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36655-133 | Commercial in confidence
Overview of Analysys Mason 2012 study on the
value of spectrum to the UK economy
Pres...
36655-133 | Commercial in confidence
Background and objectives
Workstream A: Existing spectrum uses and value to the econo...
36655-133 | Commercial in confidence
The objective of the 2012 study was to advise on the value of radio
spectrum to the U...
36655-133 | Commercial in confidence
The study ran for six months and comprised three workstreams
5
Workstream C:
Implicat...
36655-133 | Commercial in confidence
Background and objectives
Workstream A: Existing spectrum uses and value to the econo...
36655-133 | Commercial in confidence
Workstream A took an economic welfare approach to estimating the value
of spectrum, b...
36655-133 | Commercial in confidence
Our estimate of the overall economic welfare in 2011 was GBP51.9-55.9
billion, compar...
36655-133 | Commercial in confidence
In addition, we analysed revenue and employment along the value chain
for three major...
36655-133 | Commercial in confidence
Background and objectives
Workstream A: Existing spectrum uses and value to the econo...
36655-133 | Commercial in confidence
The key developments identified in Workstream B by and large describe
what has happen...
36655-133 | Commercial in confidence
Background and objectives
Workstream A: Existing spectrum uses and value to the econo...
36655-133 | Commercial in confidence
We made recommendations to maximise the future value created of
spectrum use, grouped...
36655-133 | Commercial in confidence
Background and objectives
Workstream A: Existing spectrum uses and value to the econo...
36655-133 | Commercial in confidence
We made recommendations to maximise the future value created of
spectrum use, grouped...
36655-133 | Commercial in confidence
New Delhi
Tel: +91 124 4501860
newdelhi@analysysmason.com
Milan
Tel: +39 02 76 31 88 ...
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Philip bates - Analysys Mason - spectrum policy forum 29 march 2018

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Overview of Analysys Mason 2012 study on the value of spectrum to the UK economy
Presentation to UK Spectrum Policy Forum - Cluster 3: Economic and Social Value of Spectrum
29 March 2018
Philip Bates

More information on the UK Spectrum Policy Forum can be found here: https://www.techuk.org/about/uk-spectrum-policy-forum

Published in: Technology
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Philip bates - Analysys Mason - spectrum policy forum 29 march 2018

