Ostrich MNOs ignore the fact that 5G must use spectrum very differently

With World Radio Conference 2019 – where the first globally and regionally harmonized 5G spectrum allocations will be decided – looming, spectrum issues were high on the MWC agenda this year.

Some regulators are already prompting interesting and creative debates about plans for 5G spectrum – not just band plans, but regulatory environments, with a greater emphasis on sharing and dynamic access than in the past. The FCC, India’s TRAI and the UK’s Ofcom have all contributed to the discussion with new plans in the past week (see separate item).

Vendors, too, are working hard to ensure that the spectrum famine of the early 4G era does not return. In 4G, it was averted by opening up higher, capacity-oriented bands such as 2.5 GHz (most operators acquired this, but few have used more than a fraction of the available capacity yet). In 5G, there will be a continuation of the same process, moving up to 3.5 GHz, 4.9 GHz and right up to millimeter wave bands. Suppliers large and small were demonstrating the MIMO arrays and beamforming which will make those high frequencies usable, as well as flexible RF technologies which can support a wide range of airwaves.

There was also a focus on more flexible use of spectrum. Vendors like Ruckus Wireless and ip.access launched small cell systems to support CBRS or white spaces shared spectrum and private networks. Others, like Huawei with CloudAIR, were looking at how different radio technologies can share a single band in a fully dynamic way.

But one group failed to take on board the industry’s shift towards shared, on-demand spectrum and its ability to support a far wider range of service providers and use cases. Instead, the major European MNOs used their keynote and panel spots to make demands which were almost word-for-word the same as they were a decade ago when 4G was new. Give us exclusive spectrum at low cost and with few strings attached, was the top line message, otherwise we will not be able to invest in new networks.

Of course, MNOs do bear the brunt of paying for new mobile networks, only to see many of the revenues and profits going to digital and web providers which have a fraction of the costs. But a history of ‘just good enough’ quality of experience and customer service, and a failure to think creatively about new services to replace voice, are also to blame for the crisis in MNOs’ future prospects. A few of them are considering new approaches – a greater emphasis on wholesale and on a new breed of MVNOs, targeting high value industrial cases; ways to move up the IoT and enterprise value chain; sharing network investments with industry or webscale partners.

But many are just complaining. Predictably, their cause was championed by Mats Granyrd, director general of the GSMA, who told the conference: “Operators are set to invest half a trillion dollars in the mobile sector between now and 2020, but these investments can only be made if we have regulatory frameworks that are fit for purpose.” In particular, he said

timely release of harmonized spectrum, and an openness to operator consolidation, were necessary to facilitate investment.

Vodafone Group CEO, Vittorio Colao, told a media briefing: “Returns for the telecoms industry must be better. Regulators should take that into account. We should not be overcharged for spectrum and we should have long spectrum life. They need to take a long term view of just what technology can do. It’s not just about selling spectrum to squeeze as much money out of telcos as possible. I’m a little bit critical of one or two regulatory elements.”

He continued: “I am not so sure that we have communicated well enough how important it is to have a higher return on capital, to facilitate higher levels of investment. Let’s face it, when I became CEO, Vodafone was investing 10% of its revenues every year in capital investment. Now, we are investing more than 15%. That should correspond to higher returns, but at the moment it isn’t and that is the problem.”

He, along with his counterparts at Telefónica, Telia and others, called for spectrum to be more affordable (ignoring the fact that some non-MNOs are starting to make creative wireless business models using free unlicensed spectrum). He used Italy as an example, saying: “Let me pick on the Italian government for a moment. We have a spectrum auction in 2018 for spectrum that will be released in 2022. So, I am expected to pay money now but I cannot start using it until 2022. That’s capital that is going nowhere. It’s not an investment, its merely a pre-payment. Is this the right approach?”

Telefónica CEO José María Álvarez-Pallete said in a keynote: “In order to efficiently enable our contribution, we need an efficient regulatory framework.” And Deutsche Telekom’s CTO Bruno Jacobfeuerborn added: “We can’t print money and frequency auctions are different in Europe than Asia, where you almost get it for free. If regulators want fast roll-out, they need to understand this.”

His CEO, Timotheus Höttges, was also targeting Europe’s regulators, saying: “I hope that we get less regulation in the mobile space and not more ideas like mobile wholesale access or national roaming, which would be counterproductive to the build-out of 5G in our environment.” And with Germany due to auction 5G spectrum later this year, DT was lobbying for limits on prices, saying: “It will be important that spectrum auctions are decent, that no one has the idea the auction is putting money toward the financial deficit of the state.”