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| Spectrum Allocation in Latin America: An Economic Analysis |
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| Written by Amy Mahan | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Monday, 02 October 2006 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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With mobile telephony increasingly being used to provide connectivity throughout the region, how much bandwidth should be allocated to wireless operators and under what kinds of licensing conditions? Thomas W. Hazlett and Roberto E. Muñoz survey Latin American spectrum regimes and offer an analysis of the regions' inefficiently constrained spectrum access; and model simulations to assess social value increases via liberalisation and making more spectrum available.
Spectrum management practices vary widely across the Latin American region. According to the International Telecommunication Union (ITU), Guatemala has “probably the world’s most liberal radio spectrum regulatory model.” In Guatemala, any person or entity is entitled to request a titulo de usufructo de frecuencia (TUF), a regulatory device specifying conditions of the frequency ownership in terms of band or frequency range, hours of operation, coverage area, etc. Contested TUFs are assigned by an auction (p. 10). And, El Salvador’s spectrum management practices grants of 20-year concessions for frequency use – which can be further transferred or subdivided (geographically or temporally) without further regulatory approval (p. 10-11). Also standing out are Chile and Paraguay, which allocate the highest amount of spectrum in the region (140 MHz and 176 MHz respectively, as compared with the region’s average of 101.84 MHz – see Table II.1, p. 5); and Argentina and Nicaragua, which both offer liberal conditions for use of allocated spectrum (but don’t allow firms to move unallocated spectrum into productive use – p. 24).
However, as shown in Figure II.1 (p. 6), all of the six largest economies in the region “allocate substantially less spectrum to mobile telephony than what is predicted by their per capita national income.” In their modelling to assess consumer welfare increases, the authors also consider factors such as license conditions and constraints on the use of spectrum. The following table contains only some of the regulatory elements provided in the author’s more complete summary of Legal Aspects of Licenses in Latin America (see Table IV.1., p. 23).
In addition to a succinct and clear assessment of the state of spectrum management in Latin America, the authors also undertake country pricing simulations and modelling around potential consumer welfare increases contingent on increasing spectrum availability. The authors' conclusions point to inefficient allocation practices, which constrain spectrum use and corresponding downstream benefits to consumers.
Spectrum Allocation in Latin America: An Economic Analysis George Mason Law & Economics Research Paper No. 06-44 Thomas W. Hazlett Roberto E. Muñoz This paper can be downloaded without charge from the
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