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Under the Spotlight: Sweden Sets Pace for Europe-wide 2.6 GHz Spectrum Licensing

13 мая 2008

As Sweden blazes the trail for licensing of the 2.6 GHz spectrum, Global Insight looks at how the auction will reshape the European telecoms scene.

Sweden, on 8 May, became the first European country to officially auction off its 2.6 GHz spectrum, netting the Swedish state about 2.1 billion kronor (US$349.7 million) in the process. Expectedly, Sweden's auction has now paved the way for other auctions expected across Europe in 2008 for a spectrum band which is ideal for providing mobile broadband services. So far, Austria, Italy, Netherlands, and the United Kingdom have signalled their interest to proceed with auctions later in the year. Importantly too, the Swedish auction, conducted by the Swedish Post and Telecom Agency (PTS), becomes the first spectrum auction to adopt a harmonised band arrangement spectrum allocation system as defined by the European Conference of Postal and Telecommunications Administrations (CEPT).


The CEPT's guidelines call for spectrum allocations that will encourage the adoption of mobile broadband services, facilitate economies of scale for operators and ensure the availability of standardised terminals, allowing roaming between countries for users.
Similarly, in a survey conducted in April 2007 by the Association of European Radios (AER).


OUTLOOK AND IMPLICATIONS


Although the prospects of the 2.6GHz band for the provision of mobile broadband services looks promising, Global Insight highlights the key message from the Swedish auction.


Hyped Expectation
: Yet again, it appears the industry has begun whipping up a frenzy over the auction for the 2.6GHz spectrum. While announcing their spectrum wins, Telenor and TeliaSonera described it as "4G" spectrum although the PTS' press statement conspicuously avoided mentioning 4G, opting instead to describe the spectrum as suitable for mobile broadband services. Even Ericsson avoided using the 4G term. Although it is universally admitted that the spectrum can be used for next-generation mobile broadband services, there is an acknowledgment that the services commercially on offer or nearing commercial rollout, still fall below the 100 Mbps speed as described by the ITU as 4G. Accordingly, by hyping up the spectrum as 4G, the operators may be inadvertently triggering a chain reaction, akin to the 3G brouhaha, that will inevitably lead to overpayment and disappointment, both for customers and operators. One thing that is certain though is that the spectrum will enable the provision of next generation mobile broadband services which can at best be described as post-3G or 3.5G technologies and services.


Guaranteed Scramble
: Thanks to the hype, perhaps the biggest revelation from the Swedish auction is that all the four leading mobile operators in the market where actively involved. In Sweden, TeliaSonera, Telenor, Tele2, and Hi3G all got a chunk of the frequency division duplex (FDD) spectrum on offer, with a fifth player, Intel Capital getting the time division duplex (TDD) spectrum. Contrast the scenario with the general apathy towards WiMAX licenses by leading mobile operators across Europe and it becomes clear that the 2.6GHz auction could well be the biggest spectrum auction in the post-3G era. If Sweden managed to raise about US$350 million for a population of about nine million, then Europe's bigger countries may be expecting a windfall for their treasury coffers. Indeed, the U.K. regulator, Ofcom, is already describing its auction, expected in the third quarter of 2008, as "the single largest release of radio spectrum in the United Kingdom to date".


Bonanza for Equipment Vendors
: The biggest victors in the auction in Sweden and the expected auctions across Europe will invariably be the equipment vendors. Faced with an uncertain evolutionary environment by mid 2007, most equipment vendors began to suffer financially with their share prices taking big hits. However, the advent of aviable market for mobile broadband services across Europe has rapidly reshaped the scenario. Yes, equipment vendors are not yet raking in money yet, but the cloud of gloom hovering over them towards the end of 2007 has begun to disappear. Indeed, Ericsson was exuberant in its press release today about the Swedish auction, declaring that winners of the Sweden's 2.6 GHz spectrum can now look to its HSPA and LTE solutions for rapid rollout of deployment of advanced mobile networks. Ulf Ewaldsson, Vice President and Head of Product Area Radio at Ericsson, said: "All the pieces of the puzzle are now in place, with harmonized spectrum and licensing all backed by Ericsson products and solutions that support HSPA and long-term evolution (LTE) on the 2.6GHz band." Similarly, in anticipation of the push towards LTE, several LTE vendors came together in April to agree to a streamlined royalty structure so as not to hinder LTE adoption.


Consumer Benefits
: Despite the hype and the concerns about overpaying, the services envisioned for the 2.6GHz spectrum will ultimately gain consumer traction. Mobile broadband is becoming an integral part of society's broadband portfolio with Finland reporting that 8% of its broadband subscriber base at the end of 2007 was on mobiles. While other European countries may not have attained such mobile broadband penetration, the service is quickly establishing itself as a viable alternative and is no longer a niche service. Fixed broadband, especially with the push for fibre-to-the-house (FTTH) and VDSL, will remain a dominant player, particularly for those bandwidth-hungry video services. However, add in the growing trend towards flat-rate mobile data pricing, an increasingly mobile workforce and the coming of age of the SMS generation and a picture of a future, reliant on mobiles for most of its information technology services becomes clear.

Источник: http://communicationsdirectnews.com

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