The Norwegian 2.6GHz auction provides some reassurance for mobile operators, but operators in other countries might expect to pay more.
All eyes within European mobile operators were focused on Oslo, as the Norwegian regulator NPT announced the results of Europe’s first 2.6GHz auction. This band can be used by mobile operators to add capacity to their 3G networks, and is also suitable for providing WiMAX services.
Some had predicted that this round of European auctions would raise fees close to the astronomic amounts raised at the original 3G auctions in 2000. However, in reality this was highly unlikely, and in fact the Norwegian auction raised just EUR29 million. In terms of euros per MHz per population, the Norwegian spectrum cost around one hundred times less than the 3G spectrum sold in the UK and German auctions in 2000 (see Figure 1 below). Indeed, the price was closer to that paid recently for 3.5GHz broadband wireless access spectrum.
| Auction |
Price (EUR/MHz/population) |
| Norway 2.6GHz |
0.0325 |
| UK 2.1GHz auction |
3.53 |
| Germany 2.1GHz auction |
3.35 |
| UK 3.5GHz |
0.004 |
| Germany 3.5GHz |
0.005 |
Figure 1: Comparison of fees paid for spectrum (Source: Analysys 2007)
For mobile operators, the Norwegian auction provides some reassurance that they are unlikely to have to pay similar amounts to the auctions in 2000. However, 2.6GHz spectrum might be more expensive in other countries. Spectrum in the Oslo area fetched a 50% higher price than for other more rural regions, reflecting the fact that mobile traffic density is much higher in urban areas, and demand for spectrum is correspondingly greater. Therefore, operators in countries with higher population densities should expect to pay more.
Furthermore, Norway is unusual in having just two major mobile operators: Telenor and NetCom. So although NPT only allocated 80MHz of paired spectrum (as required for 3G), this was sufficient for both operators to more or less gain 2 x 20MHz nationwide (NetCom only won 2 x 15MHz in the Oslo region). Future mobile technologies such as LTE are forecast to require larger channel widths than the 2 x 5MHz channels needed by UMTS, so 2 x 20MHz will stand both operators in good stead for the future. In markets with four or five players, operators may find that competition for paired spectrum is higher.
WiMAX players looking for unpaired spectrum will be interested by the fact that the Canadian operator Craig Wireless won 50MHz of the spectrum. Craig already has a WiMAX operation in Greece, and although its ambitions in the other European 2.6GHz auctions are unclear, Craig represents potential competition for other potential WiMAX players such as BT, which has publicly announced its desire for 2.6GHz spectrum in the UK.
For regulators, it difficult to draw conclusions from the Norwegian auction. NPT allocated more unpaired spectrum than recommended by CEPT (2 x 70MHz of paired spectrum plus 50MHz of unpaired), and its decision to do so appears justified by the fact that this fetched a higher price than the paired spectrum (EUR0.036 per MHz per population compared to EUR0.028 per MHz per population). However, most other European markets have more than two mobile operators, meaning that the demand for paired spectrum will be higher. In the upcoming 2.6GHz awards in Sweden, PTS is following CEPT’s band plan, while in the UK Ofcom is proposing a novel auction format which will vary the split between paired and unpaired spectrum depending on the demand at auction.