectrum allocated (often referred to as blocks, lots,
or channel pairs) and the addressable market, which is restricted
geographically. Without PMP, the information from two countries cannot
be compared reliably. For example, in Iraq, a license was sold which
covers about 24 times as many people as a license in Denmark, but the
size of the actual spectrum allocated was almost four times smaller.
Such dynamics have an impact on Capex, and ultimately on bid levels, as
will be discussed later in this report. |
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