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GSMA warns excessive spectrum fees will stifle mobile access

GSMA warns excessive spectrum fees will stifle mobile access

The GSMA has warned governments in Africa that high spectrum costs and taxes could negatively impact mobile coverage across the continent.

At the GSMA Mobile 360 Africa event, held recently in Kigali, the organisation said its spectrum pricing study (of over 1,000 spectrum assignments across 102 countries -including 60 developing and 42 developed countries globally from 2010 to 2017) shows that consumers in developing markets are hardest hit.

Research showed that governments in developing countries drive up spectrum prices by setting exorbitant reserve prices for spectrum auctions, which limits supply and forces operators to overpay.

It also highlighted the impact of poor award rules, such as auction formats, which limit price discovery as well as the lack of spectrum roadmaps to guide operators in terms of the availability of this resource.

GSMA mentioned the reserve price of US$150 million set by the National Communications Institute of Mozambique (INCM) in April 2013 for 50 MHz in the 800 MHz band which it deems to have been excessive.

That price was 50% higher than the average final prices in Sub-Saharan Africa over the period 2000–2017, once adjusted for income per capita according to the study. No bidders participated in the Mozambican spectrum auction and it was eventually cancelled by the regulator and this continues to affect the country's technological development negatively.

Yasmina McCarty, Head of Mobile for Development at the GSMA said governments that tax social media and mobile money, in addition to implementing high spectrum fees, harm digital empowerment in the long term.

"The mobile sector today is making up seven percent of the GDP in Sub-Saharan Africa, but we are paying thirty five percent of revenues, taxes, regulatory fees and other charges. The taxation that comes the way of the mobile industry is very high. We are very happy to pay our fair share but we do not support telecom specific taxation and the reason why is because it impacts the consumer. At the end of the day the adoption of wonderful, life enhancing digital services like mobile money is being suppressed because the government is making them more expensive."

The GSMA says Sub-Saharan Africa remains the fastest growing mobile market globally and forecasts that the region will grow at 4.8% which is more than double the global rate of 2.2% up to 2025.

The region had 444 million unique mobile subscribers at the end of 2017 which represents a penetration rate of 44% according to the industry body compared to the global average of 68%.

Kenechi Okeleke, Lead Analyst at GSMA Intelligence added: "The GSMA has a capacity building team which engages with regulators across the different subjects to help them in their efforts to modernise their regulatory principles and policies. They have been engaging with governments across the world and not just in Sub-Saharan Africa. We've worked in Nigeria, in the DRC and Tanzania as well. This is ongoing, however you will agree with me that changing a decade of policies will take some time."

"The feedback that we are getting from regulators is a desire to change things to improve the regulator environment because there is a general understanding that mobile technology is moving very rapidly and they need to have the right regulatory environment in place in order to foster growth of the industry."

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