A Concise Model for Liberalizing Spectrum in the 4G Era
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A Concise Model for Liberalizing Spectrum in the 4G Era
- 1. A Compensation Model Developed to Liberalize Spectrum in the 4G Era Yuntsai Chou Department of Information Management Yuan Ze University ITS 2014 Biennial Dec 2, 2014
- 2. Research question • Limited competition in mobile communications (3~4 operators in the mature market) • Is it a policy problem? • Competition (anti-trust) law is ex-post • Ex-ante behavioral regulation is largely discouraged due to potential cumbersome regulation
- 3. Research assumption • Spectrum allocation assigns the usage rights to operators and therefore influences the market values of spectrum they possess. • Since 4G, multiband uses and spectrum heterogeneity are typical • Spectrum allocation as policy tool to create a level playing field and to encourage contestable competition
- 4. Taiwan’s Telecommunication Market The numbers of mobile subscription in Taiwan, unit: thousand Year. Month 4G 3G 2G WBA PHS 2014.10 2,000 24,672 2,625 99 n/a 2013.12 n/a 24,772 4,205 122 n/a Source: NCC website
- 5. Taiwan’s Telecommunication Market The numbers of mobile subscription in Taiwan, unit: thousand Year.mont h CHT TMT FET VIBO APT WBA Source: NCC website operato rs in total 2014.10 10,421 7,106 6,998 1,500 1,874 99 2013.12 10,269 7,012 6,864 1,670 2,860 122
- 6. Spectrum licensing in Taiwan -Beauty contest - Restricted technology Restricted service - Auction -2.5~2.69GHz - technology neutrality - Service neutrality Digital low-power wireless Licenses WBA Licenses 2G Licenses 3G Licenses 2G licenses granted tender period tperiod PHS licenses expire - Auction -5 licenses for all area -800、2100MHz - restricted technology - service neutrality 3G licenses expire -Beauty contest -900、1800MHz -restricted technology - restricted service ， 1900 Mhz - PHS system -- 2G tender period expire 1997 1999 2002 2008 2012 2014 2016 2017 2018 2013 4G licenses auction - Auction - 700、900、1800MHz - technology neutrality - Service neutrality - Secondary trading
- 7. Taiwan’s mobile licensing License 2G 3G WBA 4G Band 900/1800 MHz 2100/230 0 MHz 2500~2690 MHz 700/ 900/ 1800 MHz Year licensed 1997 2002 2007 2013 Allocation method Beauty contest Auction Auction Auction License fee 2 % of operating revenues Bidding price percentages of operating revenues Bidding price Usage flexibility Not permitted Service neutrality Technology & service neutrality Technology & service neutrality Secondary trading No No No Yes
- 8. Conjoint analysis • It estimates the relative value individuals place on attributes of a choice; • It converts qualitative information into quantitative form
- 9. Conjoint analysis • Conducting a survey of pairwise comparison among stimuli; • calculating the utility scores and ranking of each stimulti by regression results. • respondents: five Wimax operators, two 3G only operators and three 2G/3G operators, a total of eight operators in market. • Execution: May 2013
- 10. spectrum policy attributes 10 • 1. tender period: – a. no tender granted after license expiration; – b. tender period granted; • 2. spectrum usage right: – a. technological neutrality; – b.technological and service neutrality; – c.technological and service neutrality & secondary trading; • .
- 11. spectrum policy attributes 11 • 3. special treatment for designated entities: – a. refarming allowed for incumbents; – b. certain slots reserved for incumbents (new entrant clause); – c. spectrum caps. • 4. recall: – a. voluntary recall with compensation; – b.no recall enforced; – c. recall enforced when failing to meet the efficiency criteria.
- 12. Pairwise Survey Which of following policy stimuli do you prefer? No granted tender period, Technology and service neutrality plus secondary trading, Incumbents’ refarming, and Voluntary recall including compensation Granted tender period, Technology neutrality, Certain slots reserved for entrants, and No recall enforced Mostly inclined to the left stimulus inclined to the left stimulus indifferent Which of following policy stimuli do you prefer? granted tender period, Technology and service neutrality plus secondary trading, Incumbents’ refarming, and No recall enforced inclined to the right stimulus No granted tender period, Technology neutrality, Certain slots reserved for entrants, and Voluntary recall including compensation Which of following policy stimuli do you prefer? No granted tender period, Technology and service neutrality plus secondary trading, Certain slots reserved for entrants, and recall enforced when failing to meet the efficiency criteria granted tender period, Technology and service neutrality, Incumbents’ refarming, and Voluntary recall including compensation Mostly inclined to the right stimulus Mostly inclined to the left stimulus inclined to the left stimulus indifferent inclined to the right stimulus Mostly inclined to the right stimulus Mostly inclined to the right inclined to the right stimulus inclined to indifferent the left stimulus Mostly inclined to the left stimulus
- 13. Disspiated interests among market players clusters coefficient Net increase in coefficient Ratio of increase 1 6.116 1.37 18.27% 2 7.483 1.03 12.10% 3 8.514 5.48 39.17% 4 13.996 1.33 8.70% 5 15.329 3.04 16.53% 6 18.365 4.05 18.07% 7 22.416 2.47 9.94%
- 14. Attribute preferences by operators All WBA operators 3G only operators 2G/3G operators importanc e rank importa nce rank importance rank importance rank Tender period 14.60 4 17.92 3 47.39 1 9.47 4 SURs 33.40 1 42.36 1 15.83 3 24.36 2 Designated entity clause 32.33 2 16.23 4 24.81 2 46.34 1 recall 19.65 3 23.47 2 11.95 4 19.81 3 R-Squared 0.93920 0.98622 0.94286 0.96605
