Israel takes the ‘Vickrey’ approach to 5G auctions

The Israeli telcos have taken a bit of a battering over the last 12-18 months and it seems the Government has a sympathetic ear with its new approach to auctioning 5G spectrum.

According to Globes, the Government will make use of an auction technique known as the Vickery method to divvy up the precious 5G frequencies. It is an interesting approach, and bundled together with other incentives, should create a much more investment friendly environment for the telcos.

A Vickery auction is a blind auction where the highest bidder wins the prize, but the second-highest value is actually paid. Although this approach is uncommon, for some it is believed to be fairer as it attempts to attract bids closer to the value of the asset but does not punish competition for inflated prices. Whether this proves to be true remains to be seen, though it certainly is an interesting approach.

This auction might turn some heads, but context is key. The Israeli telcos have had somewhat of a difficult period in recent years thanks to the introduction of aggressive new players and an on-going price war which has driven down profits. The Israeli Government has suggested revenues declined in telco by 5.6% in 2018, leading some to the assumption the telcos would struggle to fulfil the financial commitments of 5G networks.

“The financial state of the companies at this time has not escaped us, and the tender also takes this situation into account,” said Minister of Communications David Amsalem. “I congratulate my friends and participants in the tenders committee for their professional work. The dedication and responsibility exercised is what made it possible to lay the cornerstone today for the next era of technology.”

To attract further interest in the 5G bonanza, the Israeli Government will also introduce a number of incentives to lessen the burden of network investment. Payments for spectrum licenses can be delayed until 2022 for example, while there are also rebates being offered to those parties who meet geographical coverage expectations set over a four-year period.

Another interesting aspect of the auction is the shared network element. Some of the assets will only be offered to those telcos who agree to participate in the creation of shared infrastructure, a strategy the Government hopes will increase the efficiency of investments.

Looking at the frequencies available, the Government will attempt to ensure all telcos have a slice of the most desirable bands, 700 MHz for example, while a series of other lots will be available. The assets bought in the 2.6 GHz to 3.8 GHz frequencies will only be useable for 5G, while the other frequencies can be used to bolster 4G.

Only time will tell whether this approach will lead to a net-gain in terms of investment and network rollout, but the Israeli Government should be applauded for taking an alternative approach which is potentially better suited to local market dynamics.

US refarms 2.5 GHz band from education to 5G

The US telecoms regulator has decided to redirect the 2.5 GHz band away from its current educational use to create more 5G spectrum.

The Federal Communications Commission is positioning this as a move to modernize the outdated regulatory framework for the 2.5 GHz band, which is apparently the single largest band of contiguous spectrum below 3 GHz. The band had been set aside for educational TV use and the FCC move removes any restrictions on who can use it and how. It had previously been made available for free but now the government gets to cash in on yet another auction.

At long last, we remove the burdensome restrictions on this band, allowing incumbents greater flexibility in their use of the spectrum, and introduce a spectrum auction that will ensure that this public resource is finally devoted to its highest-valued use,” said FCC Chairman Ajit Pai. “These groundbreaking reforms will result in more efficient and effective use of these airwaves and represent the latest step in advancing U.S. leadership in 5G.”

According to Pai, most educational users of this spectrum ended up leasing it out for commercial use anyway, which he seems to consider justification enough alone to take it off them. His full statement makes several oblique references to dissent among the FCC commissioners. The motion was opposed by two Commissioners and Pai infers that their obstruction could result in the US falling behind in the 5G race.

One of those dissenters was Jessica Rosenworcel, who often disagrees with Pai. Here’s her tweet on the matter.

“This order turns its back on the schools and educational institutions that have made the 2.5 GHz band their home since 1962,” said Rosenworcel in her statement.  “Today the FCC takes the innovative effort to infuse this band with learning opportunities—an initiative that dates back to the Kennedy Administration—and reverts to uninspired and stale commercial spectrum policy.

“This is a shame. Instead of using these airwaves in creative ways, we take the 2.5 GHz band, cut education from its mission and collapse this spectrum into an overlay auction system that structurally advantages a single nationwide carrier.” She then went on at considerable length about how important education is.

