2011101510180631984The results of the Irish auction of 3.6 GHz licenses were announced by the regulator, ComReg, on May 22, 2017. Winning bids were €60.5 million (US$67.7 million). To this are added annual usage fees totalling €17.7 million (US$19.8 million) for a grand total of €78.2 million (US$87.5 million).

The auction was for 350 MHz of capacity across Bands 42 and 43, covering frequencies from 3.4 GHz to 3.8 GHz. There was one 25 MHz “A” Block (3410-3435 MHz) and 65 “B” blocks of 5 MHz each (3475-3800 MHz), awarded in each of 9 regions using a Combinatorial Clock Auction (CCA) format. There was a spectrum cap of 150 MHz per bidder per region.

The three Mobile Network Operators – eir (Meteor), Three, Vodafone – all participated as did fixed operator Imagine Communications and US-based equipment and systems provider Airspan.

Notable aspects of the auction:

  • Ireland is first out of the blocks to issue licenses targeted for 5G Mobile on a large scale: the 3400-3800 MHz range was only recently anointed as 5G spectrum by the EC in late 2016.
  • The auction was for a very large amount of spectrum – 350 MHz – increasing licensed mobile spectrum in Ireland by 86%.
  • There was no distinction between blocks in Band 42 (3400-3600 MHz) and Band 43 (3600-3800 MHz), consistent with the expected convergence of the two into one range supporting 5G Mobile services.
  • The result sets a new high water mark for 3.6 GHz range licenses at €0.0378 per MHz-pop (US$0.0423 per MHz-pop), on top of which licensees pay a substantial annual spectrum usage fee (SUF). The SUF, paid out over 15 years, added about  €0.0111 per MHz-pop to the total (US$0.0124 per MHz-pop). Since previous 3.6 GHz licenses were typically issued for fixed service and were held pre-5G, the Irish result set an important new benchmark for auctions going forward. A precursor was the 2016 auction in Spain of one 20 MHz block, sold to Orange for €0.022 per MHz-pop (US$0.025 per MHz-pop).

The winners:

  • Three came away with 20 “B” blocks in every region – 100 MHz of capacity, paying €0.0335 per MHz-pop (US$0.0375 per MHz-pop).
  • Vodafone acquired 17 “B” blocks (85 MHz) in each of the four non-urban regions and 21 “B” blocks (105 MHz) in each urban region, paying €0.0428 per MHz-pop (US$0.0480 per MHz-pop).
  • eir won its package at the lowest price: €0.0308 per MHz-pop (US$0.0345 per MHz-pop) for 16 “B” blocks (80 MHz) in each of the four non-urban regions and 17 “B” blocks (85 MHz) in each urban region.
  • Imagine won 12 “B” blocks (60 MHz) in each rural region, reflecting where it operates as a fixed wireless provider, at €0.0445 per MHz-pop (US$0.0498 per MHz-pop).
  • Airspan won the “A” block nationwide as well as 7 “B” blocks in urban regions, totalling €0.0450 per MHz-pop (US$0.0504 per MHz-pop).

On the heels of the Irish auction, next up in this frequency range will be the Czech Republic, with an auction of 3.7 GHz licenses slated for June 2017. Seven bidders were originally qualified to participate, although only six were approved on May 23, 2017, the three MNOs and three others.

While ComReg chose the Combinatorial Clock Auction (CCA) format, awarding licenses using opportunity cost pricing, CTU in Czech Republic will be using a variation on the simultaneous multiple round ascending (SMRA) first-price auction. There will be 5 national license blocks of 40 MHz each – i.e. covering all of Band 43. Incumbent MNO bidders are limited to one block, whereas others can bid for two, i.e. 80 MHz. If there is insufficient demand from non-incumbents in the first round, then CTU will modify the limit for incumbents that can then bid for two blocks.

The Czech approach sets up an interesting game for the bidders.

With six registered participants, it seems likely that the incumbent bidders will remain capped at 40 MHz. With six bidders and five blocks, this could evolve into a game of simply waiting for whoever “blinks” first. With limited choices of what to bid on, valuation is the key element of success in winning.

Note: LYA provided advice to a bidder in the Irish 3.6 GHz auction.