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Do the High Spectrum Prices Harm Consumers? Evidence from Poland

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  • Agnieszka Kus

Abstract

Purpose: This paper contributes to research on potential links between high license fees and wireless markets outcomes. It aims to examine whether high prices paid by mobile service providers in Poland at the 4G spectrum auction could slow down network deployment and hurt Polish mobile consumers. Design/Methodology/Approach: The paper is based on the literature on the spectrum management, public reports published by European Commission (EU), Polish Office of Electronic Communications (UKE) and international diagnostic companies studying the quality of internet. We also study data provided by Ookla® based on John Paul II University in Biała Podlaska analysis of Speedtest Intelligence® data from 2017 to 2020 (Ookla® trademarks used under license and reprinted with permission). Findings: We found no evidence for the statement that the high costs of spectrum have hurt Polish consumers. Our research has revealed that the quality of the Internet in Poland has been steadily improving, and the prices of mobile services are falling. We also found no significant changes in the relationship between Poland's market outcomes to other countries - the quality of the Polish Internet remains high both before and after the auction, and mobile service prices remain among the lowest in the EU for years. Our findings provide thus some support for the veracity of the sunk cost argument in relation to mobile markets. Practical Implications: The discussions made in this paper could help policy makers in Poland and other countries in spectum management decisions. Originality/Value: This is the only article that analyzes market outcomes in the Polish mobile market in the light of LTE spectrum action in Poland.

Suggested Citation

  • Agnieszka Kus, 2023. "Do the High Spectrum Prices Harm Consumers? Evidence from Poland," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 415-437.
    • Handle: RePEc:ers:journl:v:xxvi:y:2023:i:3:p:415-437
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    References listed on IDEAS

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    1. Thomas W. Hazlett & Roberto E. Muñoz, 2009. "A welfare analysis of spectrum allocation policies," RAND Journal of Economics, RAND Corporation, vol. 40(3), pages 424-454, September.
    2. Kwon, Youngsun & Lee, Jungsub & Oh, Youngkyun, 2010. "Economic and policy implications of spectrum license fee payment methods," Telecommunications Policy, Elsevier, vol. 34(3), pages 175-184, April.
    3. R. Preston Mcafee & Hugo M. Mialon & Sue H. Mialon, 2010. "Do Sunk Costs Matter?," Economic Inquiry, Western Economic Association International, vol. 48(2), pages 323-336, April.
    4. Steve Buchheit & Nick Feltovich, 2011. "Experimental Evidence Of A Sunk‐Cost Paradox: A Study Of Pricing Behavior In Bertrand–Edgeworth Duopoly," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(2), pages 317-347, May.
    5. Theo Offerman & Jan Potters, 2006. "Does Auctioning of Entry Licences Induce Collusion? An Experimental Study," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 73(3), pages 769-791.
    6. Lewellen, Jonathan & Lewellen, Katharina, 2016. "Investment and Cash Flow: New Evidence," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 51(4), pages 1135-1164, August.
    7. Cambini, Carlo & Garelli, Nicola, 2017. "Spectrum fees and market performance: A quantitative analysis," Telecommunications Policy, Elsevier, vol. 41(5), pages 355-366.
    8. Kuś, Agnieszka, 2020. "Polish experience from first-ever spectrum auction," Telecommunications Policy, Elsevier, vol. 44(7).
    9. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
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    More about this item

    Keywords

    Spectrum auction; license fee; spectrum management; sunk cost; mobile Internet market.;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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