John Delaney (Associate VP, European Telecoms)

5G spectrum is no longer the sole preserve of mobile operators in Europe. Earlier this week, the German industrial giant Siemens announced its intention to apply for a spectrum license in the 3.4–3.8GHz band that has been allocated to 5G mobile networks. This follows a similar announcement in November from another German industrial giant, Bosch. We expect more to follow.

The development marks a watershed in European telecoms policy. Previously, licenses for spectrum in the bands allocated to mobile networks have been reserved for operators of public networks, on the principle that this is the best way to maximize utilization of a scarce national resource.

However, industry has been increasingly vocal in arguing that a country can enhance its long-term economic development by licensing some spectrum to enterprises for use in their private networks.

Germany Sees Green Light for Private Licensing

The German telecoms regulator, BNetzA, has accepted this argument. In the round of mobile spectrum auctions that concluded in June 2019, BNetzA set aside 100MHz of spectrum in the prime 5G band for licensing to private companies, rather than public operators.

Bosch and Siemens have applied for private licenses. Volkswagen and BASF have also announced their intention to do so, and more German manufacturers look likely to join them. There are certainly plenty of potential licensees: around one-third of the European manufacturing sector (by value) is located in Germany.

As momentum starts to build in Germany, we may see other European countries break with precedent by setting aside mobile spectrum for private licensing.

In The Netherlands, for example, the government and regulator have expressed interest in including some private licensing in their 5G auction (although that now looks unlikely to take place before 2022).

In the U.K., regulator Ofcom announced in July that it intends to introduce “spectrum sharing,” whereby spectrum that is licensed to a mobile operator, but is not being used in a given area, can be licensed for private companies to use for a three-year period. It will also introduce local licensing in some bands, although not in the prime 5G band of 3.4–3.8GHz.

What’s the Impact for Public Networks?

Perhaps unsurprisingly, the mobile network operators have been unenthusiastic about the idea of setting aside spectrum for private licensing. They argue that restriction of licenses to public network operators remains the most efficient way for a country to maximize the utilization of its mobile spectrum resources.

Operators are understandably concerned that the more spectrum is set aside for private companies, the less is available to increase capacity in public mobile networks as demand continues to grow. Less explicitly, but also understandably, operators are also concerned that if companies deploy their own private 5G networks, it will erode future opportunities to provide enterprise site connectivity through applying network slicing to the operators’ 5G networks.

Will Operators Embrace this Proposal?

It makes sense for operators to lobby against spectrum set-aside, while the question is still open. However, we advise operators not to take an excessively hostile position on the idea, especially now that the tide seems to be turning in the direction of private 5G spectrum usage.

Deutsche Telekom’s CEO Tim Hoettges, for example, was very outspoken in his opposition to BNetzA’s proposals at the February 2019 Mobile World Congress. Now that the proposals have been put into action, Deutsche Telekom has work to do to convince enterprises that it can be a willing partner in the development of private 5G.

And there will still be a lot of business for mobile operators to go after. Building and operating a network that uses the 3GPP family of technology standards is far from easy. Companies that want to build a private 5G network will need a lot of help: and with their decades of experience in building 3GPP networks, mobile operators are prime candidates to provide that help.

Moreover, these companies’ core business is manufacturing, not network operation. Some of them may well be attracted to the idea of outsourcing the ongoing operation and management of their private 5G networks once they have been built.

Again, mobile operators will be in pole position to bid for that business. And they will find it easier to go after such private network service opportunities if they have not previously taken a public stance as the enemy of private spectrum licensing.

 

If you want to learn more about this topic or have any questions, please contact John Delaney or head over to https://uk.idc.com and drop your details in the form on the top right.

Sharing