Weekly Wrap: Why I Think Indefinite Spectrum Licences Are a Bad Idea

Why It Matters

Indefinite licences could reshape telecom investment dynamics and challenge the principle that spectrum remains a public asset, affecting competition and consumer services across the EU.

Key Takeaways

• DNA proposes licences up to 40 years, possibly indefinite.
• Current licences average 15‑25 years, already support ROI.
• Indefinite licences may dampen operators’ investment incentives.
• Public spectrum could shift toward private, long‑term control.
• Lack of proven “use‑it‑or‑share‑it” effectiveness.

Pulse Analysis

The Digital Networks Act marks the EU’s most ambitious attempt to overhaul spectrum policy, seeking to replace the traditional 15‑ to 25‑year licences with terms that could stretch to 40 years or become open‑ended. Historically, spectrum auctions have balanced the need for operator certainty with periodic reviews to ensure efficient use. By extending the horizon, the Commission hopes to lower perceived regulatory risk, a factor often cited by mobile carriers when planning multi‑billion‑euro network rollouts. However, the shift also departs from a model that has historically aligned private investment cycles with public resource stewardship.

From an economic perspective, the incentive structure embedded in finite licences drives operators to extract value within a defined payback window. A 20‑year term typically covers the capital expenditure phase, subsequent revenue generation, and a reasonable profit margin. When a licence becomes indefinite, the urgency to recoup costs diminishes, potentially leading to under‑investment or delayed upgrades, especially in less profitable rural markets. Moreover, the lack of empirical evidence supporting the “use‑it‑or‑share‑it” clause raises doubts about its ability to force efficient spectrum utilization without active market mechanisms.

Policy‑makers must weigh the allure of long‑term certainty against the risk of cementing spectrum in the hands of a few large players. Alternatives such as short‑notice, short‑duration licences—already piloted in the UK for private 5G trials—demonstrate a flexible approach that can stimulate innovation while preserving the public character of radio waves. Maintaining periodic reviews and robust sharing frameworks may achieve the Commission’s goals without sacrificing competition, investment vigor, or the public interest.