Auctions in the mid-band spectrum between 3.4 GHz and 3.8 GHz are piling up as regulators and operators start to take these bands seriously as opportunities to deploy early 5G services. Though the US and China are setting the pace – though with no alignment of their activities – many regulators are preparing auctions, and the relatively plentiful capacity available may encourage new entrants.
This has happened in the Czech Republic, where two new entrants acquired spectrum in the 3.7 GHz band, along with two incumbents. Existing MNOs O2 and Vodafone each gained a block of 40 MHz in the auction, held by the Czech Telecommunication Office, as did newcomer PODA. But the other new player, Nordic Telecom 5G, grabbed the biggest spoils, with 80 MHz.
Nordic was helped by a CTO ruling that existing players would be limited to 40 MHz while newcomers could go up to 80 MHz. The third-ranked MNO, T-Mobile CR, failed to win any spectrum, as did Suntel Net.
The large amount of spectrum in this band helps to keep the prices down, which also helps new players – there was none of the spiralling cost often seen in sub-1 GHz auctions. The government netted CZK1.02bn (€39m) from the sale in total. However, each block went for seven times the reserve price, indicating how this spectrum band is gaining in perceived value. The specific allocations of blocks will be made after the participants have paid.
The value will surely rise higher, at least in countries which do not adopt an unlicensed option like the US. Until recently, this band was too high to be used realistically for wide area mobile services, but small cell architectures are making it viable for targeted capacity hotzones and indoor usage.
Jaromír Novák, chairman of the Czech regulator, said: “The result of this successful tender shows that the telecommunication market is oriented towards the provision of data services which are the core of functional data economy.”
The European Union has identified several 5G ‘pioneer bands’ in which it will coordinate trials and regulations, and 3.5-3.7 GHz is one (others include the 470-790 MHz UHF band and some millimeter wave frequencies).
The US’s moves to open up the 3.5 GHz band – which has federal incumbents in that country – have attracted most attention because of the innovative CBRS (Citizen’s Broadband Radio Service) approach, which includes licensed and unlicensed usage. However, operators like T-Mobile USA are already saying the US rules are too focused on LTE, while the band should be earmarked for early 5G.
In many other regions, the 5G focus is already clear, notably in China, whose potential scale is driving interest across the whole ecosystem. The process of making 3.5 GHz ready for 5G is simpler in most countries than in the US – some of it will be opened up for the first time, some has been in use for years for fixed wireless, so licences are already in play, and just need to be redefined to allow mobility (and in some countries, technology neutrality).
In the UK, for instance, the regulator was early to allow mobility in the bands. After experiments with WiMAX by Intel and UK Broadband, most of these frequencies are now owned by Hutchison 3, which acquired UKB from PCCW’s UKB earlier this year for £250m.
Several other countries are interested in spectrum in this region. China has allocated 300 MHz in 3.5 GHz for 5G use and is carrying out tests and South Korea recently saw its first trials in the band also. In the US, the operators’ trade body, CTIA, wants the country to align its efforts with international moves rather than focusing on an LTE-oriented CBRS policy. It said in a recent filing with the FCC: “Nations around the world are accelerating the development and deployment of 5G by streamlining access to bands like 3.5 GHz. With 3.5 GHz as the only midband spectrum in the pipeline in the US, we need a licensing framework that facilitates investment, cements our lead in 5G and maintains our position as the global leader in wireless.”
Last month, French regulator ARCEP pledged to make available 300 MHz of contiguous 3.5 GHz spectrum for 5G by 2020 – clearly earmarking the mobile usage of this band for next generation wireless rather than for LTE densification.
In some markets, 3.5 GHz is seen as an ideal way to add capacity to 4G via small cells, but as MNOs in Europe have often not reached capacity and density limits in their 2.6 GHz holdings, there is a tendency to look ahead to 5G for the 3.5 GHz spectrum.
Regulators in the UK, Sweden and Ireland have already identified the band for 5G use.
ARCEP has identified a sub-band of 80 MHz of spectrum at 3.6 GHz to be used for near term 5G trials. The first cities named to host these trials are Lyon, Nantes, Lille, Le Havre, Saint-Étienne and Grenoble.
Existing licences in the 3.4 GHz to 3.6 GHz band will be regrouped to form contiguous blocks, towards the bottom of the band. This should make it possible to have more than 300 MHz of contiguous spectrum available for 5G by 2020, and 340 MHz by 2026 (or up to 390 MHz where fixed wireless is not in use). Work will begin this year on upgrading part of the 3.5 GHz network, and the 2.6 GHz TDD band, to “superfast” networks.