Commissioner Starks was the other dissenter and wrote an essay on the importance of the education sector having access to this spectrum that it made Rosenworcel’s efforts look like a memo. With boring inevitability the two dissenters are both affiliated to the republican party and the three in favour are all republicans, which makes you wonder whether there is any principle involved at all.

As Light Reading informs us, this spectrum is likely to be used largely for rural coverage and especially for fixed wireless access. The US is a big country and there are still plenty of coverage gaps to fill. The education sector is apparently bemoaning the decision but if it has been largely reselling the spectrum maybe it’s the revenue that it will miss the most.

T-Mobile US finally joins the 5G party

After months of bashing and undermining the AT&T and Verizon approach to 5G using mmWave, T-Mobile US has announced its own launch using… mmWave.

T-Mobile US is in a strong position to capitalise on the up-coming 5G euphoria. Not only has it promised to base its proposition on its nationwide 600 MHz spectrum assets, but it is carrying considerable momentum from the last 18-24 months. The Uncarrier marketing strategy has been a welcome disruption in the US and the team is hoovering up subscriptions as a result. 5G presents another excellent opportunity to cause chaos.

Starting in six US cities (Atlanta, Cleveland, Dallas, Las Vegas, Los Angeles and New York) T-Mobile US will begin offering 5G services to the consumer in two days time (June 28).

“5G from T-Mobile is different because we have a very different plan to deliver broad, deep and transformational 5G – to everyone,” said CEO John Legere. “Unlike the other guys, we believe 5G should cover people near and far – especially those in rural America. And we believe 5G should not cost more.”

This is where T-Mobile US could make waves in the 5G pond; it seems Legere is promising access to 5G connectivity without the need for a premium tariff. It isn’t the clearest, but in suggesting “customers won’t pay a dollar more”, T-Mobile US seems to be promising anyone can access 5G connectivity, as long as you have the right phone.

As it stands, the Samsung Galaxy S105G will be the only device available at launch, but this might change over the coming months. We strongly suspect T-Mobile US is in conversations with other brands, and if it isn’t, it should be.

“With this device, customers can supplement their already kick-ass LTE experience with a 5G boost in a few cities now, but if our merger with Sprint is approved, the New T-Mobile will build a 5G network for all … the kind of 5G network America deserves.”

To start with, coverage will be incredibly limited, the firm will only be using the high-speed, short distance mmWave spectrum, but in months to come this will be expanded. T-Mobile US has promised a nationwide rollout in the second-half of the year, which will make use of the much hyped 600 MHz spectrum assets.

As you can see from the following coverage map where you can plug into 5G is incredibly limited, but that doesn’t seem to matter to executives in the telco world. The objective seems to be say you can offer 5G, but worry about coverage and experience later. Having spoken to a few people recently regarding 5G in Chicago, the experience is pretty woeful and much needed network upgrades are needed.

Alas, that does not seem to be a concern. Across the world 5G seems to be turning into somewhat of a gimmick instead of a connectivity solution. Early adopters can proudly proclaim they have 5G, but only if they are standing in the few spots it is available. This is where the T-Mobile US pricing plan comes into play.

This is a smart move from the T-Mobile US executives. They are offering consumers a glimpse into the future, but not charging them for it. It might certainly turn a few heads and steal a few subscriptions. If the objective is to gain customers and keep them, running 5G as a loss-leader for the first couple of months is an interesting approach. Once nationwide 5G coverage is achieved, the tariffs can be addressed, but for the moment this could be a very clever move to lure customers away from the likes of AT&T and Verizon.

Telcos complain about auction as German regulator bags €6.5bn

With 41 blocks available in the 2 GHz and 3.6 GHz bands, this spectrum auction has proved to be a busy one for Germany, but it certainly is a profitable one also.

Lasted 52 days and consisting of hundreds of different bids in what appeared to be a frustrating process, the German regulator will pocket €6.5 billion. It seems Deutsche Telekom and Vodafone were having the biggest feud, sending the total expenditure considerably north of the €3-5 billion expectation.

