Regulators round the world are expressing concern that LTE spectrum prices, which started modestly in the first round of auctions, are now spiralling, risking a bubble effect, and making it hard for new entrants to gain licences.
In March, the Czech regulator suspended its spectrum auction when prices got too high and will restart it with tougher rules to protect new applicants. Now similar issues have arisen in Austria and Taiwan, and many fear inflated price wars will become a feature in countries which did not manage to sell their 4G spectrum in the early days of the market, when prices were hit by uncertainty about the business model and global recession.
Austria's three main operators are complaining that they have paid among the highest prices for spectrum in Europe, even though their market has some of the lowest mobile tariffs in the region.
And once again, Hutchison Whampoa's 3 group failed to win any spectrum in the coveted 800-MHz coverage band.
In many European markets, there have been only three low frequency licences on offer for four established cellcos, and generally it has been the smallest operator (3 is in that position in several countries), as well as new entrants, that have lost out. The losing player will often have to merge with a rival to gain sufficient LTE spectrum to remain viable, as seen in Germany, where 800MHz loser E-Plus is combining with Telefonica O2.
Such events strengthen the arguments of those who believe there is too much competition in many European markets, although consolidation has started to take place in some, such as the UK. In Austria, the situation is even more extreme as there are only three incumbent cellcos, after the recent merger of 3 Austria and Orange Austria, but only two managed to get 800-MHz concessions. That may reduce the competitive capability of 3 despite its merger, though at least it will be relieved that no new player was ushered in by the auction process.
Market leaders A1 and T-Mobile gained 2x10MHz apiece in the 800-MHz band, plus 2x15MHz in 900-MHz (where 3 gained just 2x5MHz). Also on offer was 75MHz in the 1.8-GHz GSM band, which is being refarmed in many countries for LTE and is considered the optimal spectrum for balancing coverage and capacity, and for international roaming. T-Mobile and 3 won 2x20MHz each while A1 got 2x35MHz.