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The social value of TV band spectrum in European countries

Thomas W. Hazlett (Professor of Law & Economics at George Mason University, Arlington, Virginia, USA (E‐mail: thazlett@gmu.edu).)
Jürgen Müller (Professor of Economics at Berlin School of Economics, Berlin, Germany (E‐mail: jmueller@fhw‐berlin.de).)
Roberto Muñoz (Assistant Professor of Economics at CIDE, Mexico City, Mexico (E‐mail: roberto.munoz@cide.edu).)

info

ISSN: 1463-6697

Article publication date: 1 March 2006

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Abstract

Purpose

This paper aims to estimate the social gains from an analog TV switch‐off in 13 EU countries, focusing on the value of TV band spectrum in alternative uses.

Design/methodology/approach

By using data from existing mobile phone markets, changes are projected in retail prices for wireless voice services, assuming a reallocation (to mobile telephony) of about 42 percent of TV band spectrum.

Findings

It is forecast that retail mobile phone tariffs would substantially decline if a transition to digital television led to enhanced availability of VHF/UHF spectrum for wireless telecommunications. Consumer surplus gains offset transition costs by at least 2‐to‐1, and as much as 45‐to‐1. These net benefits are conservatively estimated in that other services (apart from mobile telephony) could prove more socially valuable, and because we ignore the considerable increase in video choices the transition could provide. It is also found, however, that wireless operators' profits sharply decline with additional spectrum, due to more intense competition. This suggests a public choice dynamic, often overlooked, that potentially helps to explain the slow pace of the digital TV transition.

Practical implications

Regulations blocking TV band spectrum from reallocation to non‐TV applications ought to be re‐examined in light of the associated costs and benefits.

Originality/value

This paper quantifies, using conservative methods, the cost of current spectrum policies.

Keywords

Citation

Hazlett, T.W., Müller, J. and Muñoz, R. (2006), "The social value of TV band spectrum in European countries", info, Vol. 8 No. 2, pp. 62-73. https://doi.org/10.1108/14636690610653590

Publisher

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Emerald Group Publishing Limited

Copyright © 2006, Emerald Group Publishing Limited

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