Predictive study on the economic value of radio spectrum in China

Increasing popularity of spectrum-based services brings the striking contradictions between the limited spectrum resource and its increasing demands. This paper puts forward an approach to forecast the future spectrum demand and its economic value, so as to offer a scientific basis for spectrum regulators to resolve this contradiction effectively and make a long-term spectrum-use plan. Specifically, this paper analyzes the driving factors of spectrum demand firstly, based on which a forecasting model is constructed to predict the spectrum demand and its deficit/surplus in the next few years. Then, a forecasting model to measure the economic value of spectrum is proposed based on marginal opportunity cost theory, and the indifference curve is introduced to show the economic value generated by additional spectrum. Additionally, an empirical study is conducted to forecast the spectrum demand and its economic value for China in the next 10 years according to the proposed method. The results of this study show that spectrum deficit is a trend in future and releasing additional spectrum will bring China huge economic benefits.