In the UK in recent years attention has focussed on achieving a fair distribution of existing spectrum assets and the new bands shortly coming up for auction. In the US in 2008 it was the opportunity (unrealised!) of creating a “third broadband pipe” in the 700 MHz auction.

And in Mexico, where PolicyTracker has just held its first Latin American Spectrum Conference, the issue of competition is dominating the agenda.

This isn't surprising in a country where Telcel, the largest mobile operator, has a market share of about 70%, making it one of country's uncompetitive sectors which is damaging economic growth, according to several economists. Mexico's mobile market was the most concentrated of the 50 countries recently analysed by Merril Lynch, the president of Mexico's Federal Competition Commission, Eduardo Pérez Motta, told the conference.

Unfortunately in an era of consolidation in the mobile sector the 2010 auctions of 1.9 GHz and 1.7 GHz didn't produce a new entrant, reflecting a common trend around the world. France has just announced that the invitation to bid for 2.6GHz had only produced applications from the current mobile licence holders.

Mexico has 60 MHz of further mobile spectrum it can release and they are hoping this will help to make the market more competitive. However, at the conference Chris Doyle from Apex Economics argued that spectrum policy can only take us so far. In this case the real heavy lifting may have to be done by the competition authorities and so far this has proved problematic in Mexico.

The Competition Commission's attempt earlier this year to impose a $1B fine on Telcel for anticompetitive practices is being challenged in the courts and has yet to be confirmed. The general election due next year makes an early resolution unlikely and the British Embassy's advice to business is that this dispute will last five years.

The Mexican telecoms regulator, COFETEL, is keen to discuss a "paradigm shift" in spectrum policy which would help increase competition and address the data tsunami.This could include MVNOs, infrastructure sharing and spectrum trading, but the question remains: how much can be achieved when the competition issue has not been resolved? 

Martin Sims
PolicyTracker Managing Editor

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Further updates about issues raised during the conference, including the digital dividend in Latin America and the results of liberalisation in Guatemala, will follow on our website shortly. Make sure you don't miss them by taking a trial!

The new bands offer much more, but they do not command higher values at auction. In fact where 700/800 MHz and 2.6 GHz have been sold so far they have proved cheaper than 2GHz, or about the same price.

More for less

The average price for 2 GHz licences auctioned since 2000 is $1.33/Mhz/pop but the 700 and 800 MHz spectrum released by the switchover to digital TV has gone for less than 70% of this price. So far 700 and 800 MHz have only been sold in the US, Sweden and Germany and the average price was $0.905/Mhz/pop.

Of course 2 GHz was famous for generating the bubble valuations of the dotcom boom. But even if you ignore the prices from 2000 ($2.88/Mhz/pop!) the average value of a 2 GHz licence over the past ten years has still been $0.90 Mhz/pop: about the same price as the digital dividend bands, despite inflation and the superior properties of the 700 and 800 MHz bands.

The contrast with 2.6 GHz is even more marked. Since 2005 the average auction price for this band is $0.073/Mhz/pop, only 8% of the 2 GHz average.

So why is this new spectrum proportionately much better value? There seem to be three explanations: Firstly, there is more spectrum available. Single bands like 2 GHz are no longer seen as the only option for new services, and as more alternatives become available so operators are less willing to pay high prices for specific bands.

Secondly, operators have greater certainty about business models, customer habits and spending patterns. Unlike ten years ago, auction bidding is no longer a shot in the dark on which the future of the business may depend.

Thirdly, the mobile industry is consolidating making it less likely that new entrants will try to break into markets so pushing up spectrum prices.

The Global Spectrum Database covers spectrum usage and allocation in 90 major economies and has has information on 1500 licences and 800 operators. This research is based on data from the June update. A more detailed article about this study will be available shortly on the PolicyTracker website.

Martin Sims
PolicyTracker Managing Editor

With the 800 MHz and 2.6 GHz bands, which have been earmarked for LTE in most of Europe and beyond, not available for use in the UK until probably late 2012 commercial services in these bands are unlikely before well into 2013.

However operators around the world have been trialling LTE in the 1800 MHz band, and there have been early LTE 1800 commercial launches in Poland, Hong Kong and Lithuania. Australian incumbent Telstra has also announced it will launch LTE 1800 in cities later this year to take the strain off its HSPA+ network.

Common to many of the trials and launches to date has been the main vendor involved in them, Huawei, and its FlexiRAN software defined radio (SDR) architecture which supports a number of standards and bands, including HSPA at 2.1 GHz and LTE at 1800 MHz, and allows seamless handover between them.

A growing concensus

Another hint that something might be afoot comes in the form of an announcement from EE’s parents, Deutsche Telekom and France Telecom that they have joined together with TeliaSonera to nominate 1800 MHz as their frequency of choice for rolling out LTE networks. Speaking at the LTE World Summit, executives from the telcos called on vendors to develop devices for the band.

UK Telecoms regulator Ofcom recently released a report showing current-generation LTE was more than 3.3 times as spectrally efficient as 3G networks (with this to increase to 5.5 times with the advent of LTE Advanced), giving another good reason to refarm 1800 MHz spectrum for LTE data traffic while shifting voice to 3G at 2.1GHz.

