EU mulls spectrum sales as bailout
As featured on TM Forum’s the Insider Blog
Neelie Kroes, Europe's Digital Agenda Commissioner, may have been stating the ‘bleeding obvious’ when she said recently that spectrum "doesn't grow on trees.”
Speaking at the Spectrum Management Conference in Brussels, Kroes intimated that better EU coordination of digital dividend spectrum could add between €1 billion and €3 billion per year to the quarter of a trillion Euros already being generated by radio spectrum in the region each year.
This can only be described as a novel means of lifting Europe out if its economic slump and it is certainly not the first time governments have eyed the enormous revenue streams form spectrum sales to improve national bottom lines.
The big issue here is that European spectrum is still managed at national levels and there is not always consistency on how it is being managed. Kroes wants TV broadcasters to free up another 200-MHz of spectrum for mobile operators in addition to the 1-GHz already available. Spectrum owners/buyers are still expected to meet data rates of 30-Mbps for all European citizens by 2020.
Even if the EC wants to make 1,200-MHz of spectrum available for mobile internet by 2015, many member states are still a long way off contributing to or achieving that goal.
Without a centralized spectrum inventory the process of freeing up more spectrum in a consistent fashion may prove to be a massive hurdle. Not only would delays impact on potential revenue generation, it could also stifle the growth of mobile broadband or, worse still, exhaust the existing capacity.
Nevertheless, one has to question if centralized control of anything would be advisable in the current economic climate that exists in Europe. Even with centralized management of the European Community, in a financial sense, results are hardly encouraging with five countries now seeking bailouts. Could we ever see the case where national spectrum is traded between countries to help ease national debts?
Although this is purely hypothetical, we have already seen examples of spectrum holders in other countries selling their excess capacity to competitors, and usually at a handsome profit. Bandwidth remains a very limited resource (remember, it doesn’t grow on trees), and despite the imminent releases from the digital dividend and redistribution of TV spectrum, its value will continue to climb. It is a simple matter of supply and demand, after all. European nations expecting windfalls from the sale of spectrum may be unwilling to hand over any of it to a central agency.
The question now is: who will have the money to buy this valuable resource? Up until now, mobile network operators have been the prime bidders but they, too, are coming under pressure because of lowering ARPUs and ebitdas in the Eurozone. Their funders, the banks, are under even greater pressure and unlikely to be able to fund the purchases. Neither may be in a position to make the multi-billion Euro investments in the new spectrum that governments are hoping for and, if they won’t, who will?
Dare we mention those entities with very deep pockets that have a vested interest in seeing mobile networks survive, the OTT players? Is it too far-fetched to assume that they may, at some stage, invest in spectrum as a hedge that would make them an essential partner to existing network operators?
The likes of Google, Amazon, Facebook and Netflix regularly deny any desire to compete head-on with the mobile operators, and why would they want the responsibility of running those ‘pipes’ that deliver content to their customers? On the other hand, by buying and managing spectrum, the lifeblood of the mobile operators, they could almost guarantee their own survival without having to run the physical networks themselves. Is that theory too far-fetched?