Kruse, Jorn --- "Competition in mobile communications and the allocation of scarce resources: the case of UMTS" [2004] ELECD 59; in Buigues, A. Pierre; Rey, Patrick (eds), "The Economics of Antitrust and Regulation in Telecommunications" (Edward Elgar Publishing, 2004)

Book Title: The Economics of Antitrust and Regulation in Telecommunications

Editor(s): Buigues, A. Pierre; Rey, Patrick

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781843765103

Section: Chapter 10

Section Title: Competition in mobile communications and the allocation of scarce resources: the case of UMTS

Author(s): Kruse, Jorn

Number of pages: 28

Extract:

10. Competition in mobile communications and the
allocation of scarce resources: the case of
UMTS
Jörn Kruse

1. INTRODUCTION
In the 1990s, mobile communication in Europe was a tremendous success story in terms of
technical and economic developments. Prices declined and penetration rates grew surpris-
ingly. To facilitate these socially desirable developments, private companies invested heavily
in communication infrastructures.
These developments were accompanied by (and not independent of) a comparatively low
level of regulation ­ with the very significant exception of spectrum licensing. Government
licensing predominantly shaped industries and market structures in the individual countries.
Since spectrum is a scarce resource under the governance of the countries' authorities, its
allocation is a very important element for the procedures and for the efficiency results of
competition in mobile communications. Spectrum is not only a technically essential re-
source. The availability of more or less spectrum (and what kind of spectrum) is of primary
importance for a mobile operator's economic success. Adequate spectrum allocation is a
crucial factor for the competitiveness and efficiency of the mobile sector. Since national
regulatory authorities (NRAs), or national governments respectively, were (and are) using
different methods of spectrum allocation, this raises questions regarding competition issues
on the European level.
Government licensing in mobile communications is (from an economic viewpoint) only
justified by the relevance of spectrum allocation. But government decisions and influence
were going much beyond that. They basically predetermined the number of market players,
usually on a step-by-step basis over time, and ...