High cost and lower volume of spectrum for telephony brings slow deployment of networks and lower quality of services, reveals GSMA

a academic analysis reveals that the cost of spectrum in Ecuador, it is three times the cost of the regional average. While in 2010, the annual cost of spectrum in Ecuador represented the 10% of the recurring income of the operators. By 2019, that proportion increased to 16%.

Additionally, Ecuador has delivered less spectrum volume than its peers in the region. A By the end of 2020, Ecuador had allocated around 280 MHz spectrum for mobile use, well below the regional average of 400 MHz.

The expensive, defined in a large percentage by the State, and not by supply and demand, and the lower volume of the spectrum, They have generated negative effects both in the deployment of new networks and in the quality of mobile phone service in the country. The analysis was delivered this morning and afternoon at GSMA (Global Mobile Ecosystem Association) that brings together mobile operators in the region.

The debate on costs arises amid the negotiations that the Government is already conducting with mobile service companies to the renewal of the spectrum concession contracts that must conclude in 2023.

In agreement with the study the costs of renovation of the 1900 MHZ was 7 times higher than the measurement in Latin America and the 900 and 1700 MHZ band was five times higher.

The total cost of the spectrum consists of initial payments and up-front costs (direct financial costs to operators for assignments and renewals), plus annual fees or charges. In the case of Ecuador, these payments represented around 60% of the total annual cost of the spectrum. Of these, 70% consisted of payments of administrative fees for the use of the spectrum, says the study.

“In Ecuador, annual payments, particularly administrative fees for spectrum use, have become a growing portion of the cost of this resource. This heavy load has reduced the capacity and the incentives to invest of the operators, harming the users ”, says Lucas Gallitto, Director for Latin America, GSMA.

Regarding the quality of services, the study says that if Ecuador had had costs close to those of the regional average, consumers would have been able to count with 40% faster download speeds in 2020, explains Pau Castells, Director of Economic Analysis at GSMA.

The cost has caused Ecuador to delay a year in reaching 80% coverage in 4G, compared to the regional average.

Based on a larger study conducted in 64 countries, the GSMA report indicates that prioritizing revenue targets in spectrum management has negative consequences on services.

The Government has included in the Law of Economic Development and Fiscal Sustainability the possibility that telephone companies can pay part of the spectrum with services for remote sectors. This issue generates certain misgivings in assembly members who rather propose to charge more to telephone companies, instead of facilitating payment. In any case, on the subject, Gallitto explained that this type of agreement has been made in several European countries, such as France.

Faced with the question of When will 5G technology arrive in Ecuador, Gallitto that there are several factors that can make demand take off. One driver of this demand may be the existence of smart cities. In any case, he explained that this type of development always faces the same barriers mentioned above: the cost of spectrum and the portion of spectrum available.