Spanish cablecos could form Clearwire-style group in 2.6GHz

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Spanish cablecos could form Clearwire-style group in 2.6GHz

By CAROLINE GABRIEL

Published: 3 December, 2009

The anticipated impact of 2.6GHz spectrum in Europe has changed several times already, and only three countries (all Nordic) have actually conducted auctions as yet. First the band was going to be the great hope for WiMAX; then, as early sales like the UK's were delayed, it was considered a dead cert for LTE overlays by established 3G cellcos; now that the attention of many of those operators has shifted to refarming and digital dividend, 2.6GHz may attract lower demand and prices, and so once again provide an entry point for disruptive forces.

In Spain, as in the US, this disruption to the telco status quo could come from the cable operators, with four of the largest players - Ono, Euskaltel, R and Telecable - negotiating a combined bid for 2.6GHz spectrum. Like the leading US cablecos - which have also bid as a group in auctions, and which are working with Clearwire and Sprint to create a quad play - the four Spanish firms could acquire licenses to support fixed/mobile bundles and improve their customer appeal and their competitiveness against broadband and mobile providers, especially Telefonica.

If they manage to create a common entity, and win spectrum in the auction (scheduled for the first quarter of 2010), sources indicate they might adopt WiMAX technology, to gain a headstart on 3G competitors in terms of introducing a flat, IP, OFDMA-based network, before LTE has gained a full ecosystem. Telefonica recently started its own LTE trials, working with six potential suppliers in several European and Latin American territories, and Madrid has been something of a 4G hotbed. Clearwire recently decided to build out its 3.5GHz spectrum, while Telefonica unit Iberbanda is already there, and Madrid was home to the initial LTE trials by Vodafone, Verizon Wireless and China Mobile.

The CEO of one of the cablecos told Spanish newspaper Expansion that the authorities are in favor of a combined cableco bid, to bring new competition into the market. The auction is to be run partly on a regional basis to facilitate bids from cable providers, which have regional territories.

Traditionally, these firms have offered mobile services via MVNOs but may now be looking for greater control and the differentiation of creating a 4G network even ahead of Telefonica. This could give them access to new markets, not just consumer services but machine-to-machine, backhaul and other segments. Currently, Euskaltel, R and Telecable have MVNOs with Vodafone Spain, and the only national cableco, Ono, works with Telefonica's Movistar. They now say that the MVNO wholesale model is hard to justify because of the price war in retail tariffs.

They have shown signs before of wanting to have greater control and ownership of their mobile assets, even if that means upfront capex investment. According to the Expansion report, the cablecos were previously in talks with Spain's smallest cellco, Yoigo, about a possible deal where the cable partners would invest in expanding the mobile provider's network, in return for lower wholesale fees. These talks started three months ago, and Yoigo could still play a part in a cableco project, perhaps offering national roaming capabilities in the way that Sprint does for the Clearwire cableco investors/MVNOs.