Sitting at the top of the pile, Deutsche Telekom spent €2.2 billion, while Vodafone contributed €1.9 billion. Telefonica spent €1.4 billion and up-start Drillisch wrote a cheque for €1.1 billion as it searches for a means to break the dominance of the three MNOs.

“Vodafone is committed to bring the full benefits of a digital society to Germany through our gigabit network including 5G,” said Vodafone Group CEO Nick Read. “We believe it is important to have a balance between the price paid for spectrum and our strong desire to create an inclusive society through investment in mobile network coverage.”

And while Read’s comments are as bland as you would expect for a press statement, there have been grumblings elsewhere over price. Deutsche Telekom has said the process has left a ‘bitter taste’.

“The network rollout in Germany has suffered a significant setback. The price could have been much lower,” said Dirk Wössner, Member of the Board of Management of Telekom Deutschland.

“Once again, the spectrum in Germany is much more expensive than in other countries. Network operators now lack the money to expand their networks. With the auction proceeds one could have built approximately 50,000 new mobile sites and close many white spots.”

Deutsche Telekom has secured 4 frequency blocks in the 2 GHz band and 9 frequency packages in the 3.6 GHz band. Vodafone on the other hand has purchased four different blocks in 2 GHz, and one continuous block of 90 MHz in the 3.6 GHz spectrum band. Telefonica collected two paired blocks in the 2 GHz band and seven unpaired blocks in 3.6 GHz.

Although Telefonica feels it can maintain its market share leadership position in mobile following this auction, it also felt the need to vent over a frustrating couple of months.

“We remain convinced that frequency allocation via auction was counterproductive for the expansion of mobile communications in Germany,” said Valentina Daiber, Chief Officer for Legal & Corporate Affairs at Telefónica Deutschland.

“The course of the auction showed that the design as well as the insufficient amount of available frequencies drove up the costs. From the consumer’s point of view and for Germany as a business location, these investment funds would be much better spent on network expansion.”

The telcos will certainly be glad they have a bit of breathing room from the auction process now, though the relationship between the regulator and industry seems to be turning very sour.

Ericsson raises global 5G subscriptions forecast by 27%

In its latest mobility report, Ericsson has upped its forecast for global 5G subscriptions significantly thanks to everyone getting their act together quicker than it expected.

Ericsson now reckons global 5G subscriptions will hit 1.9 billion by 2024, 27% up from its November forecast of 1.5 billion. This is a response to the number of operators around the world that have flicked the 5G switch earlier than even Ericsson, which must have a fair bit of visibility into these things, anticipated. The company is revising a bunch of other expectations accordingly.

“5G is definitely taking off and at a rapid pace,” said Fredrik Jejdling, Head of Networks at Ericsson. “This reflects the service providers’ and consumers’ enthusiasm for the technology. 5G will have positive impact on people’s lives and businesses, realizing gains beyond the IoT and the Fourth Industrial Revolution. However, the full benefits of 5G can only be reaped with the establishment of a solid ecosystem in which technology, regulatory, security, and industry partners all have a part to play.”

Here are a bunch of charts taken from the report. In the first you can see how pretty much all mobile subscriptions are expected to be driven by 5G. The second shows the regional split, with North America expected to lead the way in terms of 5G subscriptions, while the third shows how smartphone subscriptions are expected to evolve between now and 2024. Lastly we have a look at the types of devices that will be launched to support the various 5G frequency bands.

Ericsson mobile subscriptions june 19

Ericsson mobile regions june 19

Ericsson smartphone subscriptions june 19

Ericsson 5G devices june 19

Four Chinese operators are awarded 5G licences

All the four incumbent telecom operators in China received commercial 5G licences, raising the curtain on the commercial rollout of the next generation mobile networks in the world’s biggest telecom market.

The Ministry of Industry and Information Technology, both the government policy making body and the telecom regulator in China, announced earlier this week that 5G licences would be awarded soon. It turned out the market did not need to wait for too long. On Thursday, 6 June 2019, all the four state-owned telecom operators were awarded 5G commercial licences. These include China Mobile, the world’s biggest mobile operator by subscriber numbers, China Telecom, the world’s largest integrated telecom operator by subscriber numbers, China Broadcasting Network Corporation Ltd, the state broadcaster which was awarded a basic telecom service licence in 2016, and China Unicom.

