Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 1

Ensuring European spectrum
renewals are aligned with Digital
Decade targets
Report for Ericsson

1 October 2022

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 2

Contents
1.

Executive summary ......................................................................................................................... 32.

Introduction .................................................................................................................................... 13

3.

Importance of spectrum in achieving Digital Decade and Green Deal targets ............................. 15

4.

Best practices for spectrum pricing ............................................................................................... 28

5.

Best practices for spectrum renewal processes ............................................................................ 36

6.

Conclusions ................................................................................................................................... 58

Annex A

Upcoming spectrum renewals in Europe..................................................................... 61

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 3

1. Executive summary
1.1

Introduction

Aetha Consulting Limited (Aetha) has prepared this report for Ericsson to discuss how renewal
processes for spectrum licences in Europe – including the pricing of spectrum – can be designed bypolicymakers to help achieve Europe’s Digital Decade and European Green Deal targets.
Europe is aiming for digital transformation in the 2020s (the ‘Digital Decade’), including the extensionof high-speed fixed and mobile connectivity to all citizens. However, achieving this will require significant
investment from operators at a time when they face major financial pressures due to stagnating
revenues and increasing capital expenditure. One major component of capital expenditure contributing
to this increase is the cost of spectrum, including one-off spectrum fees, annual licence fees and indirect
licence costs, all of which contribute to the Total Cost of Spectrum Ownership (TCSO).
There are a large number of spectrum renewals set to occur in Europe in the coming years, providing
an opportunity for policymakers to adjust spectrum licence terms, including the TCSO and its distribution
between the three components outlined above. By doing so, regulators could ease financial pressure
on operators and thereby promote investment to meet the Digital Decade and European Green Dealtargets. In this report, we discuss best practices for spectrum renewal processes and spectrum pricing
which, if followed, will enable policymakers to increase the likelihood of achieving their aims for the
Digital Decade.

1.2

1.2.1

Importance of spectrum in achieving Digital Decade andGreen Deal targets
Europe’s Digital Decade

The European Commission (EC) has set out a vision for Europe’s digital transformation by 2030, as
well as the measures required to achieve this during the 2020s – the so-called ‘Digital Decade’. The
Digital Decade plans revolve around four cardinal points: skills, secure and sustainable infrastructures,
digital transformation of businesses, and digitalisation of public services.
A key component is the development of secure and sustainable digital infrastructures, including the aim
for all households to be covered by a Gigabit network and for all populated areas to be covered by 5G,
by 20301. The universal connectivity to be provided by this infrastructure is a key enabler for other areasof the ‘Digital Decade’ – without it, the other three cardinal points cannot be achieved.
Universal connectivity is also vital for creating a sustainable society – for example, it enables a multitudeof new Internet of Things (IoT) applications with the potential to increase the efficiency of manufacturing,farming and transportation processes, saving energy and reducing waste. Indeed, a resilient telecoms
infrastructure is a key component of United Nations Sustainable Development Goal (SDG) 9 2.

1

European Commission, ‘2030 Digital Compass: The European Way for the Digital Decade’, March 2021. The forthcoming 2030
Policy Programme "Path to the Digital Decade", is likely to specify that “all populated areas are covered by next generation
wireless high-speed networks with at least 5G equivalent performance.”2

See European Commission, ‘Communication from the Commission to the European Parliament, The Council, The European
Economic and Social Committee and the Committee of the Regions: Next steps for a sustainable European future: European
action for sustainability’, COM(2016) 739 final, 22 November 2016 and United Nations General Assembly, ‘Resolution adopted
by the General Assembly on 25 September 2015: 70/1. Transforming our world: the 2030 Agenda for Sustainable
Development’, Reference A/RES/70/1, 21 October 2015.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 4

The EC has outlined its sustainability vision for Europe within the ‘European Green Deal’, which aims
for Europe to achieve net zero greenhouse gas emissions by 2050, making it the first climate-neutral
continent.3 The telecoms industry has a key role to play in achieving these goals – as highlighted by
ETNO, high-quality telecoms networks are essential for the digitalisation of industry and will act as acatalyst for reaching these ambitious climate targets.4 Digital technologies have the potential to increase
efficiency and sustainability across all sectors of the economy but universal connectivity is essential forthese benefits to be unlocked, maximising the chances of achieving the European Green Deal targets.
Data from the EC’s Digital Economy and Society Index (DESI) report for 2022 indicates that fixed very
high-capacity networks (VHCNs) cover 70% of European households, but only 37% of those in rural
areas5. Meanwhile, 5G coverage across Europe continued to develop at the time of DESI’s report whichindicated that, as of mid-2021, 25 Member States had started commercial 5G network deployments,
with the greatest coverage recorded in Italy, Denmark and the Netherlands (with over 90% of populatedareas covered). Since then 5G deployment has continued – commercial 5G services are now available
in all EU member states, with 64% of EU population covered as of July 2022.6 However, we note that
5G is commonly deployed using either new low frequency spectrum (e.g. 700MHz) or existing 4G midband spectrum and Dynamic Spectrum Sharing (DSS) so, in many cases, will not yet be delivering a
step-change in performance when compared to 4G networks.
Operators require a portfolio of low-, mid- and high-band spectrum to support high speeds, provide
sufficient network capacity and enable network coverage to be provided in the most cost-effective way.
Sufficient low frequency spectrum (below 1GHz) is needed to provide mobile services to areas (lesspopulated areas, deep indoor areas) which higher frequency signals cannot reach.
To unlock the full benefits of 5G, including such a change in network performance, 5G needs to
deployed by operators using a mix of low-band spectrum (e.g. 700MHz) for a coverage layer and alarge contiguous block of mid-band spectrum (e.g. 100MHz from the 3.5GHz band) to offer high speeds
across a wide area, supplemented with mmWave spectrum (e.g. 26GHz band) to provide sufficient
capacity in very busy areas (e.g. transport interchanges, sports/entertainment arenas etc).
In the future, additional mid-band spectrum (e.g. upper 6GHz band) will be required to support traffic
growth in city areas. GSMA Intelligence estimates that mid-band spectrum will generate around 63% of
the total GDP uplift generated by 5G 7. Additional low-band spectrum (e.g. 600MHz) will be needed toprovide extra capacity in deep indoor and more rural areas that cannot be reached by mid-band
spectrum and additional mmWave spectrum (e.g. 40GHz band) may also be required.
Despite the progress outlined above with regards to the deployment of 5G and fixed VHCNs,
considerable investments will need to be made by both the telecoms industry and governments toachieve the EC’s Digital Decade and European Green Deal targets, with public funding required tobridge the ‘investment gap’ where network deployment would otherwise be uneconomic.

3

European Commission, ‘A European Green Deal’, 7 June 2022.

4

European Telecommunications Network Operators’ Association (ETNO), ‘ETNO unveils European telecoms contribution to EU
Green Deal debate’, 24 June 2020.

5European Commission, ‘Digital Economy and Society Index (DESI) 2022: Thematic Chapters’, 28 July 2022.

6

VVA, PolicyTracker and LS telcom for the European 5G Observatory, ‘5G Observatory Quarterly Report 16, July 2022’, 1August 2022.

7

GSMA Intelligence, ‘The Socio-Economic Benefits of Mid-Band 5G Services’, February 2022.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 5

1.2.2

Financial challenges facing mobile operators

The public funding required to deliver on the Digital Decade and European Green Deal objectives
depends on the industry’s ability and economic incentive to fund network coverage expansion.
However, operators are facing significant financial challenges. Mobile operators are currently making
record investments in their networks due to:
•
•
•
•
•

Investment in new 5G technology (radio access network and core network upgrades)
The simultaneous operation of four generations of mobile technology (2G, 3G, 4G & 5G)
Investment in new network architectures (e.g. small cells)
The deployment of new sites to increase network coverage
Spectrum acquisition costs.

However, this is occurring at a time mobile service revenues are flat lining (or even declining). The
result is that capital intensity (capital expenditure as a proportion of revenue) is increasing, as shown in
Figure 1-1, and margins are decreasing. This is clearly unsustainable in the long term.
Figure 1-1:

1.2.3

Capital intensity of operators in home markets [Source: ETNO 8]

Impact of upcoming spectrum renewals

One key area of expenditure is spectrum acquisition. As discussed in Section 1.3.1 below, this expense
costs ~7% of mobile service revenue on average across Europe.9 Given that the total capital intensityof European mobile operators is estimated at ~18% in Figure 1-1 above, spectrum costs are estimatedto represent an average of ~35-40% of capital expenditure.

8

ETNO, ‘State of Digital Communications 2022’, February 2022. ETNO members are mostly the main incumbent fixed telecoms
operator in individual European countries – such operators typically operate a mobile business in their ‘home’ country andmany also have mobile operations in other countries. The figure depicts the capital intensity of the members in their homemarkets.

9

This estimate is based on analysis performed by Aetha Consulting and presented within Figure 4-3 of this report.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 6

We highlight spectrum acquisition because the availability and price of spectrum are often under the
direct control of regulators, in contrast to many of the other sources of financial pressure outlined above(e.g. revenue decline). It is therefore an area in which regulators can make a positive contribution
towards easing operators’ financial challenges, potentially increasing the investment they are able to
make in other areas (e.g. 5G deployment) and reducing the investment gap.
As discussed above, operators require a portfolio of low-, mid- and high-band spectrum. In the future,operators will need to both acquire new spectrum and retain existing spectrum to maintain a competitive
spectrum portfolio. Renewal is particularly important because (i) it affects operators’ short-term ability
to continue offering 2G, 3G & 4G services, and (ii) there are pre-existing equipment deployments socomparatively less capital expenditure is required to use the spectrum.
In addition, much spectrum is due for renewal in the next 10 years. We have analysed spectrum
holdings in Europe, identifying licences which are due to expire in this period. The upcoming renewals
are summarised in Figure 1-2 below, which shows the date of expiry for currently awarded spectrum ineach of the 32 countries studied (European Economic Area (EEA) plus Switzerland and the UK). The
expiry dates are colour-coded, with expiries in the next 2, 5 and 10 years shown in red, orange andyellow, respectively. Licences which are not due to expire in the next 10 years are shown in green,
whilst grey is used to denote spectrum that is yet to be awarded for mobile in the country in question.
We have found that of the 32 countries studied, only two do not have any spectrum licences that expire
in the next 10 years (Liechtenstein and the United Kingdom). Furthermore, we found that in eight
countries (Czech Republic, Estonia, Iceland, Ireland, Lithuania, Poland, Romania and Spain), allspectrum licences expire in the next 10 years.
The bands which have the greatest number of expiring licences are 800MHz, 900MHz, 1800MHz,
2.1GHz and 2.6GHz – the 800MHz and 2.6GHz bands are key 4G bands, whilst the 900MHz and
2.1GHz are typically used for 2G and 3G, respectively. However, in the long-term, all spectrum is
expected to be refarmed for 5G use.
The spectrum to be renewed commonly forms an integral part of operators’ spectrum portfolios, without
which they would be unable to offer a full set of services to customers. The loss of spectrum in key
bands can be an existential threat to operators, as illustrated by the example of Tele2 in Norway which
failed to re-acquire spectrum in the 900MHz band during an auction process in 2013, resulting in its exitfrom the Norwegian market. Due to the magnitude of these risks, a lack of information over how expiring
spectrum licences will be re-assigned and the corresponding prices creates a huge amount of
uncertainty, potentially impacting operators’ ability/willingness to invest in their networks.
For the above reasons, it is important for operators to have confidence that spectrum renewal processes
will enable them to retain key spectrum at a price that is affordable in the long term, so that they candivert their energy and investments into deploying 5G and enhancing mobile network coverage. In lightof this, we focus our recommendations on renewal processes in this report, although many of theprinciples are equally applicable to new spectrum awards.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 7

Figure 1-2:

Austria

Summary of spectrum licence expiry dates in Europe [Source: European
Communications Office10,11 and European 5G Observatory12]
700
MHz
FDD

800
MHz

900
MHz

1500
MHz
SDL

1800
MHz

2044

2029

2034

2044

2034

Belgium

2024

2024

Croatia

2036

2024

2024

2024

Cyprus

2041

2028

2023

2023

2029

2024

2024

2034

2040

2032

2030

2030

2030

Czechia2040

Estonia
Finland

2033

2033

France

2035

2032

2024

Germany

2033

2025

2033

Greece2030

2027

Hungary

2029

2029

Iceland

2.1
GHz

2.3
GHz

2044

2033

Bulgaria

Denmark

1900
MHz
TDD

2032

Ireland

2024
2024
2030

2023
2030

2030

2.6
GHz
TDD

3.5
GHz

2026

2026

2039

2027

2027

2025

2025

2041

2041

2024

2024

2023

2023

2028

2028

2041

2024

2029

2029

2032

2027

2030

2030

2030

2030

2030

2029

2029

2030

2033
2033

2.6
GHz
FDD

2030

2031

2025

2025

2025

2025

2025

None

2027

2030

2029

2029

2034

2029

2029

2034

2023

2032
2022

2037

2029

2029

2029

2029

Latvia

2042

2033

2026

2042

2026

Liechtenstein

None

None

None

None

Lithuania

2030

2032

2032

2026

2027

2027

2027

2033

2027

2033

2026

2026

2022

2033

2033

2040

2030

2029

2022

2022

2035

Malta

2030

2022

2029

2027

Netherlands

2040

2029

2030

Norway

2038

2033

2033

2028

2022

2032

2023

2022

2022

2022

Poland

2040

2029
2027

2032

2028
2037

2029

2029

2037

2028

2028

2025

2030

2022

None
2029

2022

2027

2035
2036
2022

2027

2027

2027

2027

2027

Romania

2029

2029

2029

2029

2029

2025

2026

2028

2028

2024

2031

2023

2029

2029

2022

2030

2030

2030

2023

2023

2022

2028

2028

2035

None

None

None

2040

2028

2026

Slovenia

2036

2029

2031

Spain

2031

2028

2030

Sweden

2035

2025

2027

2036

Switzerland

2035

2028

2028

2035

2028

UK

None

None

None

None

None

2025

2025

2045

2028
None

None

2022

2024

Portugal

Slovakia

2033

2023

Italy

Luxembourg

2033

2022

2022

2036

2025

2024

2030

26
GHz

None

10

European Communications Office, ‘ECO Report 03: The Licensing of “Mobile Bands” in CEPT’, 9 March 2022.

11

European Communications Office, ‘ECO Report 03: The Licensing of “Mobile Bands” in CEPT’, 6 April 2021.

12

European 5G Observatory, ‘Belgium grants provisional 5G licences in the 3.5GHz band’, 15 May 2020.

2025

2036

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 8

1.3

Best practices for spectrum pricing

Spectrum pricing is one area in which regulators can make a positive contribution towards
easing operators’ financial challenges, as highlighted above. The availability and price ofspectrum are often under the direct control of regulators, in contrast to many of the other sourcesof financial pressure outlined above (e.g. revenue decline).

1.3.1

Total cost of spectrum ownership

For regulators to make positive decisions regarding spectrum pricing, it is important to consider all
aspects of spectrum price; the Total Cost of Spectrum Ownership comprises several components:
Figure 1-3:

Components of the Total Cost of Spectrum Ownership•

Auction (one-off) payments: The amount of money determined by the award process, typically
expressed as a one-off lump sum (although staggered payments are increasingly common).

•Annual licence fees: Annual spectrum fees are charged to cover the cost of administering thespectrum and are typically determined outside the award process.

•Indirect licence costs: Licences can contain specific obligations, for example to extend network
coverage. The costs of these obligations can be difficult to quantify as they depend on the operators’
private cost structures and network rollout ambitions; however, they can be significant.

The TCSO to a mobile operator is the sum of the three components. Therefore, an operator will only
seek to acquire spectrum if the TCSO is lower than the spectrum’s value to it. Consequently, the true
‘reserve price’ in an auction is the sum of the auction reserve price, annual licence fees over the licence
period and indirect licence costs – if one is high, the others should be reduced to account for this.
One way of evaluating the impact of the cost of spectrum on mobile operators is to consider these costs
as a percentage of operator revenues. The main limitation of this calculation is that it does not takeaccount of indirect costs. However, it does provide a useful lower bound indication of the impact ofspectrum costs on mobile operators. This is often a very significant expense – on average, European
mobile operators are estimated to spend ~7% of revenue on spectrum, as shown in Figure 1-4 below.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 9

Spectrum cost to revenue ratio [Source: Aetha]

16%
14%

12%
10%
8%
6%
4%

2%

Finland

Switzerland

Portugal

NorwaySwedenBulgaria

DenmarkUK

Slovakia

FranceCzechia

Belgium

GreeceSpain

IrelandRomania

Germany

PolandAustria

Italy

Hungary0%

Netherlands

Spectrum cost to revenue ratio (%)

Figure 1-4:

Average

Spectrum is a pre-requisite for the provision of mobile services – operators cannot exist without it – andtherefore the fees associated with it can, to some extent, be considered to be an additional form oftaxation on the industry – a ‘spectrum tax’. This is particularly true of ongoing spectrum costs –specifically, annual licence fees and one-off fees for previously assigned spectrum – because whilst
this spectrum is required for continuity of services and, over time, will be refarmed to the latest more
spectrally efficient technologies, the spectrum on its own does not directly enable the provision of all
new services or open up new revenue streams.
A large quantity of existing spectrum is due for renewal in Europe in the coming years, as highlighted
in Figure 1-2 above. For this reason, close consideration of the link between the TCSO for expiring
spectrum and investment incentives is required, in order for policymakers to help close the investment
gap.

1.3.2

Risk and impact of high spectrum prices

One element to consider when renewing spectrum is spectrum pricing, including all components of the
TCSO. High spectrum prices carry significant risks, having the potential to stymie investment and leave
spectrum underutilised. Therefore, it is essential that spectrum prices are set at a level which isaffordable for operators in the long term and are aligned with policymakers’ objectives.
Operators are having to acquire new spectrum, as well as renew their existing spectrum holdings, inorder to support traffic growth. At the same time, revenues are relatively static. Therefore, if spectrum
continued to be awarded at the same price (per MHz), the overall spectrum cost (as a proportion ofoperator revenues) would increase. This is clearly unsustainable – as the amount of spectrum available
increases, the unit price paid for spectrum (including all elements of the TCSO) has to decrease.
However, regulators often use the outcomes of historic auctions in the country as a basis for setting
spectrum prices. This risks prices being set at excessive levels, potentially resulting in spectrum
remaining unassigned (as has occurred in e.g. India, Thailand, Mexico, Romania). Even if the spectrum
does sell, it may still be an inefficient outcome for the market that harms investment (e.g. Italy). For
example, several studies have highlighted possible links between high spectrum prices and both
reduced investment/network coverage and increased service prices:Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 10•

A study by NERA13 found a modest correlation between higher prices for spectrum and both
reduced network quality/availability (in terms of 3G/4G coverage, 4G subscribers and average
speeds etc.), likely due to reduced network investment, and increased service prices. The resultsof this study were referenced within the GSMA’s report on ‘effective spectrum pricing’.14•

A report15 produced by LS telcom, PolicyTracker and VVA for the European Commission suggested
that there may be an inverse relationship between price paid for spectrum and network availability(i.e. higher auction prices are associated with lower 4G availability).

In summary, high spectrum prices can have a detrimental effect on network investment andservice prices. With the increasing amount of spectrum required by operators to meet customer
needs, unit prices for spectrum must go down – and therefore regulators should not continue toadopt the approach of using previous auction price outcomes to set reserve prices for upcoming
auctions.