- 15. conjoint analysis results attributes levels Average utility value WBA operators 3G only operators 2G/3G operators Tender period a.1 No tender period granted -8.896 94.793 4.252 a.2 Tender period granted 8.896 -94.793 -4.252 SURs b.1 Technology neutrality -69.886 37.995 48.497 b.2 Technology and service neutrality -29.671 -25.352 -32.466 b.3 secondary trading in addition to technical and service neutrality 99.557 -12.643 -16.030 Designated entity rules c.1 refarming for incumbents 9.541 32.344 98.923 c.2 licenses reserved for entrants -19.603 -52.962 -12.479 c.3 Spectrum caps 10.062 20.619 -86.444 d. recall d.1 voluntary recall with compensation -38.486 -0.331 4.939 d.2 No recall enforced 22.842 -0.291 -42.108 d.3 Recall enforced when underperformance 15.644 0.622 37.168
- 16. conjoint analysis results • 1. The WBA operators have highest positive score on SURs, meaning they prefer secondary trading the most. • 2. the 3G only operators prefer no tender period granted. • 3. The 2G/3G incumbents are the mostly supportive of incumbent refarming. • 4. the 2G/3G incumbents demonstrate the same direction in terms of policy preferences with the 3G only operators but with a different degree of intensity.
- 17. spectrum policy preferences 17 WBA (Wimax) operators 2G、3G operators Tender period granted when licenses are expired Tender period No tender period granted Secondary trading permitted, in addition to technological and service neutrality SURs Only technological neutrality Spectrum caps placed Designated entity Refarming allowed for incumbents No recall enforced recall Recall enforced when failing to meet the efficiency criteria
- 18. Cluster harmonized spectrum policy WBA operators 3G only operators 2G/3G operators Utility score -53.5967 165.75405 188.83961 Rank 40th 1st 1st Policy attribute Tender period No tender period granted SURs*** Technological neutrality Entity rules Refarming for incumbents Recall Recall enforced when underperformance
- 19. Policy outcomes derived • 1. The 3G only operators have highest stakes against tender period granted. • 2. Although the WBAs operators prefer secondary trading, the others show negative interests in it. • 3. The 2G/3G incumbents have highest stakes on the refarming. • 4. As for recall, the enforced recall when failing to meet the efficiency criteria is the likely policy outcome.
- 20. Cluster differentiated spectrum policy WBA operators regime 3G only operators 2G/3G operators Utility score 115.8457 115.1158 124.3126 Rank 8th 7th 5th Policy attribute Tender period No tender period granted SURs Technological & service neutral plus secondary trading Entity rules refarming for incumbents recall Recall enforced when underperformance
- 21. regulatory differences of managing spectrum 3G only operators 2G/3G operators - Low incentive to switch to higher efficient uses - subscribers’ migration costs - Low incentive to switch to higher efficient uses - subscribers’ migration costs Recall enforced when underperformance Recall enforced when underperformance 21 P既ro有vid業ing者 d執iffe照ren優tia先ted權 in的ce保nti留ves for different players Limited bandwidth for service coverage WBA operators LLimimitietedd p prrooffitiatabbiliiltiyty Limited bandwidth for service coverage - secondary trading allowed - secondary trading - -R Reeffaarrmminingg a alllolowweedd allowed LLoonngg-t-eterrmm e efffefecctitviveenneessss o off s sppeecctrtruumm m maannaaggeemmeennt ta anndd m maarrkkeet tc coommppeetittiitoionn problem policy adjustment goal
Notes de l'éditeur
- The high HHI and CR4 scores indicate a highly concentrated telecom market.
- The high HHI and CR4 scores indicate a highly concentrated telecom market.
- Although individual license is developed in Anglo-Saxon countries, we are not used to differential treatments to different players. This usually leaves a great room for regulators’ discretion and thus regulatory uncertainty. However, it is argued regulatory flexibility necessary in promoting service innovation and convergence. Instead, more detailed and specified rules are in need to make differential regulation works.
- Although individual license is developed in Anglo-Saxon countries, we are not used to differential treatments to different players. This usually leaves a great room for regulators’ discretion and thus regulatory uncertainty. However, it is argued regulatory flexibility necessary in promoting service innovation and convergence. Instead, more detailed and specified rules are in need to make differential regulation works.
- We used conjoint analysis that asks each interviewee to make a series of pairwise comparison among stimuli in order to calculates operators’ preferences. The Wimax operators have highest positive score on secondary trading, meaning they prefer secondary trading the most. Likewise, the 3G operators prefer no renewal of licenses the most, while they oppose it strongly the reserved licenses for entrants. As for the 2G operators, they demonstrate the same direction of preference with the 3G operators but with a different degree of tendency. The 2G operators prefer the most the auto renewal for the incumbent licenses (since they are all incumbents). On the other hand, they oppose enforced recall of spectrum strongly.
- As shown in the next slide, WBA operators mostly adopting Wimax standard (licensed in 2006) have disparate different preferences from 2G and 3G operators in every regard of spectrum use.