Main radio spectrum trends
Montpellier, 27 January 2012 – IDATE provides readers of its yearly published market report “Radio Spectrum- 4G: the mobile broadband bottleneck?” an overview of the latest trends in the field of radio spectrum, which in 2011 included: Digital Dividend availability and prospects for a second Digitale Dividend, the deployment of LTE in the 1800 MHz band, allocation and use of the 2.6 GHz band, new frequency bands such as the L-Band and the advent of cognitive radios with the first white-spaces developments.
“The search for new spectrum is very active in Europe and in the USA in order to provide resources for the mobile broadband expansion as we observe fast-growing mobile broadband uptake”, says Frederic Pujol, Head of the Mobile and Spectrum Practice at IDATE.
The main radio spectrum trends in 2011
• Digital Dividend availability,
• deployment of LTE in the 1800 MHz band,
• allocation and use of the 2.6 GHz band,
• new frequency bands such as the L-Band
• and the advent of cognitive radios with the first white spaces developments.
• There is a growing interest in a ‘Second Digital Dividend’ in Europe where mobile services could be introduced below the existing 790-862 MHz frequency band. This could provide benefits in terms of international harmonisation but is only a very long-term prospect.
• The analogue switch-off is under way in Europe and will be finalised by end-2011 in most countries. Auctions took place in Germany in May 2010 and in 2011 in Spain and Sweden. Other countries are following but timetables are fragmented across Europe.
• LTE commercial services in the Digital Dividend started in 2010 in the USA and in Germany.
• In the USA, the Digital Dividend spectrum was auctioned in 2008 and LTE services are developing as Verizon Wireless launched its LTE network in the 700 MHz band at the end of 2010.
• Interference issues with Digital TV and Cable TV networks and (Programme Making and Special Events (PMSE) still have to be solved.
Factors playing a role in spectrum valuation
The value of the spectrum depends on the following factors:
• Mobile traffic growth automatically increases the value of harmonised spectrum
• Frequency band: spectrum below 1 GHz has the best characteristics for mobile services. Spectrum in the 2.6 GHz band is likely to be much more expensive than in the 3.5 GHz band due to the ecosystem for 4G in this band and better propagation characteristics;
• In the 2.6 GHz band, the split made by the NRAs or spectrum agencies between FDD and TDD spectrum affects the valuation of the spectrum as it almost determines the technology that will be used (Mobile WiMAX in TDD spectrum and HSPA/LTE in FDD spectrum);
• Harmonised spectrum or not – degree of harmonisation;
• ‘Quality’ of spectrum:
- Possibility of using 20 MHz duplex channels for broadband services using LTE for instance;
- Potential for interference: UWB or not, situation of adjacent channels, coordination necessary or not – such as at borders or with adjacent users;
- Type of radio planning, including traditional and ‘BEM’ type;
- Middle-of-the-band or edge-of-the-band (for instance, in the 2.6 GHz band): has an impact on the potential for interference, on the cost of the base station filters for mobile operators;
- Timetable for real availability of the spectrum (some portions of the spectrum often need to be freed by existing users).
• Availability of new technologies: LTE will bring more flexibility with its ability to use channels from 1.25 MHz to 20 MHz. It will give more value to small frequency bands which could not accommodate the 5 MHz channels of UMTS;
• Spectrum aggregation: this technical innovation increases the value of isolated spectrum such as the L-Band which had a limited interest due to its ‘non-FDD’ nature (a single and isolated frequency block is available). The supplemental downlink functionality will offer mobile operators the possibility to add spectrum for downlink traffic only.
• Geographical location/ National or regional licenses; the latter have a much lower valuation;
• External factors such as the state of financial markets in the world, which affects the possibilities of borrowing money on the markets;
• Regulatory constraints: too many regulatory constraints, such as the ones imposed on the ‘D’ block of the 700 MHz auctions in the USA, reduce the interest of potential bidders.