Administrative pricing is a form of spectrum pricing where equipment license fees or charges for spectrum rights are set by the Spectrum Manager. There are several types of administrative pricing including shadow pricing, incentive pricing, and regulatory pricing. Shadow pricing sets prices according to a formula taking into account factors like bandwidth and frequency location. Incentive pricing sets fees to promote efficient spectrum use. Regulatory pricing sets prices to recover spectrum management costs unrelated to market considerations.

1. TECHNIQUE OF DETERMINATION OF
ADMINISTRATIVE PRICES AND
SPECTRUM ROYALTIES
Costs Choice
Definiti Price
Demand of
on of
pricing
assess pricing determinat
ment assessm method
goals ion
ent s

2. Spectrum pricing is
method used the
pricing as a spectrum
Administrative pricing
management tool.
Administrative pricing is
form of spectrum
pricing in which
equipment licence
fees or charges for
spectrum rights are
set by the Spectrum
Manager.
The aim of
Administrative pricing

3. Types of Administrative
pricing
Administrative pricing may include
such types as:
shadow pricing;
incentive pricing, where an attempt is made
to set prices to promote efficient
spectrum use;
regulatory pricing, where fees are set
unrelated to market considerations, for
example, to recover spectrum
management costs.
Administrative pricing involves the
spectrum manager setting the level
of licence fees as a surrogate for
market forces.

4. Shadow pricing
A form of administrative pricing in which
the price is set according to a
predetermined formula intended to mimic
the effect of market forces by taking
spectrum consumption, value and scarcity
into account.
Parameters commonly used include:
●
bandwidth;
●
frequency
location;
●
geographical
location;
●
coverage area.

5. Incentive pricing
Method used to set a fee for the right
of use of spectrum that reflects a
certain value for that spectrum, in
order to achieve certain spectrum
management objectives.
Incentive price
is set by the Regulator;
is prices charged to license holder
(holder of recognized spectrum access
(RSA));
is intended to reflect the opportunity
cost of spectrum use (provide effective
incentives for efficient use of
spectrum).

6. Opportunity cost of
spectrum
The opportunity cost of
spectrum represents the
benefits that would be
derived from the next best
alternative use.
The opportunity cost
represents the benefits
foregone from assigning
spectrum to the best use
instead of the next best use.

7. Regulatory pricing
Regulatory (administrative) pricing
is cost-based pricing method.
Administrative spectrum price
is set by the Regulator;
is charges to license holder;
is intended to recover the
regulator's administrative costs
incurred in spectrum management,
control and enforcement.

8. Administrative pricing
models
Types of
single and annual
charges
The • For the right of access
principle of to a spectrum
spectrum
fees • For direct utilisation of
collection spectrum
The body
establishing
Government bodies/
value of
spectrum agency
charging