French LTE auction imminent

3 Jun 2011

The planned auction of spectrum frequencies for 4G Long Term Evolution (LTE) services is all set to begin in France, after digital economy minister Eric Besson signed off on a decree launching the tender for bids. Le Monde says the process will now get underway in the next few days, once the government has published a formal announcement in the official gazette. Operators wishing to participate in the process will have until September to submit bids.

At the end of last month the French telecoms regulator Arcep submitted its recommendations to the government concerning the proposed distribution of spectrum. At the time it highlighted the core priorities as being national coverage, increased sector competition and the maximising of value from the auction itself. Under the watchdog’s plan, ambitious coverage targets have been set at both the national level – operators will be obliged to cover 98% of the population within twelve years, rising to 99.6% within 15 years for those with 800MHz spectrum. Licensees holding 2600MHz spectrum will be required to provide coverage of 75% of the population within 15 years. In addition, a priority deployment area comprised of sparsely populated regions (equivalent to 18% of the population and 63% of the territory) will be given an accelerated rollout timetable, while measures that encourage carriers to engage in network and frequency-sharing arrangements will make it easier for them to achieve this timetable.

Arcep says that the process used to award the LTE frequencies must also ‘satisfy the goal, set by the law, of ensuring fair and effective competition in the mobile market’. As such, the total amount of spectrum that any operator will be awarded cannot exceed 15MHz duplex (800MHz band) and 30MHz duplex in the 2600MHz band. Moreover, the regulator says that should there be four eligible candidates for the higher-band frequencies, each carrier is guaranteed to receive a 15MHz duplex if it has applied for this quantity of spectrum. The procedure also includes a scheme that is designed to encourage carriers to open their networks up fully to MVNOs. Licences for the 2600MHz band could then be awarded in October 2011 and 800MHz frequencies in early 2012.

The government of France is hoping to raise EUR2.5 billion (USD3.55 billion) from the sale of 4G mobile frequency spectrum. The country had earlier targeted over EUR2 billion from the sale of the frequency spectrum, but has revised its expectations to match auctions in the US, Sweden and Germany. Moreover, to prevent cash rich firms such as France Telecom (FT) bagging the majority of the spectrum on offer, the government will split the spectrum into various lots to ensure smaller players such as Bouygues Telecom and Iliad can compete.