NETWORK STRATEGIES

900-MHz and 1800-MHz spectrum, will all have a bearing on how MNOs value 800-MHz and 2.6-GHz spectrum.

“In

Finland and the Netherlands 2.6-GHz prices were extremely low, but that won’t necessarily be repeated elsewhere as a limited number of bidders and high avail- ability of 1800 MHz for LTE [in Finland] and tight spectrum caps [in the Netherlands] were big factors in those auctions,” says Iain Morris, technology editor at the Economist Intelligence Unit. But prices can increase drastically when

demand exceeds supply. “In Hong Kong’s 850-MHz and 900-MHz spectrum auctions earlier this year the prices per megahertz per pop paid by SmarTone and Hutchison were more than six times greater than the sums paid by Hong Kong’s operators in the 2.6-GHz auction [in January 2009],” says Morris. “If rapid growth in mobile data traffic continues, and networks become congested, it may well start to drive spectrum prices up, even if regulators do impose some onerous bidding conditions.” In Ireland Comreg intends to auction

off 28 blocks of spectrum, each consist- ing of 2×5 MHz of spectrum, in the 800-, 900- and 1800-MHz bands. It plans to have a cap to ensure that no company can win more than ten blocks of spectrum. In DotEcon’s benchmarking study the

consultancy concluded that a 2x5-MHz block of sub-1GHz spectrum was worth between €18 million and €26 million. A reserve price tag of €26 million would work out at €0.58/MHz/Pop, close to the €0.7/MHz/Pop finally paid for by opera- tors in Germany, which has a much stronger economy than Ireland. Setting high reserve prices would be a

dangerous game for Comreg to play, warns Stefan Zehle, CEO of Coleago Consulting. “Prices paid elsewhere are not an indication of how operators value the spectrum in Ireland,” he says. “If the regulator sets high reserve prices, there may in effect not be much of an auction as the regulator is setting the price for spec- trum… There are ample studies that show that high prices for spectrum are counter- productive in terms of overall economic gain. Ireland is running that risk.” n

14

Price per megahertz per pop (US$), selected auctions 0.0

0.1

Germany 800 MHz (May 2010) Sweden 800 MHz (Mar 2011) Hong Kong 2.6 GHz (Jan 2009) Sweden 2.6 GHz (May 2008) Denmark 2.6 GHz (May 2010) Norway 2.6 GHz (Nov 2007) Austria 2.6 GHz (Sep 2010) Germany 2.6 GHz (May 2010) Estonia 2.6 GHz (Dec 2010) Finland 2.6 GHz (Nov 2009) Netherlands 2.6 GHz (Apr 2010)

Source: Economist Intelligence Unit

‘If rapid growth in mobile data traffi c continues it may well start to drive spectrum prices up’

EU27 implementation deadlines and auction timetable Digital

Digital

Austria Belgium Bulgaria Cyprus

switchover Deadline Q3 2011 Q1 2010 Q1 2015 2011

Czech Republic Q4 2011 Denmark Estonia

Germany Greece Finland France

Hungary Ireland Italy

Latvia Lithuania

Q4 2009 Q3 2010 Q4 2008 2013

Q3 2007 Q3 2011 Q4 2014 Q4 2012 Q4 2011 Q2 2010 Q4 2012

Luxembourg Q2 2006 Malta

Netherlands Poland

Portugal Romania Spain

Slovakia Slovenia Sweden

Q2 2011 2012

Q3 2013 Q2 2012 2013 2014

Q4 2010 Q4 2010 Q4 2007

United Kingdom Q2 2012 dividend

Auction Frequency (MHz) Q1 2012 - -

900 1800

2012-13 Q2 2010 2012 -

Q2 2010 -

Q3 2011 Q1 2012 -

2012-13 2012-13 - - - -

2012-13 - - -

Q3 2011 - -

2011 2012

900/1800 900/1800 900/1800 900/1800 900 900

900/1800 1800 900 -

900/1800 900

900/1800 900/1800 900

900/1800 900/1800 900/1800 900/1800 900/1800 900/1800 900/1800 900

900/1800 900/1800

Spectrum IMT extension re-farming

Timeframe Q4 2010 Q2 2011 Q4 2010 -

2012-13 Q2 2011 Q1 2014 Q4 2009 2013-14 Q4 2009 2010 -

Q3 2011 2013

Q4 2009 -

2011 2011

Q3 2010 Q3 2010 Q1 2010 Q1 2010 Q4 2011 2010

Q2 2010 -

Q1 2010

Auction Q3 2010 -

2012 -

2012-13 Q2 2010 Q4 2010 Q2 2010 - -

Q4 2011 - - -

2013 - - -

Q2 2010 - - -

Q4 2011 2011 -

Q2 2008 2013

Source: Wireless Intelligence (June 2011) www.totaltele.com September 2011 0.2 0.3 0.4 0.5

0.6

0.7

0.8

0.9

1.0