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

Glenn A Woroch

Department of Economics, Working Paper Series from Department of Economics, Institute for Business and Economic Research, UC Berkeley

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.

Keywords: Industry; Innovation and Infrastructure; Spectrum concentration; Industry performance; Mobile wireless services; Applied Economics; Economics (search for similar items in EconPapers)
Date: 2020-02-01
New Economics Papers: this item is included in nep-com, nep-cse, nep-ind and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.escholarship.org/uc/item/8vv381jt.pdf;origin=repeccitec (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cdl:econwp:qt8vv381jt

Access Statistics for this paper

More papers in Department of Economics, Working Paper Series from Department of Economics, Institute for Business and Economic Research, UC Berkeley Contact information at EDIRC.
Bibliographic data for series maintained by Lisa Schiff ().