Latin America's Radio Spectrum 40% Pricier Than Average: GSMA

The radioelectric spectrum in Latin America is 40% more expensive than in other regions, negatively impacting network quality, internet connection speeds, and the sustainability of the telecommunications sector, according to the Global System for Mobile Communications (GSMA).

Luiz Felippe Zoghbi, Spectrum Director, GSMA, highlighted these impacts during the Latin American Congress on Digital Transformation (CLTD) 2024. He noted that spectrum costs continue to rise while operators' revenues are declining.

“The financial pressure comes not only from the value of spectrum; it also comes from all the public policy objectives that countries have, which leads to establishing additional investment burdens on telecommunications companies to bring connectivity to certain locations,” said Zoghbi.

Meanwhile, spectrum in Mexico is among the most expensive in the world, positioned 60% above the international average, according to the GSMA. This high cost becomes an obstacle for companies to participate in bids, hindering the effective use of the spectrum to close the digital divide, according to Tania Villa, general director of Spectrum Planning, Federal Telecommunications Institute (IFT).

“Currently, operators face challenges in acquiring the spectrum needed for the expansion and modernization of their networks and the investments required for the deployment of 5G infrastructure,” DPL News noted.

In that context, Horacio Romanelli, director of Regulatory Affairs and Sustainability, Millicom, stated, “We have to be imaginative about how to find new ways to allocate spectrum. We are going to need bigger and bigger bandwidths. That is happening now with 5G (...). Every new band we are going to acquire is going to be even wider and to traffic the same cost to the user. That clearly makes us see that the cost per megahertz has to come down; it is something that regulators and governments have to start understanding”.

To guarantee economic growth and social development in Latin America, executives agreed that lowering spectrum costs is essential. In the Dominican Republic, Julissa Cruz, executive director, Dominican Telecommunications Institute (INDOTEL), highlighted that the deployment of 5G greatly boosted the economy.

“As of today, the Dominican Republic has 55% of the population connected to 5G networks, demonstrating a commitment by operators to accelerate investment to achieve this milestone in terms of coverage,” said Cruz. “It also represented an important contribution to the growth shown by the Dominican Republic’s economy in 2021 and 2022, being one of the countries in the region with the highest economic growth.”

To achieve these benefits, Julissa Cruz emphasized that the Dominican Republic launched a spectrum auction with prices that allowed for broad industry participation and rapid commercial deployment. 

In addition to spectrum policies, other challenges facing Latin America in the deployment of 5G include market immaturity and finding the right time for implementation, according to Romanelli.

"The industrialization gap of economies can also be a challenge to advancing in the installation of fifth generation technology and take advantage of its potential”, Romanelli added.