A brave new world in which 5G enables new entrants, regulators support a more creative approach to spectrum licensing, and MNOs support both may seem an encouraging response to the possibilities offered by 5G – but it is not necessarily about to happen.
Only a few ‘5G’ auctions have been held yet, mostly in the C-band (3.4-4.2 GHz or subsets), plus the USA’s 600 MHz incentive auction – though some operators will deploy early 5G in repurposed 2G, 3G or even 4G bands. But so far, most of those auctions which have taken place look very similar to those of the 4G era, with a few, expensive national licences being snapped up by the established MNOs.
The UK’s recently concluded 3.4 GHz auction is a case in point. The country’s four MNOs were the only bidders apart from one new entrant, Airspan, which is bidding for spectrum in various countries to support a neutral host, small cell platform play – exactly the kind of approach which would help open the market to the kind of new, vertically oriented services and providers that could enable a more compelling 5G business case. Although Airspan did secure 3.5 GHz spectrum for this purpose in Ireland, it dropped out quickly in the UK race, in an auction which pushed prices higher than expected, inevitably working against newcomers.
There are exceptions. As noted, Ireland’s regulator, ComReg, awarded a 3.5 GHz licence to Airspan and another to fixed wireless provider Imagine. And it split the airwaves between rural and urban allocations to ensure 5G would reach country areas too.
Airspan got a useful 85 MHz (60 MHz urban), for which it paid €9.6m. It is focused on deploying networks for vertical markets, especially utilities, transportation and public safety. And Imagine spent €9.7m on 60 MHz of rural to add to its existing holdings in 2.5 GHz and 3.5 GHz, which it used for WiMAX and, more recently, TD-LTE.
ComReg chairperson Gerry Fahy said: “Continuity for existing services has been underpinned and the possibility of new services has been significantly enhanced.”
That balance – between enabling the MNOs to continue to invest in existing and new business models while encouraging new players – is also being sought by Canada’s government, which says it will exclude the country’s three national operators – Bell BCE, Telus and Rogers – from bidding for 43% of the spectrum in its forthcoming 600 MHz auction.
This is notable because the sub-1 GHz bands are usually the least likely to include allocations for new entrants, because of the limited amount of spectrum available, and because operators regard these bands as the most valuable, and so will pay large sums per MHz.
Of course, allowing new entrants to secure spectrum at reasonable prices is only the first step to opening the market for innovative services and increased competition. The winners of the licences need to have the financing, expertise and business model to deploy and monetize a mobile network, and in the past, this has certainly not always proved the case. Indeed, a national, or large regional, sub-1 GHz licence – best suited to wide area mobile connectivity, in direct competition with established MNO networks – is a high-risk way to encourage new players. Deploying such a network is a daunting undertaking when starting from scratch, and the competitive landscape is tough in most developed markets.
That is why assigning spectrum on a more localized or vertically specific basis – which favours the higher bands where there is more capacity to share around – is a less risky way forward, and leaves the MNOs with the incentive to continue to enhance the national mobile networks, since they will continue to control and monetize those.