The most recent sale of spectrum in Croatia in early January was in the 800MHz, 900MHz, 1800MHz, 2100MHz, 2.6GHz and 3.5GHz mid-spectrum bands and included both national and regional licenses. Prior to it, spectrum was sold in Ireland in mid-December 2022 in the700MHz, 2100MHz, 2300MHz and 2.6GHz bands, and in November in Romania in the 700 MHz, 1500 MHz, 2.6 GHz and 3.6 GHz bands. While all market players showed up at Ireland’s sale, that wasn’t the case for Romania’s and as a result, 24% of the Eastern European country’s spectrum offered for sale remains unsold. These events follow many others happening on the continent towards achieving the European Commission’s (EC) objective of ensuring uninterrupted 5G coverage in urban areas and along main transport paths by 2025 in the member states. In its 2016 5G Action Plan, the EC put forward the objective of ensuring uninterrupted 5G coverage in urban areas and along main transport paths by 2025. In March 2021, it extended the objective to include 5G coverage of all populated areas by 2030. There are estimates that across the EU, the total cost of 5G deployment could reach €400 billion including building new macro sites and upgrading existing ones to facilitate launching commercial 5G services such as in-building solutions for healthcare and hospitals, municipal buildings, ports, providing uninterrupted 5G connectivity for roads across transport corridors, etc. This is important for towercos as expanding their business models is seen as pivotal to maintaining growth. Europe’s macro tower infrastructure is hitting critical mass and slowing organic growth, while the rapid rate of Sale and Leaseback deals has also limited inorganic growth opportunities. As 5G is developing, towercos are evolving to support their tenants with new network infrastructure. For example, two projects that will provide 5G connectivity along transport corridors are just starting to be implemented in Spain by Cellnex – these are transport corridors linking Spain with France and Spain with Portugal, both funded by EC and within EC’s Digital Decade objective. Cellnex plans to work with MNOs using the neutral host model. Sustainability is another key topic accompanying 5G development and is prevailing in some member states’ agendas more than in others’. With ESG targets of their own, MNOs are demanding sustainability metrics and initiatives from their towerco partners. ESG is a key part of any investment or financing decisions from shareholders and banks, with towercos being subjected to detailed questioning and reporting requirements on a regular basis. Plus, employees and the communities that towercos and MNOs serve are wanting to see companies fulfil their role as responsible corporate citizens. For example, the building and leasing of neutral infrastructure to host multiple MNOs is inherently more environmentally friendly and sustainable than each operator building its own – reducing the consumption of energy, materials and resources. The spectrum auctions bring the Member States closer to assigning all 5G pioneer bands. The most favourable spectrum bands for 5G are:* • The 700 MHz band that has been assigned in 14 EU countries: Austria, Cyprus, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Italy, Luxembourg, Netherlands, Slovakia and Sweden. • The 3.4-3.8 GHz band that has assigned in accordance with 5G technical conditions2 in 16 EU countries and the UK: Austria, Cyprus, Czech Republic, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Luxembourg, Romania, Slovakia and Spain. • The 26 GHz band – that has been assigned in Spain and which can be also used for private 5G networks for the automation of factories and production centres. *Source: 5G Observatory The spectrum sale for the 26 GHz band that took part in Spain in December is a recent example of a member state working towards the common European goal, however tenders for that frequency are not so common. While 26 GHz also provides high speed 5G, current plans are to deploy this as a specific solution for very high-density locations like sports stadiums, tourist locations and train stations, it has limited propagation characteristics. The 26 GHz frequency is so unpopular that Spain was the only country to assign the band - it was the only mmWave auction to take place amongst EU member states during the whole of 2022. On the other hand, 3.6 GHz, is the basis of high speed 5G deployment in countries like Germany. There are some countries that are further behind in assigning pioneer bands than others, the 5G Observatory notes that “Approximately 72% of EU’s population is covered by at least one 5G network. “ Although the recent spectrum tender that took place in the Republic of Ireland in December 2022 is another example of member states working towards the common goal, the country is among the last countries in the European Union to fully allocate its spectrum for 5G, which offers services considerably faster than other mobile formats. Looking back, by the end of 2020, 23 Member States had launched commercial 5G services and achieved the EC’s intermediate objective of at least one major city with 5G access. However, not all Member States refer to the EU’s 2025 and 2030 objectives in their national 5G strategies or broadband plans. In addition, in several countries the European Electronic Communications Code has not yet been transposed into national law and the assignment of 5G spectrum has been delayed. These delays in assigning the spectrum can be attributed to different reasons: a weak demand by local MNOs, cross-border coordination issues with non-EU countries along the Eastern European borders, the impact of COVID-19 on the auction schedules and uncertainty about how to deal with security issues. In order to achieve 5G coverage EU member countries have to make the pioneer spectrum bands available for 5G use and provide investment certainty and reliability for 20 years, which ultimately means regulators awarding licenses for this or longer period of time. 5G DESI According to a (EU) 2017/899) decision all Member States are required to adopt national roadmaps regarding the licensing of the 700 MHz band. Portugal adopted its strategy and calendar for 5G rollout in February 2020. In March 2019, Croatia adopted a new plan with 5G as a priority and started consultations on spectrum auction processes. They also published a document as a result of consultation. In May 2020, Ireland revised its national roadmap on the use of 700 MHz frequencies initially published in March 2019. Mid-band provides high-capacity city-wide 5G and is less susceptible to interference from buildings and trees than high band, and it can carry lots of data across significant distances. The first of the the two 5G pioneer bands remain popular for regulators across the world. Of the ten countries which have recently awarded spectrum, half have handed out licences in the 3.3—3.8 GHz band. Kazakhstan, Montenegro, Northern Cyprus (disputed territory), Romania have all assigned spectrum in this vital 5G band. In total, 1070 MHz of 3.5 GHz spectrum was awarded. This is 30%of the total amount of spectrum recently awarded (when excluding mmWave bands). The second most popular band was the 700 MHz band. A total of 190 MHz of this band was assigned in five countries. The 700 MHz band is also considered a key 5G band due to its favourable propagation characteristics, enabling wide-area and indoor coverage. Recent awards have not been particularly competitive, suggesting that some MNOs may be tightening their belts during times of economic uncertainty. Out of the ten auctions recorded, four only had one winner, while two auctions sold licences very close to or at the reserve price. In total, there were recorded auctions involving over 3500 MHz of spectrum in ten countries in 2022. Some countries’ 5G coverage and strategy are high on the national agendas. In Spain for example, the government’s plan has a focus to promote the 5G technology in the country, which is aligned with the objectives established in the Recovery Plan (post Covid-19) and the Digital Spain 2026 Agenda. And in the Republic of Ireland, the local regulator ComReg says “The Government wants all populated areas of the State covered by 5G by 2030.” According to a recent EC study, only 11 Member States are likely to achieve an uninterrupted 5G coverage in all their urban areas and along major terrestrial transport paths by 2025. For the remaining 16 Member States, the Commission considers that the probability of achieving this objective is either medium (Austria, The Czech Republic, Estonia, Germany, Ireland, Poland, Lithuania and Slovenia) or low (Belgium, Bulgaria, Croatia, Cyprus and Greece). Could this and would this change? TowerXchange will monitor the developments in the EU markets and will report on the most recent development at Meetup Europe on 16 and 17 May in London.