Three of them (except for Broadcasting Network) received 5G trial licences at the end of 2018. Trials by China Telecom and China Unicom were conducted on the 3.5GHz band, while China Mobile conducted its trials on the 2.6GHz and 4.9GHz bands. The consensus at that time was China would not roll out commercial 5G services until 2020 when all the major standalone (SA) mode standards are frozen. The latest move looks to be pushing the schedule forward.

Earlier this year, China Telecom announced that it had live trialled out 5G in 17 cities. China Unicom announced that it would extensively cover seven cities with 5G and cover the hotspots in 33 more cities. China Mobile also pledged to cover 40 cities with 5G. China Unicom has also certified six 5G smartphones and five industrial terminals.

The Minister for Industry and Information Technology spoke at the ceremony that China “will continue to welcome overseas enterprises to participate in the rollout of China’s 5G networks”. But the largest beneficiaries are expected to be China’s leading equipment vendors Huawei and ZTE, both of which quickly pledged their full support to the Chinese operators with their “end-to-end 5G capabilities”.

Nokia and Ericsson, both with sizeable footprints in China’s 3G and 4G networks, may carry the investors’ expectations to maximise their shares in the Chinese market, but may feel the heat of the ongoing trade war between the US and China and the exclusion of Huawei from 5G in a number of western markets. On the other hand, if the sanction is not lifted fast enough, despite the claim that it has built a stockpile of components, Huawei may soon find it difficult to supply the equipment needed by the Chinese operators.

No clear winners in the latest US spectrum auction

Millimetre Wave spectrum has been a polarised topic in the US, and now the results are in from the latest auctions, some interesting tales have emerged.

Two spectrum auctions have taken place so far this year in the US, with both results being announced at the same time. $2.7 billion might be a lot to add into the FCC coffers, but it is considerably short of the monstrous amount of cash which was spent ahead of the 3G and 4G connectivity euphoria. Considering the amount of attention which has been given to mmWave, some might have expected this auction to attract more attention.

Strictly speaking, mmWave spectrum should be considered way above what we are talking about here, though the industry seems to have adopted anything above 26 GHz. Here, the two auctions are dealing with assets in the 24 GHz and 28 GHz spectrum bands.

Telco 24 GHz licences Total spend 28 GHz licences Total spend
AT&T 831 $982,468,996 N/A N/A
T-Mobile 1,346 $803,212,025 865 $39,288,450
Starry 104 $48,462,700 N/A N/A
US Cellular 282 $126,567,813 408 $129,404,200
Windstream 116 $20,439,360 106 $6,170,990
Verizon 9 $15,255,000 1,066 $505,733,170

The list of companies who have actually won spectrum assets through the auction is quite extensive, many are regionalised, rural telcos. We’ve only included the big ones here, and some interesting also-rans.

Although there still has been a considerable amount of cash spent during the auction period, the results do seem to imply mmWave might not be as crucial as previously believed. These assets might well be able to transmit huge amounts of data, but shorter ranges in comparison to the low- and mid-band bands, and the risk of signals being easily blocked, perhaps have telco fearing to dig too deep into the pockets.

Starting with Verizon, the telco now owns 65% of the available assets in the 28-31 GHz band. Through this auction and previous acquisitions of XO and Straight Path, Verizon has worked up quite a holding, though considering how much it has been beating its chest in the mmWave debate, it is perhaps surprising it low-balled the 24 GHz auction. Here, the firm only owns 1% of the total assets available.

From T-Mobile US’ perspective, the firm has shored up its spectrum breadth. Previously, the firm had not owned any licenses in the mmWave bands and has been the most critical of the potential of the assets. Spending the most in total across the two auctions, it seems the team is attempting to cover all bases, adding to the 600 MHz assets it has accumulated and plans to launch 5G on later this year.

AT&T’s focus was exclusively on the 24 GHz auction, where it spent the most cash, building out its portfolio in the higher spectrum bands.

