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Summary

On July 13, 2017, the Czech telecoms regulator announced the results of its auction of the 3.7GHz band, with bids far above the reserve prices. The Austrian regulator has also launched a consultation on the auction procedure for 5G-suitable spectrum in the 3.4–3.6GHz and 3.6–3.8GHz bands. These bands have been identified by the European Commission (EC) as being pioneer bands for 5G and will pave the way for the development of 5G technology in the country.

Based on previous auctions in countries such as the Czech Republic, bidding in the Austrian 5G auction is likely to be fierce

There has been a clear push by national regulators in Europe to release 5G-suitable spectrum since the EC announced its 5G Action Plan in September 2016. The aims of the plan include achieving early 5G network introduction by 2018, releasing provisional spectrum bands for 5G ahead of the 2019 World Radio Communication Conference, and making 5G commercially available in at least one major city in each EU member state by 2020. The 3.4–3.6GHz and 3.6–3.8GHz bands in particular have been identified by the EC as 5G pioneer bands in Europe. Therefore, it is not surprising that there has been a lot of activity surrounding the release of these frequencies in a number of states such as the UK, Germany, and Ireland. In Ireland, the auction of 350MHz of spectrum took place in May 2017.

Due to the increasing demand from customers for more data, mobile operators across Europe are desperate to access additional spectrum in order to expand capacity. In the Czech Republic, the regulator announced the results of its own auction of the 3.7GHz band on July 13, 2017. The regulator set a cap of 40MHz on the total amount that each incumbent operator could purchase and new entrants were restricted to a maximum 80MHz per operator. Ultimately, existing operators O2 Czech Republic and Vodafone Czech Republic and new entrant PODA each won a block of 40MHz in the auction and another new entrant, Nordic Telecom 5G, acquired 80MHz of spectrum. This additional spectrum puts the operators in a good position to start trials and tests on next-generation networks. Each spectrum block was sold for seven times the reserve price and raised a total of CZK1.02bn ($45.1m). Despite the fact that the spectrum is not immediately usable, there seems to have been a considerable surge in demand, which has resulted in prices far above the reserve. It provides an indication that operators are becoming more willing to invest and plan for future resources, instead of trying to find ways to meet any immediate capacity demands. The auction in the Czech Republic will act as a good reference point for other regulators in the region that might be looking to auction the same spectrum and are looking to assess the demand in the market.

Austria will be the next country to launch a 5G auction after releasing a consultation on the auction procedure for 190MHz of technology-neutral spectrum in the 3.4–3.6GHz band and 200MHz of technology-neutral spectrum in the 3.6–3.8GHz band. The consultation, which closes on September 15, 2017, will look at the allocation method, auction conditions, spectrum caps, and supply obligations. The auction is expected to be held in the second or third quarter of 2018. Even though the 3.4–3.6GHz and 3.6–3.8GHz bands will also not be available to operators immediately, if previous auctions in other countries such as the Czech Republic are anything to go by, bidding in the Austrian auction is likely to be fierce in 2018.

Because most regulators are focused on allocating low-frequency spectrum, the future of 5G will lie in the high-frequency millimeter-wave spectrum above 24GHz. These come in large bandwidths, which provide greater capacity and are more suitable for 5G use, but have a shorter range than the frequency bands that are currently in use. So far, the US has made most progress in making these spectrum bands available and if Europe is to compete on the world stage in 5G innovation, national regulators will not want to delay exploring the possibility of releasing this spectrum too.

Appendix

Further reading

Spectrum Requirements for 5G, TE0007-001111 (February 2017)

Spectrum Auction Tracker: 2016, TE0007-001061 (December 2016)

Austria (Country Regulation Overview), TE0007-000963 (January 2016)

"Ofcom confirms spectrum caps in its consultation on the postponed 5G auction," TE0007-001167 (July 2017)

"German regulator paves the way for 5G with spectrum auction planned for 2018," TE0007-001166 (July 2017)

"3.6GHz spectrum auction in Ireland sees new entrant to the market," TE0007-001156 (May 2017)

Author

Sarah McBride, Analyst, Regulation

sarah.mcbride@ovum.com

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