The EC is working on making the band available for LTE, WiMAX and 3G in the EU and the British government has promised to alter the law here accordingly later in the year.

Meanwhile, Everything Everywhere is sitting on most of the UK’s 1800 MHz spectrum, 2 x 60 MHz in all, although it will have to divest itself of a 2 x 15 MHz chunk of this before the auction of “official” 800 MHz and 2.6 GHz LTE spectrum next year.

• it has the most savvy LTE 1800 vendor in the world upgrading its existing networks
• unlike its rivals it has plenty of 1800 MHz spectrum
• the new legislation will give it the opportunity to get a jump on the other telcos
• and it makes sound economic sense
  
  

Although Kip Meek (now the EE in-house policy wonk) might profess to not having even considered it , don’t be surprised if we see an announcement followed by a rapid launch of LTE1800 in major urban areas before the end of the year.•

Until now these have been behind-the-scenes whisperings but here at PolicyTracker we have tried to report them whenever they have surfaced (e.g. Finland).

However, the muttering is becoming louder. The interest in a second mobile sub band in UHF is growing in Europe and the Middle East. 700 MHz is likely to be identified as a possible mobile band at WRC-12.

Noting these developments the UK has just started a a consultation on developing a long term framework for the future use of UHF. And in the US the FCC and many politicians see incentive auctions as a way to encourage TV companies to vacate UHF.

Pressure on broadcasters is growing as never before and it is time for an open debate. Why? Because this needs to be a discussion about achieving socially important policy goals, not about who “owns” the spectrum, who is “giving it up” or who is the most efficient.

So what are broadcasting's social goals? To boil it down:

• Providing important information for citizens, like news and covering political debate

• Representing geographic and ethnic diversity, so bringing nations together

• Covering important cultural events

• Supporting a local broadcasting industry (or the cultural coverage is unlikely to materialise!)

• Universal service (or you can't bring a nation together!)

Do you need terrestrial TV to achieve these goals? The answer will vary from country to country, depending on levels of TV platform penetration. Terrestrial TV may make sense in countries where it has guaranteed universal service, like the the UK and Spain, but little sense in Bahrain where its penetration is effectively 0% compared with 96% for satellite.

We must also ask whether these goals are achieved mainly by the public subsidy of broadcasting production or whether TV companies need access to UHF spectrum as well.

Can terrestrial cope with HDTV?

Neither can this debate stand still. Terrestrial TV's case may well be weakened by the impending growth of HDTV, where satellite or cable can deliver many more channels, or the superior functionality of IPTV. Conversely, it could be strengthened by a wider economic slump.

We should also be considering compromise solutions like universal terrestrial service for a more limited number of channels or reducing the coverage requirement for terrestrial and “filling in” with satellite.

The most important thing is having an open and public debate. Whatever is chosen, governments have to bring the public with them. Mutterings between experts are not enough.

Martin Sims
PolicyTracker Managing Editor

The US came first with the 800 MHz auction, and now it's leading the way in calling for the use of another innovative technique. Incentive auctions allow TV stations to share some of the proceeds from the sale of relinquished spectrum and was high on the agenda at a recent FCC workshop. The regulator believes it could recover 120 MHz from broadcasters.

This is significant: the FCC is effectively saying the market should have a much bigger role in determining the national balance of TV platforms, something which other countries regard as so crucial to democracy and culture that it should be set by government.

If the FCC's plan goes ahead this is sure to be influential in those countries which have resisted a more market-orientated approach to broadcasting spectrum.

There is also a wider question of whether the economic, social and cultural goals of spectrum policy can be achieved more successfully through new types of auctions. This will be one of the theoretical issues examined at the PolicyTracker Spectrum Auctions Masterclass, on 10-14 January 2011, along with hands on experience of running and participating in auctions

Also in this month's PolicyTracker is an interview with the new Director of the ITU Radiocommunications Bureau, François Rancy.  Please take a trial of the only newsletter devoted to spectrum management by clicking on the links below or downloading the PDF of our printed edition.

regards

Martin Sims, Managing Editor, PolicyTracker

What's new this month?

Incentive auctions

Incentive auctions will tackle spectrum crunch say FCC — by Dugie Standeford

High Tech Spectrum Coalition pushes for incentive auctions — by Dugie Standeford

Other auctions news

Clearwire said to be selling chunk of 4G spectrum for $5 billion — by Michael Newlands

Danes cancel auction and award licences to Hi3G — by Michael Newlands

Ofcom leans towards 2.6 GHz band for Games use before commercial release — by Michael Newlands

ITU elections

François Rancy: Radiocommunication Bureau should not be seen as a miracle worker — by Scott Billquist

ITU elects leaders for next four years — by Scott Billquist, Geneva correspondent

Digital dividend

Irish regulator wants joint 800/900 MHz auction in early 2011 — by Michael Newlands

Australia consults on digital dividend — by Michael Newlands

New research confirms cable industry's LTE interference fears — by Dugie Standeford 

Latin America gears up to address the digital dividend — by Michael Newlands

Other articles

Ofcom to cut budget by 28 per cent — by Jonathan Watson

IMT in extended C-band still a question mark following WRC-07 decision — by Scott Billquist

IMT-Advanced 4G specs on track for approval — by Scott Billquist, Geneva correspondent