Europe’s first 4G mobile broadband spectrum (radio airwave) auction officially kicked off in Mainz, Germany, on April 12, 2010. The country’s telecom regulator Bundesnetzagentur has reportedly commenced auctioning the 4G radio spectrum, which will be used by the incumbent carriers to roll out mobile broadband services based on the emerging Long-Term Evolution (LTE) standard.
This represents the first wireless broadband spectrum auction in Germany in nearly a decade. The previous auction, which was held in 2000, allocated spectrum licenses to six operators to roll out 3G wireless broadband services. The 4G auction sets a benchmark for the other leading economies in Europe that are expected to hold spectrum auctions in 2010-2011.
This time, Bundesnetzagentur has allowed four operators to bid in the 4G auction, namely, Telefonica (TEF), Deutsche Telekom (DT), Vodafone (VOD) and E-Plus, the German subsidiary of Netherlands-based carrier Royal KPN NV (KPN). No new entrants have been allowed to bid.
The regulator is auctioning spectrum in 41 frequency blocks across the 800 megahertz (MHz), 1.8 gigahertz (GHz), 2.0 GHz and 2.6 GHz frequency bands. Out of these, 800 MHz and 2.6 GHz bands are best suited for rolling out 4G LTE services. All four operators are vying to grab a chunk of spectrum in the 800 MHz band as it enables more cost-effective delivery of data traffic.
The minimum bid price has been set at €1.5 million (US$2 million) per 5 MHz frequency block compared to €25.57 million (US$35 million) set in the 3G auction. However, total available spectrum for sale is 360 MHz (in four different bands) vis-à-vis 145 MHz in 2000.
Three rounds of the bidding took place until the hammer fell on the first day, with bids totaling €116.8 million (US$159 million). Telefonica’s O2 subsidiary placed the highest bids in the first round. The carrier submitted two bids of €7.5 million (US$10 million) each for two frequency blocks in the 800 MHz band. However, E-Plus leapfrogged over O2 with bids of €8.6 million (US$11.7 million) each for two blocks in the same band at the end of the third round.
The multi-round 4G auction, which may take days (or weeks) to conclude, is expected to raise between €5 billion and €10 billion (US$6.8 billion and US$13.6 billion), compared to the staggering €51 billion (US$69 billion) in revenues generated from the sale of 3G licenses ten year ago.
Leading carriers across the world have adopted LTE as the base technology standard for 4G network upgrade initiatives due to its fast data transfer capability, several times higher than the existing 3G networks. LTE offers rapid downlink and uplink speeds of 100 megabits per second (Mbps) and 50 Mbps, respectively, which are competitive or faster than other leading 4G standards including WiMax.
The growing popularity of next-generation wireless devices such as smartphones and associated bandwidth-hungry data applications have boosted demand for spectrum among carriers required to effectively handle the burgeoning data traffic.
Besides fostering the deployment of next-generation bandwidth-intensive services (such as high-definition video on handheld devices), the 4G spectrum auction will trigger sizable network investments in the rural and remote regions currently with little or no broadband connectivity.
Read the full analyst report on “DT”
Read the full analyst report on “TEF”
Read the full analyst report on “VOD”
Read the full analyst report on “KPN”
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