What with that volcano and the upcoming election, the spectrum auctions in Germany and the Netherlands have gone largely unreported in the UK. In Germany, total bids for available spectrum (in 800 MHz, 1800 MHz, 2 GHz and 2.6 GHz bands) already amount to more than €1.88 billion. Some observers estimate the final figure will be between €6 billion and €8 billion, though this would be a modest sum compared with the €50 billion the German government made from 3G licences.
It’s unclear when the auction will end, but it’s setting a precedent for other European markets. In Germany, only the existing cellular operators are bidding, and I see they’ve focussed their efforts on the 800 MHz band — a lucrative option that will allow winners to provide more cost-effective coverage in buildings and connectivity in rural areas.
In the Netherlands, five bidders have won licences in the 2.6 GHz band, making €2.6 million in auction fees for the government. KPN and Vodafone won 20 MHz of spectrum, and T-Mobile won 10 MHz. Ziggo, a cable provider, and Tele2, a converged telecom provider, each secured 40 MHz. Ziggo will be new to the mobile market; Tele2 already provides a mobile offering through an MVNO agreement with T-Mobile. We expect the three established cellular operators to use their new spectrum to deploy LTE and expand their cellular networks.
In our view, mobile network operators across Europe will choose to deploy LTE on spectrum gained in the current round of auctions. Fixed line and cable providers that win licences may opt for WiMax technology instead, and provide “hot spot” services that complement their fixed broadband networks.
We’ll be following European spectrum auctions with interest, especially those in the UK, where BT holds a unique position. As far as I know, it’s the only former state-owned telecom monopoly without a mobile licence. That means it’s almost certain to participate in the next auction of spectrum in the UK.
The UK auction has already been delayed many times, and further delays will make it harder for eventual winners to achieve the vision set out in the government’s Digital Britain report. And any new government in the UK will be desperate for revenue to soften the tough decisions on spending that all political parties have promised in the run-up to the election. We may see spectrum auctions given a higher priority in the UK (and elsewhere in Europe) once governments see the sums generated in Germany and the Netherlands.
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