Austria's budget '5G' auction shows Dutch telcos were fleeced

Beer costs the same in the Netherlands as it does in Austria. So why is Dutch spectrum about four times as expensive?

Iain Morris, International Editor

September 14, 2020

4 Min Read
Austria's budget '5G' auction shows Dutch telcos were fleeced

Outside visitor hotspots, your conscientious telecom executive, seeking refreshment after a day in the cloud-native coalface, would hand over between €4 ($4.75) and €4.50 ($5.35) for a pint of beer in Amsterdam, according to a quick Internet search.

His counterpart in Vienna would pay about €4 for the same foamy treat, as long as he avoided the main tourist thoroughfares.

In other words, there is little difference between them when it comes to the price of a basic consumable. And why should there be? Austria is hillier and less populous than the Netherlands. The Dutch are more enthusiastic cyclists. But socio-economically, the two countries have much in common.

Both would be categorized as mid-size, developed and reasonably affluent members of the European Union.

And yet for a concession to send a mobile phone signal through the air, your beer-guzzling executive in the Netherlands must pay four times as much as his Austrian peer, on a like-for-like basis.

Try charging a Dutchman €16 ($19) for his Amstel and there would probably be rioting in Amsterdam's famous Red-Light district.

When Dutch regulators recently extorted about €1.23 billion ($1.46 billion) from the country's telecom operators for what they billed as 5G licenses, T-Mobile Netherlands could only muster a complaint that "starting prices for the auction were too high."

Hard to fathom
No kidding. Austria today auctioned a similar quantity of frequencies in the same spectrum bands (which are more any G than 5G specifically) for as little as €202 million ($240 million).

Per MHz, per head of population, that works out to less than €0.09 ($0.11). In the Netherlands, the equivalent fee was more than €0.32 ($0.38).

It's especially hard to fathom given that each auction had three winners as well as similar offerings.

T-Mobile Austria, which has started referring to itself as Magenta Telekom, spent just €86.4 million ($102.6 million) on 40MHz in the 700MHz band, a 30MHz license at 1500MHz and another 30MHz of 2100MHz spectrum.

T-Mobile Netherlands, its sibling, had to cough up €400 million ($475 million) for a stingier 70MHz across the 700MHz, 1400MHz and 2100MHz ranges.

The licenses are valid over similar periods, too. In the Netherlands, they expire in 2041. In Austria, they will need renewing in 2044.

This clearly makes no sense whatsoever. But logic and European officialdom are rarely seen in each other's company.

Telecom operators across the region have spent years imploring national and regional legislators to harmonize investor-friendly rules across the different member states.

If there are markedly different regimes from one country to the next, Europe stands less chance of producing the kind of pan-regional service providers that might halt the international advance of US or even Chinese firms.

Considering the current fondness for nationalism, and the backlash against the EU exemplified most starkly by the UK, this is perhaps one of the only ways the EU can endure: by convincing Europeans it is business-friendly to their ultimate advantage.

Want to know more about 5G? Check out our dedicated 5G content channel here on Light Reading.

Unfortunately, too much of its rhetoric in the last few years has made business out to be the enemy of the consumer.

In the age of coronavirus and a more assertive, aggressive China, the EU's long-running opposition to mergers of any kind has now backfired.

The region's weakened service providers are now in danger of being swallowed up by overseas investors. Abandoning their earlier principles, European authorities are suddenly advising governments to prop up companies the Chinese might otherwise look to acquire.

Harmonization of spectrum rules is part of the same narrative, and what Europe's ailing service providers really need is a pandemic-era break from the costly auction format.

Disappointingly, though, the UK's Ofcom rebuffed Vodafone and Three when they recently asked it to parcel out spectrum for an administrative fee, and not award it to the highest bidder.

Taking its apparent lead from the Dutch, Ofcom has set a minimum price of £1.1 billion ($1.4 billion) for the 200MHz it soon plans to sell.

Austria, Finland and a few other small European countries have recently done the opposite, licensing spectrum at a fraction of the rates charged by Italy, Germany and some of the other money grabbers.

A coherent, Europe-wide approach on those lines has been sadly elusive.

Related posts:

— Iain Morris, International Editor, Light Reading

Read more about:


About the Author(s)

Iain Morris

International Editor, Light Reading

Iain Morris joined Light Reading as News Editor at the start of 2015 -- and we mean, right at the start. His friends and family were still singing Auld Lang Syne as Iain started sourcing New Year's Eve UK mobile network congestion statistics. Prior to boosting Light Reading's UK-based editorial team numbers (he is based in London, south of the river), Iain was a successful freelance writer and editor who had been covering the telecoms sector for the past 15 years. His work has appeared in publications including The Economist (classy!) and The Observer, besides a variety of trade and business journals. He was previously the lead telecoms analyst for the Economist Intelligence Unit, and before that worked as a features editor at Telecommunications magazine. Iain started out in telecoms as an editor at consulting and market-research company Analysys (now Analysys Mason).

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like