1.4

Best practices for spectrum renewal processes

There are many aspects that must be considered by regulators when re-allocating spectrum that has
previously been assigned for mobile use, leading us to identify several areas of best practice:•

Timing of renewal process – Renewing spectrum in advance of licence expiry:–•

Renewal processes ought to be commenced well in advance of licence expiry, in order to limit
the degree of uncertainty faced by operators and protect investor confidence – as set out in
Article 4516 and Article 50 of the European Electronic Communications Code (EECC)17

Objectives of process – Ensuring the priorities/objectives for renewal are understood:–

Regulators’ priorities would be expected to include encouraging the growth and development of
the mobile market, maintaining competition, and encouraging investment and innovation•

These priorities are aligned with the provisions of the EECC, the objectives18 of which
include promoting access to and take-up of VHCNs, as well as competition and efficientinvestment, whilst contributing to the development of the internal market and promoting theinterests of EU citizens

13

NERA Economic Consulting, ‘The Impact of High Spectrum Costs on Mobile Network Investment and Consumer Prices’, May
2017.

14

GSMA, ‘Effective Spectrum Pricing: Supporting better quality and more affordable mobile services’, February 2017.

15

LS telcom, VVA and PolicyTracker for the European Commission Directorate General for Communication Networks, Content
and Technology, ‘Study on Spectrum Assignment in the European Union’, October 2017.

16

Article 45 of European Union, ‘Directive (EU) 2018/1972 of the European Parliament and of the Council of 11 December 2018
establishing the European Electronic Communications Code’, 17 December 2018, sets out that "[Member States shall …. by](c) ensuring predictability and consistency in the granting, renewal, amendment, restriction and withdrawal of rights of use forradio spectrum in order to protect long-term investments.”

17

Article 50 of European Union, ‘Directive (EU) 2018/1972 of the European Parliament and of the Council of 11 December 2018
establishing the European Electronic Communications Code’, 17 December 2018, sets out that “National regulatory or othercompetent authorities shall take a decision on the renewal of individual rights of use for harmonised radio spectrum in a timely
manner before the duration of those rights expired, …”.

18

See Paragraph 23 of European Union, ‘Directive (EU) 2018/1972 of the European Parliament and of the Council of 11
December 2018 establishing the European Electronic Communications Code’, 17 December 2018.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 11

–

•

•

Regulators’ priorities would not be expected to include the maximisation of spectrum
assignment revenue (as per Best Practice 24 of the European Connectivity Toolbox19) as thisis likely to detract from investments in operators’ networks

Conditions of spectrum use – Specifying an appropriate licence duration:–

Renewed licences should be as long as possible, ideally indefinite, to provide certainty forinvestors by allowing a longer amortisation period and avoiding ‘dead periods’ before expiry. At
a minimum, licences should have a duration of 20+ years as set out in Article 49(2)20 of the
EECC.

–

Ideally long spectrum durations should be coupled with allowing operators to trade spectrum,
since the adoption of extended licences, particularly indefinite licences, has been shown topromote spectrum trading (e.g. in the UK & USA) and thereby increase the efficiency ofspectrum use

Design of renewal process – Selecting an appropriate award process:–Whilst auctions are increasingly the default approach for assigning mobile spectrum, and are avery useful tool, sometimes simple administrative extension/renewal processes may beappropriate in cases where demand does not outstrip supply, and may involve either the equal
distribution of spectrum in the band to all operators or direct renewal of the existing holdings ofeach operator•–

Auction processes are likely to be appropriate where demand for spectrum exceeds supply•–

Regulators may seek discussions with industry regarding how its priorities may be achieved
through an administrative renewal process (e.g. in terms of expanding network coverage inexchange for reduced spectrum fees or rebalancing spectrum holdings between operators)

Policymakers should focus on the main objectives of the award process, and not get
distracted by the dynamics of the auction process itself – the primary objective should be toencourage competition and investment in the mobile market to meet mobile connectivity
objectives, not to create artificial competition in the auction

Partial renewal is likely to be appropriate in cases where demand for spectrum exceeds supply
but there is a business continuity risk to existing licensees if they lose key spectrum•

The guaranteed renewal of part of an operator’s spectrum holdings would significantly derisk the process by addressing concerns regarding business continuity and ensuring thefuture availability of existing technologies (e.g. 2G/3G) – as required by Article 50(2)21 of the19

European Union Connectivity Special Group, ‘Common Union Toolbox for Connectivity’, March 2021.

20

Article 49(2) of European Union, ‘Directive (EU) 2018/1972 of the European Parliament and of the Council of 11 December
2018 establishing the European Electronic Communications Code’, 17 December 2018, sets out that “Where Member States
grant individual rights of use for radio spectrum for which harmonised conditions have been set by technical implementing
measures in accordance with Decision No 676/2002/EC in order to enable its use for wireless broadband electronic
communications services (‘wireless broadband services’) for a limited period, they shall ensure regulatory predictability for theholders of the rights over a period of at least 20 years regarding conditions for investment in infrastructure which relies on theuse of such radio spectrum, taking account of the requirements referred to in paragraph 1 of this Article.”

21

Article 50(2) of European Union, ‘Directive (EU) 2018/1972 of the European Parliament and of the Council of 11 December
2018 establishing the European Electronic Communications Code’, 17 December 2018, sets out that “In taking a decision
pursuant to paragraph 1 of this Article, competent authorities shall consider, inter alia: ….. (f) the need to avoid severe service
disruption.’Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 12

EECC which requires policymakers “to avoid severe service disruption” when renewing
spectrum rights••

Such an approach would only be appropriate in situations where the partial renewal iseconomically efficient and do not risk distorting competition in the mobile market•

This approach is particularly important in the short-term where specific technologies(2G/3G) can only be deployed in particular frequency bands

Auction best practices – Where an auction is required, adopting best practice approaches including:––

Avoiding risky or complex auction formats/rules:•

If an auction is deemed necessary, the auction design should take account of the risks anduncertainties that the mobile operators are facing in a spectrum renewal process•

To reduce the uncertainty faced by operators when seeking to re-acquire previously
licensed spectrum, we recommend using simple ‘tried and tested’ formats (e.g.
Simultaneous Multi Round Ascending Auction (SMRA), Clock) and avoiding the use offormats which yield highly uncertain outcomes (e.g. Combinatorial Clock Auction (CCA))

Ensuring that auctions do not unduly impact on natural evolution of the market:•–

Where auctions are deemed necessary, we recommend that the auction rules do notprevent natural market evolution (e.g. forcing a new entrant through a spectrum reservation)

Prioritising non-monetary objectives, such as coverage:•

If expanding coverage is an objective, regulators should consider accepting lower spectrum
fees in return for operator commitments to expanding mobile coverage/5G deployment etc.
Article 42(2)22 of the EECC sets out that regulators should take account of the licenceconditions when setting reservice prices for spectrum.

Overall, renewing spectrum with extended licence periods, well ahead of licence expiry, using either
administrative licence renewals where demand does not exceed supply or simple auctions whichguarantee partial renewal where demand does exceed supply, would have several benefits. It would
avoid “investment hesitancy” on equipment using the spectrum in the years prior to licence expiry, as
well as avoiding putting historic investments at risk. In addition, it would reduce the level ofrisk/uncertainty perceived by mobile operators with expiring spectrum licences, thereby releasing
funding for strategic investments such as increasing network coverage.

22

Article 42(2) of European Union, ‘Directive (EU) 2018/1972 of the European Parliament and of the Council of 11 December
2018 establishing the European Electronic Communications Code’, 17 December 2018, sets out that “With respect to rights ofuse for radio spectrum, Member States shall seek to ensure that applicable fees are set at a level which ensures efficientassignment and use of radio spectrum, including by: (a) setting reserve prices as minimum fees for rights of use for radio
spectrum by having regard to the value of those rights in their possible alternative uses; (b) taking into account costs entailed
by conditions attached to those rights; and (c) applying, to the extent possible, payment arrangements linked to the actual
availability for use of the radio spectrum.”Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 13

2. Introduction
Aetha Consulting Limited (Aetha) has prepared this report for Ericsson to discuss how renewal
processes for spectrum licences in Europe – including the pricing of spectrum – can be designed bypolicymakers to help achieve Europe’s Digital Decade European Green Deal targets.

2.1

Background

The European Commission (EC) has set out a vision for Europe’s digital transformation by 2030 as wellas the measures required to achieve this during the 2020s – the so-called Digital Decade. The Digital
Decade plans revolve around four cardinal points: skills, secure and sustainable infrastructures, digitaltransformation of businesses, and digitalisation of public services.
A key component is the development of secure and sustainable infrastructures, including aims for all
households to be covered by a Gigabit network and all populated areas to be covered by 5G, by 2030 23.
As well as ensuring all citizens and businesses can access the benefits of digitalisation, e.g. in termsof increased productivity, universal connectivity – particularly 5G connectivity – is vital for creating asustainable society. The EC has outlined its sustainability vision for Europe within the ‘European Green
Deal’, which aims for Europe to achieve net zero greenhouse gas emissions by 2050, making it the firstclimate-neutral continent.24 Expanding connectivity is key to achieving this aim.
The achievement of such targets will require considerable investment by both the telecoms industry
and governments – with public funding required to close the ‘investment gap’ and bring connectivity toareas where network deployment would otherwise be uneconomic, thereby unlocking the fullproductivity and sustainability benefits of digitalisation. The greater investment made by the telecoms
industry, the smaller the ‘investment gap’ which needs to be closed using public funds.
A key factor impacting operators’ ability to invest is certainty over the regulatory environment in which
they operate – the greater the level of certainty, the greater the level of investor confidence and therefore
the greater the levels of investment that can be made. In respect of mobile service provision (including
5G), regulatory certainty over radio spectrum availability is critical.
Radio frequencies are a key input to mobile services – too little spectrum and mobile operators will incur
additional costs to carry the traffic generated, for example, by smartphone applications used byconsumers and businesses. Mobile operators are not awash with funds at present – the investment
climate is very tight – so any money spent on expanding network capacity which could have been saved
through access to spectrum reduces the funding available for network investment to address Digital
Decade and European Green Deal targets. Furthermore, any money spent by operators on‘unnecessarily expensive’ spectrum reduces available funds for network investment.
The expense of spectrum is not limited to auction payments, however. There are multiple additionalcosts associated with spectrum acquisition, including annual licence fees and licence obligation costs,
all of which contribute to the Total Cost of Spectrum Ownership (TCSO). All of these must be consideredwhen determining spectrum prices, with the objective being to ensure that the total is not excessive.
Only by doing so is it possible to avoid spectrum being ‘unnecessarily expensive’ and thereby protect

23

European Commission, ‘2030 Digital Compass: The European Way for the Digital Decade’, March 2021. The forthcoming 2030
Policy Programme "Path to the Digital Decade", is likely to specify that “all populated areas are covered by next generation
wireless high-speed networks with at least 5G equivalent performance.”

24

European Commission, ‘A European Green Deal’, 7 June 2022.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 14

operators’ ability to fund network investments, including those associated with achieving Digital Decadeand European Green Deal targets.
Mobile operators regularly invest in spectrum to deploy new technologies such as 5G and support traffic
growth. Operators face an additional challenge as many of their existing spectrum licences are due toexpire. Operators therefore face huge uncertainty over whether and on which (financial) terms they will
be able to continue using this spectrum, which is key for service continuity. Until they have certainty on
the renewals, operators will be hesitant to further invest in networks as they seek to avoid inefficientinvestments in case the renewals do not occur as envisioned.
In this paper, we therefore set out a series of recommendations for policymakers in relation to spectrum
renewals, both in terms of spectrum pricing and award format. We set out best practice approaches
which will significantly reduce the level of risk and uncertainty facing mobile operators, which in turn will
mean that their attention can be focused on expanding network coverage to meet the Digital Decadetargets, thus minimising the investment gap that the government/public need to fund.
We urge policymakers to consider our recommendations and signal intentions to adopt the suggested
approaches to the mobile industry as early as possible, allowing the industry to have the confidence tomake the required investments for achieving universal 5G coverage.

2.2

Structure of this document

The remainder of this document is structured as follows:•

Section 3 further discusses the importance of spectrum in achieving universal coverage and thechallenges currently facing mobile operators, particularly with regards to the cost of spectrum•

Section 4 presents our recommendations with regards to spectrum pricing, in consideration of allcomponents of the TCSO and the risks of policymakers setting excessive spectrum prices•

Section 5 presents our recommendations, based on best practices, in relation to the renewal of
expiring spectrum licences•

Section 6 summarises the conclusions of our assessments.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 15

3. Importance of spectrum in achieving Digital
Decade and Green Deal targets
The EC has declared the 2020s to be a ‘Digital Decade’, outlining ambitious connectivity targets that it
aims to achieve by 2030 (Section 3.1). It has also published its ‘European Green Deal’, which outlines
ambitious sustainability targets for 2050 – connectivity is expected to play a key role in enabling Europe
to meet these targets. In order to achieve these targets, operators will need to further deploy 5G
networks, for which spectrum is a key input. There are significant investments required in acquiring
spectrum, rolling out networks and achieving the Digital Decade and European Green Deal targets, allof which add to the financial pressures that operators are currently feeling (Section 3.2) and which will
negatively impact operators’ willingness and ability to invest, thereby increasing the risk of Europe
missing its connectivity targets.
One source of financial pressure on operators is the investment required to acquire spectrum. Spectrum
pricing lies within policymakers’ control. Therefore, it is one means by which policymakers may easethe financial pressure on operators, thus facilitating investments in universal connectivity. In Europe,
the majority of existing spectrum licences are due expire in the coming years, after which they are
expected to be re-allocated through so-called renewal processes. It is therefore important to understandthe specific impact that these renewals will have on the ability and willingness of operators to invest in
networks, as well as the licence and award conditions which will need to be in place for renewals tocontribute to meeting the Digital Decade and European Green Deal targets (Section 3.3).
This complex interaction and the specific role that spectrum plays in this context has been summarisedin Figure 3-1 below – we will discuss each of the components in more detail in this chapter.
Figure 3-1:

3.1

The role of spectrum in achieving the Digital Decade targets and the factors
contributing to the financial pressure on operators

Europe’s Digital Decade

The EC has set out a clear ambition for all European households to be covered by a Gigabit network
and all populated areas to be covered by 5G, by 2030. Universal connectivity is a key enabler of otherEnsuring European spectrum renewals are aligned with Digital Decade targets │Page 16

areas of the ‘Digital Decade’ – without it, the other three cardinal points cannot be achieved, andbusinesses and citizens of the European Union will not be able to fully participate in the digital world.
In particular, we note the potential for the deployment of 5G to further enable access to key information,
education and entertainment resources for citizens, as well as new business applications that will
increase productivity and drive economic growth, additionally it support Europe to fulfil net zero goals
by digitalization of industries. 5G networks do not just provide an economic boost to the telecoms sector
but to the wider economy. 5G improves upon 4G in three main areas: enhanced mobile broadband,
ultra-reliable low-latency communication and massive machine-type communication. These threecomponents are known as the 5G triangle, as shown in Figure 3-2.
Figure 3-2: The 5G
triangle [Source: ITU25]•

Enhanced mobile broadband refers to data speeds, which are expected to be around 20 times fasterthan for 4G. The actual speed of a 5G connection depends on the frequency of spectrum used. As
the International Telecommunication Union (ITU) has defined 26, the total capacity for a single 5G
mobile cell must be at least 20Gbps in download and 10Gbps in upstream. Furthermore, ITU has
also defined the “per-user” speed for downloads as 100Mbps and uploads as 50Mbps. According
to industry expectations, the mobile cell speed will increase up to 100Gbps in the future.

•

Ultra-reliable low-latency communication is extremely important for time-critical applications likegaming. Low latency will also play an important role in many business applications – for example,
in Automated-Guided Vehicles (AGV), manufacturing plants or warehouses. In current 5G
deployments, latency of approximately 30ms is achieved, while some optimisations (e.g. operatingin the edge cloud field) could realistically see a latency as low as 10ms. Latencies below 10ms are
possible under lab conditions and the long-term target is to achieve 1ms, however this may be
extremely challenging in reality.

•

Massive machine type communication refers to support for the growing number of IoT devices thatare all communicating with each other. Connection density is expected to be a major considerationfor 5G that has never been as much of an issue for previous generations. Statistica, for example,
predicts that the ratio of IoT connected devices per human on the planet will increase from the two

25

ITU, ‘Emerging Trends in 5G/IMT2020’, September 2016.

26

ITU, ‘Minimum requirements related to technical performance for IMT-2020 radio interface(s)’, 22 February 2017.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 17

per person today to ten per person by 2025. 27 For a future smart city with connected traffic lights,
parking lots and meters (gas, water, power), the approximately 2000 active users per square
kilometre envisaged in 4G is very different from the assumptions made in developing the IMT-2020
standard where 5G aims to support at least one million connections per square kilometre. 28
As a consequence of these new capabilities, 5G is expected to impact on many different industries,
driving new processes and productivity growth. Some examples include:
•
•
•
•
•
•
•

Agriculture: Monitoring and control
Education: New learning opportunities enabled by Augmented Reality and Virtual Reality
applications
Health: Remote diagnosis, Telemedicine
Logistics and transportation: Smart ports, autonomous connected vehicles
Manufacturing: Automated robots and vehicles
Public sector: Access to e-services
Professional services: Improved remote workforce productivity.

Providing universal connectivity, particularly 5G connectivity, is also vital for creating a sustainable
society – for example, it enables a multitude of new Internet of Things (IoT) applications with thepotential to increase the efficiency of manufacturing, farming and transportation processes, savingenergy and reducing waste. Indeed, a resilient telecoms infrastructure is a key component of United
Nations Sustainable Development Goal (SDG) 929.
The EC has outlined its sustainability vision for Europe within the ‘European Green Deal’, which aims
for Europe to achieve net zero greenhouse gas emissions by 2050, making it the first climate-neutral
continent.30 The telecoms industry has a key role to play in achieving these goals – as highlighted by
ETNO, high-quality telecoms networks are essential for the digitalisation of industry and will act as acatalyst for reaching these ambitious climate targets. 31 We illustrated the potential of digital technologies
to increase efficiency and sustainability across all sectors of the economy above. However, universal
connectivity is essential for these benefits to be unlocked, maximising the chances of achieving theEuropean Green Deal targets.
Member States are currently in very different positions in respect of the 2030 connectivity targets. Figure
3-3 shows the coverage of fixed very high-capacity networks (VCHNs) in mid-2022 as a percentage ofhouseholds, as presented in the EC’s Digital Economy and Society Index (DESI) report for 2022.

27

Statistica, ‘Number of IoT connected devices worldwide 2019-2030’, 19 October 2021.

28

ITU, ‘Key features and requirements of 5G/IMT-2020 networks’, 14 February 2018.

29

See European Commission, ‘Communication from the Commission to the European Parliament, The Council, The European
Economic and Social Committee and the Committee of the Regions: Next steps for a sustainable European future: European
action for sustainability’, COM(2016) 739 final, 22 November 2016 and United Nations General Assembly, ‘Resolution adopted
by the General Assembly on 25 September 2015: 70/1. Transforming our world: the 2030 Agenda for Sustainable
Development’, Reference A/RES/70/1, 21 October 2015.

30

European Commission, ‘A European Green Deal’, 7 June 2022.

