The 2.5GHz spectrum to be sold in the upcoming Digital Dividend auction will be critical to bolstering data capacity for 4G service in urban areas, according to the mobile industry and auction observers.
The government plans to auction 700MHz and 2.5GHz spectrum in the Digital Dividend auction scheduled for this April. The mobile industry has called the auction critical to meeting growing demand for mobile data.
“Everyone has been very focused on 700[MHz] because it is an extremely valuable band in terms of propagation and in-building coverage and particularly in a big country with sparse population like Australia,” Australian Mobile Telecommunications Association (AMTA) CEO Chris Althaus told Computerworld Australia.
“But with the general pressure on spectrum resources, 2.5GHz is an equally important band.”
The 2.5GHz spectrum is particularly attractive to Telstra, and Vodafone Hutchison Australia may bid for 2.5GHz even though it won’t bid for 700MHz, said Chris Coughlan, an independent telecom analyst.
The 2.5GHz band was previously used in Australia by broadcasters for electronic news gathering. The band is widely used around the world for 4G LTE.
“It’s a big band, it’s globally harmonised and it’s got good complementary characteristics to other bands,” including 700MHz, Althaus said.
The 2.5GHz spectrum will provide greater data capacity for 4G LTE services, allowing more users to use data at once, said Mark Gregory, senior lecturer at the Royal Melbourne Institute of Technology (RMIT). “With smartphones, notebooks and tablets, it’s the data that’s the key.”
“700MHz is going to be more aimed at ... regional and remote areas, and the 2.5GHz is something that’s going to be more suitable for high-capacity urban areas,” said Gregory.
“At the end of the day, 700[MHz] for capacity in the metropolitan areas won’t be enough spectrum” on its own, Coughlan said. The 2.5GHz spectrum provides capacity depth in busier, metropolitan areas, he said.
The 2.5GHz spectrum could be useful for femtocells and other small cells used to provide enhanced indoor coverage, Coughlan said. While 700MHz is low frequency and therefore can travel through buildings, larger buildings with many users may require extra capacity, he said. By using 2.5GHz for that purpose, “you’re not interfering with the 700 MHz macro layer,” he said.
Vodafone to bid?
The Australian Communications and Media Authority (ACMA) began accepting applications for the Digital Dividend auction last week. In Australia, wireless operators will not be able to use the 700MHz or 2.5GHz spectrum until 2016.
Coughlan predicted Telstra and Vodafone will be the top bidders for 2.5GHz spectrum, even though Vodafone has said it will not bid for 700MHz under the current terms. The 2.5GHz spectrum has a much lower reserve price (3 cents per MHz POP for 2.5GHz compared to $1.36 for 700MHz) and more of the 2.5GHz spectrum will be available through the auction.
Vodafone is “assessing the ACMA’s planned auction process and finalising our approach for 2.5GHz among other business priorities,” a Vodafone spokeswoman said.
Optus already has significant 2.3GHz spectrum, so it may have “less of a need” for 2.5GHz, Coughlan said. It’s unlikely that a new entrant will bid for the spectrum, he added.
Gregory expects all three telcos to be interested in 2.5GHz, he said. Optus “may be less interested in this because really 2.3[GHz] and 2.5[GHz] are similar in how they can be used,” Gregory said. However, Optus may be proactive bidding to ensure it has enough spectrum in the long term, he said.
Growth in demand for data “means that the industry has got to really be very focused on adding spectrum,” Althaus said. “Any opportunity to add to spectrum resources is an important one.”
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