12 Jan 2021

Key points from UK SPF Cluster 3 meeting held virtually on 15 December 2020 at 10:00

Social value in spectrum awards

The purpose of the meeting was to explore how to take account of social value in spectrum awards and was a follow on to the Cluster 3 meeting on future mechanisms for spectrum authorisation. There were two presentations from Tim Miller of Plum Consulting who covered an introduction to externalities and social value, and from Dr Abhaya Sumanasena on an investment friendly framework for spectrum awards, a case study from Austria.

Here is a link to the original event listing. 

The presentations were followed by an interactive session with the audience the key points of which are set out below:

  • To maximise social benefit regulators need to not rely purely on an economic award mechanism. It is important to capture aspects likely to generate externalities which operators will not necessarily value in their bids. There have been examples of this with coverage obligations. However, social value is not just about coverage, it is about the ability to provide access to different services as well.
  • Austria is a good example where the regulator used an investment-friendly framework for incentivising MNOs during spectrum awards. In this case, bidders could commit to cover rural communities beyond the coverage obligations attached to each block of spectrum in exchange for a discount on their spectrum fees.
  • In Austria, the objective of the regulator was to focus on improvements of mobile coverage to rural areas likely to secure greatest incremental economic gain for the society / population. Key to achieving this is to understand the cost of coverage. 
  • The model developed for Austria successfully balances auction value with maximum achievable coverage and social and economic benefits.
  • Key to successfully addressing social value is first to define the parameters i.e. services, coverage etc. that are likely to deliver the greatest incremental social and economic benefits before moving on to regulatory and financial mechanisms on how to incentivise them.
  • Key points raised in wider discussion were:
    • Pushback from other industries about the focus on mobile spectrum and the need to achieve a balance of spectrum allocation and assignment in a way that allows other spectrum users reasonable access to spectrum. PMSE was a key example raised.
    • How to change the institutional approach to award of spectrum to bring in wider consideration of externalities and social value.

Closure of the meeting

The chair said that points raised would be followed up with DCMS and that consideration would be given to a further meeting on this topic and thanked all participants for their contribution.