31

European Telecommunications Network Operators’ Association (ETNO), ‘ETNO unveils European telecoms contribution to EU
Green Deal debate’, 24 June 2020.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 18

Figure 3-3:

Fixed very high-capacity network coverage in mid-2021 (% of households)[Source: European Commission DESI32]

Overall coverage of VHCNs in mid-2021 amounted to 70% of European households, but only 37% in
rural areas. The lowest levels of coverage as of mid-2020 were in Greece, Cyprus, Italy and Austria.
The Digital Decade ambition for universal 5G coverage built upon the EC’s 2016 target33 for all urban
areas and major transport paths to have uninterrupted 5G coverage by 2025. 5G network coverage
across Europe continued to develop at the time of the DESI 2022 report which indicated that, as of mid2021, 25 Member States had started commercial 5G network deployments, with the greatest coverage
recorded in Italy, Denmark and the Netherlands (with over 90% of populated areas covered). Since
then 5G deployment has continued – commercial 5G services are now available in all EU member
states, with 66% of EU population covered as of July 2022.34 In total, ~150k 5G base stations have now
been deployed in EU member nations, equating to ~24% of 4G base stations, as shown in Figure 3-4
below.

32

European Commission, ‘Digital Economy and Society Index (DESI) 2021: Thematic Chapters’, 28 July 2022.

33

See European Commission, ‘Communication from the Commission to the European Parliament, The Council, The European
Economic and Social Committee and the Committee of the Regions: Connectivity for a Competitive Digital Single Market –Towards a European Gigabit Society’, COM(2016) 587 final, 14 September 2016 and European Commission, ‘Communicationfrom the Commission to the European Parliament, The Council, The European Economic and Social Committee and theCommittee of the Regions: 5G for Europe – An Action Plan’, COM(2016) 588 final, 14 September 2016.

34

VVA, PolicyTracker and LS telcom for the European 5G Observatory, ‘5G Observatory Quarterly Report 16, July 2022’, 1August 2022.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 19

Figure 3-4:

5G base stations in European Union member states as a proportion of existing
4G base stations (end 2021) [Source: European 5G Observatory34]
23.5%

5G base stations as aproportion of 4G basestations (%)

25%
20%
15%

11.5%

10%
5%

3.3%

3.6%

700MHz basestations

3.5GHz basestations0%
DSS base stations All 5G base stations

However, we note that 5G is commonly deployed using either new low frequency spectrum (e.g.
700MHz) or existing 4G mid-band spectrum and Dynamic Spectrum Sharing (DSS), as illustrated in
Figure 3-4 above. As a result, 5G will not yet be delivering a step-change in performance whencompared to 4G in many cases. This is the case, for example, in the Netherlands. The reported
coverage of over 90% of populated areas is likely to have been based on the deployment of 5G
technology using spectrum below 3GHz – therefore, the user-experienced speeds are likely to be lower
than where 3.5GHz has been deployed. As discussed in Section 3.3 below, new spectrum bands are
required to enable the full benefits of 5G to be realised.
In order to achieve the Digital Decade’s target of 100% 5G population coverage, operators need to:•

Deploy 5G technology on existing sites (where 2G, 3G and 4G have been deployed)•

Deploy 5G technology on new sites (in areas the operator does not currently provide services)

Especially the latter rollouts are very expensive for operators because these areas have often remained
uncovered because they are not commercially viable due to low network usage – the operators would
need to make ‘loss-making’ investments to provide coverage, so government support (e.g. financial aid)
is required.

3.2

Financial challenges facing mobile operators

Given the significant investment required in deploying networks in commercially unviable areas, theDigital Decade target of universal connectivity can only be met through a combination of incentivising
private investment to a maximum and leveraging public funding to bridge remaining coverage gaps.
The funding required from the public (the so-called ‘investment gap’) depends on the extent to which
the telecoms industry can fund network coverage expansion, including 5G deployments.
Mobile operators are making record investments in their networks at present – see, for example, theannual capital expenditure by mobile operators in EU5 countries (France, Germany, Italy, Spain andthe United Kingdom) in Figure 3-5. Such high levels of investment are arising as a consequence of:•

The requirement to invest in new 5G technology – including both radio access network (RAN)
and core network upgrades (incl. virtualisation of the core) to support new services which requirefeatures such as low latency, network slicing etc.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 20•

The requirement for operators to operate four generations of mobile technology in parallel –2G, 3G, 4G & 5G. Operators are increasingly planning to shut down 3G around 2025 but 2G will beneeded for some time yet to support users/devices (incl. M2M) which are incompatible with 4G/5G.

•

Investing in new network architectures – as mobile traffic grows, investments need to be madein deploying additional spectrum, plus moving to a small-cell architecture in the densest areas.

•

Deploying new sites to increase network coverage – there are coverage gaps in operators’
coverage footprints and investment in new sites is required to close these gaps. This is in addition
to the additional sites that need to be deployed to extend network coverage in less populated areas.

•

The cost of spectrum acquisition – This is a key expenditure, as we discuss further below.

Figure 3-5:

Annual capital expenditure (excluding spectrum acquisition costs) on mobile
networks in EU5 countries35 [Source: GSMA Intelligence36]

Capital expenditure on mobile networks in
EU5 countries (USD billion)

25

20

15

10

5

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

0

This peak in capital expenditure is occurring at a time when operators’ revenues are flat-lining (or evendeclining) – the surge in traffic has not translated into increased spending on mobile services. This is
illustrated in Figure 3-6, which shows the capital intensity (capital expenditure as a proportion ofrevenue) for European Telecommunications Network Operators Association (ETNO) members from2014-2020, compared to that for operators in the USA, Japan and South Korea. The capital intensity ofEuropean operators increased during this period and is above that in the USA, Japan and South Korea.

35

EU5 is used to refer to the five largest countries in Europe, namely France, Germany, Italy, Spain and the United Kingdom.

36

GSMA Intelligence, ‘Financial – Cost & Profitability. Total Capex’, Accessed 17 May 2022.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 21

Figure 3-6:

Capital intensity of operators in home markets [Source: ETNO37]

The combination of these factors has meant that operators’ margins have also reduced. For example,
McKinsey reported that from 2007-2018, European operators suffered a 24% reduction in revenue,
resulting in a 6 percentage-point reduction in EBITDA margin.38 Such reductions are clearly
unsustainable in the long term and the situation will further worsen with the rising cost of debt.

3.3

Impact of upcoming spectrum renewals

We outlined the key contributions to mobile operators record investments above, one of which isspectrum acquisition. Spectrum is a major area of investment for mobile operators and is sometimes
described as the ‘lifeblood’ of a mobile network. We examine the magnitude of the spectrum acquisition
costs faced by mobile operators within Section 4.1.
We highlight spectrum acquisition because the availability and price of spectrum are often under the
direct control of regulators, in contrast to many of the other sources of financial pressure outlined above(e.g. revenue decline). It is therefore an area in which regulators can make a positive contribution
towards easing operators’ financial challenges, potentially increasing the investment they are able to
make in other areas (e.g. 5G deployment) and reducing the investment gap.
Operators require a portfolio of low-, mid- and high-band spectrum to support high-speeds to customers,
provide sufficient network capacity and enable network coverage to be provided to less populated areasin the most cost-effective way. Sufficient low frequency spectrum (below 1GHz) is needed to provide
mobile services to areas (less populated areas, deep indoor areas) which higher frequency signals

37

ETNO, ‘State of Digital Communications 2022’, February 2022. ETNO members are mostly the main incumbent fixed telecoms
operator in individual European countries – such operators typically operate a mobile business in their ‘home’ country andmany also have mobile operations in other countries. The figure depicts the capital intensity of the members in their homemarkets.

38

McKinsey & Company, ‘Telecom operators: Surviving and thriving through the next downturn’, August 2019.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 22

cannot reach. Looking forward, European mobile operators both need to acquire spectrum in new bands
and also seek to renew their existing spectrum holdings.
••

New spectrum is required to enable the deployment of new services and to achieve full 5G
performance.
–

For example, initial full deployment of 5G requires operators to acquire 700MHz spectrum (fora low frequency coverage layer), a large contiguous block (e.g. 100MHz) of 3.5GHz spectrum(to offer high-speed services across a wide area) and 26GHz spectrum (to provide sufficient
capacity in very busy areas (e.g. transport interchanges, sports/entertainment arenas etc)).

–

In the future, additional mid-band spectrum (e.g. upper 6GHz band) will be required to support
future traffic growth in city areas; GSMA Intelligence estimates that mid-band spectrum will
generate around 63% of the total GDP uplift generated by 5G 39. Additional low-band spectrum(e.g. 600MHz) will be needed to provide extra capacity in deep indoor and more rural areas thatcannot be reached by mid-band spectrum and additional mmWave spectrum (e.g. 40GHz band)
may also be required.

Existing spectrum is important for continuing to offer 2G, 3G and 4G services. Losing access tocertain bands (e.g. 900MHz) could necessitate an operator shutting down services to part of its
customer base (e.g. individuals with 2G-only devices). Over time, this spectrum can be refarmed
for use by newer technologies (e.g. 5G) and will provide additional capacity to support traffic growth.

Whilst both are important, the remainder of this report focuses on the continued use of existing bands
by mobile operators – and, in particular, the process adopted for renewal of mobile operators’ licencesat the point of expiry. We focus on the renewal of existing licences as these processes carry the greatest
risks and uncertainties for operators, particularly if the loss of spectrum would mean certain customers
can no longer be served. The following case studies for Norway and Thailand vividly highlight thepotential risks associated with adverse outcomes from renewal processes for key spectrum bands.

39

GSMA Intelligence, ‘The Socio-Economic Benefits of Mid-Band 5G Services’, February 2022.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 23

Case Studies – Risks from spectrum renewal processes
Norway – Poor auction design leads to market exit by Tele2
Background: Tele2, the third-largest operator in Norway, held a licence for 2×5.1MHz of spectrum

in the 900MHz band prior to Norway’s 4G multi-band spectrum auction in 2013. Within the auction,
which adopted a first price, sealed bid format, Tele2 was unsuccessful in acquiring any spectrum,
which was acquired by other incumbents (Telenor & TeliaSonera) and an entrant (Telco Data). 40
The auction design, which the regulator communicated as being driven by a desire to maximise
revenues, was a one-shot first price, sealed bid auction forcing operators to make risky bids. Tele2
ultimately placed too low a bid and was left without low-frequency spectrum, which is vital for
providing widespread voice and data coverage. Tele2 ultimately decided that it was unable tocompete effectively in the market without this spectrum and entered into a merger agreement with
TeliaSonera which was approved in October 2015, resulting in its exit from the market. 41
Key learnings: The one-shot auction design forced operators to place risky bids on key spectrum
assets and forced an existing operator to exit the market, harming the market and competition.
Thailand – New entrant outbids incumbent operator and creates 2G continuity risk
Background: In 2015, Thailand hosted a multi-band auction including a renewal of 2×20MHz in
the 900MHz band, previously licensed to AIS.42,43 There were four bidders in the auction – however,
only two were successful in acquiring spectrum: True Move (the third-largest operator) and Jasmine(a new entrant). Neither of the two largest operators (AIS, dtac) acquired 900MHz spectrum, despite
the spectrum being essential to AIS’s (2G) network. The bidding was highly competitive – at thetime, it was reported that final prices were the highest ever per MHz paid for 900MHz spectrum.44
Whilst it had access to other bands (1800MHz / 2.1GHz), the loss of its 900MHz spectrum createda significant business risk to AIS as it faced significant gaps in its network coverage (built on
900MHz) and had about 400,000 devices relying solely on 900MHz.45 Ultimately, there was no
impact on the market, purely as a result of Jasmine defaulting on its payments and AIS re-acquiring
the 900MHz spectrum in a subsequent auction.46
Key learnings: By placing all of AIS’s 900MHz assets up for auction, the largest operator in themarket was faced with an enormous business continuity risk, placing the service of millions ofcustomers at risk. This situation stimulated excessive bidding, driving prices beyond rational levels
and resulted in one of the winning bidders defaulting on its payments.

40

Tele2, ‘Tele2 AB: Tele2 Norway does not obtain frequencies in the Norwegian spectrum auction’, 6 December 2013.

41

Norwegian Competition Authority, ‘The Norwegian Competition Authority clears the acquisition of Tele2 by TeliaSonera, subject
to conditions’,21 October 2015.

42

Telegeography, ‘Jasmine, True win 900MHz licences in USD4.2bn auction’, 21 December 2015.

43

Telegeography, ‘NBTC confirms 900MHz, 1800MHz auction by September 2015’, 17 November 2014.

44

Developing Telecoms, ‘True and Jasmine win Thai 4G licences with record bids’, 22 December 2015.

45

Telegeography, ‘AIS wins month leeway to migrate 900MHz users’, 17 March 2016.

46

Telegeography, ‘AIS wins uncontested 900MHz re-auction at USD2.11bn’, 31 May 2016.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 24

The prevalence of spectrum renewals in upcoming European spectrum awards
A large number of spectrum licence renewals are due in European countries over the next 10 years, assummarised in Figure 3-7 below, which covers the (European Economic Area (EEA), plus Switzerland
and the United Kingdom). Specifically, Figure 3-7 outlines for each combination of country and spectrum
band, the date on which existing licences (if any) are due to expire. The expiry dates are colour-coded,with expiries in the next 2, 5 and 10 years shown in red, orange and yellow, respectively. Licences
which are not due to expire in the next 10 years are shown in green, whilst grey is used to denote
spectrum that is yet to be awarded for mobile services in the country in question. Full details of thespectrum licences set to expire in each of the countries are provided in Annex A.
Of all the countries studied, only the United Kingdom and Liechtenstein do not have any spectrum
licences expiring over this period– this is because spectrum is awarded through indefinite licences. In
eight countries (Czech Republic, Estonia, Iceland, Ireland, Lithuania, Poland, Romania and Spain), alllicences across all bands are set to expire within the next 10 years.
The bands which have the greatest number of expiring licences are 800MHz, 900MHz, 1800MHz,
2.1GHz and 2.6GHz. Generally, the 700MHz and 3.5GHz bands do not expire soon as they haverecently been awarded for the provision of 5G services in many countries; however, there are
exceptions such as in countries which have previously awarded 3.5GHz spectrum for Fixed WirelessAccess use during the 2000-2010 period and these licences are now reaching their end dates.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 25

Figure 3-7:

Austria

Summary of spectrum licence expiry dates in Europe [Source: European
Communications Office47,48 and European 5G Observatory49]
700
MHz
FDD

800
MHz

900
MHz

1500
MHz
SDL

1800
MHz

2044

2029

2034

2044

2034

Belgium

2024

2024

Croatia

2036

2024

2024

2024

Cyprus

2041

2028

2023

2023

2029

2024

2024

2034

2040

2032

2030

2030

2030

Czechia2040

Estonia
Finland

2033

2033

France

2035

2032

2024

Germany

2033

2025

2033

Greece2030

2027

Hungary

2029

2029

Iceland

2.1
GHz

2.3
GHz

2044

2033

Bulgaria

Denmark

1900
MHz
TDD

2032

Ireland

2024
2024
2030

2023
2030

2030

2.6
GHz
TDD

3.5
GHz

2026

2026

2039

2027

2027

2025

2025

2041

2041

2024

2024

2023

2023

2028

2028

2041

2024

2029

2029

2032

2027

2030

2030

2030

2030

2030

2029

2029

2030

2033
2033

2.6
GHz
FDD

2030

2031

2025

2025

2025

2025

2025

None

2027

2030

2029

2029

2034

2029

2029

2034

2023

2032
2022

2037

2029

2029

2029

2029

Latvia

2042

2033

2026

2042

2026

Liechtenstein

None

None

None

None

Lithuania

2030

2032

2032

2026

2027

2027

2027

2033

2027

2033

2026

2026

2022

2033

2033

2040

2030

2029

2022

2022

2035

Malta

2030

2022

2029

2027

Netherlands

2040

2029

2030

Norway

2038

2033

2033

2028

2022

2032

2023

2022

2022

2022

Poland

2040

2029
2027

2032

2028
2037

2029

2029

2037

2028

2028

2025

2030

2022

None
2029

2022

2027

2035
2036
2022

2027

2027

2027

2027

2027

Romania

2029

2029

2029

2029

2029

2025

2026

2028

2028

2024

2031

2023

2029

2029

2022

2030

2030

2030

2023

2023

2022

2028

2028

2035

None

None

None

2040

2028

2026

Slovenia

2036

2029

2031

Spain

2031

2028

2030

Sweden

2035

2025

2027

2036

Switzerland

2035

2028

2028

2035

2028

UK

None

None

None

None

None

2025

2025

2045

2028
None

None

2022

2024

Portugal

Slovakia

2033

2023

Italy

Luxembourg

2033

2022

2022

2036

2025

2024

2030

26
GHz

None

2025

2036

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 26

The relevance of spectrum renewals to mobile operators
As highlighted above, there are several key bands due for renewal in many countries:•

The 800MHz and 2.6GHz bands were made available for 4G services and continue to be importantfor capacity provision (and in the case of the 800MHz band, coverage of 4G deep indoors and inless populated areas).

•

The 900MHz band is key for the continuing provision of 2G services (and in some cases also forthe continuation of 3G services). Over time the spectrum is expected to be refarmed for 4G and 5G.

•

The 1800MHz band was once key for providing additional 2G capacity (and in some countries someof this band continues to be used for 2G) however the spectrum has increasingly been refarmed for4G since 2012.

•

The 2.1GHz band was the key pioneer band for 3G but the spectrum has frequently been refarmed
for use for 4G and 5G services.

It can be seen that these spectrum bands are all key components of a mobile operators’ overall
spectrum portfolio.
The lack of availability of spectrum in any particular band could have a major impact on mobile
operators. For example, lacking access to 900MHz spectrum could mean an operator cannot offer
nationwide mobile services – this would not just impact users of 2G/3G-only devices, but also users of
4G devices that are not VoLTE capable. A further example is loss of the 800MHz band, which would
mean that nationwide 4G coverage would be lost. The loss of 1800MHz, 2.1GHz and 2.6GHz spectrum
would result in a loss of 4G (and sometimes 2G and 3G) network capacity. Loss of a combination ofbands would be even more disastrous for a mobile operator. We present two case studies
demonstrating the impact that the loss of spectrum can have on operators.
Fundamentally, because continued access to existing spectrum is so critical to operators, a lack of
information about how expiring spectrum licences will be re-assigned and the price that will need to be
paid to maintain access to spectrum creates a huge amount of uncertainty/risk for an operator:•

It is not clear whether the operator will maintain access to any individual spectrum band andtherefore this may require a major reconfiguration of the network and/or the loss of customers –thereby impacting on the revenues and profitability of the business and the cash remaining (if any)
for investment in network expansion. Consequently, making large investments in network expansion
is incompatible with operators waiting to undertake renewal processes for their existing spectrum.

•

If the operator ultimately needs to pay a high price for the spectrum, that will limit the amount offunding available for network investments – including deploying new base station sites for coverage
expansion. So funds cannot be invested in advance of the renewal process just in case they areneeded to reacquire existing spectrum holdings.

•

In the last few years of the existing spectrum licence, operators will be reluctant to invest in newtechnologies using the spectrum in question since there is always a risk that they may not be able
to reacquire the spectrum – essentially this creates a ‘dead’ period towards the end of licences
when investment in the relevant spectrum band(s) ceases.

47

European Communications Office, ‘ECO Report 03: The Licensing of “Mobile Bands” in CEPT’, 9 March 2022.

48

European Communications Office, ‘ECO Report 03: The Licensing of “Mobile Bands” in CEPT’, 6 April 2021.

