Platter that matters: 4G dividend gives Swedes spectrum smorgasbord

7 Mar 2011

The Swedish Post and Telecom Agency (Post- och Telestyrelsen, or PTS) on Friday awarded wireless frequency licences in the 800MHz band to the country’s four existing cellcos, TeliaSonera (Telia), Hi3G Access (3, or Tre), Tele2 and Telenor Sweden – the last two bidding via their joint infrastructure venture, Net4Mobility. Following five days of bidding in 31 rounds, the three 2×10MHz paired spectrum licences in the ‘digital dividend’ band of 790MHz-862MHz – earmarked for 4G mobile network expansion – were sold for a total of SEK2.05 billion (EUR233 million) and are valid until the end of 2035. TeliaSonera paid SEK854 million for its blocks, Hi3G Access spent SEK431 million, while Net4Mobility bid SEK469 million plus commitment of SEK300 million to invest in 800MHz network expansion which will complete the PTS’s goal of achieving 100% fixed/mobile broadband coverage of the country’s population and business premises (with all costs shared equally by Tele2 and Telenor). In addition, the winning bidders will each pay processing charges of SEK400,000 (SEK200,000 per spectrum block) to the PTS. Com Hem and Netett Sverige also participated in the auction but were outbid.

Although technology- and service-neutral, the 800MHz licences are expected to augment the four cellcos’ rollouts of 2600MHz 4G Long Term Evolution (LTE) networks, taking advantage of the lower frequencies’ wider coverage properties for cost-effective expansion. Telia launched its world-first commercial LTE mobile broadband network in Stockholm in December 2009 before expanding the 2600MHz service to 28 cities and towns across Sweden. Tele2 and Telenor Sweden launched LTE in the 2600MHz band via Net4Mobility in November 2010, and currently cover five main cities. LTE mobile data speeds range up to 80Mbps (download). By the end of 2011, Telia expects its 4G network to cover 237 towns, whilst Tele2 and Telenor are aiming to expand LTE to up to 200 locations by the same date, and 99% of Swedish households by the end of 2012. Niclas Palmstierna, CEO of Tele2 Sweden, commented on the 800MHz licensing: ‘The frequencies add another dimension to our 4G network and enable us to challenge the monopoly that currently may be deemed to exist in the fixed broadband market. The fact that we also can use a large amount of the purchase price to further strengthen our coverage, [means] we will be able to offer a superior 4G coverage in all parts of Sweden.’

Meanwhile, 3 is expected to launch a Swedish LTE network by the end of 2011, using its 2600MHz allocation (including an FDD paired block and a TDD licence it agreed to acquire from Intel Sweden in late 2010) and its new digital dividend concession. ‘We’re very satisfied with the result of the 800MHz auction,’ said Peder Ramel, head of 3 Scandinavia, adding: ‘Now we can continue to expand our mobile broadband network with higher speeds and better coverage.’ Telia’s president of mobility services, Hakan Dahlstrom, also emphasised the importance of winning the lower frequency concessions, saying: ‘Our investment in the 800MHz frequency band is the basis for a continued cost efficient 4G rollout as well as providing a high quality customer experience.’

Digital dividend auction results (28 February – 4 March 2011):

Licence holder: Frequency block: Downlink band (MHz), Uplink band (MHz) (Cost):

Hi3G Access: FDD1: 791–796, 832–837 (SEK165m);

Hi3G Access: FDD2: 796–801, 837–842 (SEK266m);

TeliaSonera: FDD3: 801–806, 842–847 (SEK386m);

TeliaSonera: FDD4: 806–811, 847–852 (SEK468m);

Net4Mobility: FDD5: 811–816, 852–857 (SEK420m);

Net4Mobility: FDD6: 816–821, 857–862 (SEK49m) + (SEK300m coverage commitment).