Sprint is perhaps the biggest omission from the list, not winning any licenses across the two auctions, though it has previously aired its own criticisms of the potential of mmWave. The firm has started its 5G rollout, primarily using its 2.5 GHz spectrum for the launch. Whether its anonymity in this auction is evidence of its confidence in the success of the T-Mobile US merger we’ll leave you to decide.

There is of course life beyond the four major providers, and there have been some interesting wins across both the auctions.

FWA start-up Starry is an interesting one, winning 104 licenses in the 24 GHz auction. At the Big 5G Event in Denver this year, Starry COO Alex Moulle-Berteaux suggested the business was able to operate at such low prices while scaling in new regions was down to making best use of unlicensed spectrum assets. Spending $48 million this time around suggests a slightly new approach to delivering connectivity for the start-up.

These licences are now owned by Starry in 51 Partial Economic Areas (PEA), suggesting the business could be on the verge of much more aggressive geographical expansion. Details of where in the US Starry has won are not available just yet, but soon enough there will be much more colour on the plans. The assets might be used to shore-up performance in existing markets, or fuel geographical expansion.

US Cellular is another interesting case from the auctions, spending more than $250 million on 690 licenses. The telco currently has a presence in 23 markets across the US, with more than six million subscribers. It certainly isn’t going to challenge on a nationwide scale, however, with a stronger presence in the mmWave segment it could prove to be a worthy pain in the side to the big four telcos.

Windstream is the final ‘also-ran’ which we want to look at here. Spending just over $25 million on 222 licenses across both of the auctions, the team appear to be targeting the emerging FWA segment in some of the regions which are often overlooked in the US.

The firm launched a fixed-wireless access to business customers several years ago, and more recently has added products for consumers. In states such as Nebraska and Iowa, Windstream has pointed out signals can travel further thanks to “fairly flat topology”, while the mmWave assets will help the firm achieve the higher speeds demanded by enterprise and consumers alike.

What is worth noting is this is not the end of the spectrum auction bonanza. Over the next couple of months, the hype will start building for a combined auction in the upper 37 GHz, 39 GHz and 47 GHz bands.

That said, at the moment, the mmWave euphoria is appearing to be somewhat of a let-down.

Licensing renewal – improving regulation

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this article Engineer Gerado Mantilla and Lawyer Patricia Falconí Castillo offer a deep dive into the topic of licensing renewal.

We live in a time where the rapid and growing technological changes are transforming societies, economies and public-private relations; which, in addition, not only generate an important impact in any company and more than anything on telecommunications, it implies to advance deeply in business models changes; and, it must influence unrestrictedly on Administrations, especially on National Regulatory Authorities (NRA), which must observe the changes that could accompany this economy transformation with a totally innovative and agile vision.

Telecommunications have been recognized as a transversal element on society and economy digital transformation. Recently, the Inter-American Association of Telecommunications Companies (“ASIET” in Spanish), public a document called “Telecommunications: a strategic ally for Latin America development”, where it made important contributions to telecommunications regulation policy, in special, regarding authorizations issue on spectrum use.

In this document, ASIET proposed the spectrum licensing duration up to 20 years. However, from our point of view, this recommendation should be accompanied by recommendations such as establishing clear rules for licensing renewal; being an important factor for telecommunications companies that make investments.

In certain countries, there are cases in which administrative titles or administrative authorizations granted by regulators allow operators to provide telecommunications services cases, which may not have a finite period of validity. For specific mobile services, spectrum licensing are required, which have a finite time for its duration, having a substantial difference between provider to provide service and an input as indispensable as its radio spectrum.

Although in most cases the Telecommunications Laws establish possibility to renewing these licensing, it is no less true that these processes can generate uncertainty to service providers and therefore in the rest of the sector.

Now, it is worth analyzing these aspects since its genesis, taking much more relevance when considering telecommunications markets openings, especially in Latin America, where in many cases some spectrum licensing for use and telecommunications exploitation have already been renewed.

From these licensing renewals, it has been possible to observe a lack of clear rules and tangible or measurable elements that allow an objective identification of causes that will be evaluated by NRA to make decision to renew or not. It is evident that, due to exclusive decision from NRA, as grantors of licensing, there must always be a legal reserve for final decision, based either on current regulations or depending on public policy needs.