49

European 5G Observatory, ‘Belgium grants provisional 5G licences in the 3.5GHz band’, 15 May 2020.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 27

For all the above reasons, it is important for mobile operators to have confidence that spectrum renewal
processes will enable them to retain key spectrum bands at a reasonable price so that they can divert
their energy and investments into deploying 5G and enhancing mobile network coverage, thus helping
to achieve the European Digital Decade and European Green Deal targets/vision. In the following
sections of this report we discuss how policymakers can help to provide mobile operators with this levelof confidence.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 28

4. Best practices for spectrum pricing
One of the key contributions to mobile operators’ record investments is spectrum acquisition, as alluded
to in Section 3.3. Given this, and the fact that spectrum availability and pricing are often under the directcontrol of regulators, it is an area in which regulators can make a positive contribution towards easing
operators’ financial challenges. By easing the financial burden of spectrum acquisition, regulators canincrease the investment operators are able to make in other areas (e.g. 5G deployment), reduce theinvestment gap, and thereby increase the likelihood of Digital Decade and European Green Deal targets
being met.
If one is to lessen the financial burden of acquiring spectrum, it is essential to firstly understand the
Total Cost of Spectrum Ownership (Section 4.1). Furthermore, it is essential to understand the risks
and impacts of high spectrum prices and adopt best practice approaches to spectrum pricing (Section
4.2). Ultimately, mobile operators are having to acquire additional spectrum to support high traffic
growth at a time when revenues are static or declining – therefore, if spectrum were to continue to beawarded at the same unit price (per MHz), the overall spectrum cost (as a proportion of revenue) would
increase. This is unsustainable and therefore the unit price of spectrum must decrease.
This applies to all spectrum, including existing spectrum which is set to expire, and is therefore
particularly relevant in the context of upcoming spectrum renewals, the importance and prevalence of
which we highlighted within Section 3.3.

4.1

Total cost of spectrum ownership

We highlighted in Section 3.3 that operators require a portfolio of low-, mid- and high-band spectrum tosupport high-speeds to customers, provide sufficient network capacity and enable network coverage tobe provided to less populated areas in the most cost-effective way. In light of this, operators will require
both new spectrum and continued access to existing spectrum in order to be able to offer a complete
set of mobile services (2G, 3G, 4G & 5G).
However, the financial burden of spectrum acquisition is a key component of the financial challenges
facing operators. Furthermore, the availability and price of spectrum are often under the direct controlof regulators, in contrast to many of the other sources of financial pressure outlined above (e.g. revenue
decline). Spectrum pricing is therefore an area in which regulators can make a positive contribution
towards easing operators’ financial challenges, as highlighted above.
For regulators to make positive decisions regarding spectrum pricing, it is important to consider all
aspects of spectrum price; the Total Cost of Spectrum Ownership comprises several components:
Figure 4-1:

Components of the Total Cost of Spectrum OwnershipEnsuring European spectrum renewals are aligned with Digital Decade targets │Page 29•

Auction (one-off) payments: The amount of money determined by the award process, typically
expressed as a one-off lump sum (although staggered payments are increasingly common).

•Annual licence fees: Annual spectrum fees are charged to cover the cost of administering thespectrum and are typically determined outside the award process.

•Indirect licence costs: Licences can contain specific obligations, for example to extend network
coverage. The costs of these obligations can be difficult to quantify as they depend on the operators’
private cost structures and network rollout ambitions; however, they can be significant.

The total cost of spectrum to a mobile operator is the sum of the three components. Therefore, a mobile
operator will only seek to acquire spectrum if the TCSO is lower than the value of the spectrum to themobile operator (e.g. in terms of network cost savings, additional revenue-generating opportunities etc).
Consequently, the true ‘reserve price’ in an auction is essentially the sum of the published reserve price,annual licence fees and any indirect licence costs. Again, if this sum is higher than the value of thespectrum to the operator, then the operator will not be interested in acquiring the spectrum in an auction,no matter how low the published ‘reserve price’ appears to be. Therefore, policymakers must consider
the cost of annual fees and licence obligations when determining auction reserve prices – if the cost of
one component is high (e.g. a coverage obligation), the others should be reduced to account for this.
Unsurprisingly, given the importance of spectrum to mobile operators, the amount of operator
expenditure on spectrum is considerable. One way to assess its relative magnitude is to consider the
impact of spectrum expenditure on operator returns. As shown in Figure 4-2, analysis by Barclays
Research suggests that expenditure on spectrum has reduced the capital returns of European mobile
operators by around 20% – from a level which is already below the cost of capital (estimated at 7%)
and is therefore already unsustainable in the long-term.
Figure 4-2:

EU telecoms operators Return on Capital Employed (ROCE) including andexcluding spectrum [Source: Barclays Research50]

Another way to evaluate the impact of spectrum costs on mobile operators is to consider these costs
as a percentage of revenues. Here, the cost of spectrum considers all mobile spectrum licences

50

Barclays Research, ‘European Telecom Services. The New Normal’, June 2020.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 30

currently in use by the operator, not just those most recently awarded. It considers both upfront
payments (translated into an annualised amount) and any annual fees associated with each licence.
The resulting annualised spectrum cost for each operator can then be divided by the operator’s annual
mobile service revenue. A similar calculation can be undertaken at a country level by summing thespectrum costs of all of the operators and dividing by the total mobile service revenues in the country.
We have analysed spectrum costs as a proportion of revenue in 22 European countries, with the resultssummarised in Figure 4-3 below. This illustrates two key points.
Firstly, spectrum costs are a significant burden for operators, representing an average of ~7% of mobile
service revenue. Given that the average capital intensity of European mobile operators was estimatedat ~18% by ETNO51 (details provided within Section 3.2), spectrum costs are estimated to represent an
average of ~35-40% of capital expenditure. This is a very significant proportion.
Secondly, there is variation in spectrum costs between countries, with the highest costs observed in the
Netherlands and the lowest in Finland. We examine the underlying reasons further in Section 5.2 –however, the fundamental difference between these countries is that Finland has adopted simple
auctions aiming to guarantee spectrum access for all operators, whilst the Netherlands has adopted
complex auctions designed to promote competition (including poorly designed spectrum reservations).
We consider the relationship between spectrum costs and consumer outcomes, both in terms of
network quality/availability and service pricing, in Section 4.2 – multiple studies have establishedrelationships between high spectrum prices and unfavourable consumer outcomes.
Spectrum cost to revenue ratio [Source: Aetha]

16%
14%

12%
10%
8%
6%
4%

2%

Finland

Switzerland

Portugal

NorwaySwedenBulgaria

DenmarkUK

Slovakia

FranceCzechia

Belgium

GreeceSpain

IrelandRomania

Germany

PolandAustria

Italy

Hungary0%

Netherlands

Spectrum cost to revenue ratio (%)

Figure 4-3:

Average

The main limitation of this calculation is that it does not take account of indirect licence costs (e.g.
coverage obligations) since these are hard to quantify; however it does provide a lower-bound indicationof the impact of spectrum costs on the mobile operators/all mobile operators in the country.
The spectrum costs considered in Figure 4-3 above include costs for both new and existing spectrum
and are typically directly linked with the quantity of spectrum licensed to operators, with fees also
varying depending on frequency and device availability etc. Spectrum is a pre-requisite for the provisionof mobile services – operators cannot exist without it – and therefore the fees associated with it can, tosome extent, be considered to be an additional form of taxation on the industry – a ‘spectrum tax’.

51

ETNO, ‘State of Digital Communications 2022’, February 2022.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 31

This is particularly true of ongoing spectrum costs; specifically, annual licence fees and one-off fees forpreviously assigned spectrum, such as that available in renewal processes. This spectrum is requiredfor continuity of services and, over time, will be refarmed to the latest more spectrally efficienttechnologies; however, the spectrum on its own does not directly enable the provision of all new
products/services or open up new revenue streams. Therefore any costs associated with this spectrum
may reasonably be considered to be a form of additional taxation on mobile operators.

4.2

Risk and impact of high spectrum prices

In this section, we discuss the risks and impacts of high spectrum prices. As discussed in Section 3.3,
mobile operators are having to acquire new spectrum bands as well as renew their existing spectrum
holdings in order to provide services to customers and support the high traffic growth levels (typically
30%-50% network traffic growth each year). At the same time, revenues are relatively static or declining.
Therefore, if spectrum were to continue to be awarded at the same unit price (per MHz), the overall
spectrum cost (as a proportion of operator revenues) would increase considerably.
Such a situation would be unsustainable – as shown in Section 4.1, the return on capital employed forEuropean operators is already below the cost of capital. Effectively, as the amount of spectrum held byan operator increases, the unit price paid by the operator for spectrum has to decrease. However, insetting prices for spectrum (including reserve prices for auctions), regulators often use the outcomes ofhistoric auctions in the country as a basis for setting spectrum prices. This is likely to result in excessive
spectrum prices being set, carrying significant risks (including the risk of spectrum remaining
unassigned).
There are many examples of spectrum going unassigned in auctions as a result of the effective reserve
prices being set too high. This can arise from different components of the TCSO – not just the reserve
price for the auction itself. For example:•

High annual fees have resulted in spectrum remaining unassigned in Romania and Mexico•

An onerous emergency services obligation resulted in spectrum remaining unassigned in the USA•

High auction reserve prices in India and Thailand have resulted in spectrum remaining unassigned.

In all cases, the failure to assign spectrum is indicative of regulators failing to recognise (i) the need forunit spectrum prices to reduce over time in order for the telecoms industry to be sustainable, and (ii)the need to consider all aspects of the TCSO (auction payments, annual licence fees and indirect
licence costs) when setting auction reserve prices.
To address this issue and ensure that spectrum prices remain affordable for operators in the long term,
it is essential for policymakers to consider all components of the TCSO across operators’ entire
spectrum portfolio when renewing spectrum. The overall objective should be to ensure that the
spectrum tax (i.e. TCSO as a proportion of revenue) is set at a manageable level – it certainly should
not exceed 10%, and the overall benefits to the economy are likely to be higher if it is at a lower level.
Only by keeping the spectrum tax at a manageable level is it possible to avoid the problems highlighted
in the case studies below.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 32

Case studies – The negative impact of annual fees on spectrum auctions
Romania – High annual fees leading repeatedly to unsold spectrum
Background: 2.6GHz FDD spectrum has remained unassigned in Romania through two auction
processes (2012 and 2021) due to very high reserve prices.52,53,54 In the 2012 auction, spectrum
also remained unassigned in the 800MHz band for the same reason. 55 This has been primarily due
to high annual fees, resulting in the TCSO being in excess of operators’ valuations.
Key learnings: The ultimate impact of this has been spectrum remaining unassigned for many
years, denying both operators and consumers from the potential benefits associated with it. This isclearly an inefficient outcome and could be solved easily be reducing annual spectrum fees.
Mexico – High annual fees leading to spectrum being unassigned and even returned
Background: Large amounts of AWS and PCS spectrum remain unassigned in Mexico. As an
example, in the 2021 auction for 800MHz, AWS, PCS and 2.5GHz spectrum, only 3 of the 41 lots
were sold. The result was attributed to high annual fees by the regulator, IFT, which has previously
submitted proposals for adjusted annual licence fees to the Mexican government. 56
Mexican operators have even returned spectrum due to the high annual spectrum fees. Telefónica
relinquished its 800MHz, PCS and 2.5GHz frequencies, reportedly generating USD104 million insavings. Having returned its spectrum, it now provides services as a virtual operator using AT&T’s
network, having signed an access agreement with AT&T in 2019. 57
Key learnings: High annual fees have left large amounts of spectrum unsold and have forced an
operator to shut down its network. This is an inefficient outcome which is widely accepted to havenegatively impacted consumers through reduced quality of service etc.

52

ANCOM, ‘Results of the spectrum auction for mobile electronic communications’, 24 September 2014.

53

ANCOM, ‘Task book for the organisation of the competitive selection procedure in view of granting some radio frequency rightin 800MHz, 2600MHz and 3400-3600MHz’, September 2021.

54

ANCOM, ‘This year's auction for spectrum allocation has been completed’, 23 November 2021.

55

GSMA, ‘Effective Spectrum Pricing in Europe: Policies to support better quality and more affordable mobile services,
September 2017.

56

Telecoms.com, ‘Mexican regulator blames high prices for spectrum auction failure’, 8 October 2021.

57

Telegeography, ‘Telefonica generates EUR95m from returned Mexican spectrum, report says’, 28 February 2020.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 33

Case studies – The impact of high reserve prices and costly obligations on auctions
Thailand – Historic spectrum pricing leads to unsold spectrum
Background: As previously highlighted, the 2015 Thai 900/1800MHz auction resulted in Jasmine(a new entrant) defaulting on its payment. but contributing to competitive bidding leading to very
high prices.58 In 2018, a further auction for 1800MHz only sold two of the nine available lots.59 The
primary reason for this were the reserve prices, set based on prices from the 2015 auction.60
Key learnings: With more spectrum available in the market, there was no interest in acquiring
spectrum at high prices. By setting the wrong reserve price, the regulator contributed to there being
unsold spectrum – a situation that was repeated in an auction of 850MHz spectrum in 2018. 61
India – High reserve prices lead to unsold spectrum
Background: India has repeatedly failed to assign spectrum, including in the 700MHz band, due
to the setting of very high reserve prices.62 It first attempted to award spectrum in the 700MHz bandin 2016; however, all spectrum remained unassigned. 63 In total, more than 50% of the available
spectrum in this auction (which included other bands) remained unsold. A second auction was heldin 2021; however, all 700MHz spectrum again remained unassigned, as well as spectrum in the
2.1GHz and 2.5GHz bands (in total, ~70% of the available spectrum remained unassigned in 2021).
Key learnings: The primary reason for spectrum remaining unassigned has been high reserve
prices, combined with the heavy debt burden on the industry resulting from previous high-priceauctions. The result is that large quantities of spectrum remain unassigned, despite operators
expressing clear interest, holding back 4G deployments and impacting the quality of service.
USA – Emergency service obligation leads to unsold spectrum
Background: The 2008 700MHz auction included one 2×5MHz lot (D Block) requiring the winningbidder to deploy a national public safety communications network via a public/private partnership.
As all bids received in the auction did not exceed the reserve price, the lot remained unsold. 64
Key learnings: This is an example of where onerous licence obligations (a key element of the
TCSO) resulted in spectrum remaining unassigned – bidders considered that the cost of addressing
this obligation made acquiring it at the specified reserve price unjustifiable.

58

Mobile World Live, ‘Thailand’s AIS, True pay $1.1B each to win 1.8GHz licences’, 13 November 2015.

59

Telegeography, ‘NBTC’s 1800MHz auction concludes with just two blocks sold’, 20 August 2018.

60

NERA Economic Consulting, ‘Spectrum Auction Risks Leaving Thailand Stranded in a Mobile Data Slow Lane’, 15 December
2017.

61

Telegeography, ‘AIS, DTAC submit bids for 1800MHz spectrum; 850MHz auction cancelled’, 9 August 2018.

62

European 5G Observatory, ‘Spectrum auction raised 778 billion INR (9 billion EUR) in India, but 700MHz spectrum was left
unsold for second time’, 18 March 2021.

63

Telegeography, ‘Spectrum auction nets USD9.9bn despite conservative bidding’, 7 October 2016.

64

FCC, ‘Auction 73: 700MHz Band’, 18 March 2008.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 34

Even in cases where the reserve prices in an auction have not been so high that the spectrum remained
unassigned, high prices are unlikely to represent an efficient market outcome and can be considered
to be a revenue (tax) raising exercise for the government, as illustrated in the case study for Italy below.
Case study: Italy – Spectrum packaging resulting in high prices
Background: Italy assigned 200MHz of 3.5GHz spectrum in 2018. The auction was successful interms of assigning spectrum; however, operators were forced to compete strongly for the spectrum,
resulting in prices much higher than in other European countries. 65 There were two main reasons:•Firstly, a relatively small quantity of spectrum was made available. 200MHz equates to 50MHz
per operator in Italy, far below the 80-100MHz that operators typically target.

•

Secondly, rather than awarding the spectrum in equal-sized lots which would allow all operators
to acquire a meaningful quantity, the band was split into two 80MHz lots and two 20MHz lots. This
meant that at least two operators would acquire 40MHz or less, effectively forcing an outcomethat would create ‘winners’ (those acquiring ≥80MHz) and ‘losers’ (those acquiring ≤40MHz).

Key learnings: The high prices in this auction are likely to have negatively impacted upon 5G
deployment in Italy, as a greater proportion of operators’ budgets had to be diverted towards spectrum
acquisition and away from network investment. Therefore, it could be argued that this auction failed
to meet its objectives, despite the successful assignment of all spectrum.

A study undertaken by NERA66 on a possible link between spectrum fees and service prices also
examined whether there could be a link between spectrum fees and network investment. This study
considered network investment in terms of the coverage of 3G and 4G networks, average speeds andthe proportion of subscribers on 4G networks, finding a modest correlation between higher prices forspectrum and lower levels of network investment. The results of this study were referenced within the
GSMA’s report on ‘effective spectrum pricing’.67
A report produced by LS telcom, PolicyTracker and VVA for the Directorate General for
Communications Networks, Content and Technology of the EC68 included an analysis of the relationshipbetween auction prices and network coverage, comparing OpenSignal data on 4G availability withauction prices. The results suggested that there may be an inverse relationship between price paid forspectrum and network availability (i.e. higher auction prices are associated with lower 4G availability).
One counter-argument that is sometimes made regarding the impact of high spectrum prices(particularly from competitive auction processes) on network investment is that the intensity ofcompetition in the auction resulting in high auction prices will translate into operators maximising their
network investments in order to secure the high returns that are required to justify the prices paid forthe spectrum. In considering this issue, it is important to consider the different types of investments thatare made:•Investments that are made for commercial reasons i.e. to help maximise an operator’s revenues
and profit – such as the rapid deployment of 5G in the biggest cities. Here it is possible that this65

European 5G Observatory, ‘Italian 5G spectrum auction’, 15 October 2018.

66

NERA Economic Consulting, ‘The Impact of High Spectrum Costs on Mobile Network Investment and Consumer Prices’, May
2017.

67

GSMA, ‘Effective Spectrum Pricing: Supporting better quality and more affordable mobile services’, February 2017.

68

LS telcom, VVA and PolicyTracker for the European Commission Directorate General for Communication Networks, Content
and Technology, ‘Study on Spectrum Assignment in the European Union’, October 2017.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 35

argument may apply although it would be expected that the operator’s business case would include
the profit-maximising investment/network deployment strategy, independently of the amount paid
for spectrum.
•

Investments that are made for wider societal reasons e.g. extending network coverage that on astrict commercial basis are uneconomic for the operator to provide coverage. This is the type of
network investment that we are discussing in this report and clearly if an operator is forced to spend
more money on spectrum, less money will inevitably be available for such network coverage
expansion.

