dailywireless.org » European 2.5 GHz Auctions & the Global Market

European 2.5 GHz Auctions & the Global Market

Sweden has concluded their auction of 2.6 GHz spectrum by the National Post and Telecom Agency (PTS). Auctioning 190 MHz in the in the 2.6 GHz band raised a total of SEK 2.1 billion (USD 346 million).

Five companies won licenses. Intel Capital acquired one block of 50 MHz TDD spectrum for USD 26.2 million. The blocks of FDD frequencies went to Tele2, Telenor, and TeliaSonera, each paying approximately USD 90 million each for 2×20 MHz, and 3G operator HI3G Access AB paid USD 49 million for 2×10 MHz.

The licenses will be technology and service neutral, allowing use for mobile mobile telephone and wireless broadband. according to Analysys Mason, a telecom adviser.

Swedish 2.5 GHz Auction Winners (2008)
SOURCE: National Post and Telecom Agency

Bidder	Bandwidth MHz	Revenue (in SEK)
HI3G Access AB	2×10 MHz FDD	296,600,000
Intel Capital	50 MHz TDD	159,250,000
Tele2 Sverige AB	2×20 MHz FDD	548,100,000
Telenor Sverige AB	2×20 MHz FDD	533,050,000
TeliaSonera Mobile	2×20 MHz FDD	562,450,000

With auctions coming up in other European countries, including the UK, Austria and the Netherlands, the outcome of the Swedish auction provides information on the price that operators will pay for 2.6GHz spectrum throughout Europe.

The Swedish auction concluded at a price of EUR0.13/MHz/pop, with unpaired spectrum going for just below EUR0.04/MHz/pop and paired spectrum for EUR0.16/MHz/pop. The prices achived in the Swedish auction were higher than the recent Norwegian 2.6GHz auction (EUR0.03/MHz/pop).

Upcoming 2.5 GHz Spectrum Auctions (2008)
SOURCE: WiMAX Day

Date	Frequency	Country	Regulator
Q1 2008	2.5 ~ 2.69 GHz	UK	OFCOM
Q2 2008	2.5 ~ 2.69 GHz	Austria	RTR
Q2 2008	2.5 ~ 2.69 GHz	Sweden	PTS
Q2 2008	2.5 ~ 2.69 GHz	Ukraine	NKRZ
Q2 2008	3.4 ~ 3.69 GHz	Chile	SUBTEL
Q3 2008	3.4 ~ 3.69 GHz	Brazil	Anatel
Q4 2008	2.3 ~ 2.39 GHz	Hong Kong	OFTA
2009 - 2010	2.5 ~ 2.69 GHz	Hong Kong	OFTA

The competitive situation in Sweden, with four mobile players, may be more representative of the situation in most European countries than the Norwegian two-player market,” says Bart-Jan Sweers, Strategy Consultant at Analysys Mason.

“Some European countries (e.g. the UK and the Netherlands) plan to deviate from the CEPT band plan by using a flexible band plan, in which the split between paired and unpaired spectrum is not fixed but varies according to demand at auction.

The Swedish result suggests that “competition between bidders for paired and unpaired spectrum will be minimal, given that the price fetched for unpaired spectrum was four times lower than for paired spectrum,” says Sweers.

OFCOM expects a summer 2008 auction for the 205MHz of spectrum in the 2010-2025 MHz and 2500-2690 MHz bands. As with previous auctions, the spectrum is being made available on a service-neutral basis - which means bidders are not required to restrict their use of the spectrum to a particular technology or service.

Potential WiMAX providers worry that cellular operators will simply outbid them in the UK, virtually excluding Mobile WiMAX operators from the 2.6 GHz band, leaving them with less ideal 3.5 GHz frequencies. But director of Intel Capital EMEA, Ashish Patel, says “WiMax will cover the UK in 18 to 24 months“.

In the far East, analyst Caroline Gabriel says the Indian regulator TRAI aims to auction 3G bands (in 450MHz, 800MHz and 2.1GHz), but also spectrum in 2.3-2.4GHz, 2.5-2.69GHz, and 3.3-3.6GHz.

India is likely to be the largest short to medium term market for WiMAX, with operators looking to meet fixed broadband targets and leapfrog 3G services. According to an earlier TRAI recommendation to the DoT, BWA spectrum should cost only a fraction of the price of 3G spectrum. For example, a block of BWA spectrum in Mumbai has a reserved price of R10Cr (about $2.5m), while a block of 3G spectrum in the same area has reserved price of R80Cr ($19.5m).

In China, the Chinese Ministry of Information Industry (MII) has already allocated the 2.6 GHz spectrum to C-band satellite transmission, but the Ministry has separately confirmed that they have dedicated spectrum to 3G mobile services, but they do not plan to extend that spectrum to 2.3–2.5 GHz, and it is unlikely that the government would allocate bandwidth to mobile WiMAX to operate in the same 3G spectrum.

In February 2003, MII auctioned licenses for 3.5 GHz covering 32 cities. There are now many networks in development that utilise the 3.5 GHz band. Among the dozen companies that were awarded licenses, the largest include China Netcom, China Telecom, ChinaComm and Hua Tong Electricity. Intel has been working with companies in several regions to establish trials, and Alvarion has worked with China Telecom since 2004.

There are some 3.3 billion wireless users on Earth but only 350 million broadband subscribers in the world (at the end of 2007), according to Point Topic. DSL has 65% of that number - around 228 million - while cable modem users have a 22% share (76.8 million). FTTx with 37.8 million users, is just under 11% of the global market. The WiMAX Forum projects more than 133 million WiMAX users globally by 2012.

Intel says Mobile WiMAX is the most cost/effective way to deliver broadband. Cellular operators say LTE will prevail as the defacto wireless broadband solution.

The global consumer mobile Internet services market could be worth more than $66 billion/year - today - say WiMAX proponents, but has instead only reached $9.5 billion because of the high cost of cellular services.

Clearwire’s Chief Strategy Officer, Scott Richardson says the key is getting WiMax cards under $50. “When you get into that lower price point, the attach rates go up very high”.