To make this evaluation, it is necessary to consider how other economic activities, traditionally comparative with telecommunications markets, such as banking and other productive sectors, establish its authorizations for general public services provision.

Legal Analysis

We must start with clarifying what are licensing in telecommunications, so we can say they are: the voluntary agreement between the State and companies licensed, which generates rights and obligations between those parties, by virtue of which the State delegates temporarily, a public service execution, to ensure its operation, carrying out exploitation at risk and licensing expense, under supervision and State control itself. That is, licensing are subject to a specific term, in Brazil for example, it are 20 years, Chile 30 years; and, Mexico 20 years.

Knowing what licensing are and assuming that, one fundamental pillars for telecommunications development are investments that companies make it, not only at infrastructure level, but also when it participate on radio spectrum assignments; licensing granted must take care of legal security application principle, which “is nothing other than the possibility that the State must give us through the right to foresee the effects and consequences of our actions or the conclusion of contracts to perform them in the terms prescribed in the norm, so that they have the effects that we want or to take the updated measures to avoid the effects that we do not want, and that could take place according to the law”

In this sense, although there is no consensus on how to measure legal security and its impact on the economy, it is no less true that the “Global Competitiveness Report” issued by the World Economic Forum considers legal security as a fundamental pillar to have an attractive legal framework for investments, measured on institutional soundness parameter, being the first of twelve parameters that make up this index.

This pillar consists of 22 parameters, among which are included, among others, government regulation complexity, regulatory policy transparency, government services to improve companies performance, all of which are closely linked to legal security system.

One could then consider, as key factors for investments, legal security and regulatory predictability that NRA can provide to companies in the sector. With this, it is not a question of limiting or normative restricting of the State power, on contrary, this faculty must be developed and implemented from licensing moment, through clauses establishment that contain clear elements that are will consider at renewal time.

It could be admissible if and only if, public policies under which these elements were established have changed substantially; or in its absence, constitutional framework of country undergoes modifications that are opposed to said elements, in exercise of its regulatory the State power, could generate certain modifications, without this meaning, violations of economic equilibrium contract, subtract or limit acquired rights; make it more expensive or impossible to comply with obligations, but above all taking care opportunity for its; that is, that modifications are not made within last years concession from our point of view.

Now, reviewing Chilean, Mexican and Brazilian laws, it can see something in common and there is no clear and express provision of what elements will be considered within the renewal processes, only establish process to be followed, requirements and request times. This lack of clarity translates into a strong legal uncertainty that can limit or strongly restrict investments in the sector, generating delays when deploying new infrastructure or adopting new technologies.

Propositive elements

Taking into consideration this legal analysis, we can afford to present a possible proposal that allows us to place this issue on discussion table, only as an initial vision, but not as a single truth or formula or even a position in favor of one of the actors on telecommunications market. Obviously, each NRA has the possibility of making the decisions that it consider appropriate in favor of development and services deployment; however, from an academic position we can propose these elements.

Deepening, we consider that there are elements that can be considered, in order to reduce as much as possible the NRA discretion; without implying limitations of its faculties, on contrary that generate legal security; by defining clear and measurable objectives, which could be following: investments, coverage, services quality, tax payments and administrative fees.

At investments case, operators usually carry it out during licensing entire duration, which usually focus on the first years of network deployment, considering the first 5 years of the licensing – new licensing. However, although these investments decrease after fifth year, operators continue to invest on equipment maintenance and systems necessary to ensure network operation.

In renewals licensing case, although there has already been a first investment, it is no less true that companies must constantly invest in technological innovation and network, based precisely on high technological turnover by accelerated services improve and same generations.

Next element is networks coverage, many NRA impose obligations on mobile operators to cover certain areas or population centers that may not be of interest to operators, given their low or no profitability. The fulfillment of these coverages can easily be measured by NRA, and can be included from beginning, with certain indicators that allow the operators to foresee all necessary actions to guarantee its compliance and effective deployment.

