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| Sweden first in the race to 4G? |
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| Monday, 12 May 2008 | |
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Sweden’s recent auction of 2.6GHz spectrum could herald a new era of broadband wireless services, with interesting implications elsewhere in Europe.
The National Post and Telecom Agency (PTS), the Swedish regulator, auctioned off 190MHz of spectrum in 14 FDD frequency blocks and one TDD block. The auction was carried out over the Internet and involved 112 bidding rounds over 12 days. In total the five successful bidders paid €226mn for the spectrum. Four of the successful bidders – HI3G Access (operating as ‘3’), Tele2 Sverige, Telenor Sverige and TeliaSonera Mobile Networks – were predictable being established regional operators. The fifth, Intel Capital, was the surprise winner, prompting immediate speculation that the company planned to use the TDD spectrum it paid US$26mn for to build a national Swedish WiMAX network. Intel refused to comment officially but apparently dropped a hint to a local newspaper that it might lease the spectrum to a third party rather than deploy a network itself. The licences are technology neutral and do not have any population coverage requirements or timetables for network deployment. The intention of PTS in opening up the new spectrum was to drive a new generation of high-speed broadband wireless services. In discussing the auction, the term ‘4G’ has been used extensively. One successful bidder, Telenor, was very bullish on the opportunities opened up with the new spectrum and made its technology choice clear. "This is the most important spectrum auction since the 3G frequencies were distributed, and I'm very pleased that Telenor Sweden now holds this opportunity to build high-quality 4G networks and provide our customers with the many possibilities provided by next generation mobile services and Long Term Evolution (LTE) technology", said Johan Lindgren, CEO of Telenor Sweden. Another winner, TeliaSonera, said it would use the frequencies to build ‘a new generation super-fast mobile broadband network offering access speeds of more than 100Mbit/s’. According to market watchers Analysys Mason, the Swedish spectrum auction has implications for other 2.6GHz spectrum auctions: “with auctions coming up in other European countries, including the UK, Austria and the Netherlands, the outcome of the Swedish auction provides much needed information on the price that operators will pay for 2.6GHz spectrum throughout Europe.” "Clearly prices fetched at the 2000/2001 European UMTS auctions, especially in the UK and Germany, are unlikely to be repeated. On the other hand, operators are reporting a rapid uptake of mobile broadband dongles, and new WiMAX players may be eager to enter the arena, suggesting that prices may still be substantial", says Bart-Jan Sweers, Strategy Consultant at Analysys Mason. “Interestingly, the Swedish auction may be a more reliable indicator of prices in other upcoming European auctions than the Norwegian auction. The reason for this is that the competitive situation in Sweden, with four mobile players, is more representative of the situation in most European countries than the Norwegian two-player market", says Sweers. "Still, there are plenty of specifics in the Swedish situation that should lead to caution when using this auction result as a benchmark." The decision by the PTS to auction the unpaired spectrum in one block may have affected its value and as Sweers points out this may not be the case elsewhere. "Some European countries (eg 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. In theory, this will enable a more efficient allocation of spectrum among FDD and TDD operators, and therefore could lower prices overall but at the same time could lead to higher prices for paired spectrum. 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. Ian Channing |
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