Thursday, April 5, 2018

U.K. Auction Illustrates Lower Spectrum Price Trend

With massive amounts of millimeter wave spectrum being released, big allocations of new unlicensed spectrum, spectrum sharing and aggregation of licensed and unlicensed spectrum in the U.S. and a growing number of other markets, it is easy enough to predict that spectrum costs are headed lower.


It is a simple matter of supply and demand, as well as a vastly-increased role for unlicensed spectrum.


The U.S. Federal Communications Commission, for example, already is moving to add 11 GHz of new spectrum for wireless use (largely 5G), and is considering adding at least 18 GHz more new spectrum to that total.


Even in raw physical terms, and ignoring the actual information-carrying capacity of the millimeter systems, the new 11 GHz of spectrum already envisioned for deployment is more than an order of magnitude (10 times) all available mobile capacity.


When combined with advanced radio techniques, small cell architectures and the inherently-greater symbol representation of millimeter-range signals, perhaps two orders of magnitude of usable capacity (100 times) will be possible, compared to today's mobile business.


The cost of 4G spectrum has been dropping, for example.


In the United Kingdom, where 2.3-GHz and 3.4-GHz spectrum intended to support 5G is being auctioned, prices arguably are 22 times less than 3G prices and less than half 4G prices (though there are lots of nuances).


Present expectations are that mobile service providers will spend £1 billion ($1.4 billion) on 2.3 GHz and 3.4 GHz spectrum.


Mobile service providers spent  £22 billion ($30.9 billion, at today’s rates) U.K. operators paid for 3G spectrum in 2000. In 2013, mobile service providers paid £2.3 billion ($3.23 billion) for 4G spectrum.

In other words, mobile operators paid about £0.11 ($0.15) per MHz per capita for 5G spectrum, compared with the £2.75 ($3.85) per MHz per capita that operators spent in 2000 for 3G assets. 




Beyond all that, unlicensed spectrum is becoming more important as well. That includes spectrum aggregation, where licensed mobile spectrum and unlicensed Wi-Fi spectrum can be used together, as one pool of spectrum resources.


But new unlicensed spectrum, and in some cases, huge amounts, also are being released. Included in the 11 GHz of new spectrum being readied for release by the FCC, fully 7 GHz is unlicensed.

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