  1. 1. 36655-133 | Commercial in confidence Overview of Analysys Mason 2012 study on the value of spectrum to the UK economy Presentation to UK Spectrum Policy Forum Philip Bates 29 March 2018
  2. 2. 36655-133 | Commercial in confidence Background and objectives Workstream A: Existing spectrum uses and value to the economy Workstream B: Factors affecting future spectrum use and demand Workstream C: Implications for spectrum management and allocation Recommendations for a new study 3Contents
  3. 3. 36655-133 | Commercial in confidence The objective of the 2012 study was to advise on the value of radio spectrum to the UK economy, and factors influencing this ▪ A study on the value of radio spectrum to the UK economy last commissioned by Ofcom in 2006 ▪ Substantial changes since 2006 in various key factors affecting value generated by radio spectrum use, notably: – Enormous growth in mobile broadband consumption, driven by smartphone adoption (though 4G not launched in UK at the time) – Switchover from analogue to digital terrestrial TV broadcasting – Substantial growth in DAB (from 11% in 2005 to 36% in 2010, according to Ofcom estimates – Growth in IPTV and Internet radio ▪ Objectives of study were three-fold: 1.Provide updated assessment of impact of radio spectrum on UK economy – and extend assessment by considering additional aspects of wireless use (e.g. by public sector) 2.Consider how economic impact of spectrum use is affected by current and future market and technology developments, and by other shifts in supply and demand (e.g. greater use of spectrum sharing) 3.Assess impact of different options for release of 500MHz from public sector holdings 4 Source: Analysys Mason Background and objectives
  4. 4. 36655-133 | Commercial in confidence The study ran for six months and comprised three workstreams 5 Workstream C: Implications for spectrum management and allocation Effect on value of allocation policy Effect on value of options for timing of release Effect on value of options for prioritising bands Deliverable: Final report Deliverable: Meeting to discuss initial findings Deliverable: Presentation of results from final report Workstream A: Existing spectrum uses and value to the economy Review existing literature Review spectrum use Design modelling method- ologies Assess value of spectrum use Analyse findings Stake- holder interviews 1a: Existing uses 1b: Method- ology definition 1c: Economic modelling Identify constraints Technology and market trends Workstream B: Factors affecting future spectrum use and demand Migration, re-farming and sharing Technology and convergence International develop- ments Overview of study methodology
  5. 5. 36655-133 | Commercial in confidence Background and objectives Workstream A: Existing spectrum uses and value to the economy Workstream B: Factors affecting future spectrum use and demand Workstream C: Implications for spectrum management and allocation Recommendations for a new study 6Contents
  6. 6. 36655-133 | Commercial in confidence Workstream A took an economic welfare approach to estimating the value of spectrum, building on the method used in previous studies ▪ We considered economic welfare to be sum of consumer surplus and producer surplus (i.e. external benefits were not quantified) ▪ Given extent of changes in the public mobile and TV broadcasting sectors since previous study, we built new models to estimate consumer and producer surplus from public mobile and TV broadcasting (the two areas with largest economic welfare benefits) ▪ Due to lack of recent data on willingness to pay for mobile services, we presented a range of values for consumer surplus for mobile ▪ We also used a different and, we believe, more robust approach to calculating benefits of Wi-Fi, based on savings achieved through offload by mobile broadband consumers and mobile operators ▪ For remaining areas covered by 2006 study (which are relatively small in comparison), we updated previous models ▪ In addition to providing annual values for 2011, we also calculated NPV of welfare benefits from 2012-2021 ▪ We did not attempt to quantify economic welfare benefits arising from public sector uses of spectrum 7 Source: Analysys Mason Workstream A Consumer surplus Producer surplus Supply curve Demand curve Quantity Price Choke price Selling price Subscribers Illustration of consumer and producer surplus calculation
  7. 7. 36655-133 | Commercial in confidence Our estimate of the overall economic welfare in 2011 was GBP51.9-55.9 billion, compared to GBP35.2 billion in 2006 8Workstream A Fixed links Benefit Consumer Producer 3.9 3.9 – 3.3 3.3 – 22.1 22.1 – Satellite links Benefit Consumer Producer 2.8 2.8 (0.005) 3.6 3.0 0.6 31.3 22.0 9.3 PBR Benefit Consumer Producer 1.2 1.2 – 2.3 2.3 – 19.2 19.2 Radio Benefit Consumer Producer 1.91 1.61 0.3 3.0 2.7 0.3 28.6 2.8 25.6 Wi-Fi Benefit Consumer Producer – – – 1.8 1.8 – 25.6–31.0 24.8–27.9 0.8–3.1 Total mobile Benefit Consumer Producer 21.8 19.0 2.8 30.2–34.2 24.2–28.2 5.9 273–341 246–314 27 2006 2011 2012 -2021 discountedGBP billion TV Benefit Consumer Producer 3.61 3.41 0.2 7.7 6.2 1.4 86.0 72.6 13.4 1European Economics figures restated in a manner that is consistent with our approach –
  8. 8. 36655-133 | Commercial in confidence In addition, we analysed revenue and employment along the value chain for three major areas of spectrum use: public mobile, TV and radio 9 Source: Analysys Mason Workstream A Site Property Owners Site Civil Contractors Network Equipment Suppliers Network Operators Mobile Subscribers Independent Mobile CPE Retailers Mobile Advertising Companies Mobile Commerce Companies Mobile Content Suppliers Mobile App Developers MVNOs 1 4 5 Passive infrastructure Network equipment Devices Content Third-party airtime retailers 2 Sales, marketing & distribution 3 Value chain for public mobile services ▪ We estimate that total revenues along the public mobile value chain are around GBP20 billion per annum, with an employment level of around 75 000 ▪ We estimate that total revenues along the TV broadcasting value chain (not illustrated here) are around GBP16.1 billion, with an employment level in excess of 40 000 ▪ We estimate that total revenues along the radio broadcasting value chain (not illustrated here) are around GBP1.2 billion, with an employment level is around 2 500
