Spectrum pricing model for mobile telecommunications services in Korea

In this paper, we propose the spectrum pricing model based on the notion of marginal value and estimate the spectrum value for 800 MHz spectrum bandwidths for the cellular Korean mobile telecommunications markets in Korea. The goal of this study is to develop a spectrum pricing model for estimating the spectrum price for the Korean spectrum situation and then to obtain spectrum pricing for 800 MHz bands as a case study. The study developed a new valuation approach that is suited for the Korean telecommunication situation and estimated the spectrum value of the 800 MHz spectrum. The research implication is that the spectrum value of 800 MHz is approximately US$285 billion, which is higher than is generally thought when spectrum usage fees are considered: approximately US$1trillion. The second implication is that the result of spectrum value in 800 MHz is similar to the 900MHz result that was estimated by Ofcom in 2005. Although a market mechanism is likely to promote the increased efficiency of spectrum management, implementing a market mechanism is not a simple issue. By implementing one, other economic and non-economic effects result. These effects were not considered in this paper, and still need to be studied comprehensively. Implications and avenues for future research are discussed at the conclusion of this paper.