Europe Makes Way for WiMax

Norway, Sweden, and the U.K. will be the first European markets to auction the 2.6 GHz spectrum that will be used for mobile broadband.

These early auctions will set a precedent for how much 2.6 GHz spectrum will be set aside for operators wanting to deploy WiMax versus 3G cellular technologies such as UMTS.

The national regulators in these markets have adopted a flexible approach to spectrum allocation because they believe there is strong demand from those wanting to offer WiMax services in these frequencies. (See Table 1.)

The key decision facing regulators is how much of the spectrum to allocate for time division duplex (TDD), or unpaired spectrum, and how much for frequency division duplex (FDD), or paired spectrum.

TDD, which is used by WiMax systems, allows data to be sent and received over the same channel, while FDD, which is used by UMTS systems, requires two channels.

According to the recommendation from the European Conference of Postal and Telecommunications Administration (CEPT), regulators should allocate this spectrum as 50 MHz for TDD and 2 x 70 MHz for FDD. But some regulators find this guideline doesn't correspond with what market players want and are prepared to diverge from those guidelines.

In Norway, which is planning its spectrum auction for November 5, the regulator is not adhering to the CEPT band plan because of demand from the WiMax fraternity.

"There is a big demand for TDD spectrum," says Garl Sgerdingy, head of section for strategy and frequency planning at Norwegian regulator. "The cry for TDD spectrum is much louder than the cry for FDD."

The most likely reason for the big interest in unpaired spectrum is that the Norwegian government wants broadband to be ubiquitous. As many regions of Norway are sparsely populated, wireless broadband technologies such as WiMax are the best way to cover these areas.

In the Norwegian band plan for 2500–2690 MHz, 2 x 40 Mhz are allocated to FDD and 100 MHz is allocated to TDD.

And in order to ensure the most flexible use for the spectrum, the regulator will allow operators to change their spectrum allocations after they have bought a license. For example, if an operator buys TDD blocks, it can request to change the license conditions to FDD, if technical considerations such as interference will permit it.

The Swedish regulator will also allow these requests to change the frequency allocation between FDD and TDD after licenses have been purchased. Sweden plans a 2.6 GHz auction in the second quarter of next year. (See Want Swedish Spectrum? and PTS Plans Spectrum Auction.)

In the U.K., the 2.6 GHz auction is planned for early next year. U.K. regulator Ofcom has engineered the most complex and flexible auction for the 2.6 GHz spectrum. The auction will have two phases. In the first phase, operators will bid for generic lots, which will determine how much spectrum is allocated for FDD and TDD. In the second phase, operators will be for specific blocks of spectrum.

Ofcom states in the consultation document that there is "significant potential interest in gaining access to 2.6 GHz spectrum for unpaired use and the level of interest is likely to exceed the limit of 50 MHz... that would be available under the CEPT plan."

So, the U.K. auction could also differ from the CEPT band plan, and Ofcom seems to expect this outcome. Like Norway, there may be more demand for unpaired TDD spectrum (i.e., WiMax) in the U.K.

The Norwegians admire Ofcom's auction structure but are unable to adopt it.

"It's a very expensive and cumbersome procedure, but may get a more optimal result," says Sgerdingy. "We could not undergo such a complex auction procedure, so we chose a middle way."

But will the competing interests between WiMax and UMTS drive up the prices in these auctions? The standard answer is that it's too soon to tell, but that the prices for these licenses won't reach the heady heights of 2000, when operators paid a staggering £22.5 billion ($45.8 billion) for 3G licenses in the U.K. alone.

"This [U.K.] spectrum is going to be fairly highly valued," says Dean Bubbley, founder of Disruptive Analysis Ltd. "The existing operators and BT Group plc (NYSE: BT; London: BTA) are the likeliest candidates... someone with deep pockets." (See BT Wants WiMax.)

"It's very difficult to predict how expensive this is going to be, but we should get a really decent price for this spectrum," says Sgerdingy.

In Austria, the regulator launched a consultation in August to determine how best to allocate its spectrum based on market demand. It plans to hold its auction in 2008.

All these countries are examples of how European regulators are now adopting a so-called "technology neutral" approach to spectrum auctions. The intention is to let the market decide how spectrum should be used and not to dictate specific technologies for specific frequencies. (See Spectrum up for Grabs in Europe.)

The upcoming 2.6 GHz auctions will be the first time this approach has been implemented on any notable scale across Europe, and the impact on future spectrum allocation processes and mobile broadband technology deployments in the region will likely be significant.

— Michelle Donegan, European Editor, Unstrung

AllKindsOfThings 12/5/2012 | 3:01:19 PM
re: Europe Makes Way for WiMax Do you have ans hints if the spectrum be auctioned or assigned by beauty contests in the different markets?
Did local regulators make any statemens if the assignments are bound to technologies or if they may decide to go technology agnostic?
Michelle Donegan 12/5/2012 | 3:01:13 PM
re: Europe Makes Way for WiMax In Norway, Sweden and the U.K., the spectrum will be auctioned.
Regulators in these countries and others are going for a technology neutral approach, which means they won't bind the spectrum to any technology.

Any ideas on how expensive these spectrum auctions are going to be?
AllKindsOfThings 12/5/2012 | 3:00:59 PM
re: Europe Makes Way for WiMax Hmm - sorry to be so inquisitive: Is tech neutrality a documented policy in these markets?

On price I could not beleive a serious response could be expected here.

A rough comparative approach with 3G inlcuding reducing it by at least what was written off from that in the meantime is really not doing the job, even when obviously most people consider the prices achieved in the UK or German 3G auctions were totally overhyped and blown out of proportion, so the upper limit seems to be rather obvious.

Narrowing it down any further would likely require
a) looking at the right a pool of value driving criteria
b) having a different way to look at it depending on which stakeholders strategy from the impacted / involved industries with regard to their bulid out plans for capacity, possible specifically with regard to their vision on non-voice services

Which easily leads to purely speculative guessing unless you are in the inner circle of some of the valuation teams planning to bid in such auctions.

In which case you're VERY certainly going to keep your mouth VERY shut on this topic whereever you are - and be explicitly non-existant on that topic in public.
Michelle Donegan 12/5/2012 | 3:00:44 PM
re: Europe Makes Way for WiMax Yes, these countries have adopted the technical neutrality policy for spectrum allocation.

As for the price, well, I wish I knew what operators were willing to pay. It will certainly be closely guarded information, as you say.

I agree that comparing these spectrum auctions to the 3G auctions in 2000 is almost unfair because that was a totally different time with extraordinary market conditions. But the WiMax hype is still quite strong. And if the operators are up for a WiMax v. 3G/4G cellular fight, then that could drive the prices up for this spectrum.
IPobserver 12/5/2012 | 3:00:32 PM
re: Europe Makes Way for WiMax The UK is technology neutral, or biased that way at least. Looks like Sweden is taking a similar approach.

But across Europe there's strong support for linking spectrum to IMT technologies.

WRC-07 will be interesting GÇô lots of Euro stakeholders seem to be holding the line and insisting new spectrum is designated for IMT technologies and is harmonized internationally.

The ITU is set to approve WiMax as an IMT-2000 technologyGǪ but, to the great annoyance of many in that camp, will restrict it to TDD.

WiMax Gets ITU Standards Boost

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