5G spectrum auction facing headwinds in France

A lack of airwaves is likely to result in higher prices during auctions; this will mean carriers will have to shell out more resulting in a potential fund crunch for further investments on new mobile infrastructures that are crucial to leverage the benefits of 5G technology which promises to connect everything ranging from autonomous vehicles to smart objects.

As per the head of France’s telecom regulators, in 2019 French telecom operators will be shelling out heavily to buy 5G radio frequencies although authorities are aiming to avoid bleeding them dry.

Italy, which was one of the first European countries to offer frequencies for 5G services, stunned markets when it raised a bumper $7.39 billion (6.5 billion euros) during the fifth-generation mobile auction.

“In the past, the financial argument may have been important, perhaps very important, but opinions have changed,” said Sebastien Soriano, head of Arcep, France’s telecom authority. “There’s room to be inventive. Now, we need to find the right ideas and that’s not easy”.

In the past, many countries in Europe have used mobile spectrum auctions, which provide raw material for wireless carriers to develop their own networks, as an easy money-making means in times of low state revenues.

However, with growing concerns that these auctions could bleed telecom companies dry and as a result increase risks and hamper much-needed investments on new mobile infrastructure needed for 5G technology which could connect everything ranging from autonomous vehicles to smart objects.

According to Soriano, one of the reasons prices at the auction are likely to go up because there may not be enough airwaves for everyone. Arcep plans on using the 3.5 GHz band out of the 1.4 GHz, 3.5 GHz and 26 Ghz bands on the table for 5G.

“As long as we’ve not solved this problem about the quantity of frequencies that we have at our disposal … there’s a difficult equation to balance,” said Soriano. “I can’t say that Italy is a counter-example as long as I haven’t found the solution so that we don’t do the same thing.”

However, one thing is certain – there will be no reiteration of the “new deal” under which French wireless carriers Orange, Altice Europe’s SFR, Iliad and Bouygues Telecom promised to spend 3 billion euros in rolling out a 4G network to ensure there are no coverage gaps by 2020.

“Sadly, we can’t make a comparison with the new deal in the sense that it’s a new attribution (of frequencies),” said Soriano.

Incidentally, France still has a few months to find the answer to this equation and that work starts with a public consultation on Friday about the attribution of frequencies, which will run until December 19.

The last spectrum auction in 2015 raised 2.8 billion euros for French state coffers.

($1 = 0.8794 euro)

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