A further argument is that network investment can in some cases be seen to increase in cases whereoperators have not acquired spectrum due to high prices or acquired less spectrum that they would
have targeted in advance of an auction. Here it is important to distinguish between efficient network
investment and inefficient network investment. Specifically if an operator does not acquire spectrum in
an auction, it may actually be forced to spend more money on its network in order to deploy new networksites to support the levels of traffic generated by the operator’s customers. However this is not efficientinvestment – the more efficient investment would be to deploy additional equipment on existing sites touse new frequency bands as this would be considerably lower cost than deploying new sites. In thisreport we are concerned with maximising efficient investments by network operators – not inefficientinvestments.
On the topic of the link between high spectrum prices and the prices of mobile services to consumers,
in a competitive market with high fixed costs/barriers to entry such as telecoms, market prices typicallyseek to recover marginal costs and fixed costs 69. Consequently, if the costs of inputs such as spectrum,site rental, staff salaries etc are higher, then ultimately market prices will reflect these higher costs since
they need to be recovered by the operator. Consequently if spectrum fees are higher, then over time,
the underlying price of mobile services will also be higher - and if spectrum fees are lower, then theunderlying price of mobile service should be lower.
In summary, high spectrum prices can have a detrimental effect on network investment. With theincreasing amount of spectrum required by operators to meet customer needs, unit prices for spectrum
must go down. Therefore, regulators should not continue to adopt the approach of using previous
auction price outcomes to set reserve prices for upcoming auctions – otherwise, these auctions aregoing to result in spectrum remaining unassigned with hugely detrimental impacts on the operation of
the mobile market, the prices of mobile services and levels of network investment by mobile operators.
Instead, spectrum prices should be set in consideration of all components of the TCSO, with the overall
objective of keeping the spectrum tax at a manageable level (<10%).

69

See, for example, Harald Gruber, ‘The Economics of Mobile Telecommunications’, 2005.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 36

5. Best practices for spectrum renewal
processes
Spectrum renewal processes can pose a significant business risk to mobile operators, especially if (alarge share of) their key spectrum holdings are awarded through a single process. However,policymakers can contribute significantly to minimising any unnecessary risks from the award process.
In this section, we briefly discuss the key questions that policymakers need to address when developing
their approach to the renewal of existing spectrum licences (Section 5.1) before presenting ourrecommendations based on international best practices (Section 5.2). These recommendations are
made in the context of ensuring that the TCSO is manageable for mobile operators. Finally, we detailthe benefits of renewing spectrum in line with our best practice recommendations (Section 5.3).

5.1

Key questions facing policymakers

Developing a best practice spectrum award remains a challenging task, despite the large number ofawards that have taken place in Europe over the last 10 – 20 years. An ever-changing technology
environment, a growing number of available bands and changing market structures all contribute tothere not being a ‘one-size-fits-all’ solution. This is particularly true for spectrum renewals.
The first question to consider when awarding spectrum is that of timing. The appropriate timing of
renewal processes will vary; however, it is important that renewal occurs in a timely manner so as tominimise the uncertainty faced by operators.
Once the appropriate timing of the renewal process has been determined, there are three key questions
that policymakers should answer when awarding spectrum – as illustrated in Figure 5-1 below:
1. What are the priorities from the renewal process? Without a clear target to achieve, it is
impossible to design the right process.
2. Which licence conditions to attach to spectrum? Licence conditions cover a wide range of topics(technology restrictions, coverage obligations, licence duration etc.) and have a significant impact
on the value of the spectrum that is awarded. Therefore, they need to be carefully defined.
3. Which type of award process is most suitable? Whilst auctions are the most common format,
there are a variety of award mechanisms available to policymakers to award spectrum.
Figure 5-1:

Key questions facing policymakers ahead of spectrum awards

In the remainder of this section, we discuss these key questions in more detail, noting that the choiceof award process can be an iterative process, interlinked with the choice of licence conditions. In eachcase, we also outline our recommendations, based on international best practice. With respect to thequestion of setting the right licence conditions, we focus in particular on the question of licence duration.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 37

5.2

Recommended best practice approach to spectrum renewal

In this section, we outline our recommendations for conducting award processes for previously assigned
spectrum based on international best practices. We do so in the context of the key questions highlighted
within Section 5.1. Specifically, we provide detailed recommendations and examples of good/badpractice with regards to the following:•

Timing of renewal process (Section 5.2.1): Renewal processes should be commenced well inadvance of licence expiry to limit the uncertainty faced by operators and thereby protect investor
confidence.

•

Objectives of process (Section 5.2.2): The objectives of the spectrum renewal process andrelative priorities should be clearly defined prior to its commencement.

•

Conditions of spectrum use (Section 5.2.3):–••

Longer licence durations: Longer, ideally indefinite, licence durations provide certainty for
operators when making network investments, as well as allowing a longer amortisation period.

Design of award process (Section 5.2.4):–

Administrative licence renewal: Administrative licence renewal processes may beappropriate in cases where demand does not outstrip supply.

–

Auction: Auctions are likely to be appropriate where demand for spectrum exceeds supply.

–

Partial renewal: Where demand for spectrum exceeds supply but existing licensees facebusiness continuity risks if they lose spectrum, policymakers should consider guaranteeing
renewal for part of operators’ holdings in key bands, thereby reducing the uncertainty.

Auction best practices (Section 5.2.5): To be adopted in situations where an auction is necessary.

5.2.1

Timing of renewal process

Naturally, operators are happy to invest in recently acquired spectrum, granted that it can be used fora period of at least 10 – 20 years. However, once the licence expiry approaches, uncertainty increases
and so does investment hesitancy. If the expiring spectrum were not to be renewed, the scope torecover investment prior to the licence expiry would reduce significantly, meaning there is a greatly
increased financial risk. This can be particularly damaging if the licence expiry coincides with a periodof renewed investment, as is currently the case in Europe, where operators are considering significant
investments in 5G but also face renewal decisions on key spectrum assets, as shown in Section 3.3.
It is therefore imperative that renewal processes are commenced well in advance of licence expiry,
limiting the degree of uncertainty faced by operators and protecting investor confidence. This
recommendation is supported by:•

Article 4570 of the European Electronic Communications Code (EECC) which states that "[Member
States shall …. by] (c) ensuring predictability and consistency in the granting, renewal, amendment,
restriction and withdrawal of rights of use for radio spectrum in order to protect long-term
investments”.

70

Article 45 of European Union, ‘Directive (EU) 2018/1972 of the European Parliament and of the Council of 11 December 2018
establishing the European Electronic Communications Code’, 17 December 2018.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 38•

Article 5071 of the EECC which states that “National regulatory or other competent authorities shalltake a decision on the renewal of individual rights of use for harmonised radio spectrum in a timely
manner before the duration of those rights expired”.

The optimum timing is situation-dependent; however, it is advisable for renewal to be completed at least
1-2 years prior to licence expiry. This has a secondary benefit of allowing operators to plan for any
spectrum redistribution or other changes to licence terms that are deemed necessary during the renewal
process.
Positive examples in this context are provided by the regulatory authorities in Germany 72 and Croatia –with key spectrum assets expiring around 2024/2025, the regulators in both countries are alreadyengaging proactively with industry on the best models for renewals, with award processes planned atleast 2 years prior to the expiry of the spectrum licences.

5.2.2

Objectives of process

As for all spectrum award processes, the first step for policymakers is to determine their main
objective(s) for the renewal. In all cases, it is essential for the objectives and priorities of the process tobe well understood prior to the commencement of the renewal process – this information is required inorder to make informed decisions regarding other aspects of the renewal process (e.g. award format,
licence conditions).
The objectives of the renewal process will vary depending on the situation, but commonly include:
•
•
•
•
•
•
•

Creating incentives to ensure the technically and economically efficient use of spectrum
Encouraging investment in the widespread deployment of innovative new technologies and services
Ensuring that the award process is transparent and non-discriminatory, allowing fair access tospectrum for all relevant parties
Protecting competition in the mobile market, both at the retail and infrastructure level
Ensuring a fair return for a valuable public resource
Maximising the quality of mobile services received by consumers, both in terms of network speeds
and coverage
Minimising retail prices for mobile services (or, more directly, avoiding inflated retail prices due tohigh spectrum prices).

In best practice spectrum award processes, we would expect the regulator’s priorities to include
encouraging the growth and development of the mobile market, (including expanding network
coverage), maintaining (or increasing) competition between operators, and encouraging investment andinnovation. These priorities are aligned with the provisions of the EECC, whose objectives 73 include:••••

Promoting connectivity and access to, and take-up of, VHCNs
Promoting competition and efficient investment
Contributing to the development of the internal market
Promoting the interests of the citizens of the Union.

71

Article 50 of European Union, ‘Directive (EU) 2018/1972 of the European Parliament and of the Council of 11 December 2018
establishing the European Electronic Communications Code’, 17 December 2018.

72

German regulator Bundesnetzagentur has already launched three consultation processes to prepare for the expiry of 800MHz,
1800MHz and 2600MHz spectrum by the end of 2025, the ‘Frequenzkompass 2020’, the ‘Szenarienpapier 2021’ and the‘Orientierungspunkte 2022’.

73

See Paragraph 23 of European Union, ‘Directive (EU) 2018/1972 of the European Parliament and of the Council of 11
December 2018 establishing the European Electronic Communications Code’, 17 December 2018.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 39

More specifically, Article 45(2) of the EECC requires members states to act by “ensuring predictability
and consistency in the granting, renewal, amendment, restriction and withdrawal of rights of use forradio spectrum in order to promote long-term investments”.
Conversely, we would not expect maximising spectrum assignment revenues to be a priority – Best
Practice 24 of the European Connectivity Toolbox 74 specifically states that “Member States should avoid
revenue maximization”. Although we understand that there is sometimes pressure from government tosecure a minimum amount of revenue – we would expect the regulator to prioritise the long-term
economic benefits of having a functioning mobile market and maximising service
availability/connectivity over short-term government revenues. Best Practice 29 of the European
Connectivity Toolbox further encourages Member States to consider the use of financial incentives(including discounts on spectrum prices) in combination with coverage obligations. As an example ofthe implementation of this, Denmark now allows licensees to postpone payments for spectrum licences
until after the time that coverage commitments have been fulfilled 75.
We also note that improved connectivity has the potential to elicit significant economic benefits,
increasing the productivity and profitability of businesses across many industries. This is likely totranslate into increased tax revenues for governments – therefore, lower spectrum fees may, in thelong-term, translate into increased government revenue.

5.2.3

Conditions of spectrum use

A key question is how which licence conditions to attach to the spectrum. As highlighted in Section 5.1,
licence conditions cover a wide range of topics (technology restrictions, coverage obligations, licenceduration etc.) and have a significant impact on the value of the spectrum that is awarded, meaning theyneed to be carefully defined when renewing spectrum. The most significant consideration when
renewing spectrum is the duration of new/renewed licences and, therefore, we focus on this issue here.
However, all licence conditions must be carefully considered for successful renewal to be achieved.

Longer licence durations
Regulators can sometimes be tempted to offer short ‘extensions’ to existing licences (e.g. an additional
5 years), particularly in cases where the renewal process is administrative rather than competitive.
However, this does little to address the uncertainty faced by operators with regards to spectrum
renewal, potentially damaging investment.
As for newly assigned spectrum, it is important that licence durations are sufficiently long to encourage
investment – specifically, operators investing in the deployment of new radios and antennas for aparticular frequency band will require time to recover this investment and a longer amortisation period
can enhance an operator’s balance sheet. A 5-year licence does not provide sufficient time to do soand, therefore, such a short period should not be used unless there are particularly strong spectrum
management reasons why it is appropriate (e.g. to align expiry with other licences in the band).
However, even with longer licence durations, one of the main issues with a finite duration licence is thatit creates a ‘dead period’ at the end of the licence where no network investment is likely to take place(unless there is a very high likelihood of renewal). These ‘dead periods’ arise due to the uncertainty for
operators over whether they will regain access to the spectrum following licence expiry, especially if acompetitive award process is likely. This risk means that little investment in using the spectrum (e.g.

74European Union Connectivity Special Group, ‘Common Union Toolbox for Connectivity’, March 2021.

75

See ‘Connectivity Toolbox: Implementation Report of Denmark’, published by the European Commission on 19 May 2022.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 40

deploying a new technology) is made towards the end of its licence period – this is not the most efficientuse of spectrum that regulators aim for.
Indefinite spectrum licences overcome this problem. Few countries have adopted such an approach –mainly the USA (even in the USA, licensees are subject to “substantial service” requirements). The UK
has also adopted perpetual licences for certain mobile frequency bands where spectrum has been
auctioned with an initial minimum term (typically 20 years) for which a fixed price is paid, after which
licences are renewed annually. Japan is another example of a country making use of indefinite spectrum
licences. We provide further details of these examples in the case studies below.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 41

Case studies – Countries providing long-term spectrum certainty
USA – Initial term with indefinite extension
Background: The American regulator, the FCC, has awarded renewable spectrum licences inmany bands, including PCS, WCS, 700MHz, AWS and 3.5GHz. 76,77 Licences are awarded with an
initial term which is typically either 10 or 15 years. However, there is a presumption of renewal,
other than in exceptional circumstances.
Key learnings: This right of renewal means the spectrum licences are effectively of indefinite
duration, providing operators with greater certainty regarding their future spectrum holdings andthereby promoting investment.
UK – Initial term with indefinite extension
Background: For certain frequency bands, the United Kingdom regulator, Ofcom, has awarded
spectrum licences of indefinite length with a fixed initial licence period during which the licencecannot be revoked other than in exceptional circumstances (e.g. if the terms of the licence havebeen breached). For example, in the UK’s multi-band spectrum auction in 2021, all licences wereawarded with an initial term of 20 years. After this initial term, the licences are renewed annually on
payment of the annual licence fee, however Ofcom has the right to revoke the licence for spectrum
management reasons, provided it gives operators at least five years’ notice.78 Essentially thelicences effectively become indefinite in duration. The same indefinite licence durations apply inother spectrum bands, including the 800MHz, 2.1GHz and 2.6GHz bands etc.79
Key learnings: Awarding licences of indefinite duration provides operators with greater certainty
regarding their future spectrum holdings and thereby promotes investment. Ofcom does however
face the challenge of setting the appropriate annual fee for the spectrum after the initial minimum
term is over.
Japan – Base-station licences with indefinite renewal option
Background: In the 2019 5G award already discussed above, the award conditions did not specify
a specific licence duration as spectrum licences are granted for individual base stations with aduration of 5 years.80 However, as these licences are renewable, they effectively become indefinite
in duration.
Key learnings: Whilst this approach raises concerns in terms of its complexity, it provides morecertainty regarding future spectrum availability, encouraging investment.

A further benefit of indefinite licences is that they increase liquidity by promoting spectrum trading. Thereis extensive spectrum trading in the USA, partially for historical reasons due to the award of licences
on a localised basis but also because of the inherent value of indefinite use of the asset. The UK is the76

FCC, ‘Report and Order – Promoting Investment in the 3550-3700MHz Band’, 24 October 2018.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 42

only European market where any major mobile spectrum trades have taken place and these trades of
1400MHz and 2.6GHz spectrum may not have occurred if the licence durations had been fixed.
Case study: Spectrum trading in the UK and USA
Background: One potential impact of indefinite licences is in spectrum trading – i.e. the market
migrating spectrum to the party which can make most efficient use of it, without the direct involvementof regulators. It has been allowed in many countries for a number of years; however, there are
relatively few examples of successful spectrum trades. The UK and USA buck this trend. For example,
the UK has seen trades in the 1400MHz (Qualcomm to Vodafone/Three)81 and 2.6GHz bands (EE toO2)82, whilst the USA has seen many trades, including in the AWS band (AT&T to T-Mobile)83.
Key learnings: Whilst it is not the only enabling factor, the certainty provided by the award ofindefinite spectrum licences will have contributed to the success of these spectrum trades – it isunlikely that such transactions would have occurred in their absence.

We recommend that, where possible, policymakers adopt indefinite licence periods to provide maximum
certainty to operators regarding future spectrum availability. Regulators can be concerned that issuingindefinite spectrum licences could potentially make it difficult to change the nature of use of thespectrum in the event that a new use arises. Whilst service and technology neutrality can help,
sometimes the underlying conditions of use of the licence (e.g. power transmission
rights/characteristics) can prevent other types of use. Even with indefinite duration licences, regulators
retain the rights to terminate spectrum usage rights for spectrum management reasons and changes ofuse that could not be facilitated by the market alone can be facilitated by the regulator – this is notprevented by the existence of indefinite rights of use. For example, in the USA spectrum used for theprovision of commercial broadcast television services in the 600-800MHz range have been repurposes
for use for mobile services (creating the 600MHz and 700MHz bands) and spectrum used for satellite
services (for the provision of space to Earth communications) has again been repurposed for terrestrial
mobile use (3.7-4.0GHz range – the so-called ‘C-band’).
Nonetheless, recognising that some regulators may still not be open to indefinite licences, werecommend adopting a minimum licence period of 20 years to ensure that operators can generatesufficient returns from any investments – this has already occurred in, for example, Spain, as highlighted
below. Typically, such a duration will allow two cycles of equipment investment.

77

FCC, ‘Public Notice – Auction of Flexible-Use Service Licenses in the 3.45-3.55 GHz Band for Next-Generation WirelessServices; Notice and Filing Requirements, Minimum Opening Bids, Upfront Payments, and Other Procedures for Auction 110;
Bidding to Begin October 5, 2021’, 9 June 2021.

78

Ofcom, ‘Award of the 700MHz and 3.6-3.8GHz spectrum bands – Information Memorandum’, 13 March 2020.

79

ECO, ‘ECO Report 03. The licensing of “Mobile Bands” in CEPT’, 9 March 2022.

80

APT, ‘APT report on information of mobile operators’ frequencies, technologies and license durations in Asia-Pacific countries’,
April 2021.

81

Ofcom, ‘Trade of frequencies in the 1452-1492 MHz band from Qualcomm UK Spectrum Ltd to Vodafone Limited andHutchison 3G UK Limited’, 22 September 2015.

82

Telecompaper, ‘Ofcom formally approves spectrum transfer from EE to O2’, 5 November 2020.

83

Fierce Wireless, ‘FCC approves AT&T’s AWS spectrum transfer to T-Mobile’, 26 April 2012.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 43

Case study: Renewable spectrum licences in Spain
Background: Spain awarded 2×30MHz of 700MHz spectrum in 2021, for a total of EUR1.01 billion.84
Licences had an initial term of 20 years but will be extended for a further 20 years at zero upfront costprovided that all licence conditions are met, including coverage obligations. 85 The coverageobligations included requirements to cover ports, roads and railway stations, as well as for listed
municipalities to be covered by June 2025. The obligations associated with Telefónica’s spectrum
were more extensive – therefore, the reserve and final auction prices were correspondingly lower.
Key learnings: Spain provided operators with certainty regarding spectrum availability by offering
guaranteed renewals for zero upfront fee, providing licence conditions are met, further incentivising
operators to meet their coverage obligations. We also note that the reserve price for Telefonica’s lot
was discounted to account for the cost of additional coverage obligations – this is good practice.

In summary, we recommend that licence durations should be as long as possible (minimum 20+ years
duration, ideally indefinite), and this should be coupled with allowing operators to trade spectrum, as
this will increase the efficiency of spectrum use.
This recommendation on licence duration is consistent with Article 4986 of the EECC states:“Where Member States grant individual rights of use for radio spectrum for which harmonised conditions
have been set by technical implementing measures in accordance with Decision No 676/2002/EC in
order to enable its use for wireless broadband electronic communications services (‘wireless broadband
services’) for a limited period, they shall ensure regulatory predictability for the holders of the rights overa period of at least 20 years regarding conditions for investment in infrastructure which relies on theuse of such radio spectrum, taking account of the requirements referred to in paragraph 1 of this Article.
This Article is subject, where relevant, to any modification of the conditions attached to those rights ofuse in accordance with Article 18.
To that end, Member States shall ensure that such rights are valid for a duration of at least 15 years
and include, where necessary to comply with the first subparagraph, an adequate extension thereof,
under the conditions laid down in this paragraph.”
Effectively this Article requires policymakers to provide “regulatory predictability” over a period of atleast 20 years, with spectrum licences to be awarded with a minimum duration of at least 15 years (orlonger, as is required to provide regulatory predictability).87

84

Ministry of economic affairs and digital transformation, ‘The 700MHz band frequency auction ends’, 22 July 2021.

