Do the high spectrum prices harm consumers? Evidence from Poland

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 spectrum 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.