Market Insight

EU set to free up 3G spectrum for 4G

November 14, 2012

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The European Commission has decreed that all EU member states will have to make spectrum currently assigned to 3G services available for next generation services by June 2014. The ruling relates to the 2100MHz band which is used for 3G services in every EU country. The band will add 120MHz (1920MHz to 1980MHz and 2110MHz to 2170MHz) to the pool available to operators for next generation mobile broadband services. This ruling follows a similar directive in 2009 by the EC liberalising of the 2G bands. The EC claimed the decision will make close to 1000MHz of spectrum available for high-speed mobile broadband services.

Making more spectrum available for high speed mobile broadband spectrum does not mean that the benefits will be seen immediately. The 3G services operating in these bands would likely need to remain operational for many years into the future. Indeed, very few operators worldwide have been able to turn off their 2G networks so far, and none of them have been in Europe.

There is also less 3G spectrum than 2G spectrum for refarming, reducing the opportunity for operators to redesign their networks to make room for new services. Even with much more 2G spectrum available for refarming and far less traffic needing to be carried on the 2G network, many operators have not been able to take advantage of the relaxed regulations. Despite the EC ruling that 2G bands should be freed for 4G services in 2009, only 19 operators in 13 EU countries have commercially launched 4G services in the band so far.

Further complicating matters is that most 3G licences were issued with 20 year terms which will be due for renewal in around 10 years' time. Even if operators were in a position to launch 4G services in the 3G band in four years, many would probably not invest more in spectrum they may not have much longer. As a result, IHS Screen Digest predicts this 3G spectrum will not be widely re-used for 4G services, unless telecom regulators allow a loosening of other licence conditions or they issue new licenses with longer terms.

Nonetheless, making this spectrum available now is good for operators and networks equipment manufacturers to plan ahead. The EC is eager to have Europe at the cutting edge of mobile technology again. Europe led the way with 2G and 3G, but has lost that initiative with 4G to the US, Japan and South Korea. Mobile is also a key plank of its Digital Agenda plan which aims to make available a 30Mbps connection to every EU citizen by 2020.

Unlike their US counterparts, EU operators have not been clamouring for extra spectrum allocations. While this is probably related to the current macroeconomic conditions, which would curtail operators' ability to invest in new spectrum auctions, there have been less claims of congestion from European operators. Vodafone in 2011 said that its European networks had an averages 37 per cent busy hour utilisation.

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