Telco groups snap up Italian 5G spectrum - and pay dearly for it
- Record sums paid for mid-band 5G spectrum in Italy
- A grateful government bags the cash
- The 3.5 GHz band might also soon be released for 5G in the US
The hard-pressed Italian government (currently embroiled in a budget battle with the European Commission and possible withdrawal from the Euro) is the winner of Italy’s 5G spectrum auction, reaping a cool $US 7.6 billion, just when it needed the cash most. At least, that’s the view of the global financial press, which has bemoaned the prices being paid for spectrum in Europe on the basis that the sums involved won’t leave any room for telco profit.
Here’s the damage
The consensus for some time has been that mid-band spectrum is where the smart money should be invested and the Italian players have done just that, with Telecom Italia and Vodafone Italia grabbing the lion’s share with 80 MHz each for around €1.7 billion a pop. Wind Tre and new Italian entrant Iliad Italia, paid an equivalent amount (€0.483 billion) for 20 MHz each.
Also up for grabs were blocks of 700 MHz spectrum which went for around €340 million each.
Up in the high frequency 26 GHz zone, spectrum blocks were fetching much less - around €33 million, a reflection perhaps that European telcos aren’t buying all the hype around ultra-fast, small cell 5G and its alleged world-changing applications - at least not yet
So, far from expensive mid-band spectrum dragging European telcos into the abyss, the price trends playing out in Europe feed into the growing view that even expensive mid-band spectrum for use with 5G is paradoxically the key to carrier profitability. It should allow telcos to expand capacity (since mobile broadband data demand is still growing) and, along with things like network automation and virtualization, reduce their cost-per-bit dramatically. That could ensure profitability without their having to start building out thousands of newer and smaller base stations to support high frequency spectrum.
The view in the US is increasingly focused on mid-band too, with the FCC apparently now scrambling to finalise rules for the 3.5 GHz band to get mid-band spectrum into the market. According to FCC Commissioner O’Rielly (in an op-ed) the 3.5 GHz band looks like being “the quickest and most appropriate band to initiate mid-band 5G services in the United States.”
According to the CTIA’s Senior Vice President for Regulatory Affairs, Scott Bergmann, the 3.5 GHz band was recommended for commercial use in 2012 but targeted for spectrum sharing (not necessarily 5G). Meantime there’s been more of a focus on small cell technology to support 4G LTE and the development of 5G.
Bergman says that the reforms the FCC will vote on later this month - longer license terms, larger geographic area licenses, and an expectation that licenses will be renewed - will be critical to “making the most out of this 5G-ready spectrum.” He claims the spectrum-sharing initiative using micro-licenses originally proposed for the band would have severely hampered its use.
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