I know it might sound like heresy, but could it be that more spectrum might do more harm than good to the nascent mobile broadband market?
In markets worldwide, huge amounts of additional bandwidth (freed up by activating more existing carriers, 900 MHz refarming, digital dividend and 2.6GHz spectrum auctions, HSPA/LTE upgrades) will soon be unleashed on waiting subscribers, with severe implications for supply, and thus demand.
Today demand exceeds supply. Obviously it's not an easy thing to prove, but I think it's reasonable to assume that I'm not the only one who finds himself fuming as his mobile broadband connection speed drops to a snail's-pace. This is indicative of substantial demand, without the capacity to meet it. Where demand exceeds supply there is little incentive for MNOs to engage in fierce price wars. They wouldn't be able to support the customers. So prices should stay artificially high.
However, if you put MNOs in a situation where they can support 3 or 4 times as many customers, won't they simply cut prices to attract them, ultimately compromising the profitability of their existing subscriber base. Experience from the voice market seems to suggest so: in many cases prices have been cut to little more than the marginal cost of providing the service. Making more bandwidth available to operators - and thus customers - will simply encourage MNOs to race for the bottom in terms of price.
OK, so I'm playing devil's advocate a little here. The addition of further bandwidth will improve the user experience and hopefully alleviate my fury. It also allows mobile to more closely replicate the broadband experience by enabling higher bandwidth applications such as over-the-top video. But, to be worth implementing, it must be possible for MNOs to monetise the increasing capacity and bandwidth. Giving users a better service must translate into additional revenue, either through more subscribers or higher ARPU. History suggests that it will be very difficult for MNOs to increase prices as they ramp up bandwidth. So far there has been an inverse relationship between price and capacity/speed.
It would be a very foolish MNO that did not pursue additional capacity given that competitors will be so doing. If more bandwidth means lower prices (e.g. through greater spectral efficiency), you don't want to be the MNO that can't compete. MNOs need to participate in the arms race, rather than risk being left behind.