France kicks off 700-MHz spectrum auction

French regulator Arcep invited bidders to submit their applications to take part in an auction of 700-MHz spectrum, kicking off a process that the French government hopes will raise at least €2.5 billion ($2.8 billion) for state coffers.

Arcep's invitation was issued after Economy Minister Emmanuel Macron and Axelle Lemaire, junior minister for the digital economy, confirmed that the government planned to sell six 2×5 MHz blocks of 700 MHz spectrum to mobile operators at a reserve price of €416 million per block.

Potential applicants have until midday CEST on Sept. 29, 2015 to submit their applications. Arcep plans to conduct the auction and award the licences to the winning candidates before the end of 2015.

The regulator said the frequencies will be allocated through a multi-round ascending auction and will include coverage obligations as strong as those attached to the 800 MHz band, as well as new obligations requiring on-board coverage on trains.

In an illustration of how the bidding process might transpire, Arcep suggested the final bid per block could amount to €501 million, raising total proceeds of over €3 billion. However, Arcep will also run a sealed bid auction to decide where in the band the different blocks should be positioned, suggesting a further €100 million could be raised from this process.

All four French mobile operators (Orange, Bouygues Telecom, Numericable-SFR and Free Mobile) are expected to take part in the auction. Each will be limited to no more than 2×15 MHz in the 700 MHz band. In addition, no operator will be able to hold more than 2×30 MHz of low frequency spectrum in total.

The 700 MHz band is currently being used by digital terrestrial television (DTT) services in France. The government decided to allocate 2×30 MHz to mobile operators "to enable them to keep pace with the exponential increase in mobile data traffic," Arcep noted. The band will be freed up progressively across the country between 2016 and 2019.

France is the next country in Europe after Germany to auction off frequencies in the 700 MHz auction. The recent German auction also included frequencies in the 900 MHz, 1500 MHz and 1800 MHz bands and raised a total of over €5 billion, although the reserve price had been set at just €1.5 billion.

The UK also plans to open up 700 MHz frequencies to mobile operators for wireless broadband services by 2022 or possibly up to two years earlier. Regulator Ofcom also said this week that it would use the German auction to estimate the market value of 900 MHz and 1800 MHz licences in the UK, and has opened a consultation on the matter with a closing date of Aug. 7.

For more:
- see this Arcep release
- see this statement by the French government
- see this Ofcom report

Related articles:
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German spectrum auction could have been €3B cheaper, say analysts
German spectrum auction raises more than €5B
France sets €2.5B reserve price for 700 MHz auction
Ofcom will allocate 700 MHz frequencies to mobile operators by 2022

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