85

Ministry of economic affairs and digital transformation, ‘Order ETD / 534/2021, of May 26, approving the tender documents,
particular administrative clauses and technical prescriptions for the granting by auction of concessions for private use in the
public domain radio in the 700 MHz band and the corresponding auction’, 31 May 2021.

86

Article 49 of European Union, ‘Directive (EU) 2018/1972 of the European Parliament and of the Council of 11 December 2018
establishing the European Electronic Communications Code’, 17 December 2018, sets out that “Where Member States grantindividual rights of use for radio spectrum for which harmonised conditions have been set by technical implementing measuresin accordance with Decision No 676/2002/EC in order to enable its use for wireless broadband electronic communications
services (‘wireless broadband services’) for a limited period, they shall ensure regulatory predictability for the holders of therights over a period of at least 20 years regarding conditions for investment in infrastructure which relies on the use of such
radio spectrum, taking account of the requirements referred to in paragraph 1 of this Article.”

87

European Union, ‘Directive (EU) 2018/1972 of the European Parliament and of the Council of 11 December 2018 establishing
the European Electronic Communications Code’, 17 December 2018.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 44

5.2.4

Design of renewal process

Once the licence conditions have been defined, the next step is to assess the appropriate format to use
to achieve the award’s priorities within the stated timeline.
Regulators have historically relied on a variety of different award formats to make spectrum available:•

Administrative licence renewals: Occasionally, licences have simply been extended for the
existing licence holders, often as a result of there being no demand from other parties.

•

Auctions: Spectrum auctions are the most commonly used mechanism to award spectrum andtypically award spectrum to the bidder that is prepared to pay most for the spectrum. Auctions havebeen used for over 80 awards in Europe over the last 10 years.

•

Partial renewal: Partial renewal is a hybrid administrative/auction processes, within which existing
licensees are guaranteed renewal for part of their spectrum to provide them with a minimum quantity
to ensure service contiguity whilst allowing competition for remaining spectrum.

•

Beauty contests: Historically, spectrum has at times been awarded through beauty contests,
where bidders have to signal their plans with respecting to meeting a number of qualitative scoring
criteria set by the regulator (in line with its priorities).

Within this section, we focus on administrative renewals, auctions and partial renewal processes, withspecific reference to previously allocated spectrum (i.e. renewals). We will not discuss beauty contests
in detail. This is because beauty contests are subject to subjective scoring by individuals and lacktransparency – they have therefore stopped being used in most countries (Japan being a notable
exception, being discussed as a case study below).
We also exclude national wholesale networks from discussion here. In these processes, spectrum isawarded to a national infrastructure provider with the intention of setting up a common network that all
mobile operators can use. However, this approach is typically used only for new spectrum and istherefore not relevant here. Furthermore, whilst several countries have announced plans for national
wholesale networks in recent years, they have so far struggled to gain significant traction – with the
Mexican wholesale operator going bankrupt and plans for a South African network being shelved.

5.2.4.1

Administrative licence renewal

One option for the award process is direct licence renewal via an administrative process. This may beappropriate in cases where demand does not outstrip supply (i.e. the supply of spectrum exceeds
demand from existing holders of spectrum and any other parties, such as mobile operators without any
holdings in the band). If demand is unclear, an initial industry consultation could be undertaken tounderstand this, allowing an informed decision to be made with regard to the award type. The primary
benefit of this approach is that it provides certainty to existing licensees.
Once a decision has been made to pursue an administrative renewal process, it is necessary toconsider the details of the process. The exact nature of administrative renewal processes differs
between countries, but there are typically two types:•

The first is a simple renewal/extension of existing spectrum holdings, in which all current licensees
retain their existing spectrum under the same licence terms, often with no significant upfront fees
(but possibly with annual licence fees).

•

The second is more complex, with licences being renewed/extended in exchange for changes tothe licence conditions, potentially with benefits to both licensees and policymakers. The nature ofEnsuring European spectrum renewals are aligned with Digital Decade targets │Page 45

the changes to licence conditions varies in depending on the regulator’s objectives but may include
obligations to extend coverage or redistribution of spectrum between operators.
To decide the necessary changes to licence conditions, policymakers must firstly consider theirobjectives for the renewal process. Simple licence extension/renewal is only appropriate in situations
where there is no excess demand, there is no possibility of the renewal creating an artificial barrier tomarket entry, and the regulator’s objectives in terms of coverage and competition will continue to besatisfied under the current licence conditions. Otherwise, alterations to licence terms will be necessary.
If improving coverage/availability of services is a priority, the regulator could enter discussions withlicensees with regards to how its objectives might be achieved (whilst acknowledging that operators will
incur costs). For example, it could work with industry to agree commitments to expand network
coverage in exchange for lower spectrum fees – this would likely yield much greater long-term benefits
for the economy than higher spectrum fees, a point which has been highlighted by the GSMA which
estimates that 5G will benefit the global economy by >USD960 billion annually by 2030. 88 Such an
approach has been pursued in both France and Japan, as highlighted in the case studies below.
If competition in the mobile market is a concern, the regulator could work with operators to identify anappropriate rebalancing of spectrum holdings (e.g. ensuring operators that do not have existing holdingsin the band can secure spectrum). An industry-driven solution is likely to be a simpler way of achieving
such rebalancing of spectrum holdings than conducting an auction. We highlight the examples of France
and Denmark below, within which spectrum has been renewed administratively in exchange for industry
agreements to redistribute spectrum (plus coverage commitments, in the case of France) – theseprocesses provided certainty to existing licensees whilst continuing to promote competition throughspectrum redistribution.

88

GSMA, ‘The Mobile Economy 2022’, 28 February 2022.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 46

Case studies – Different administrative renewal processes
Denmark – Licence renewal in exchange for entrant spectrum accessBackground: The Danish regulator, NITA, refarmed 900/1800MHz spectrum in 2009, removing
technology restrictions, extending licence durations and redistributing spectrum, all at zero upfrontcost.89 900MHz licences were due to expire in 2011/2012 but were extended until 2019 (1800MHz
expiries remained unchanged). In exchange, the existing operators agreed to a redistribution of thespectrum and to make spectrum available for a fourth operator via a separate auction process90.
Key learnings: Whilst reserving spectrum for a fourth entrant is not necessarily best practice, thisexample shows how extending 900MHz licences and removing technology restrictions provided
operators with certainty, whilst allowing NITA to achieve its objectives without a complex auction.
France – Industry solution exchanging coverage commitments for auction fees
Background: In 2018, the French regulator, ARCEP, engaged industry to sign a “New Deal for
Mobile” when 900MHz, 1800MHz and 2.1GHz spectrum was up for renewal. Whilst technically an
auction, the process effectively included a renewal at zero upfront cost in exchange for operators’agreeing to invest in coverage and redistribute 900MHz and 2.1GHz spectrum equally between all
operators.91, 92 The operators’ committed to a ~EUR3bn investment to improve rural coverage,
achieve ubiquitous 4G coverage, and improve transport corridor coverage and indoor services.
Key learnings: With licences expiring at various points in 2021, 2022 and 2024, starting therenewal process in 2018 provided operators with certainty and created a platform for investment,
further enabled by ARCEP’s decision to waive auction fees in exchange for coverage commitments.
Japan – Beauty contest rewarding commitments in 5G
Background: Japan typically awards spectrum via administrative processes. The 2019 award for
3.6-4.1GHz, 4.5-4.6GHz and 28GHz spectrum was a beauty contest, with criteria including 5G
investment, 5G launch date, 5G coverage (using the awarded bands) and MVNO customers. 93,94
Key learnings: The process traded off revenue generation against 5G coverage commitments.
However, concerns remain around transparency – whilst this award type appears to work in Japan,
beauty contests place a strong obligation on decision makers to score as objectively as possible.

89

GSMA, ‘900MHz and 1800MHz band refarming case study. Denmark’, 24 November 2011.

90

Telegeography, ‘Telestyrelsen awards 900MHz, 1800MHz licences to Hi3G’, 14 October 2010.

91

ARCEP, ‘Mobile coverage. New Deal Mobile. Implementation of new mobile coverage targets: Launch of the frequency
reallocation procedure, and writing new obligations into operators' licences’, 2 August 2018.

92

ARCEP, ‘900MHz, 1800MHz and 2.1GHz bands: ARCEP opens a public consultation on the terms and methods for reallocating
longstanding mobile telephony frequencies’, 5 April 2018.

93

Communication Infrastructure Bureau, ‘Certification of a plan to open a specific base station for the introduction of the 5th
generation mobile communication system (5G) (Overview)’, April 2019.

94

Communication Infrastructure Bureau, ‘Examination results related to the approval of the establishment plan of a specific basestation for the introduction of the 5th generation mobile communication system’, April 2019.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 47

5.2.4.2

AuctionIn those situations where the demand for spectrum exceeds the supply, then a competitive award
process such as an auction is typically appropriate. Adopting such an approach has multiple benefits,
including increased transparency in the award process with allocation decisions being made based on
objective criteria. Furthermore, auctions do not typically discriminate between existing licensees andpotential new entrants, although there are exceptions to this.
Overall, whilst auctions present their own difficulties, they do address many of the concerns associatedwith administrative renewal processes (e.g. in terms of transparency). However, the auction design
should take account of the risks and uncertainties that operators face in a spectrum renewal process.
We make detailed suggestions on ways the auction process can be adapted accordingly in Section
5.2.5. Before doing so, we highlight some of the key considerations to be made herein.
Firstly, we note that in situations where the key policy objective is extending network coverage, theaward process can be designed to take account of this – for example, by associating coverageobligations with specific lots or by offering spectrum price discounts in exchange for coveragecommitments.
In addition, it is important that regulators and auction advisors focus on the main objectives of the award
process – and do not get distracted by the dynamics of the auction process itself. We have observed
situations in which policymakers are concerned about a possible lack of competition in an auction
process and adjust the spectrum packages, competition rules (e.g. spectrum caps) and/or detailed
bidding rules in order to create artificial competition – for example, we note the case of Italy’s 3.5GHz
auction, details of which are provided later in this section.
However, rarely (if ever) is a competitive auction the objective of the regulator – instead, the principal
objectives of the regulator are encouraging competition and investment in the downstream mobile
market. Whether or not an auction is competitive should not be relevant provided the objectives of theaward process are met – but this can sometimes be forgotten.

5.2.4.3

Partial renewal

Competitive award processes (i.e. auctions) are typically appropriate in situations where demand forspectrum exceeds supply, as highlighted above. However, there are complicating factors where existing
spectrum is being re-awarded. Therefore, in such cases the use of a partial renewal format should beconsidered – partial renewal is hybrid process in which part of the spectrum is awarded via
administrative renewal whilst the remaining spectrum is awarded via a competitive award process.
One of the biggest risks faced by operators in spectrum renewal processes concerns business
continuity. Without access to certain spectrum, an operator may not be able to continue supporting agiven technology (e.g. 2G). Article 50(2)95 of the EECC requires policymakers “to avoid severe service
disruption” when renewing spectrum rights.
The vast majority of the risk faced by operators could be removed by regulators offering existing
licensees guaranteed renewal of part of their spectrum holdings in a band (e.g. 2×5MHz of 900MHz
spectrum), ensuring a sufficient amount of spectrum is available to ensure they can continue to offer

95

Article 50(2) of European Union, ‘Directive (EU) 2018/1972 of the European Parliament and of the Council of 11 December
2018 establishing the European Electronic Communications Code’, 17 December 2018, sets out that “In taking a decision
pursuant to paragraph 1 of this Article, competent authorities shall consider, inter alia: ….. (f) the need to avoid severe service
disruption.’Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 48

services to customers. The remaining spectrum could then be made available in a competitive award
process (e.g. using a tried-and-tested auction format).
Such an approach would only be appropriate in situations where the partial renewal is economicallyefficient and does not risk distorting competition in the mobile market. An example of this is provided in
the following case study of Belgium – by providing a certain amount of spectrum to all existing operators
prior to the auction, operators were guaranteed to be able to continue operating existing 2G/3G/4G
networks.
Case study: Belgium reserves spectrum in existing spectrum bands for incumbent operators
Background: BIPT, the Belgian regulator, is planning a multi-band spectrum auction for June 2022,
within which it has reserved 2×5MHz of 900MHz, 2×15MHz of 1800MHz, and 2×10MHz of 2.1GHz
spectrum for existing licence holders.96
Key learnings: This is an example of a partial renewal because each incumbent operator will be
guaranteed access to a minimum quantity of spectrum at a fixed price. It therefore provides operatorswith a degree of certainty regarding future spectrum availability, removing much of the risk whilst stillallowing the most efficient spectrum allocation to be determined via auction. This is good practice;
however, there are other aspects of this auction process which do not necessarily correspond withbest practice (e.g. the process has been delayed several times, potentially impacting 5G deployment).

Partial renewal is primarily relevant in the short-term where we have mobile technologies (such as 2G
and 3G) that can only be deployed in specific frequency bands. Once operators have multiple bands inlo, mid and high-band spectrum and, over time, as all mobile technologies can be deployed acrossmultiple bands, the level of risk faced by an operator in respect of an individual band is significantly
lower and a partial renewal may not be so relevant. The exception to this may be the case where an
operator is facing the renewal of a large number of frequency bands at the same time that represent alarge portfolio of its spectrum holdings – in such a case the operator may be facing very high levels ofrisk and uncertainty and partial renewal could be a solution to this.

5.2.5

Auction best practices

We outlined the situations in which competitive spectrum award processes (i.e. auctions) would beappropriate within Section 5.2.4 above – an auction is typically appropriate if demand for spectrum
exceeds supply. In this section, we outline a series of best practices that should be adopted bypolicymakers if an auction is deemed necessary for previously assigned spectrum. These are:•

Avoiding risky or complex auction formats/rules: To reduce the uncertainty faced by operators,
the use of any unduly risky or complex auction formats should be avoided. Instead, we recommend
use of simple ‘tried and tested’ simple formats (e.g. SMRA, Clock).

•

Ensuring the auction does not unduly impact on natural evolution of the market:
Policymakers should avoid auction rules which aim to ‘force’ changes to the market structure (e.g.
spectrum reservations), with the aim of allowing existing players to continue operating.

•Prioritising non-monetary objectives, such as coverage: If expanding connectivity is an aim,
regulators should consider lowering spectrum fees in return for coverage commitments.

96

BIPT, ‘Procedure for the granting of rights of use for the 700 MHz, 900 MHz, 1400 MHz, 1800 MHz, 2100 MHz and 3600 MHz
frequency bands – Information Memorandum – Version 1’, 14 January 2022.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 49

In the rest of this section, we provide detailed best practice recommendations on each of the topics
above, as well as providing examples of good and bad practice internationally.

Avoiding risky or complex auction formats/rules
To further reduce the risk/uncertainty faced by operators in relation to existing spectrum, we recommendthat regulators avoid use of any unduly risky or complex auction formats. We recommend use of simple‘tried and tested’ formats and avoid use of formats which can yield highly uncertain outcomes.
Examples of the main auction formats used include:•

First price, sealed bid auctions: Each bidder submits a sealed, one-off bid for each lot/category. The
winner is the bidder who submits the highest bid, and it is required to pay the price it bid.

•

Simultaneous multi-round ascending auctions (SMRAs): In each round, the auctioneer defines aminimum bid for each lot/category, which is higher than the previous highest bid (or, in the firstround, the reserve price). Bidders are then invited to submit bids for each lot/category, with theprovisional winner for each lot being the bidder who submits the highest bid. This continues until
there are no new bids on any lots in a round, with the spectrum being sold to whoever submitted
the highest bid. All successful bidders must pay the price they bid in the final round.

•

Clock auctions: The auctioneer sets the price for each lot/category in each round, with the priceincreasing from one round to the next – this is known as the ‘clock price’. In each round, bidders
are required to indicate the quantity of spectrum they wish to acquire in each category at the clock
price, with the auction continuing until demand is less than or equal to supply. All successful bidders
must pay the final clock price for the spectrum.

•

Combinatorial clock auctions (CCAs): A more complex auction format, consisting of two stages. The
first stage is a clock auction. The second is a sealed bid, within which bidders are invited to submit
their best and final offers for all combinations of the available spectrum that they would be interested
in acquiring. However, restrictions are placed on the bids one can submit in this second stage – allbids must be consistent with the preferences expressed in the first auction stage. The auctioneer
then determines the combination of bids that would maximise the price paid, subject to certain
constraints – each lot can only be sold once and only one bid from each bidder can be accepted.
The price paid is calculated based on all bids and it is typically below the submitted bid price.

The appropriate choice of auction format will evidently be situation-dependent, with policymakers
required to consider the following three components in order to identify a suitable format:•••

The theoretical merits of candidate auction formats
The specific circumstances of the auction (market conditions, policy goals, available spectrum etc.)
The requirements of bidders due to the practical constraints they face.

However, there are some general principles to which policymakers should adhere. Specifically, theauction format should only be as complex as is required to meet the auction’s objectives – complexity
should only be added where there is a demonstrable benefit. In addition, the auction format should
avoid the final results coming as a surprise at the end of the auction – the final outcome should emerge
as the auction evolves, allowing bidders to take corrective action where necessary. Finally, the format
should be ‘tried and tested’ – this is not an environment for experimentation, as this creates uncertainty.
If these principles are adhered to, auctions can have many benefits, allowing an efficient allocation ofspectrum to be achieved within a robust and transparent process. However, the risks of getting it wrong
are severe. Therefore, simplicity is key – it reduces uncertainty and risk for all concerned.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 50

We outline examples of good and bad practice with regards to auction design in the case studies below.
Finland is positive example of what might be achieved by adopting a pragmatic, tried and tested
approach to spectrum auctions. Meanwhile, the case of Ireland highlights the risks of unnecessary
complexity – the separation of spectrum licences into multiple time-slices has resulted in an
unnecessarily complex auction with significant risks.
Finally, we note the example of Tele 2 (previously discussed in Section 3.3), which was forced to exit
the Norwegian mobile market as a result of failing to re-acquire its existing 900MHz spectrum holdings
at auction. One of the main contributing factors was the selected auction format: first price, sealed bid.
This auction format raises significant problems from a bidding strategy perspective because participants
are only permitted to enter a single bid and, if successful, are obliged to pay their full bid price.
Operators aim is always to pay as little as possible for spectrum (i.e. as far below its theoretical value
as possible), to generate a surplus and enable them to direct investment at network deployment.
However, in a first price, sealed bid auction, the lower they bid, the less likely they are to win spectrum
and vice versa. Furthermore, it is not able to increase one’s bid if unsuccessful. Therefore, bidding
strategy effecting becomes a ‘guessing game’ – operators are estimating the minimum price they needto outbid their competitors without any indication of what this might be.
Tele2 lost this ‘guessing game’, submitting the lowest bid for spectrum and not acquiring any 900MHz
spectrum as a result. However, that does not necessarily mean its value for the spectrum was lowest.
That is the main flaw of first price, sealed bid auctions – they do not incentivise participants to bid tovalue and are therefore prone to producing inefficient outcomes. Other auction formats have their own
flaws and therefore the appropriate format is dependent on the auction’s objectives. However, this is a
powerful example of what can happen if regulators get it wrong.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 51

Case studies – Different approaches to auction complexity
Finland – Pragmatic approach to spectrum auctions
Background: Finland has conducted multiple spectrum auctions, typically achieving successful
outcomes. It tends to avoid unnecessary complexity, ensuring spectrum is awarded and deployedswiftly. Finland relies on tried-and-test formats (typically the SMRA97 format) and uses a pragmatic
approach to spectrum caps and packaging. For example, in its 700MHz auction in 2016, six lots of
2×5MHz were auctioned with a spectrum cap of 2×10MHz.98,99 With three incumbent operators,
each of them was guaranteed equal access to spectrum, unless an entrant were to participate.
Key learnings: In adopting a simplified auction process, Finland retains many of the benefits ofcompetitive awards whilst avoiding common pitfalls. It provides transparent outcomes with equal
access to spectrum, whilst offering new entrants the opportunity to bid for spectrum on equal termswith incumbents. At the same time, it prevents auctions from becoming unduly lengthy if only theincumbents participate.
Ireland – Unnecessary complexity through time slicing
Background: The upcoming Irish auction is an example where complex auction and licenceconditions may have a negative impact on network investments. Later this year, the Irish regulator,
ComReg, intends to award 700MHz, 2.1GHz, 2.3GHz and 2.6GHz spectrum via auction. Spectrum
licences in all bands but the 700MHz are awarded for two time slices, the first covering the period
to March 2027 and the second covering the period from March 2027 to February 2042.100 The
reason for spectrum being awarded in two time slices is to align with the expiry dates of existing
2.1GHz licences.
Key learnings: Whilst timing slicing is an innovative approach, for new spectrum bands (2.3/2.6GHz) it
presents a number of challenges – specifically an operator may only invest in these bands if it gains
access to the spectrum until 2042. One potential impact of the time slices could be that operators
only acquire spectrum in the later period, thereby delaying network investments, to the detriment of
all parties concerned.

