Two days into Germany’s multi-band spectrum auction, total bids reached nearly €1.9 billion – so eclipsing the €1.5 billion floor set by BNA, the telecoms regulator – with operators apparently valuing 900MHz spectrum much more than frequencies in the 700MHz ‘digital dividend’ band.
By Friday morning (29 May), the auction had already seen 27 rounds of bidding since its start on 27 May.
While BNA set minimum bids at €75 million for each 2x5MHz block in both the 700MHz and 900MHz frequency bands, 900MHz spectrum has attracted the highest offers.
Deutsche Telekom made the highest bid of the auction by the end of round 27, willing to spend nearly €106 million for a 2x5MHz block of 900MHz spectrum. Telefonica Deutschland and Vodafone – the other two bidders in the auction – had made similar offers for 900MHz airwaves.
By contrast, bids for 2x5MHz spectrum at 700MHz – from all three operators – was little more than the €75 million reserve price.
One possible reason for the relative lack of enthusiasm for 700MHz – other than the fact there are only three bidders for the 2x30MHz of digital dividend spectrum up for grabs – is that these licences have conditions attached to them that operators no doubt believe are onerous.
BNA has stipulated that 700MHz licence holders must provide broadband coverage to at least 97 per cent of households in each federal state, and at least 98 per cent of households nationwide, as well as provide a minimum transmission rate of 50Mb/s per cell in order to ensure households get an average transmission rate of 10Mb/s.
It is unlikely, too, that 700MHz will be available anytime soon. To clear 700MHz spectrum for mobile broadband use, terrestrial television broadcasters must switch from so-called DVB-T transmission to DVB-T2.
According to the BNA’s announcement on the multi-band auction, the shift to DVB-T2 will mean that 2x30MHz of 700MHz spectrum “can gradually be used for mobile broadband starting in 2017”, although the switchover process may not be completed until 2018 or 2019.
By comparison 900MHz and 1800MHz spectrum acquired in the auction will become available at the end of 2016, which is when existing licences in these bands expire.
Analysts cited by Reuters expect the auction – which also puts 1500MHz spectrum under the hammer – to raise somewhere between €4 billion and €5 billion.
It is well short, of course, from the spectrum feeding frenzy in 2000 that saw Germany raise more than €50 billion for 3G licences.