News
09/11/2009
Which conditions for mobile broadband and 4G growth?
Radio Spectrum
At a time of explosive growth for mobile broadband and the progressive deployment of 4G networks starting next year, new frequency bands are being made available. Digital dividend spectrum was already awarded last year in the US, and is progressively being harmonised in Western Europe. In the meantime, the refarming of the 900 MHz band creates an opportunity for mobile broadband to be made available in rural areas.
This latest IDATE report focuses on three main topics: Digital Dividend, spectrum refarming and 4G Spectrum.
Digital Dividend
The Digital Dividend represents a unique opportunity to facilitate the dissemination of mobile broadband in Western Europe. The 800 MHz band (790-862 MHz) freed up in Europe for mobile communications has a very high value for mobile operators. The takeoff of mobile broadband adds value to this new spectrum.
Analogue TV switch-off has already happened in the US and is progressively taking place in Europe with a switch-off to be completed by the end of 2015.
The status of the Digital Dividend in Western European countries is getting clearer as most European countries have already allocated, or shall do so soon, the 800 MHz band (790-862 MHz) to mobile services. The regulatory framework is getting clearer and the technical conditions have been established by the CEPT.
Harmonisation throughout Europe is likely to be reached and this adds even more value to the 800 MHz band. Most mobile operators are planning to use LTE in FDD mode in this band.
USA took the lead and auctioned the second part of its own digital dividend early in 2008. The 700 MHz auctions in the USA were a real success even though the D block was not allocated. The reserve price ($10 billion) was largely exceeded and the winning bids reached US$ 18.9 billion. This confirms the great interest which the UHF band has for those mobile operators who are going to deploy LTE.
Spectrum refarming
The use of the 900 MHz band by 3G or 4G technologies represents a short-term opportunity to facilitate mobile broadband coverage of rural areas.
Regulatory hurdles have been lifted in Europe as the GSM Directive was repealed in mid-2009.
The potential benefits for operators are the possibility to provide extended coverage for 3G as well as reduced CAPEX and OPEX.
Spectrum refarming can be considered as a trend in Western Europe and is coherent with the wish of NRAs to offer broadband access in rural areas but could be slowed down in many countries due to the distribution and fragmentation of the 900 MHz spectrum between the main players.
The refarmed 900 MHz band will be mainly used by 3G technologies but some operators are considering using the 900 MHz band for LTE (in Sweden, for instance).
900 MHz refarming has already begun in Finland and is planned in many other countries.
4G spectrum
The continuous and exponential growth of data traffic on mobile networks will increase the need for new spectrum.
LTE is going to dominate the 4G field; our projections show that there will be more than 350 million LTE subscribers at the end of 2015. LTE commercial growth is expected to start in 2011 in the USA and in Japan and from 2012 on in Western Europe.
LTE needs larger bandwidth (typically 10 and 20 MHz) to deliver all its benefits in terms of large data rate and spectrum efficiency.
4G mobile networks will use various combinations of frequency bands in the different regions of the world. In the USA, LTE is first going to be implemented in the 700 MHz band.
We expect the 2.6 GHz and 800 MHz bands to be the most widely used in Western Europe for 4G deployments. The 900 MHz band will be subject to refarming and spectrum arrangements between operators.
2.6 GHz status in Europe: no harmonisation in terms of FDD/TDD distribution is expected. This could slow down the availability of terminals and increase their cost.
In the long term, the 3.5 GHz band will become available for mobile applications and could be used in the cities to provide very high data rates. Technical compatibility between fixed and mobile networks and competition issues could prove to be a problem though.
The S-Band was allocated in May 2009 by the European Commission to Inmarsat and Solaris. It could be used as a complement to terrestrial mobile networks but the regulatory conditions still have to be clarified.
The 2.6 GHz and 800 MHz bands will be auctioned in the years to come in Western Europe. We expect prices for the 2.6 GHz spectrum to be in the 0.02- 0.5 per MHz per pop and for the 800 MHz spectrum in the 0.1- 1 per MHz per pop range.
TDD spectrum is less attractive to operators than FDD spectrum as shown by its valuation in Sweden and by the lack of interest in Hong Kong.