97

Simultaneous Multi Round Ascending (SMRA)

98

Fierce Wireless, ‘Finland to hold 700 MHz spectrum auction in November’, 10 October 2016.

99

Ministry of Transport and Communications, ‘The Government adopted a decision on the details of the 700 MHz spectrum
auction’, 6 October 2016.

100

ComReg, ‘Multi Band Spectrum Award – Information Memorandum and Draft Regulations. The 700MHz Duplex, 2.1GHz,
2.3GHz and 2.6GHz Bands ‘, 16 April 2021.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 52

Ensuring that the auction does not unduly impact on natural evolution of the market
We recommend that the auction design and rules do not prevent natural evolution of the underlying
market (e.g. forcing a new entrant through a spectrum reservation or forcing consolidation throughlimiting supply of spectrum).
Specifically, we refer here to (i) avoiding artificial market entry where there is no desire and/or provenneed for it given the market context, and (ii) ensuring that the auction process imposes reasonable
restrictions on operators’ acquisition options, both to avoid spectrum hoarding and to ensure a minimum
quantity of spectrum is available for all operators, whilst acknowledging the importance of ensuring thatall spectrum is awarded and does not remain unassigned for long periods of time.
On the first point, we note the positive example of Sweden, which renewed 900MHz spectrum
administratively in exchange for redistribution of the spectrum between all incumbent operators.
However, there are also negative examples, including that of the Netherlands which has used spectrum
reservations on multiple occasions, resulting in high spectrum prices and windfall profits.
On the second point, we note the examples of Slovakia and Belgium below. Slovakia adopted goodpractice in its spectrum caps for its recent 3.5GHz auction, ensuring all operators could acquire ameaningful quantity of spectrum whilst allowing for caps to be relaxed if spectrum remained unassigned.
Meanwhile, Belgium adopted tight inflexible caps that resulted in spectrum remaining unassigned – thisis clearly a negative outcome for consumers.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 53

Case studies – Auction processes supporting natural market evolution
Sweden – 900MHz renewal based on industry proposals
Background: PTS, the Swedish regulator, conducted a refarming processes for spectrum in the
900MHz band in 2009. This was an administrative process based on industry proposals for the
sharing of spectrum between operators and included the redistribution of spectrum to ensure all
operators had access to a minimum quantity. This process included renewing the licences ofincumbent licensees (with new expiry dates of 31 December 2025), as well as expanding the
900MHz band from 2×30MHz to 2×35MHz and relaxing technology restrictions. 101 The process also
included the transfer of 2×5MHz of spectrum (2×2.5MHz each from Tele2 and Telenor) to Hi3G,
which did not have prior access to 900MHz spectrum, and the redistribution of spectrum to ensurethat each operator’s holdings were contiguous. The outcome was that all five incumbent operators
had access to at least 2×5MHz of 900MHz spectrum.
Key learnings: In this case, the adoption of an administrative process provided certainty tooperators regarding future spectrum availability and pricing, whilst achieving the regulator’s
objective of redistributing spectrum to ensure that all operators had access to a sufficient quantity
to compete effectively. It also avoided the need for a potentially complex auction procedure.
Slovakia – Flexible spectrum caps enabling different demand scenarios
Background: Slovakia’s 3.5GHz auction included 400MHz of spectrum, split into 40 lots of 10MHz
each. One of these lots (3400-3410MHz) was deemed to be of limited use due to interference fromradar and was therefore offered at zero upfront cost to the operator who acquired the 34103420MHz lot. The auction rules also defined a cap of 100MHz, which was to be relaxed to 140MHz
if spectrum were to remain unassigned after the first stage of the auction. A minimum bid of 80MHz
was also defined.102
Key learnings: There are four operators in Slovakia, the rules thus guaranteed 90MHz to each
operator in the first stage of the auction, provided no new entrants bid. However, they addressed
the possibility of unassigned spectrum by allowing the cap to be relaxed if spectrum was unassigned
after the first stage. This is an example of how auctions may guarantee all operators access to aminimum quantity of spectrum whilst enabling the market to determine the efficient allocation.

101

GSMA, ‘900MHz band refarming case study – Sweden’, 29 November 2011.

102

Telegeography, ‘Slovakia lays out terms for 3.5GHz auction in May’, 7 March 2022.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 54

Case studies – Auction processes disrupting natural market evolution
Netherlands – Entrant reservations lead to high auction prices and windfall profits
Background: Spectrum auctions were held in the Netherlands in 2010 and 2012, including
spectrum reservations for new entrants in the 2.6GHz and 800MHz bands, respectively. Tight
spectrum caps in the 2010 auction effectively reserved 2.6GHz spectrum for new entrants. 103
Ultimately, 2×40MHz was acquired by two new entrants: 2×20MHz each for Tele2 and Ziggo. 104 In
addition, all of the 2.6GHz TDD spectrum in the auction remained unsold. Overall, this was aninefficient outcome. In the 2012 auction, 2×10MHz of 800MHz spectrum was reserved for new
entrants.105 This created spectrum scarcity for the incumbents, resulting in competitive bidding forthe non-reserved 800MHz spectrum. This resulted in a 300% price differential between reserved
and non-reserved spectrum – the reserved spectrum was acquired below its market value by
Tele2.106
Key learnings: Neither Tele2 nor Ziggo had made use of the reserved 2.6GHz spectrum at thetime of their subsequent mergers with T-Mobile/Vodafone, many years after the auction. 107,108
Moreover, in 2017, Tele2 merged with T-Mobile without having deployed significant network assets.
The net effect of these reservations were thus windfall profits for Ziggo’s / Tele2’s shareholders,with the spectrum remaining underutilised for a long period of time.
Belgium – Tight spectrum caps lead to unsold spectrum
Background: Belgium’s 2.6GHz auction in 2011 attempted to encourage market entry byeffectively reserving spectrum for a fourth participant through the application of a spectrum cap –the cap was set at 2×20MHz, with 2×70MHz of spectrum being available, resulting in a reservationof 2×10MHz.109 However, interest from potential new entrants was not forthcoming and, as there
was no mechanism by which the cap could be relaxed, 2×15MHz of spectrum went unassigned.110
Key learnings: The unsold spectrum illustrates that this was clearly an inefficient auction denying
Belgian consumers of the potential benefits of this spectrum being used by incumbent operators.

Prioritising non-monetary objectives, such as coverage
If expanding network coverage is the key policy objective, regulators should consider accepting lower
spectrum fees in return for operator commitments to expanding mobile coverage/5G deployment.

103

State Secretary for Economic Affairs, ‘Regulation of the State Secretary for Economic Affairs of October 18, 2009, no.
WJZ/9155615, establishing the application and auction procedure for licenses for frequency space in the 2.6 GHz band formobile communication applications (Regulations for application and auction procedure licenses 2.6GHz)’, 18 October 2009104

Telegeography, ‘State awards mobile frequencies: Ziggo, Tele2 emerge as big winners’, 23 April 2010.

105

The Dutch Ministry of Economic Affairs, Agriculture and Innovation, ‘Regulation of the Dutch Ministry of Economic Affairs,
Agriculture and Innovation dated January 6th, 2012, no. WJZ/10146523, to establish the application and auction procedure forlicences for the frequency spectrum in the 800, 900 and 1800 MHz bands for mobile communication applications (Regulation
regarding the application and auction procedure for 800, 900 and 1800 MHz licences’, 6 January 2012.

106

Telegeography, ‘4G auction raises USD5bn for Dutch coffers’, 17 December 2012.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 55

There are myriad benefits of expanding connectivity, both social and economic, with the potential tohave a major impact – for example, the GSMA estimates that 5G will benefit the global economy by>USD960 billion annually by 2030, as highlighted previously.111 These benefits arise across a wide
range of industries, with 5G having the potential to increase both productivity and sustainability.
Given the magnitude of the knock-on benefits of non-monetary spectrum award objectives, they should
be prioritised. However, we highlighted previously how spectrum fees and coverage obligations areboth key components of the TCSO. Therefore, if policymakers’ objectives include the expansion of
network coverage (or other non-monetary objectives), it is important to acknowledge the costs that
operators will incur in achieving these objectives. Specifically, it may be appropriate for spectrum prices
to be reduced in exchange for operators’ agreement to address policymakers’ non-monetary objectives.
Ultimately, the social inclusion and economic growth benefits from greater connectivity and faster
access to 5G services will yield considerably greater economic value for the country than any shortterm gains from higher auction revenues. Furthermore, the income for governments will ultimately begreater as a result of the additional taxes that will be raised as a result of the greater economic growth(e.g. additional sales tax/VAT, additional corporation tax and additional taxes associated with
employment (income tax, employee and employer social security contributions etc).
We highlight the examples of Sweden and Austria below, both of which have offered discounts onspectrum prices in exchange for operators’ commitments to increasing coverage.

107

Telegeography, ‘Ziggo-Vodafone merger approved by EC; Vodafone to divest fixed assets’, 4 August 2016.

108

Telegeography, ‘Double Dutch: T-Mobile-Tele2 merger concludes’, 3 January 2019.

109

BIPT, ‘Auction of the user rights for radio access systems in the 2500­2690MHz band – Auction rules’, 1 April 2011.

110

BIPT, ‘BIPT makes the results of the 4G auction public’, 28 November 2011.

111

GSMA, ‘The Mobile Economy 2022’, 28 February 2022.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 56

Case studies – Auction processes trading off auction fees with coverage commitments
Sweden – Operators bidding on coverage commitments
Background: In the Swedish 700MHz auction of December 2018, 2×20MHz of spectrum wasawarded at a price of SEK2.8 billion, including a coverage commitment of SEK300 million that would
not be paid as auction fees, but as investment in underserved areas. 112 The commitment was limited
to a single 2×10MHz lot, to which coverage and deployment requirements were attached, withbidding capped at SEK300 million.113 Telia acquired the lot at a price of SEK1.38 billion – as thiswas in excess of the SEK300m cap, the remaining balance of SEK1.08 billion was paid as auctionfees.
Key learnings: Operators were offered a discount in exchange for coverage commitments,
allowing the regulator to achieve its coverage aims in exchange for reduced fees.
Austria – Discounting auction fees in exchange for white area coverage
Background: In Austria’s 2020 multi-band auction, operators were offered the opportunity, during
an additional auction stage, to bid for discounts on their auction fees in exchange for extended
coverage obligations (beyond those committed to during the main auction).114,115
The regulator outlined which locations it wanted to cover additionally (as operators were offeredchoice regarding which underserved locations would be covered by their basic coverageobligations). Operators could then indicate which additional locations they would cover at which
discount. The coverage obligations and discounts were then assigned to operators in a way thatmaximised the total locations covered within the regulator’s budget. Ultimately, operators committed
to cover more than 800 additional locations in exchange for total discounts of ~EUR87 million. 116
Key learnings: By offering an additional discount on the auction fees, the regulator was able toextend the coverage obligations beyond those already included in the original licences.

112

PTS, ‘Assignment in the 700MHz band’, 11 December 2018.

113

PTS, ‘General invitation to apply for permission to use radio transmitters in the 700MHz band’, 4 July 2018.

114

RTR, ‘Tender Document in the procedure for awarding spectrum in the 700, 1500 and 2100MHz ranges’, 11 December 2019.

115

RTR, ‘Auction rules for the awarding of spectrum in the 700, 1500 and 2100MHz bands’, 11 December 2019.

116

DotEcon, ‘Second Austrian 5G auction ends with prospect of substantial improvements in coverage’, September 2020.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 57

5.3

The benefits of applying best practice approaches tospectrum renewals

In this section, we have outlined best practice principles for policymakers to follow when renewing
spectrum. Renewing spectrum with extended licence periods, well ahead of licence expiry, using either
administrative licence renewals where demand does not exceed supply or simple auctions whichguarantee partial renewal where demand does exceed supply, would have several benefits:•

Avoiding direct “investment hesitancy” on equipment using the spectrum in the years running up to
the expiry of the licences, as well as not putting historic investments at risk (thereby creating
unnecessary duplicate investments).

•

Reducing the level of risk/uncertainty perceived by mobile operators with expiring spectrum
licences, thereby releasing funding for strategic investments such as increasing network coverage.

•

Helping to stimulate a secondary market in spectrum, thereby increasing spectral efficiency – forexample, if a mobile operator has more certainty in holding Asset A, it may be more inclined to tradea less important Asset B to another party who needs it more/can generate greater value from it.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 58

6. Conclusions
In order to promote investment and thereby increase the chances of achieving the Digital Decade andEuropean Green Deal targets, we make recommendations to policymakers regarding both spectrum
pricing and the award process for spectrum renewals – both are vital for successful renewal to beachieved (with the metric of success depending on the regulators’ policy objectives).
With regards to spectrum pricing, we recommend that decisions are made in consideration of all aspectsof the TCSO, including auction payments, annual licence fees and indirect licence costs, as operators’
investment decisions will be dependent on the sum of these components. Ultimately, the spectrum
price, and its breakdown between these components, should be set to maximise network investment
rather than auction payments if Digital Decade and European Green Deal targets are to be achieved,with the overarching objective of the auction process being to ensure an efficient allocation of spectrum.
With regards to the award process for spectrum renewals, we recommend that policymakers look tolower the risks and levels of uncertainty faced by mobile operators in relation to spectrum licences which
are coming up to expiry by adopting best practice in the following areas:•

Timing of renewal process – Conducting spectrum renewal well in advance of licence expiry.

•

Objectives of process – Ensuring the priorities/objectives for renewal are understood prior to award.

•

Conditions of spectrum use – Awarding licences of at least 20-years, and ideally indefinite licences,
coupled with supporting spectrum trading.

•

Design of renewal process – Selecting an appropriate award process:–Whilst auctions are increasingly the default approach for assigning mobile spectrum, and are avery useful tool, it is worth considering if an administrative renewal of the spectrum can be madein cases where the spectrum demand does not exceed supply. This may involve either the equal
distribution of spectrum in the band to all operators or direct renewal of operators’ existingholdings.
•

117

An industry-led solution/distribution of spectrum can be a good means of ensuring spectrum
is efficiently assigned and funds that would be spent on a competitive auction can instead
be used for expanding network coverage to lessen the digital divide.

–

Using auctions where demand for spectrum exceeds supply, ensuring that policymakers focus
on the objectives of the award process and do not get distracted by auction dynamics – theobjective should be to encourage competition and investment in the mobile market itself.

–

Considering use of partial renewal for critical parts of operators’ spectrum holdings (where thisis appropriate and would not adversely affect competition in the market). This is likely to beappropriate in cases where demand for spectrum exceeds supply but there is abusiness/service continuity risk to existing licensees if they lose key spectrum) – as required by
Article 50(2)117 of the EECC. This approach is particularly important in the short-term where
specific technologies (2G/3G) can only be deployed in particular frequency bands.

Article 50(2) of European Union, ‘Directive (EU) 2018/1972 of the European Parliament and of the Council of 11 December
2018 establishing the European Electronic Communications Code’, 17 December 2018, sets out that “In taking a decision
pursuant to paragraph 1 of this Article, competent authorities shall consider, inter alia: ….. (f) the need to avoid severe service
disruption.’Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 59•

Auction best practices – Where an auction is required, adopting the following best practices:–

Making use of simple, predictable, well-proven auction designs (e.g. SMRA, Clock) and avoiding
complex or risky formats with unpredictable outcomes (e.g. CCA, first price, sealed bid).

–

Ensuring that the auction does not prevent natural evolution of the underlying market (e.g.
forcing a new entrant through a spectrum reservation or forcing consolidation through limiting
supply of spectrum.

–

Prioritising non-monetary objectives, such as coverage. For example, by accepting lower
spectrum fees in return for operator commitments to expanding mobile coverage. Article 42(2)118of the EECC sets out that regulators should take account the costs of meeting licenceobligations when setting auction reserve prices.

In this report we have separately discussed best practice approaches to award processes and spectrum
pricing. However there is often a linkage between these two issues – a successful outcome can only
be achieved if best practice is followed with respect to both. This is illustrated, for example, by the factthat a particular auction design can work well in one situation whilst leading to unassigned spectrum inanother, as a result of the spectrum pricing decisions made:Case study: Clock auctions result in very different outcomes in Romania and Sweden
Background: Romania applied a Clock format in both its 2012 and 2021 multi-band spectrum
auctions. However, the success of these auctions was limited, with large quantities of spectrum
remaining unassigned in both cases, including in the 800MHz and 2.6GHz bands. As highlighted
previously, the main reason for spectrum remaining unassigned was the high reserve prices
associated with spectrum, particularly the annual licence fee component. The failure to assign all
spectrum was clearly an inefficient outcome, detrimental to both operators and consumers.
In contrast, several countries have successfully assigned spectrum using the Clock format. For
example, the Swedish regulator, PTS, used a Clock format for its auction of 2.3GHz and 3.5GHz
spectrum in 2021.119 This auction resulted in all spectrum being successfully assigned, with each of
the four bidders acquiring at least 80MHz of 5G-suitable spectrum.120
Key learnings: These contrasting examples illustrate how, when allocating spectrum, all elementsof the award procedure and licence conditions must be considered to achieve a successful outcome.

Fundamentally, policymakers should always keep in mind that spectrum assignment and pricing
decisions can have a significant impact on mobile operators and the functioning of the mobile market.
Poor decisions by policy makers could result in operators either not acquiring the portfolio of spectrum
that they require or having to pay a high price to obtain the spectrum that the need. This fundamentally
damages their ability to invest in the widespread deployment of new technologies including 5G.

118–Article 42(2) of European Union, ‘Directive (EU) 2018/1972 of the European Parliament and of the Council of 11 December
2018 establishing the European Electronic Communications Code’, 17 December 2018, sets out that “With respect to rights ofuse for radio spectrum, Member States shall seek to ensure that applicable fees are set at a level which ensures efficientassignment and use of radio spectrum, including by: (a) setting reserve prices as minimum fees for rights of use for radio
spectrum by having regard to the value of those rights in their possible alternative uses; (b) taking into account costs entailed
by conditions attached to those rights; and (c) applying, to the extent possible, payment arrangements linked to the actual
availability for use of the radio spectrum.”

