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___________________________________________________________. Systematic Assessment of Spectrum Policy and Mobile Market Structure. Özkan Demirbilek Supervisor : Prof. Heikki Hämmäinen MSc. in Communications Ecosystem Comnet Research Team – Instructor : Arturo Basaure.

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  1. ___________________________________________________________

  2. Systematic Assessment of Spectrum Policy and Mobile Market Structure ÖzkanDemirbilek Supervisor : Prof. Heikki Hämmäinen MSc. in Communications Ecosystem Comnet Research Team – Instructor : Arturo Basaure Master’s Thesis Presentation June 13, 2013

  3. Agenda Background Research Goals Methods • Studied Mobile Markets Market Analysis • Spectrum Policy • Market Structure Results and discussion Conclusionsand Recommendation for Future Work

  4. Background Open Industry Industry StructurePolicy SwitchingCosts NO/SO separation MNP and SIM-locking Roaming and interworkingbetweensystems Unbundling of services DecentralizedSpectrum LicensingPolicy Number of licenses for mobile services (<3) Level of liberalization of usagerights Service/ Technology neutrality Source: Basaure et al. (2012)

  5. ResearchGoals • Development of quantitative metrics to phase diagram for mobile telecom regulations • Applying the metrics to multiple mobile markets

  6. Methods • Literature review • Theoretical frameworks • Data collection on mobile markets • Data sources  Regulator, mobile operator and consultancy company websites • Combination of theoretical frameworks with state-of-art mobile market situation

  7. Studied Mobile Markets

  8. Spectrum Policy Analysis (1) • Spectrum-HHI • Market-based approaches are the most common • Finland, only market with symmetrical spectrum distribution • Japan , China  only beauty contests • Australia, USA, India  regional licenses

  9. SpectrumPolicy Analysis (2) • Reselling Rights • Auctions  Effective spectrum allocation • Sustaining the efficiency over time? • Regulator intervention or re-assigning of spectrum by market forces? • Technology Neutrality / Harmonization • What is the driver? Let the market decide or coordinate the market?

  10. SpectrumPolicy Analysis (3) • Market-HHI • China; incumbent 66% market share • India very fragmented 13+ MNO • Sweden, UK, US, India > 3 MNO • Chile, just accepted two more MNO

  11. Market Structure Analysis (1) • Multinational MNOs • Foreign direct investment (FDI) • Managerial expertise and breaking protectionism • Macro-economic environment should be suitable for entry  PESTEL • Investment • Persistent level of investment based on • Technological innovation, spectrum fees and market development • Prices • One of the marketing mix element • Different pricing schemes available: flat, block, unit based

  12. Market Structure Analysis (2)

  13. Market Structure Analysis (3) • ARPU • Tracking revenue growth • Market development in India  rural areas • Switching costs • Prepaid ratio • Mobile Number Portability • Except China, available in the rest

  14. Market Structure Analysis (4) • Churn rate • Closely linked to switching cost • Fluctates based on dynamics • India the highest, Japan the least • Network Operator / Service Operator Separation • Increased market competition • Hit and escape

  15. Results (1) • Spectrum policy explaining factor • Spectrum-HHI • Spectrum holdings in different bands possess differences • Reselling rights • Secondary trading markets not roll-out yet • Technology neutrality /harmonization • determines service offerings, influences market shares • Spectrum has clear effect on competitiveness (Lungborg)  Market shares • The spectrum policy explaining factor is market-HHI

  16. Results (2)

  17. Results (3) • Market structure explaining factor • Prepaid subscriptions  lower switching costs, high churn rate

  18. Results (4) • ARPU correlates with investment per subscriber I

  19. Results (5) • Market Structure explaining factor • Industry unbundling framework  improve ( price/quality ) ratio • Vertically disintegrated  competition in retail  reduction in prices • Vertically integrated  High level of investment • Prices  Present situation in the industry • Investments  Future direction of the industry  Prices and Investments per Subscriber is the explaining factor

  20. Results (6) Market Structure Spectrum policy

  21. Conclusions and Recommendation for Future • Explaining factors: • Spectrum policy  market-HHI • Market structure  Prices and Investments per Subscribers • Highlights from the markets • The most open and decentralized market is India • The most closed industry is Japan • European markets are more open than American market • Recommendation for future research • Enhancing the database • Developing the theoretical framework

  22. Thank you ! Questions?

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