|Tags||1400 MHz, 1800 MHz, 4G, 700 MHz, 900 MHz, Blog, Broadcasting, Digital dividend, LTE, Mobile, Spectrum Auctions, Vodafone|
The world’s most sought-after spectrum is currently being auctioned in what is arguably Europe’s strongest economy – so why are wallets staying closed?
German regulator the Bundesnetzagentur is currently one week – and 62 rounds – into its “Project 2016” auction of spectrum in the 700, 900, 1400 and 1800 MHz bands. The 1400 MHz band spectrum offers downlink-only 3G services that have just been mandated by the European Commission, and the GSM bands (900 and 1800 MHz) give operators the option to deploy a whole host of valuable services.
But it was the availability of the 700 MHz band that many felt that was the most interesting aspect of this auction. The band offers excellent rural coverage and good potential for global harmonisation, and the German auction is the first attempt to assign it in ITU Region 1 (Africa, the Middle East and Europe).
Seeing as Germany is Europe’s biggest economy, and that the country’s relatively dispersed geography lends itself to lower frequencies for mobile broadband, one could be forgiven for expecting the 700 MHz band to fetch high prices.
But since the auction started on 27 May, prices have been stuck at around €75 million per block, or a measly €0.09/MHz/POP ($0.10/MHz/POP). In round 1, Telefonica and Vodafone raised their bids for this band by €50,000 and €20,000 respectively, but since then there has been no activity in the band.
Spectrum blocks in the 900 MHz band, by contrast, have risen from €75 million to around €105 million for most blocks. This is the equivalent of jumping from €0.09/MHz/POP ($0.10/MHz/POP) to €0.13/MHz/POP ($0.14/MHz/POP).
Why is there not more competition for 700 MHz? One reason could be the auction design: incumbents that purchase any new spectrum will be subject to strict rollout conditions. New entrants were to be exempt from these obligations, but none could be persuaded to take part in the auction. As there are only six lots available, the three incumbents seem happy to let each other have two lots (2 x 10 MHz) of the 700 MHz band.
Against this, the rollout conditions apply to all incumbents regardless of which band they choose, so surely a high-propagation band’s value would be inflated by the need to provide good coverage.
Alex Pumfrey, the chief operating officer of Digital UK, told a conference in London yesterday that operators are focusing on rolling out 4G rather than acquiring new spectrum. She also said it is worth asking if some of the more bullish predictions for mobile data demand growth are proving to be accurate (Digital UK manages the terrestrial broadcasting platform between 470 and 790 MHz).
So why aren’t operators putting their hands in their pockets for the 700 MHz band? If you think you know the answer, please leave a comment below…