The adoption of 4G and 5G technologies has led to a remarkable surge in mobile data consumption, prompting regulators worldwide to make substantial amounts of new spectrum available to mobile operators. However, there are now signs the growth in mobile data consumption is slowing. In this white paper, Managing Director Hans-Martin Ihle, Senior Managing Director Richard Marsden, and Economic Analyst Yasmine Frizlen examine trends in spectrum pricing and develop a new method for forecasting mobile data demand that better fits the available data.

The paper utilizes a global dataset of more than 400 spectrum auction prices from 2007 to 2023 to demonstrate that spectrum prices have generally declined over the past two decades. The authors explain that while mobile data traffic has expanded, the release of new spectrum has generally kept pace and helped avoid capacity issues on mobile networks.

The authors then turn to mobile data consumption, which grew exponentially during the 4G era but whose growth has since slowed. The authors find that a logistics function—which exhibits an S-shaped curve, commonly found in the adoption of new technologies—better fits the OECD’s available data than an exponential function. The logistics function exhibits decelerating growth, which is more reflective of the actual trend in the data.

The authors explain this finding has significant implications for regulators planning future spectrum releases. Using a logistics rather than an exponential function to forecast mobile data consumption leads to much lower forecasts. If the forecasts of the logistics function are correct, it may be possible to accommodate the expansion in mobile data demand with relatively modest increases in spectrum allocation for mobile, as opposed to the large increases that would be required to support continued exponential growth. The authors also find that differences in mobile data consumption across countries may persist, meaning that countries may require different amounts of mobile spectrum in the long-term.