Digital Dividend

Within Europe and elsewhere the process of switching over from analogue television to digital is making available a significant amount of additional spectrum. This spectrum is often referred to as the ‘digital dividend’. The spectrum is of particular interest to mobile operators as the low frequency range in which it resides, 700MHz spectrum and 800MHz spectrum, makes it particularly attractive due to the superior propagation characteristics of lower frequencies which allows operators to provide low cost coverage compared to higher frequency bands.

Government policy in Europe and around the world is increasingly focusing on the importance of developing the digital elements of the economy. Many governments have identified the need to provide near universal access to broadband as a pre-requisite for future economic prosperity. As the economics of extending coverage through expanding mobile networks is more attractive than building additional fixed infrastructure, governments see a key role for mobile networks in achieving their public policy objectives (see for example the UK’s Digital Britain Final Report.) As a result governments are anxious to release the spectrum as early as possible to accelerate the development of the economic benefits.

In developing their spectrum strategy operators cannot ignore the potential of the Digital Dividend when they contemplate their strategies in relation to refarming of 900MHz spectrum in particular as well as other spectrum releases such as 2.6GHz spectrum. Spectrum in the 900MHz range is the current bedrock on which many of the first mobile networks are founded (later operators tended to be awarded spectrum in the 1800MHz range) and the loss of this spectrum would impose very significant costs on operators. It is not surprising therefore that many operators are arguing that the process of refarming cannot proceed until there is clarity over the release of Digital Dividend as the two may be regarded as (imperfect) substitutes. Over time as uncertainty over the availability of technology and devices in the Digital Dividend range diminishes and the time at which it is available for commercial deployment becomes closer the 900MHz and Digital Dividend spectrum will become closer substitutes for each other. It is certainly the case that valuing spectrum today is extremely challenging when considerable uncertainty remains over the Digital Dividend.

Main contacts:

Graham Friend
Managing Director
Tel: +41 79 855 1354
graham.friend@coleago.com

Scott McKenzie
Director
Tel: +44 7825 294 576
scott.mckenzie@coleago.com