119

PTS, ‘Open invitation to apply for licences to use radio transmitters in the 3.5GHz and 2.3GHz bands’, 17 April 2020.

120

PTS, ‘Decision on permission to use radio transmitters in the 3.5 GHz and 2.3 GHz bands’, 20 January 2021.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 60

In contrast, policymakers that de-risk the spectrum renewal process facing mobile operators will enable
those operators to release funds that can be used for strategic purposes, such as expanding thecoverage of their networks. In turn, this will reduce the ‘investment gap’ which the government thenneeds to fill. In other words, it will increase the likelihood and lower the cost to the public of meeting theconnectivity ambitions in the Digital Decade vision for 2030. This, in turn, increases the likelihood ofEurope meeting the sustainability/emissions targets of the European Green Deal.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 61

Annex A

Upcoming spectrum renewals in
EuropeIn this Annex, we provide further details of upcoming spectrum renewals in Europe. Figure A-1 below
lists the spectrum bands in individual countries within the European Economic Area (EEA), plus
Switzerland and the United Kingdom, where licences are due to expire in the next 10 years (byDecember 2032). The information contained in this table was summarised within Figure 3-7.
Figure A-1:

Spectrum bands due to expire in Europe in the next ten years [Source:
European Communications Office121,122 and European 5G Observatory123]

CountryBand

Operator

Expiry date

A1

December 2029

T-Mobile

December 2029

A1

December 2026

T-Mobile

December 2026

Drei

December 2026

A1

December 2026

Drei

December 2026

ProximusJune 2027

TelenetJune 2027

OrangeJune 2027

Dense Air

June 2027

Gridmax

May 2025

Citymesh

May 2025

ProximusJune 2022

TelenetJune 2022

OrangeJune 2022

Bulgarian Company

June 2024

A1

June 2024

TelenorJanuary 2031

Remarks

800MHz FDDAustria

2.6GHz FDD

2.6GHz TDD

2.6GHz FDD

2.6GHz TDD
Belgium

3.5GHz TDD

Bulgaria

900MHz FDD

121

European Communications Office, ‘ECO Report 03: The Licensing of “Mobile Bands” in CEPT’, 9 March 2022.

122

European Communications Office, ‘ECO Report 03: The Licensing of “Mobile Bands” in CEPT’, 6 April 2021.

123

European 5G Observatory, ‘Belgium grants provisional 5G licences in the 3.5GHz band’, 15 May 2020.

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 62

1800MHz FDD

2.1GHz FDD

Bulgarian Company

June 2024

A1

June 2024

TelenorJanuary 2031

Bulgarian Company

April 2035

A1

April 2035

Telenor

April 2035

A1

October 2024

Hrvatski Telekom

October 2024

A1

October 2024

Hrvatski Telekom

October 2024

Telemach

December 2024

A1

October 2024

Hrvatski Telekom

October 2024

Telemach

December 2024

A1

October 2024

Hrvatski Telekom

October 2024

Telemach

December 2024

A1

October 2024

Hrvatski Telekom

October 2024

Telemach

December 2024

A1

December 2024

Hrvatski Telekom

December 2024

Telemach

December 2024

O Telekomunikacije

November 2023

Epic

September 2028

Cyta

September 2028

Cablenet

June 2029

Epic

December 2023

Cyta

February 2024

PrimetelFebruary 2029

800MHz FDD

900MHz FDD

1800MHz FDD

Croatia
1900MHz TDD

2.1GHz FDD

2.6GHz FDD

3.5GHz TDD

800MHz FDD
Cyprus900MHz FDD

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 63

1800MHz FDD

2.1GHz FDD

2.6GHz FDD

2.6GHz TDD

800MHz FDD

Epic

December 2023

Cyta

February 2024

PrimetelFebruary 2029

Epic

December 2023

Cyta

February 2024

PrimetelFebruary 2029

Epic

September 2028

Cyta

September 2028

Cablenet

June 2029

Epic

September 2028

Cyta

September 2028

Cablenet

June 2029

O2

June 2029

T-Mobile

June 2029

VodafoneJune 2029

O2

October 2024

T-Mobile

October 2024

O2

October 2024

O2

June 2029

T-Mobile

October 2024

T-Mobile

June 2029

VodafoneJune 2029

T-Mobile

October 2024

T-Mobile

October 2024

Vodafone

February 2025

O2

June 2029

T-Mobile

June 2029

VodafoneJune 2029

O2

June 2029

T-Mobile

June 2029

900MHz FDD

1800MHz FDD
Czech
Republic
1900MHz TDD
2.1GHz FDD

2.6GHz FDD

2.6GHz TDD

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 64

O2

June 2032

VodafoneJune 2032

POD

June 2032

Nordic Telecom 5G

June 2032

TDC

May 2030

Hi3G

May 2030

Telia

May 2030

TelenorMay 2030

Hi3G

May 2030

Telia

May 2030

TelenorMay 2030

Telia

December 2025

TelenorDecember 2026

Tele2

January 2030

Elisa

February 2030

Telia

February 2030

Tele2

January 2030

Elisa

February 2030

Telia

February 2030

Tele2

January 2030

Elisa

February 2030

Telia

February 2030

Tele2

January 2030

Elisa

February 2030

Telia

February 2030

Tele2

January 2030

Elisa

February 2030

Telia

February 2030

2.3GHz TDD

Tele2

May 2030

2.6GHz FDD

Elisa

February 2030

3.5GHz TDD

2.6GHz FDD

Denmark
2.6GHz TDD

26GHz FDD

800MHz FDD

900MHz FDD

1800MHz FDD
Estonia

1900MHz TDD

2.1GHz FDD

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 65

2.6GHz TDD

2.6GHz FDD

Elisa

June 2030

Telia

February 2030

Telia

April 2030

Elisa

June 2030

DNA

February 2029

Telia

February 2029

Elisa

February 2029

Elisa

February 2029

Bouygues Telecom

January 2032

SFR

January 2032

OrangeJanuary 2032

Bouygues Telecom

December 2024

SFR

March 2031

OrangeDecember 2024

OrangeFebruary 2025

OrangeMarch 2031

Free

January 2030

Free

March 2031

Bouygues Telecom

December 2024

SFR

March 2031

OrangeMarch 2031

Free

October 2031

Bouygues Telecom

December 2022

Bouygues Telecom

December 2032

SFR

August 2031

OrangeJune 2030

OrangeAugust 2031

Free

January 2030

Free

August 2031

Bouygues Telecom

October 2031

Finland
2.6GHz TDD

800MHz FDD

900MHz FDD

France
1800MHz FDD

1900MHz TDD

2.1GHz FDD

2.6GHz FDD

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 66

3.5GHz TDD

800MHz FDD

SFROctober 2031

OrangeOctober 2031

Free

October 2031

28 regional licences

On or before July2026

Deutsche Telekom

December 2025

Telefónica

December 2025

Vodafone

December 2025

Deutsche Telekom

December 2025

Telefónica

December 2025

Telefónica

December 2025

Telefónica

December 2025

Vodafone

December 2025

1800MHz FDD
1900MHz TDD

2.1GHz FDD

Erste MVV Mobilfunk
December 2025
VermÖgensverwaltungs

Germany

2.6GHz FDD

Deutsche Telekom

December 2025

Telefónica

December 2025

Vodafone

December 2025

Erste MVV Mobilfunk
December 2025
VermÖgensverwaltungs

2.6GHz TDD

Deutsche Telekom

December 2025

Telefónica

December 2025

Vodafone

December 2025

Erste MVV Mobilfunk
December 2025
VermÖgensverwaltungs

800MHz FDD

Greece900MHz FDD

1800MHz FDD

Wind

February 2030

Vodafone

February 2030

CosmoteFebruary 2030

Wind

September 2027

Vodafone

September 2027

CosmoteSeptember 2027

Vodafone

November 2027

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 67

CosmoteNovember 2027

Wind

February 2030

Vodafone

February 2030

CosmoteFebruary 2030

OTE

April 2029

Vodafone

March 2030

CosmoteMarch 2030

Magyar Telekom

June 2029

VodafoneJune 2029

TelenorJune 2029

Magyar Telekom

June 2029

VodafoneJune 2029

TelenorJune 2029

Magyar Telekom

June 2029

VodafoneJune 2029

TelenorJune 2029

2.6GHz TDD

VodafoneJune 2029

700MHz FDD

SíminnJuly 2032

Nova

April 2023

Nova

July 2032

Sýn

April 2023

SýnJuly 2032

SíminnApril 2023

Nova

April 2023

Sýn

April 2023

SíminnJuly 2032

Nova

July 2032

Sýn

July 2032

Eir

July 2030

Three

July 2030

2.6GHz FDD

2.6GHz TDD

800MHz FDD

900MHz FDD
Hungary

2.6GHz FDD

800MHz FDD

Iceland
1800MHz FDD

2.6GHz FDD

Ireland

800MHz FDD

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 68

900MHz FDD

1800MHz FDD

1900MHz TDD

Vodafone

July 2030

Eir

July 2030

Three

July 2030

Vodafone

July 2030

Eir

July 2030

Three

July 2030

Vodafone

July 2030

Three

October 2022

Eir

March 2027

Three

July 2022

Three

October 2022

Vodafone

October 2022

Vodafone

July 2032

Dense Air

July 2032

6 regional licences

July 2032

Eir

August 2028

Three

August 2028

Vodafone

August 2028

Wind Tre

December 2029

Telecom Italia

December 2029

Vodafone

December 2029

Wind Tre

December 2029

Telecom Italia

December 2029

Vodafone

December 2029

Telecom Italia

December 2029

Vodafone

December 2029

Wind Tre

December 2029

Telecom Italia

December 2029

Vodafone

December 2029

Iliad

December 2029

2.1GHz FDD

3.5GHz TDD

26GHz TDD

800MHz FDD

900MHz FDD
Italy
1500MHz SDL

1800MHz FDD

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 69

Wind Tre

December 2029

Telecom Italia

December 2029

Vodafone

December 2029

Iliad

December 2029

Wind Tre

December 2029

Telecom Italia

December 2029

Vodafone

December 2029

Iliad

December 2029

Wind Tre

December 2029

Wind Tre

December 2037

Telecom Italia

December 2037

Vodafone

December 2037

Iliad

December 2037

Wind Tre

December 2037

Telecom Italia

December 2037

Vodafone

December 2037

Iliad

December 2037

Fastweb

December 2037

Bite

June 2030

LMT

January 2026

Tele2

February 2026

Tele2

September 2028

Bite

June 2030

LMT

January 2026

Tele2

February 2026

Bite

June 2030

LMT

June 2030

Bite

June 2030

LMT

June 2030

LMT

December 2027

2.1GHz FDD

2.6GHz FDD

2.6GHz TDD

3.5GHz TDD

26GHz TDD

900MHz FDD

1800MHz FDD
Latvia

1900MHz TDD

2.1GHz FDD

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 70

Tele2

December 2027

Bite

December 2027

LMT

December 2027

Bite

December 2028

LMT

December 2028

Tele2

December 2028

LMT

December 2028

LMT

December 2028

Tele2

December 2028

Unistars

December 2028

Telia

May 2025

Bite

July 2030

Telia

July 2030

Tele2

July 2030

Bite

October 2032

Telia

October 2032

Tele2

October 2032

Bite

October 2032

Telia

October 2032

Tele2

October 2032

Bite

February 2026

Telia

February 2026

Tele2

March 2026

Lithuanian Radio andTelevision Center

July 2029

Bite

August 2027

Telia

August 2027

Tele2

August 2027

Lithuanian Radio andTelevision Center

January 2030

Lithuanian Radio andTelevision Center

January 2030

2.3GHz TDD

2.6GHz FDD

2.6GHz TDD

3400MHz TDD

800MHz FDD

900MHz FDD

1800MHz FDD

Lithuania
2.1GHz FDD

2.3GHz TDD

2.6GHz FDD

2.6GHz TDD

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 71

Lithuanian Radio andTelevision Center

October 2022

Lithuanian Radio andTelevision Center

July 2027

Post

December 2027

ProximusDecember 2027

OrangeDecember 2027

Post

May 2027

ProximusMay 2027

OrangeJune 2027

Post

May 2027

ProximusMay 2027

OrangeJune 2027

Post

December 2027

ProximusDecember 2027

OrangeDecember 2027

MelitaAugust 2026

GO

August 2026

Epic

August 2026

GO

August 2026

Epic

August 2026

MelitaAugust 2022

GO

August 2022

Epic

August 2022

MelitaAugust 2022

GO

August 2022

Epic

August 2022

T-Mobile

December 2029

Vodafone

December 2029

KPN

December 2029

T-Mobile

February 2030

3.5GHz TDD

800MHz FDD

900MHz FDD
Luxembourg
1800MHz FDD

2.6GHz FDD

900MHz FDD

1800MHz FDD
Malta
1900MHz TDD

2.1GHz FDD

800MHz FDD
Netherlands
900MHz FDD

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 72

Vodafone

February 2030

KPN

February 2030

T-Mobile

December 2029

T-Mobile

February 2030

Vodafone

February 2030

KPN

February 2030

T-Mobile

May 2030

Vodafone

May 2030

KPN

May 2030

ZUM

May 2030

T-Mobile

December 2029

KPN

December 2029

TelenorDecember 2028

Telia

December 2028

InquamDecember 2022

TelenorDecember 2032

Telia

December 2032

Ice

December 2032

TelenorDecember 2022

TV 2

December 2022

NorwegianBroadcasting
Corporation

December 2022

TelenorDecember 2022

Telia

December 2022

Simula Metropolitan
Center for DigitalEngineering

December 2022

Cayman Spectrum

December 2022

TelenorDecember 2022

Telia

December 2022

NextGenTel

December 2022

1800MHz FDD

2.6GHz FDD

2.6GHz TDD

1800MHz FDD
2000MHz TDD

2.1GHz FDD

2.3GHz TDD
Norway2.6GHz FDD

2.6GHz TDD

3400MHz TDD

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 73

26GHz TDD

40 regional licences

December 2022

TelenorDecember 2022

Telia

December 2022

Statnett

December 2022

GlobalConnect

December 2022

GlobalConnect

December 2024

2 regional licences

On or before
December 2024

P4

December 2023

Aero 2

December 2023

Polkomtel

February 2026

T-Mobile

February 2026

Centernet

December 2022

Mobyland

December 2022

P4

December 2027

T-Mobile

December 2027

OrangeAugust 2027

P4

December 2022

Polska Telefonia
Cyfrowa

January 2023

OrangeJanuary 2023

P4

December 2022

Polkomtel

January 2023

OrangeJanuary 2023

Aero 2

December 2024

MEO

March 2027

Vodafone

March 2027

NOS

March 2027

MEO

March 2022

Vodafone

March 2027

NOS

November 2027

900MHz FDD

1800MHz FDD

Poland1900MHz TDD

2.1GHz FDD

2.6GHz TDD

800MHz FDD
Portugal
900MHz FDD

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 74

MEO

March 2022

MEO

March 2027

Vodafone

March 2027

NOS

March 2027

MEO

March 2027

Vodafone

March 2027

NOS

March 2027

2.6GHz TDD

Vodafone

March 2027

3.5GHz TDD

2 regional licences byDense Air

August 2025

Telekom Romania

April 2029

Vodafone

April 2029

OrangeApril 2029

Telekom Romania

April 2029

Vodafone

April 2029

OrangeApril 2029

RCS-RDS

April 2029

Telekom Romania

April 2029

Vodafone

April 2029

OrangeApril 2029

Telekom Romania

April 2029

2K Telecom

April 2029

Vodafone

April 2029

Slovak Telekom

December 2028

OrangeDecember 2028

O2

December 2028

Slovak Telekom

December 2028

OrangeDecember 2028

O2

September 2026

O2

December 2028

Slovak Telekom

December 2025

1800MHz FDD

2.6GHz FDD

800MHz FDD

900MHz FDD
Romania
1800MHz FDD

2.6GHz FDD

2.6GHz TDD

800MHz FDD

Slovakia
900MHz FDD

1800MHz FDD

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 75

2.1GHz FDD

OrangeDecember 2025

OrangeSeptember 2026

O2

December 2025

O2

September 2026

Swan

December 2025

Swan

September 2026

Slovak Telekom

August 2026

OrangeAugust 2026

O2

September 2026

Slovak Telekom

December 2028

OrangeDecember 2028

Slovak Telekom

December 2028

OrangeDecember 2024

OrangeAugust 2025

O2

December 2024

O2

August 2025

New licenceissuedSlovanet

August 2025

New licenceissuedTelekom Slovenije

May 2029

Telemach

May 2029

A1

May 2029

Telekom Slovenije

January 2031

Telemach

January 2031

A1

January 2031

Telekom Slovenije

January 2031

Telemach

January 2031

A1

January 2031

Telekom Slovenije

May 2029

A1

May 2029

1 regional licence

November 2022

2.6GHz FDD
2.6GHz TDD

3.5GHz TDD

800MHz FDD

Slovenia
1800MHz FDD

2.6GHz FDD
3.5GHz TDD

New licenceissuedEnsuring European spectrum renewals are aligned with Digital Decade targets │Page 76

800MHz FDD

Vodafone

April 2031

OrangeApril 2031

Telefónica

April 2031

Vodafone

January 2028

Vodafone

December 2030

OrangeDecember 2030

Telefónica

December 2030

Vodafone

December 2030

OrangeDecember 2030

Telefónica

December 2030

Xfera

December 2030

Vodafone

December 2030

OrangeDecember 2030

Telefónica

December 2030

39 regional licences

December 2030

Vodafone

December 2030

OrangeDecember 2030

Aire Networks

December 2030

15 regional licences

December 2030

Hi3G

December 2025

Net4Mobility

December 2025

Tele 2

December 2025

TelenorDecember 2025

Telia

December 2025

Net4Mobility

December 2027

Telia

December 2027

Hi3G

December 2025

TelenorDecember 2025

Svenska UMTS-Licens

December 2025

Hi3G

December 2023

900MHz FDD

1800MHz FDD
Spain

2.6GHz FDD

2.6GHz TDD

900MHz FDD

Sweden1800MHz FDD

2.1GHz FDD

2.6GHz FDD

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 77

2.6GHz TDD

Net4Mobility

December 2023

Telia

December 2023

Hi3G

December 2023

TDC

December 2022

3 regional licences

December 2022

SunriseDecember 2028

Swisscom

December 2028

Salt

December 2028

SunriseDecember 2028

Swisscom

December 2028

Salt

December 2028

SunriseDecember 2028

Swisscom

December 2028

Salt

December 2028

SunriseDecember 2028

Swisscom

December 2028

Salt

December 2028

SunriseDecember 2028

Swisscom

December 2028

Salt

December 2028

Swisscom

December 2028

3.5GHz TDD

800MHz FDD

900MHz FDD

1800MHz FDD
Switzerland

2.1GHz FDD

2.6GHz FDD

2.6GHz TDD

Ensuring European spectrum renewals are aligned with Digital Decade targets │Page 78

Aetha Consulting Limited
24 Hills Road
Cambridge
CB2 1JP
United Kingdom+44 1223 755575
enquiries@aethaconsulting.com
www.aethaconsulting.com__________________________________
Copyright © 2022. The information contained herein is property of Aetha Consulting Limited and isprovided on the condition that it will not be reproduced, copied, lent or disclosed, directly or indirectly,
nor used for any other purpose other than that for which it was specifically furnished.