Spectrum refarming

Spectrum refarming provides operators with the opportunity to deploy new technologies such as UMTS and HSPA and in the longer term LTE in the 850 / 900MHz frequency band. This lower frequency range offers attractive propagation characteristics and therefore lowers the cost of providing coverage as fewer sites are required. The lower cost of providing coverage will enable operators to extend mobile broadband services outside of urban areas where coverage may currently be limited due to the use of spectrum in the 2100MHz spectrum range. UMTS900 networks have already been successfully deployed in Europe (e.g. DNA in Finland), Asia (e.g. AIS in Thailand) and in South America (e.g. Digitel in Venezuela).

Spectrum refarming is not without its challenges for both operators and regulators. Coleago recently advised a regulatory authority on potential licence conditions for refarmed spectrum. Many regulators are taking the expiration of existing 2G licences as an opportunity to update licence terms to reflect the developments in the mobile industry. Issues being considered through the refarming process include spectrum trading, net neutrality, quality of service and technology and service neutrality. Coleago has conducted an extensive survey of licence conditions introduced by the countries that have completed the refarming process as well as all the current consultations. This survey along with our broad understanding of regulatory and public policy and economics ensures that Coleago can advise regulators and operators alike on the challenges of refarming spectrum.

Coleago has worked with operators to formulate their responses to consultations as well as advising clients on developing a holistic spectrum strategy encompassing refarmed spectrum. Spectrum refarming must be considered in light of anticipated future spectrum releases such as the Digital Dividend in the lower frequency bands and 2.5GHz and 2.6GHz spectrum in the higher frequency range. These future awards of spectrum complicate the process of valuing refarmed spectrum as Digital Dividend spectrum can be viewed as a potential substitute. However uncertainties over the release of this spectrum along with the availability of technology in this frequency range makes the spectrum an imperfect substitute and any strategy based on substitution highly risky. The process of refarmed spectrum valuation is complicated by the fact that there are very few relevant benchmarks from refarmed spectrum auctions. Coleago has worked with clients to develop bottom-up spectrum valuations for refarmed spectrum which take into account anticipated changes to licence conditions and future spectrum releases.

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