LONDON — Intel was one of the main winners in the second European 2.6GHz spectrum auction, in Sweden, which raised SEK 2.1 billion (about $350 million) after a grueling 112 rounds of bidding over 16 days.
The chip maker acquired 50MHz (TDD) spectrum for SEK 159.2 million ($26.5 million) and will likely look for local partners to build and operate a mobile WiMAX network using the license.
Intel says it will rent out the license to its chosen partners rather than sell it.
Swedish network operator TeliaSonera paid the most for its license, $93 million for 2x20MHz blocks, while H3G Access, a subsidiary of the operator of "3" branded mobile networks in several European countries, paid $49 million for just 20MHz block of spectrum.
Other winners in the 2.6GHz auction, which the Swedish regulator stresses is technology and service neutral, included Tele2 and Telenor, both acquiring 2 x 20 MHz blocks.
According to consultancy group Analysys Mason (Cambridge, England) the prices reflect "realistic" values for the spectrum that was auctioned, which it calculates came in at Euros 0.13/MHz/pop , with unpaired spectrum for going for just below Euro 0.04/MHz/pop.
With auctions coming up in other European countries, including the U.K., Austria and the Netherlands, the outcome of the Swedish auction provides much needed information on the price that operators will pay for 2.6GHz spectrum throughout Europe, the consultancy says.
"Clearly prices fetched at the 2000/2001 European UMTS auctions, especially in the U.K. and Germany, are unlikely to be repeated. On the other hand, operators are reporting a rapid uptake of mobile broadband dongles, and new WiMAX players may be eager to enter the arena, suggesting that prices may still be substantial," says Bart-Jan Sweers, Strategy Consultant at Analysys Mason.
And the Analysys Mason take on the 2.6GHz auction stresses acquiring frequencies is not the only way for operators to prepare for future demand. Refarming of 2G spectrum, the digital dividend and general easing of spectrum restrictions will improve the supply side of spectrum, while femtocells may well relieve any capacity issues.
Despite being significantly below the U.K. and German UMTS auctions in 2000, the prices achieved in the Swedish auction were considerably higher than the recent Norwegian 2.6GHz auction, which came in at Euro 0.03/MHz/pop., the consultancy group notes.
"Interestingly, the Swedish auction may be a more reliable indicator of prices in other upcoming European auctions than the Norwegian auction. The reason for this is that the competitive situation in Sweden, with four mobile players, is more representative of the situation in most European countries than the Norwegian two-player market," says Sweers. "Still, there are plenty of specifics in the Swedish situation that should lead to caution when using this auction result as a benchmark."
For example, taking the viewpoint of a bidder for paired spectrum in a country that adopts the CEPT band plan (2 x 70MHz of paired spectrum plus 50MHz of unpaired spectrum), two factors need to be taken into account when considering the Swedish outcome, adds Sweers.
Firstly, just as in the Norwegian case, Sweden has a very low population density compared to most European countries. Consequently, it has a relatively low traffic density, leading to lower spectrum demand and hence lower prices. Secondly, later auctions may be affected by rising expectations in the industry regarding the uptake of mobile data and the anticipation of LTE approaching commercial availability.
"Some European countries (e.g. the UK and the Netherlands) plan to deviate from the CEPT band plan by using a flexible band plan, in which the split between paired and unpaired spectrum is not fixed but varies according to demand at auction. In theory, this will enable a more efficient allocation of spectrum among FDD and TDD operators, and therefore could lower prices overall but at the same time could lead to higher prices for paired spectrum. The Swedish result suggests that competition between bidders for paired and unpaired spectrum will be minimal, given that the price fetched for unpaired spectrum was four times lower than for paired spectrum," says Sweers.
The Analysys Mason take on the 2.6GHz auction stresses acquiring frequencies is not the only way for operators to prepare for future demand. Refarming of 2G spectrum, the digital dividend and general easing of spectrum restrictions will improve the supply side of spectrum, while femtocells may well relieve any capacity issues.
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