Forthcoming European spectrum developments set to shape future of mobile broadband

The next six months could prove crucial for shaping future mobile broadband rollouts in Europe, with a number of key spectrum decisions and tenders on the horizon. These developments involve UMTS900, 2.6GHz spectrum and frequencies released by the digital switchover.

One move relates to the amendment of the GSM Directive, which could lend significant impetus to the development of UMTS900 by opening up the 900MHz band to technologies other than GSM. Provided it goes through in the next few months, the amendment should give a boost to operators looking for easier and cheaper ways to roll out next-generation networks.

A notable step has already taken place with the European Parliament’s recent informal acceptance of the Commission’s proposed amendment. The text still needs to be formally adopted by the Parliament and Council, which could happen in June, followed by the Commission’s adoption of the amendment a month or two later.

The move would represent a breakthrough for the Commission, which has been trying to alter the directive for a couple of years. The Commission had originally tried to repeal it by end-2007 or early-2008, but the attempt was blocked by the European Parliament. The revised amendment appears to have more positive momentum.

Technically, the continued existence of the GSM Directive has not stopped countries such as Finland and Sweden from opening up the 900MHz band already, and Finnish operator Elisa launched UMTS900 as far back as November 2007.

But other member states have been awaiting the amendment, and the move would give more clarity to those looking to pave the way for UMTS900. Ideally, it should also lead to more concrete guidance on tackling some of the hurdles that regulators and operators face in enabling UMTS900 rollouts.

There are several major challenges in enabling rollouts, and chief among them has been finding a fair way to reallocate spectrum among operators. Even when the situation has been resolved, it could take a long time to carry out the process.

The main problems are in countries where later entrants have access to only 1800MHz or 2100MHz frequencies. These companies want 900MHz spectrum in order to compete on equal terms, but their requirements must be balanced with incumbents’ reluctance to give frequencies up.

This situation is illustrated in the UK, where 3 has said that recent proposals by regulator Ofcom on reallocating 900MHz frequencies failed to give it access to enough spectrum and that it would consider legal measures if the proposals are enacted. On the other hand, O2 and Vodafone had argued that a previous consultation by Ofcom underestimated the cost of clearing spectrum for refarming and that compulsory release of spectrum could affect their ability to compete.

Other smaller European operators have faced difficulties similar to 3 UK’s. And even in Sweden, where the country’s five operators have managed to reach agreement on how to divide 900MHz frequencies, a potential legal appeal by MVNO Ventelo might delay rollouts. Ventelo has objected to the regulator’s approval of the Swedish operators’ proposal on the grounds that spectrum was simply awarded to 3 rather than being opened up to other providers as well.

Although these types of dispute are always likely to happen between mobile operators, more regulatory guidance at EU level could ensure a smoother and faster process. Amendment of the GSM Directive should also act as a signal to vendors to ramp up the number of devices compatible with UMTS900, although the volume has already increased rapidly since mid-2008, from 20 to more than 100 devices.

Regulators have separately been lining up the release of 2.6GHz spectrum, and many have planned tenders for this year, which would follow earlier ones in Norway and Sweden.

But judging from past events, there is no guarantee that those tenders will take place in the expected time frame. A variety of obstacles held up tenders originally intended for 2008, including those in Germany, the Netherlands and the UK, and some could be further delayed.

For example, the Netherlands was planning a tender for 2Q09, but the date has now been pushed back to the first quarter of next year. According to the country’s Ministry of Economic Affairs, the Dutch Parliament wanted more new entrants in the mobile market, and this necessitated a change in the auction rules. More information is due for publication in a market consultation in June.

In the UK, Ofcom has been involved in litigation with O2 and T-Mobile, which said that reallocation of the 900MHz frequencies should take place before the 2.6GHz tender. Nonetheless, Ofcom says T-Mobile has recently indicated that it no longer intends to pursue its claim for judicial review, and that a High Court judgment in the regulator’s favor in May would pave the way for it to invite applications in the summer and begin the auction in September.

The amount operators will be willing to spend on spectrum tenders is also debatable in the current climate.

In terms of the spectrum freed up by the digital switchover, the European Commission is drawing up proposals for the frequencies. It is due to publish draft recommendations for public consultation this summer and plans to adopt them in the fall. The Commission has stressed the need for coordinated European action on the digital dividend, and member states have also been setting aside the spectrum for mobile broadband.

These various spectrum developments could be important as operators seek to benefit further from the current appetite for mobile broadband, enhance data services, move toward future technologies and find cheaper ways to roll out networks and bolster capacity.

But some of the challenges, perhaps particularly those surrounding UMTS900, need to be resolved promptly in order to help operators capitalize in the current environment.

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