Valuing spectrum using a direct benchmarking approach is the most straightforward approach often used by regulators. Under this approach, values for a particular frequency band in other countries are used as comparators for the same band; more robust results may be obtained by using comparator countries which are similar to the target country. A simple average is then used as an estimate for spectrum value. The most widely-used value metric is price per MHz per pop although alternatives such as a GDP-indexed price per MHz can also be used.
In cases where there is a lack of benchmark data for specific frequency bands, a common approach is to rely on common band groupings by frequency, for example:
- Sub-1 GHz bands are often considered together as they have superior propagation characteristics which make them more valuable to mobile operators in terms of coverage and in-building penetration.
- The 1900 MHz band, which is used in the Americas, is similar to the 1800 MHz band in Europe in terms of propagation characteristics and supports both 2G and 4G technologies
- The AWS band used in the Americas are similar to the 2.1 GHz bands used in Europe and Asia Pacific for 3G and increasingly 4G services.
- The 2.5 GHz band is globally harmonised for mobile services and can be considered a separate group. It is typically used as a ‘capacity’ band rather than to provide coverage given its inferior propagation properties compared to lower frequencies.
In the selection of the dataset, country- and auction-specific circumstances need to be taken into account, and benchmark values need to be carefully interpreted.