Spectrum trading could fundamentally change the structure of existing wireless markets, says Analysys

* Regulators should see spectrum trading accompanied by liberalisation of spectrum use as key part of a dynamic, competitive and innovative wireless service market * Spectrum trading will create significant uncertainties around the existing business models of mobile network operators * Operators and regulators need to understand how the industrys structure and market dynamics will be changed by spectrum trading

CAMBRIDGE, UK (PRWEB) July 15, 2004 -- The introduction of spectrum trading, accompanied possibly by liberalisation of the use of specific spectrum bands, will play a key part in creating a more dynamic, competitive and innovative wireless service market, according to a new report, Spectrum Trading and Liberalisation: new threats and opportunities for telecoms business models, from Analysys, the global advisers on telecoms, IT and media (http://research.analysys.com).

Such trading and liberalisation could lead to significant changes in the structure of existing wireless telecoms markets and will certainly leave network operators facing some big uncertainties around their current business models.

Regulators seeking to maximise competition and innovation in wireless service markets should introduce spectrum trading with liberalisation of spectrum use," said Ross Pow, co-author of the report. While the introduction of spectrum trading alone will lead to some efficiency gains in the market, a corresponding liberalisation in the use of spectrum will lead to much greater levels of technical and service innovation with considerable benefits for customers in terms of the range and cost of services they will be able to buy."

Growing numbers of countries have already adopted, or are proposing to adopt, regimes that allow operators and carriers to obtain tradable rights in radio spectrum in order to foster efficiency and innovation. Currently there is much debate in the EU and North America, among other regions, on the precise form such rights might take and the environment in which they would be implemented.

The Analysys report argues, however, that all players -- policymakers, regulators, telecoms operators and service providers -- also need to be aware of the changes to market dynamics that are likely to follow, as these will have a fundamental impact on the structure of the wireless telecoms industry.

All wireless telecoms players should urgently re-examine their business models and strategies," warns Pow. Certain general consequences of spectrum trading and liberalisation present significant risks and opportunities to telecoms players -- especially mobile operators -- and these players must be prepared for this now." The report highlights that operators could face greatly shortened product life-cycles, the intensification of innovation-driven price competition and a decline in long­term operating margins. Spectrum trading will also fuel investment in new entrants. The financing activity we are currently seeing in relation to business models based on WiMax or OFDM technologies will tend to be accelerated by increased access to spectrum, resulting in the rapid birth of new niche players on the back of increasingly bullish investors," says Pow.

The report also suggests that there could be significant impacts on operator valuations, since current share prices are based on an industry structure which ties licences to rigidly allocated spectrum. Capital markets might view the ability to acquire extra spectrum as highly positive or, alternatively, may be concerned at the potential erosion of margin as the result of heightened competition.

The report argues that the interactions between various industry players, especially mobile network operators and regulators, each with their own differing interests and objectives, will have a marked effect on the impact of spectrum trading. It is essential that players understand these interactions, as they need to drive outcomes in the uncertainty that spectrum trading and liberalisation create in national and international markets," says Pow. This will enable them to marshal lobbying resources, correctly configure their business models and make the right investments to optimise their response to the new regulatory and business environments. For example, a challenge and opportunity for larger players is to acquire additional spectrum either to improve efficiency or to ease restrictions on the use of new technologies to expand their service offerings."

The report is available to purchase online at http://research.analysys.com/store. Prices start from GBP1500. For more information, telephone Analysys on +44 (0) 1223 460600 or email research@analysys.com.

About Analysys (www.analysys.com)
Analysys provides strategy and management consultancy, information services and start-up support throughout the telecommunications, IT and media sector. Its grasp of market dynamics, coupled with creativity, rigour and renowned objectivity, enables Analysys to consistently exceed the high levels of quality and innovation that its clients expect. The company has over 130 staff in offices in Cambridge, London, Glasgow, Madrid, Milan, Paris, San Francisco and Washington DC, and works with associates in Auckland, Melbourne and Vancouver.

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Louise Nunn   
Analysys Ltd   
Tel: +44 (0)1223 460600   
Email:louise.nunn@analysys.com