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24
May
2010

German Spectrum auction- pricing not excessive

POSTED BY Global Administrator
As the German spectrum auctions drew to a close on May 20, several factors may have reduced the amount that bidders were willing to put forward for the spectrum in the 800MHz frequency band, even though recent pressure on operators data networks means that operators may eventually need as much spectrum as they can get.

As one of the first countries to release so called "digital dividend" spectrum, made available through converting radio and TV signals from analogue to digital, the auctions could yet herald an era of reasonable pricing of spectrum for mobile use, which has in the past reached astronomical prices.

Though the German government achieved €4.38bn ($5.5bn) for the frequencies, some forecasts were coming in at twice that amount. No new players decided to join the market, which could have hiked prices, while stringent roll out requirements to create rural broadband coverage may have put some bidders off.

The jewel in the crown of this current auction was the 800 MHz band, due to its wider geographic coverage outside urban areas and better in-building penetration is built up areas. To put a price per head on the auction, the 800 MHz spectrum went for an average of US$ 0.91 / €0.73 per MHz per head of German population, considerably lower than the $4.17/MHz/head that the US government managed to achieve for its auction of spectrum in the comparable 700 MHz band. And that is despite a higher population density in Germany than the US.

O2, Vodafone and T-Mobile, won widely in the 800 MHz band. Deutsche Telekom won the frequency it needed to extend its LTE reach when it needs to: "We acquired all of the frequency blocks necessary to move forward with our network expansion," the company said. It will use its 800MHz holdings to extend LTE to rural areas while its will use the higher frequencies for 3G expansion and LTE in urban areas.