Spectrum is an essential resource for the provision of wireless communication services. With the emergence of new technologies and the speed of development of new services, there continues to be high demand for this scarce resource. Ovum's Spectrum by Operator in Europe: 2018 tracker indicates the variations in operator spectrum holdings across Europe. Although all operators hold both low and high frequencies, they tend to hold far more high-band spectrum, which improves capacity, whereas low-band spectrum provides greater coverage.
Operators with greater amounts of contiguous low-band spectrum have a competitive advantage in the market
Regulators and governments around the world are working to respond to the demand from operators for spectrum resources to meet the growing demands of traffic on their networks. As technology evolves and users continue to demand greater bandwidth capacity, it is important that operators have access to a range of spectrum. Ovum's Spectrum by Operator in Europe: 2018 tracker shows that all operators have a combination of low and high bands, but they tend to hold far more high-band spectrum. Low bands are suitable for improving coverage, whereas higher bands can be used to improve capacity. Ovum's tracker, which provides an indication of the spectrum holdings of each operator, also demonstrates that the average amount of low-band spectrum per operator per European country is 41MHz, compared to 122MHz of high-band spectrum.
Globally, the progression toward 5G technology has already started, to help respond to the increase in demand for data and the use of new applications and the Internet of Things (IoT). Allocating spectrum to 5G will therefore be the starting point for deploying this new generation of technology, although as 5G networks build on current network evolutions, it is equally important to strengthen 4G and 4G+ networks. The 700MHz band is a clear example of spectrum that has been earmarked globally for 5G use once standards have been set, and in the meantime, operators can use the spectrum for 4G. Countries should therefore work hard to free up this band from existing uses and reallocate it to mobile use in a timely manner. So far, only four countries in Europe have assigned the 700MHz band. As shown in the tracker, the countries leading the way (Finland, Germany, and Spain) with the highest amount of low-band spectrum per operator (63MHz) are also those that have already assigned the 700MHz band. This band makes a considerable difference to operators' abilities to improve coverage.
Strikingly, the tracker shows that two European operators hold considerably more high-band spectrum than any others: EE UK (225MHz) and Swisscom (204MHz). Maintaining balanced market structures is essential when evaluating whether a market tends toward greater competition, and this includes a balanced allocation of spectrum. At a country level, Austria, Czech Republic, and Germany have allocated the most high-band spectrum, with 153MHz per operator, while Bulgaria, Croatia, and Ireland have allocated the least high-band spectrum, with less than 90MHz per operator. These considerable differences in average allocations can significantly impact the quality of service that customers receive, due to lower capacity capabilities.
Spectrum has a major impact on the costs of deploying a mobile network and, ultimately, the retail prices faced by customers, as well as the eventual quality of service they receive. However, the costs are impacted not only by what spectrum an operator has been assigned, but also by the technology being used and the number of base stations required to meet certain capacity needs. The larger the size of the spectrum lots, the greater the volume of data that can be transmitted, and, depending on the type of technology used, these greater volumes of data can also be sent at higher speeds. Therefore, if an operator has a large amount of spectrum, this can significantly impact investment requirements, as less money needs to be invested in equipment such as radio bases stations. For example, if one operator only has 20MHz in one band, while another holds 40MHz in that same band, the one with double the spectrum will be able to double its data transmission capacity while using the same infrastructure. Accordingly, the operator with half the spectrum must incur higher network deployment costs. This means that operators with greater amounts of contiguous spectrum, particularly quality spectrum (low bands, high bandwidths, bands with the most compatible devices, etc.) have a competitive advantage in the market. As the tracker shows, A1 in Austria, T-Mobile in Germany, Vodafone in Iceland, and Telefonica in Spain all have approximately 70MHz of spectrum in low bands.
Governments and regulators must ensure there is sufficient allocation of internationally harmonized spectrum to support high-quality existing and future wireless broadband services. It is important not only to identify suitable spectrum, but also to allocate it in a timely manner, so that development is not held back. Not having additional spectrum can create conditions in which an operator may not be able to offer services that compete with other operators.
Spectrum by Operator in Europe: 2018, GLB005-000051 (May 2018)
Sarah McBride, Analyst, Regulation