Quality services licensed is another element that has been clearly defined by NRA on different occasions and especially for mobile services, including access to Internet through mobile, fixed or nomadic clients since its licensing. Those that although it can be redefined by NRA, must be attached to legal security principle and regulatory predictability, that is to say, that although NRA can redefine its during licensing time, it must be set considering: (i) respect for those deployments carried out under initially set quality indicators (rules non-retroactivity); (ii) that its redefinition is not on granted licensing last period, with sole purpose of having enough time for implementation and processes stabilization if applied; (iii) are set under international technical standards similar to market to be applied; and, (iv) not alter contract economic equilibrium.

About taxes payment and administrative fees, it is easy to identify correct payment in amount and time. In addition, existence or not repairs regarding these quarterly and annual payments, can be considered as elements that allow evaluating how operators have complied with this parameter.

Conclusions

In short, parameters identified are nothing new and many of its are already defined within specific regulation of each country. However, in many cases they have not been recognized as elements that may be causal to support approval or disapproval of spectrum licensing renewal.

Additionally, we consider that this discussion is at an ideal time to be evaluated by  NRA, considering upcoming processes of granting new licensing associated with spectrum that will be assigned for 5G deployment.

Finally, licensing renewals certainty about renewal methodology, spectrum evaluation, requirements and above all, in case of public competitions, process results, which translates into generating legal security.

 

Mantilla croppedGerado Mantilla is a professional with 19 years of experience in telecommunications market, performance in regulators, mobile operators and international consulting teams. Participation in International Organizations: International Telecommunications Union (ITU) and Inter-American Telecommunications Commission (CITEL). Right now, Gerardo is Regulatory Project Manager at Artifex Consulting S.A.

 

Falconi Castillo croppedPatricia Falconí Castillo is a Lawyer with more than 10 years of experience in Telecom regulation and competition. She has advised in Peru, about spectrum assignments, according to the best international practices; and proposals of normative improvements for its allocation. Currently, Patricia collaborate with Artifex Consulting S.A. and partner from Prospect Law Firm at Ecuador.

UK MNOs set to claw back £200+ million in licence fees

A UK court has ruled in favour of the telcos in an on-going battle with regulator Ofcom over licence fees paid on spectrum assets between 2015 and 2017.

The legal battle concerns the process which was undertaken by Ofcom prior to increasing licence fees paid by each of the telcos for access to the airwaves. The decision to increase the licence fees was met by much criticism during the initial announcement, and you can see why.

The licence fees concern 900 MHz and 1800 MHz spectrum assets awarded to each of the telcos during a 2013 auction.

Telco Fee paid (post-2015) Fee paid (pre-2015) Difference
Vodafone £76,245,025.10 £21,865,536 £54,379,489.10
O2 £76,245,025.10 £21,865,536 £54,379,489.10
Three £44,390,398.53 £17,463,600 £26,926,798.53
EE/BT £139,823,997 £57,380,400 £82,443,597

While telcos are constantly complaining about regulation, as well as the amount paid to regulators around the world, the drastic difference in licence fees was too much to stomach here.

Following the decision to increase licence fees, EE was first to act, challenging the ruling in the courts in 2017. The other UK MNOs were quick to follow, with Ofcom being named as a defendant in the lawsuit.

“We welcome the court’s decision that finds in favour of the mobile operators,” said an O2 spokesperson. “We are however disappointed that Ofcom has been granted leave for appeal and we will strongly defend any future appeal brought by Ofcom.”

Ofcom will most likely appeal the decision.

The argument from the telcos is one which we have heard before. The more money which is demanded from Ofcom, the less which is available to invest in networks to ready the UK for the digital economy.

Following EE’s decision to challenge the changes to licence fees in 2015, a move which was supported by the other MNOs, Ofcom decided to revert back to the licence fees which were paid in the previous regime. There has been another consultation since, resulting in an increase to licence fees paid moving forward, though this case is focused on the period between 2015 and November 2017.

Aside from clawing back the payments made during this period, the parties have agreed simple interest be applied on whatever sum is due, calculated at 2% above the Bank of England base rate during the period.

