{"id":17760,"date":"2023-10-03T05:07:10","date_gmt":"2023-10-03T09:07:10","guid":{"rendered":"http:\/\/mhgoldberg.com\/blog\/?p=17760"},"modified":"2023-10-03T06:31:38","modified_gmt":"2023-10-03T10:31:38","slug":"promoting-the-interests-of-wireless-consumers","status":"publish","type":"post","link":"https:\/\/mhgoldberg.com\/blog\/?p=17760","title":{"rendered":"Promoting the interests of wireless consumers"},"content":{"rendered":"

<\/a>A newly published paper<\/a> from University of Calgary examines whether Canada’s spectrum policy has succeeded in promoting the interests of wireless consumers.<\/p>\n

The paper, by Jeff Church of the Department of Economics, and Kent Fellows of the School for Public Policy, examined the opportunity cost associated with the spectrum set-asides in 2008. Recall, the original AWS-1 spectrum auction<\/a> set-aside 40 MHz for new entrants, and the remaining 50 MHz was for open auction.<\/p>\n

The issue of spectrum policy has been a frequent theme on these pages. A couple years ago, I wrote “Spectrum scarcity driving up wireless costs”<\/a>. A number of articles have referred to costs, as much as $100 per year<\/a> per subscriber, associated with Canada’s stubborn adherence to a four carrier policy.<\/p>\n

Last December, Jack Mintz<\/a> (President\u2019s Fellow, School of Public Policy, University of Calgary) wrote, “Ottawa\u2019s fourth wireless competitor fixation slows 5G adoption”<\/a>, saying “Canada\u2019s overall telecom policy is failing”. Mintz cites the Church \/ Fellows research – not yet published at the time of his article – when he claims “set-aside policies are misallocating spectrum, contrary to consumer interests.”<\/p>\n

The newly published paper concludes “Allocating the set-aside spectrum to the incumbents instead of the entrants would do more for consumers by increasing quality than subsidizing competition.” <\/p>\n

The data shows that Canada’s singular focus on boosting a fourth competitor through set-asides has had only a modest impact on consumer welfare. “We estimate the effect of the set-asides was to increase consumer surplus over the three year period from 2011-2013 by $932 million and the number of subscribers in 2013 by 1.4 million.”<\/p>\n

However, the Church \/ Fellows research found that the number of wireless consumers would have increased by an additional 1.8 million to 2.5 million subscribers and the consumer surplus would have been $5.9 to $8.2 billion greater.<\/p>\n

The set-aside policy had a modest impact in reducing quality-adjusted prices, from one to two percent, whereas if the spectrum was allocated to the three incumbents, quality-adjusted prices would have fallen by four to six percent. The focus of the Federal Government then, and since, was on the wrong market failure: the welfare gains from using spectrum policy to address a perceived market power issue are insignificant relative to the benefits of reallocating spectrum to increase the quality of wireless service.<\/p><\/blockquote>\n

As Jack Mintz explained<\/a>, “In the interest of price competition, set-asides restrict incumbents\u2019 quality of service.” <\/p>\n

Rather than using set-asides to effectively subsidize new entrants, Church and Fellows found that it would have been better for wireless consumers had the government provided all service providers with unencumbered access to more spectrum. <\/p>\n

Getting rid of the set-asides would increase service quality, and result in even lower quality-adjusted prices.<\/p>\n","protected":false},"excerpt":{"rendered":"

A newly published paper from University of Calgary examines whether Canada’s spectrum policy has succeeded in promoting the interests of wireless consumers. The paper, by Jeff Church of the Department of Economics, and Kent Fellows of the School for Public Policy, examined the opportunity cost associated with the spectrum set-asides in 2008. Recall, the original …<\/p>\n

Promoting the interests of wireless consumers<\/span> Read More »<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","two_page_speed":[],"footnotes":""},"categories":[1],"tags":[],"class_list":["post-17760","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"yoast_head":"\nPromoting the interests of wireless consumers • Telecom Trends<\/title>\n<meta name=\"description\" content=\"A newly published paper from University of Calgary examines whether Canada's spectrum policy has succeeded in promoting the interests of wireless • October 3, 2023\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/mhgoldberg.com\/blog\/?p=17760\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta 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The paper, by Jeff Church of the Department of Economics, and Kent Fellows of the School for Public Policy, examined the opportunity cost associated with the spectrum set-asides in 2008. 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