German spectrum auction ends but prices low
E-Plus misses out on valuable 800MHz spectrum, TMo plans for LTE
Published: 21 May, 2010
READ MORE: Spectrum | Germany | Regulator | LTE
The huge German spectrum auction came to an end yesterday, but in contrast to the Indian sale, the sums raised were only around half of expectations. The credit crunch and memories of the huge overpayments by German cellcos in the 3G auctions helped depress the takings to a total of €4.38bn ($5.5bn). Analysts at KPMG had forecast income of €8bn.
The smaller cellcos' fears that the auction rules would favor the big players were justified to some extent. The three largest mobile operators, O2, Vodafone and Deutsche Telekom's T-Mobile, each won two paired 5MHz chunks of spectrum in the 800MHz band, considered key for rural coverage of mobile broadband. The smallest cellco, KPN-owned E-Plus, failed to win any of this valuable spectrum.
A total of 41 spectrum blocks was sold in the auction, in the 800MHz, 1.8GHz, 2GHz and 2.6GHz bands. Vodafone secured 12 blocks of spectrum across the bands for €1.42bn; Telefonica's O2 paid €1.38bn for 11 blocks; E-Plus bought eight blocks for €283.6m; and T-Mobile got 10 blocks for €1.3bn.
The incumbent was most forthcoming about the results, claiming it now had the "key basis for increasing mobile data revenue". DT's head of German operations, Niek Jan van Damme, said in a statement: "We acquired all of the frequency blocks necessary to move forward with our network expansion." It will use its 800MHz holdings to extend LTE to rural areas while its will use the higher frequencies for 3G expansion and LTE in urban areas.
In some countries, the 2.6GHz and 800MHz bands - the key frequencies for 4G - are being sold some years apart, making it harder for operators to acquire the right mixture of licenses to support rural and urban mobile broadband cost effectively. However, major economies like the UK are following Germany's example of auctioning several bands together, as well as changing rules on the refarming of existing 2G holdings in 900MHz.
"The outcome of the spectrum auction puts Germany in a leading position when it comes to the award of the digital dividend in the 800 MHz range in Europe, and at the cutting edge of mobile broadband development," Deutsche Telekom said, as quoted by TotalTelecom. "If the efficient use of LTE is also to be guaranteed on an international level, neighbouring countries now need to follow suit," the company added.
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