Can We Measure the Relative Economic Value of Spectrum Channel?

The spectrum is a scare resource of vital importance, a precious national asset which needs to be carefully managed. Allocation and assignment spectrum bands constitute the central elements of spectrum management. These steps allow to plan and distribute available spectrum resources for different purposes, and determine the number of licensees as well as select them. One of the long-standing disagreements with regard to spectrum allocation concerns the fairness of spectrum license fees. In countries where spectrum licenses are not distributed through auction, but through a beauty contest-style tender, the basis of license pricing is indeed often unclear, as a pre-established scheme is rarely used for determining the fees. Hence, researching ways to develop an adequate and fair scheme for calculating spectrum license fees is of paramount importance for the integrity of a national spectrum management system. In this study, we present a method for estimating the economic value of spectrum based on a network cost structure analysis, drawing also attention to the close linkage between spectrum value and the size of initial investment required for network development. Further, an actual estimation was performed on the Korean 800MHz and 1800MHz bands, and the difference in economic value between the two amounted to 3.6 trillion won.