For the MNOs, this news will be very much welcomed considering the financial burden they face ahead of the 5G era. With billions set to be spent rolling out the networks, a bit of financial relief will go a long way.

Senators call for 5G slowdown because weatherman won’t be accurate

Two US Senators have asked President Trump and the FCC to halt spectrum usage on the 24 GHz spectrum brands as it would decrease the accuracy of weather forecasts.

Democrat Senators Ron Wyden (Oregon) and Maria Cantwell (Washington) have jointly penned a letter for the Oval Office suggesting use of the 24 GHz spectrum brands should be blocked as it would interfere with the accuracy of weather forecasts. The pair claim accuracy of these forecasts could be impact by as much as 30%, similar to the guesswork offered in the 1980s.

“American advancement in 5G networks and devices is critically important to maintaining global leadership,” said Wyden. “It’s just as imperative, however, for our nation to do 5G right. If the FCC continues advocating for standards that fail to pass scientific scrutiny, their decision will lower America’s standing in this global race for 5G leadership and risk serious damage to our economy and national security.”

Although linking weather forecasts back to national security might cause some to scoff, the pair suggest this insight is used by the navy, military and coast guard to help plan operations. Some of these operations’ focus on warning and preparedness when it comes to dealing with tornadoes, hurricanes and typhoons.

“Millions of Americans live in areas under increasing threat from hurricanes, tornadoes, and other extreme weather events,” said Cantwell. “The US military and our aviation, maritime, and numerous other industries rely on accurate forecasting information every day to ensure safety and make crucial decisions.

“We can’t afford to undermine our data and set the quality of weather forecasting back to the 1970s. Instead of overruling or ignoring the experts, the FCC and the administration should look at the science, listen to experts, and take the time needed to get this right.”

While the Senators are seemingly jumping on the bandwagon in an attempt to generate PR inches, the concerns of the use of these frequencies have dated back to 2010. The National Academies of Sciences, Engineering and Medicine put forward a report in 2010 suggesting 30% of the data collected on the 23.8-gigahertz signal would eliminate 30% of all useful data, making a significant impact on the ability to forecast conditions accurately.

The US National Oceanic and Atmospheric Administration (NOAA) and National Aeronautics and Space Administration (NASA) have now completed an investigation, which is yet to be made public, on the effects of interference from usage in neighbouring frequency bands.

Water vapour in the atmosphere emit very faint signal which is used by probes to monitor energy radiating from Earth at this frequency. This data offers insight to humidity in the atmosphere below helping to predict how storms and other weather systems will develop over the short- and medium-term future. The 23.8 GHz frequency is used to measure water vapour, 36-37 GHz for rain and snow, 50.2-50.4 GHz for atmospheric pressure and 86-92 GHz for clouds and ice.

During the most recent spectrum auction, the FCC sold licences for frequencies in the 24.25-24.45 GHz and 24.75-25.25 GHz but set noise limits on the 5G network of –20 decibel watts. The FCC might suggest this is protection enough, however the European Commission put limits of –42 decibel watts for 5G base stations, and the World Meteorological Organization (WMO) is recommending –55 decibel watts.

While the two Senators are not necessarily complaining about the limits, the pair are asking the FCC to clarify a few different notes:

  • Provide details on investigations that support the FCC’s assumptions that emission limits will not negatively impact applications in adjacent frequency bands
  • Provide details on the FCC’s public interest analysis, including any cost-benefit analysis, which addresses the loss of investments made in weather-sensing satellites, the costs to public safety and national security, and to the nation’s commercial activities that rely on weather data
  • Plans if the International Telecommunications Union (ITU) does not accept the emissions limits in the 24 GHz band
  • How the FCC addressed the concerns of the NOAA, NASA and other bodies

It does appear the Senators are looking for a stick to swing as opposed to any specific objections. That said, these are some valid concerns.

Numerous businesses and industries rely on accurate weather forecast, not to mention the security and safety of US citizens. In Europe, we are not at the mercy of some severe weather conditions, or not to the degree the US is. You only have to look at the $65 billion in damages caused by Hurricane Irma in 2017 or the 3,000 lives claimed during Hurricane Maria in Puerto Rico to understand the importance.