Mobile Spectrum auction nets €855m

The Communications Regulator has cleared the way for next-generation mobile services in Ireland, netting the Exchequer €855 million through an auction of the mobile spectrum.

The multi-band auction for the 800MHz, 900Mhz and 1800Mhz spectrum raised almost € 482 million in upfront fees, with a further € 373 million due in ongoing spectrum usage fees due between 2013 and 2030, when the licences end.

Although the proceeds of the auction would have been partly taken into account by the Department of Finance in its budgetary projections, it is understood that the final figure is being examined.

Auction process

An auction process was chosen instead of the previous approach of so-called beauty contests, in which bidders would submit business plans.

“The advantage of an auction is that it’s very transparent, and objective. It means that the winners of the spectrum are the ones that bid the most,” ComReg chairman Alex Chisolm said. “What’s vital for us is to make sure that the spectrum is used efficiently. An auction is the perfect mechanism to achieve those goals.”

As part of the process, the operators must commit to providing services to a minimum of 70 per cent of the population, although Mr Chisolm expects they would exceed that target.

For the mobile industry, the move means that operators can begin to introduce 4G and Long Term Evolution (LTE) services to the Irish market.

The auction awarded spectrum rights in the GSM bands and the spectrum freed up by the analogue switch-off last month on the 800 MHz band.It’s a multimillion euro investment for each of the mobile operators, and further investment will be needed to upgrade the networks in the future.

Winning bids

Telefonica Ireland(O2) said it would roll out its 4G network in the first half of next year. The operator paid € 125 million for the spectrum licences, which it said represented a long-term commitment to the market.It also committed a further € 200 million in investment over the next three years to upgrade the network to provide the 4G services.

Vodafone, meanwhile, described its spectrum allocation as “the best possible outcome” for their customers. The company is set to invest more than €500 million in its network over the next five years to upgrade the network.Vodafone promised a fast rollout of the new services, promising services from next year. The company paid almost € 161 million in upfront fees.

3 Ireland paid the lowest price for its portfolio of spectrum, which will double its current holding. The company, which does not support the legacy GSM network, paid € 51.14 million. The additional spectrum will allow 3 to boost its coverage in rural areas and across the country.

Eircom, which owns Meteor and eMobile, said its package included two blocks of 800Mhz, two of 900Mhz and three on the 1800Mhz band, for a total of €145 million.