Preparing for 2.6GHz spectrum licences
Project experience | Spectrum
The problem
Licences for use of 2.6GHz spectrum were being awarded in a European country, and a leading mobile operator was preparing to participate in the auction and required external assistance with the auction preparations including:
- valuation of the spectrum lots on offer
- assessing potential interference concerns in some lots
- reviewing auction rules and
- developing a strategy for the auction.
The planned auction used a combinatorial clock format and so consideration of the implications of this auction format upon strategy for participation in the auction was also required.
The solution
We supported the client with development of a model to assess requirements for 2.6GHz spectrum. Various sources of value of 2.6GHz spectrum were considered, along with the risk of not acquiring spectrum.
A range of traffic growth and network deployment scenarios were firstly developed along various revenue and cost assumptions for modelling, in order to assess the value of different amounts of 2.6GHz spectrum to the client’s business. This was used to confirm technical, commercial and strategic value of different amounts of 2.6GHz spectrum and to provide advice on incremental value of gaining additional lots, and of different spectrum lots.
The impact of winning different lots considered in particular the position of lots within the 2.6GHz band relative to the internal band edges between paired and unpaired blocks, taking into account the potential need to coordinate FDD and TDD deployments to prevent interference.
Finally, we considered a number of sensitivities within the valuation to provide spectrum value results across the defined scenarios. This was then used to confirm the operator’s bid strategy within the auction.
The impact of the proposed auction format – a combinatorial clock auction – upon bid strategy was also considered.
The result
We were able to provide the client with detailed valuation of technical, commercial and strategic value of spectrum to their business, taking account of the demand for mobile broadband services and rollout of LTE services.
The client was very happy with the result of the auction and it won 2x10MHz of spectrum at a price much lower than its competitors.
The team
The team was able to use its extensive experience on spectrum valuation and bid strategy for mobile operators to provide a spectrum strategy for our client to meet its longer term mobile spectrum needs as 2G and 3G services are migrated to LTE. The team was able to use its extensive knowledge of 3G and 4G mobile market and spectrum valuation approaches to define a range of scenarios and outcomes for the client.