  9. 9. 36655-133 | Commercial in confidence Background and objectives Workstream A: Existing spectrum uses and value to the economy Workstream B: Factors affecting future spectrum use and demand Workstream C: Implications for spectrum management and allocation Recommendations for a new study 10Contents
  10. 10. 36655-133 | Commercial in confidence The key developments identified in Workstream B by and large describe what has happened in the last 6 years ▪ Continued growth in mobile data traffic ▪ Growing use of licence-exempt spectrum, with an increasing range of M2M applications emerging as well as increased use of Wi-Fi. In particular, the 2.4GHz band is increasingly being used for subscribers who are paying for a mobile broadband service ▪ In TV broadcasting , a move towards DVB-T2 to provide additional HD capacity is envisaged at some point, but not until access to DVB-T2 receivers is higher. TV viewing is no longer restricted to just TV sets, and streamed TV is increasingly being viewed via connected TV sets, on smartphones and on tablet devices. We believe that high demand for DTT will continue beyond 2020 but in the longer term other platforms (cable, satellite, fibre and mobile) may increasingly dominate ▪ In radio broadcasting , an upgrade from DAB to DAB+ (or similar) would be desirable on technical grounds, but raises similar issues of equipment compatibility to the DVB-T2 move 11 ▪ Fixed microwave links will continue to be used to bridge gaps between a cellular base station and the nearest fibre point, although the average link length is likely to reduce as fibre is rolled out further. This may mean that more links can be based on, for example, the licence-exempt 60GHz band ▪ Principal trend in satellite communications is a move to higher frequency spectrum bands, brought about by a shortage of capacity in lower bands. For PMSE there is also a trend towards use of higher frequency bands, and a more widespread use of bands such as 6–7GHz for wireless cameras ▪ Within the PBR sector, the main trend is a need within larger PBR users (e.g. utilities, transport authorities and emergency services) to have access to mobile broadband services. The emergency services in particular have identified a need for a mobile broadband solution ▪ Making better use of spectrum by re-using under- utilised portions (e.g. UHF white space), or through sharing (e.g. authorised shared access, or licensed shared access), is an important area of policy development Workstream B     ?   
  11. 11. 36655-133 | Commercial in confidence Background and objectives Workstream A: Existing spectrum uses and value to the economy Workstream B: Factors affecting future spectrum use and demand Workstream C: Implications for spectrum management and allocation Recommendations for a new study 12Contents
  12. 12. 36655-133 | Commercial in confidence We made recommendations to maximise the future value created of spectrum use, grouped into a number of themes 13Workstream C ▪ Actions supporting the future growth of the public mobile sector ▪ Actions concerning growth in other sectors that will be influenced by the growth in mobile data ▪ Actions in relation to DTT and DAB technology upgrades ▪ Actions relating to better sharing of under-utilised spectrum ▪ Actions relating to the release of public-sector spectrum
  13. 13. 36655-133 | Commercial in confidence Background and objectives Workstream A: Existing spectrum uses and value to the economy Workstream B: Factors affecting future spectrum use and demand Workstream C: Implications for spectrum management and allocation Recommendations for a new study 14Contents
  14. 14. 36655-133 | Commercial in confidence We made recommendations to maximise the future value created of spectrum use, grouped into a number of themes 15Recommendations for a new study ▪ It seems very likely that mobile communications and broadcasting continue to generate the most value – It would be highly desirable to gather new data on willingness to pay to support consumer surplus calculations ▪ Methods to explore the value derived from public sector use of spectrum should be further considered – Issue about welfare value of having an army, police force, scientific research etc – Issue about contribution of spectrum use to overall benefit ▪ Although contribution of other areas is relatively low, they have not been remodelled in more than a decade and should perhaps be reconsidered as opposed to simply being updated
  15. 15. 36655-133 | Commercial in confidence New Delhi Tel: +91 124 4501860 newdelhi@analysysmason.com Milan Tel: +39 02 76 31 88 34 milan@analysysmason.com Manchester Tel: +44 (0)161 877 7808 manchester@analysysmason.com Contact details 16 Philip Bates Principal Philip.Bates@analysysmason.com Analysys Mason Limited North West Wing Bush House Aldwych London WC2B 4PJ www.analysysmason.com Registered in England No. 5177472 0)1223 460866 NBED You can use this box to highlight the relevant office Cambridge Tel: +44 (0)1223 460600 cambridge@analysysmason.com Dubai Tel: +971 (0)4 446 7473 dubai@analysysmason.com Dublin Tel: +353 (0)1 602 4755 dublin@analysysmason.com Madrid Tel: +34 91 399 5016 madrid@analysysmason.com Paris Tel: +33 (0)1 72 71 96 96 paris@analysysmason.com Singapore Tel: +65 6493 6038 singapore@analysysmason.com Boston Tel: +1 202 331 3080 boston@analysysmason.com Hong Kong Tel: +852 3669 7090 hongkong@analysysmason.com @AnalysysMason linkedin.com/company/analysys-mason youtube.com/AnalysysMason analysysmason.com/RSS London Tel: +44 (0)20 7395 9000 london@analysysmason.com Oslo Tel: +47 920 49 000 oslo@analysysmason.com Stockholm Tel: +46 709 211 719 stockholm@analysysmason.com

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