Reallocation of spectrum in Europe too slow, too inefficient?

Germany, Sweden, Spain, Italy, Portugal, France and recently The Netherlands and the UK have all allocated new spectrum in the 800 MegaHertz (MHz) band to providers of mobile broadband service, especially LTE (Long Term Evolution). With the so-called first “digital dividend” – attractive radio spectrum freed as a result of the switch from analogue to digital television – auctioned off, discussions about a second digital dividend in the 900 MHz band are already underway in Europe. Despite this new development, EU Commission Vice-President and Digital Agenda Commissioner Neelie Kroes is not satisfied. On several occasions, she has asked for more speed and efficiency in the spectrum management of the Union.

Speaking at the Global Mobile Conference earlier this year, Kroes made two points. First, she warned against a drainage of capital in the highly competitive spectrum auctions. The UK regulator Ofcom for example, will pocket 2,78 billion euro from selling frequencies in the 800 MHz band and 2.6 Gigahertz (GHz) band to EE, 3G, O2, Vodafone and BT. In the Dutch 4G spectrum auctions the gavel went down at 3,8 billion euro in sum. Kroes declared it no nice Christmas present with one of the first results being the cutting of dividends by KPN and a consecutive plunging of KPN shares by 15 percent. Germany in 2010 auctioned off a package of 358.8 Mhz.

High expenses on auctions costly for users in the end

Kroes warned that in all cases, the money raised was not used in further network infrastructure development. Using the considerable earnings for a better general budget seemed nice for citizens, but „citizens will rather sooner than later be confronted with a bill from their telecom operator“.

The Czech telecoms regulator seemed to agree with this reasoning when it stopped its auction of 800 MHz, 1800 MHz and 2.6 GHz bands in March 2013, because bids went up to 20 billion crowns (0,8 billion euro). The head of the Czech regulatory authority CTU, Pavel Dvorak said, according to Reuters, that the auctions should serve quick availability of 4G networks in the first place and not profit for the state.

High bids in the first round of mobile broadband auctions – the UMTS auctions in 2000 – resulted in years of struggling for the mobile telecoms sector, according to a statement of German telecoms industry association BITKOM. The German regulator received over 50 billion euro from six bidders in 2000. But the enormous investment made two bidders (Mobilcom and Quam) stumble and eventually lead to their frequencies being re-auctioned by the German regulator during the digital dividend auction in 2010.

Harmonising spectrum management

Kroes' second point is what she considers the slow reaction of some national regulators in making spectrum available for new mobile broadband operators. The EU in its first multiannual radio spectrum policy programme last year fixed the following milestones:

• By the end of 2012, member states should have authorised the use of the harmonised 2.5-2.69 GHz, 3.4-3.8 GHz and 900/1800 MHz bands for use by wireless broadband communications, including third and fourth generation mobile communication services.

• By 1 January 2013, all member states (unless an individual exemption has been obtained before that date), should have authorised the use of the 800 MHz band for wireless broadband communications. One of the main objectives here is to cover sparsely populated areas.    

• By mid-2013 at the latest, the Commission, in cooperation with member states, will set out the details for an inventory to analyse efficient spectrum use, in the 400 MHz to 6 GHz range, in the EU. This will form the basis of possible further action on the coordinated allocation of spectrum bands to specific uses, such as wireless broadband.

Kroes now warned against piecemeal steps and delays by some member states to reach these goals. Asking for a more efficient, more effective and a more „harmonised approach“ of spectrum management in the Union, the Commissioner undoubtedly tried to make the case for a more centralised spectrum management. EU spectrum management had been on the to-do-list of the wished for EU telecoms regulatory body, which was rejected by member states. BEREC, the Body of European Regulators for Electronic Communications, has only limited authority. National regulators still remain the de facto telecoms regulators in their respective territories.

Looking ahead to the World Radio Conference 2015

As the Commission is asking for „more harmonisation“ in spectrum policies and more spectrum for mobile broadband, mobile operators too, seem never to be satisfied with the amount of spectrum allocated. The preparations for the World Radio Conference 2015 is already underway. WRC is the international forum under the auspices of the International Telecommunication Forum in charge of coordinating international spectrum allocation. For 2015, the 700 MHz band is the target of mobile telecom operators. As they managed to get the second digital dividend on the next WRC agenda at the WRC12 closure, it is expected that part of the 700 MHz band will be opened for mobile services primarily, writes the German regulatory authority in its strategy paper. Some hurdles remain before yet another band is taken over by mobile services. In Germany for instance, existing users of the 700 MHz band and wish-lists from other stakeholders are still in the way.