The golden frequencies coveted by French mobile operators in the auction by ARCEP
Globally, mobile technology has emerged as a primary engine of economic growth, stimulating enormous private-sector spending in both R&D and infrastructure, and profoundly changing daily lives everywhere. Currently 3.2 billion people use a mobile device in the world and there will be 900 million using LTE by 2016.
Dramatic performance improvements in mobile communications standards have propelled mobile phones to become the fastest adopted technology of all time.
• User costs have plummeted.
• Mobile network infrastructure costs have also fallen dramatically while performance has soared.
• Mobile data-transmission speeds have skyrocketed: 4G networks offer 12,000 times faster data-transmission speeds than 2G networks.
• Consumer adoption of 3G and 4G standards has outpaced that of all other technologies.
Recently in the US, consumers spend more time with online retail on mobile devices (smartphones and tablets) than desktop and laptop PCs. In France the trend seems to be the same.
French mobile operators now offer their customers the benefits of similar services. Only the quality and the power network will generate a competitive advantage. The 4 main mobile operators (Orange, SFR-Numéricable, Bouygues Telecom and Free) have well anticipated changes and have engaged them in the battle of the mobile network.
Faced with an explosion of Internet data streams, operators need more spectrums. ARCEP assigned the low-frequency spectrum 700 MHz to mobile operators in order to accelerate the 4G/ LTE (Long Term Evolution) mobile coverage on the French territory. As indicated by the ARCEP, “the allocation of the 700 MHz band is of strategic importance for the deployment of mobile broadband networks in the short and medium term, and to assist in the long term, future innovations.” It’s also a quick and easy way to fill the state coffers, especially replenish the “defense budget”. This procedure guarantees a minimum amount of six lots of about 2.5 billion Euros.
What do the frequencies 700 MHz mean for Telecom Operators?
The frequencies 700 MHz, nicknamed “Gold Frequencies” have the advantage of allowing the mobile network to better penetrate into buildings as these waves pass through concrete and are very useful in low density areas because they provide good coverage with a limited number of antennas. Currently occupied by the channels of digital terrestrial television (DTT), these frequencies will be freed gradually, between 1st of December 2015 and 1st of July 2019. The band 700MHz lays also the foundation for future 5G.
What were the terms of allocation?
The regulator proposes to divide into six blocks of 5 MHz frequencies available for sale and make several rounds of ascending auctions. The starting price of the auction is set at 416 million Euros per lot, and will increase by 5 million each round of betting.
According to the terms of allocation, each operator may not acquire more than two lots (10MHz), with the exception of Free Mobile, which can buy three, to compensate for its weak presence in the bands of frequencies close to 800 and 900 MHz.
The allocation of frequency bands
The negotiations taking place behind closed doors in a secret location have started on Monday, 11/16/2015 and the main auction ended today on Tuesday, 17 of November 2015 at 18h00 after eleven rounds of betting. The price reached 466 million euros a block of 5 MHz duplex, or a total of 2.796 billion euros.
The results are:
– Bouygues Telecom won 1 block
– Free Mobile won 2 blocks
– Orange won 2 blocks
– SFR won 1 block
It remains to identify where, within the band, each winner will be positioned. There are 4 possible positions in the band.
The winners are invited to indicate to ARCEP on November 19th their preferences, and the amount they are willing to pay to have their first choice*.
The result of this positioning auction will be added to the result of the main auction that has just ended.
*If they get their second choice, they will pay 2/3 of that amount. If they get their third choice, 1/3. If they get their last choice, they will pay nothing.
Analyste et Veilleur Stratégique
En cours de spécialisation en E-business et Webmarketing.
Etudiant en Master 2 « Commerce Electronique » (Université de Strasbourg). Titulaire d’un Master 2 « Marketing, Gestion Relation Client, Développement d’affaires ».