Insights from a Strategic Spectrum Review
The mobile industry has accumulated a fragmented spectrum portfolio, consisting of various frequency bands that are sub-optimally allocated for modern technologies like 4G and 5G. As operators transition from legacy technologies such as 2G and 3G to newer, bandwidth-intensive solutions, the need for contiguous spectrum blocks has become critical.
This paper shares the results of Coleago’s Strategic Spectrum Review, which identifies opportunities for operators to optimise their existing spectrum holdings through swaps, trades, and more efficient allocation strategies.
Key Insights
Spectrum Inefficiencies: Operators hold a patchwork of fragmented spectrum that hampers efficiency, especially for 4G and 5G deployments. A significant opportunity exists to improve spectral efficiency by reorganising spectrum blocks, including moving from Frequency Division Duplex (FDD) to Time Division Duplex (TDD) in bands such as 2.6 GHz. Optimising existing assets in this manner could improve spectral efficiency by 10-30%.
Renewals and Optimisation: Spectrum bands originally assigned for 2G and 3G services are nearing renewal, presenting an opportunity to consolidate fragmented holdings into larger, contiguous blocks. This process can maximise spectrum efficiency and align cost structures with current market demands, reducing reliance on high-priced spectrum auctions.
Future Spectrum Needs: Mobile traffic in developing markets is projected to increase at a compound annual growth rate (CAGR) of over 20% over the next 15 years. With this growth, operators face a potential “capacity crunch” within the next four to five years unless they acquire additional spectrum. On average, operators will need between 100-150 MHz of new spectrum within five years to avoid the need for excessive site builds and meet growing demand.
Spectrum Costs: The total cost of spectrum ownership remains relatively low, generally under 5% of revenue. However, the increasing need for new spectrum will drive up costs, making it critical for operators to negotiate favourable terms and lobby for affordable spectrum prices.
Regulatory Opportunities: Key opportunities for improvement in regulatory frameworks include enabling secondary market spectrum trading, improving spectrum sharing regulations, and creating clearer, more predictable spectrum roadmaps. These adjustments could help mitigate the inefficiencies in spectrum allocation and support faster, more flexible market responses.
Conclusion
Coleago’s Strategic Spectrum Review is a vital tool for mobile operators to manage spectrum-related risks, optimise their current holdings, and plan for future spectrum requirements. Given the rapid evolution of mobile technologies and the need for timely spectrum availability, operators must take proactive steps to maximise spectral efficiency and engage with regulators to ensure that future spectrum needs are met cost-effectively and on time.
Other insights
Maximising Shareholder Value in Spectrum Auctions
Spectrum auctions, while common in the telecom industry, are complex and high-risk events that can significantly influence a company’s long-term performance. Missteps, especially vague auction objectives and poor valuation discipline, can lead to substantial destruction of shareholder value.
Spectrum and Regulatory Challenges Related to eVTOLS
Electric Vertical Take-Off and Landing (eVTOL) aircraft are poised to revolutionise urban mobility, with commercial operations expected to begin as early as 2025 and significant growth anticipated by the 2030s.
Future of the UHF Band after 2024: An Analysis of Options in the UK
Coleago Consulting in collaboration with its client, the UK Spectrum Policy Forum, has released a landmark report, “Future of the UHF Band After 2034,” setting out a detailed assessment of the United Kingdom’s Ultra High Frequency (UHF) spectrum landscape. The report looks at the industry trends and the critical trade-offs required to balance the needs of Digital Terrestrial Television (DTT), Mobile Communications, and Programme Making and Special Events (PMSE).
The Polish 700 and 800 MHz Spectrum Auction: Insights and Global Lessons
Poland’s final low-band spectrum auction marks a pivotal moment in Europe’s 5G rollout, offering key lessons in auction design, cross-border coordination, and strategic spectrum management.
The Case for Strategic Spectrum Renewal
As spectrum licences approach their expiry date, a strategic approach to spectrum renewal is crucial. Traditional presumption of renewal in favour of incumbents may no longer serve the industry’s needs. Instead, a more strategic approach to renewal can optimise spectrum assignments and improve spectral efficiency by up to 40%.
Best Practice Spectrum Management
The principles of best practice spectrum management are well established and their implementation can enhance the socio-economic value of spectrum and how much operators are prepared to pay to acquire new spectrum. Whilst most regulators in developed markets have adopted best practice, the same cannot be said for developing markets. Coleago recently studied the regulatory environments in 16 African markets and recorded the extent to which best practice had been adopted.