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Spectrum Concentration and Performance of the U.S. Wireless Industry

Author

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  • Woroch, Glenn A
Abstract
This paper estimates the empirical relationship between concentration in mobile carriers’ holdings of radio spectrum and the performance of the U.S. wireless industry. Reduced-form regressions that use a 2012–2013 cross-section of approximately 700 Cellular Market Areas reveal a robust inverted-U relationship between spectrum HHIs and subscriber penetration rates—a measure of consumer welfare. The marginal effect of spectrum concentration is positive throughout the range of sampled markets—contrary to the conventional concentration-performance hypothesis. This pattern persists when spectrum concentration is separately measured for bands below 1 GHz and for rural areas. It is also shown not to be biased by the potential endogeneity of spectrum HHIs. This paper is distinguished by relating subscriber penetration rates to the quality and coverage of operator networks that supports efficiency explanations for operator size, and hence the benefits of structural concentration. These findings cast doubt on federal policies adopted as early as the 1927 Radio Act that attempt to equalize ownership of spectrum. Instead, our empirical results recommend measures that promote investment in wireless infrastructure and other non-spectrum factors.

Suggested Citation

  • Woroch, Glenn A, 2020. "Spectrum Concentration and Performance of the U.S. Wireless Industry," Department of Economics, Working Paper Series qt8vv381jt, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    • Handle: RePEc:cdl:econwp:qt8vv381jt
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    References listed on IDEAS

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    1. Jeffrey T. Macher & John W. Mayo & Olga Ukhaneva & Glenn A. Woroch, 2017. "From universal service to universal connectivity," Journal of Regulatory Economics, Springer, vol. 52(1), pages 77-104, August.
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    Cited by:

    1. Aimene, Louise & Guiffard, Jean-Baptiste & Ivaldi, Marc & Liang, Julienne, 2023. "Welfare Cost of Mobile Spectrum (Mis)allocation," CEPR Discussion Papers 18016, C.E.P.R. Discussion Papers.
    2. Megan Emfosi Meena & Jiaying Geng, 2022. "Dynamic Competition in Telecommunications: A Systematic Literature Review," SAGE Open, , vol. 12(2), pages 21582440221, April.
    3. Howell, Bronwyn E. & Potgieter, Petrus H., 2021. "Spectrum shortage and merger by any other name in South Africa," 23rd ITS Biennial Conference, Online Conference / Gothenburg 2021. Digital societies and industrial transformations: Policies, markets, and technologies in a post-Covid world 238027, International Telecommunications Society (ITS).

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    More about this item

    Keywords

    Industry; Innovation and Infrastructure; Spectrum concentration; Industry performance; Mobile wireless services; Applied Economics; Economics;
    All these keywords.

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