It’s a successful spectrum auction model. So why is it not being widely imitated?

Signal transmission concept

The latest Austrian 5G spectrum auction is over. Austria’s Regulatory Authority for Broadcasting and Telecommunications (RTR) achieved its aim of offering a pricing model that attracted investment and a high level of increased coverage commitment from the mobile operators – especially to underserved areas. And Real Wireless played a part in making it happen.

RTR decided some years ago to establish an investment-friendly framework for its 5G spectrum auctions: 20-year licences and a reserve price for 240 MHz of spectrum in the 700 MHz, 1500 MHz and 2100 MHz bands totalling €295 million.

This very moderately priced model (compared to most other countries) was in line with an approach firmly focused on the economic and social benefits of 5G – use the spectrum to improve connectivity for all people and spur innovation, rather than treat it as a cash machine. But make no mistake, this wasn’t a spectrum giveaway: a few conditions were attached.

There are different levels of coverage and service availability for the different sections of the country: a virtually complete population coverage by 2025, at a level of 98 per cent, with at least 10 Mbps downlink and 1 Mbps uplink, and 93 per cent with at least 30 Mbps downlink and 3 Mbps uplink (95 per cent for urban populations). For regional and federal highways and selected railway lines, the coverage should be with a rate of 10 Mbps for downloads and 1 Mbps for uploads for 98 per cent of the total length.

Most importantly, the operators were also required to deliver 30 Mbps downlink and 3 Mbps uplink connectivity by 2027 to at least 900 out of 2,100 underserved rural municipalities (underserved Katastralgemeinden or uKGs) as part of the coverage obligations associated with the 700 MHz licences (150 uKGs per 5 MHz licence). Additionally, if the operators commit to cover more underserved municipalities – above their 700 MHz coverage obligation – the operators would receive a rebate on their spectrum bids.

In the end, the operators not only conformed to these obligations, but they further committed to serve additional 800 underserved municipalities, beyond and above the initial 900 obligation, bringing the total of underserved municipalities committed to be covered to 1,700 – a genuinely impressive result.

The path that led to this approach wasn’t a straightforward one; it included a lengthy process to revisit, refine and retune the key components that were required to make it happen.

At the first phase of this process, RTR, with our help, identified the 2,100 municipalities that are underserved. We predicted the current coverage levels based on the mobile operators’ infrastructure and available spectrum for the different sections of Austria’s geography – population areas, municipalities, and roads.

In the second phase, we produced an optimised site placement algorithm and integrated prediction model that densified the mobile operators’ national networks to simultaneously meet the different coverage obligations – a crucial step for RTR to be able to estimate the cost of the required network evolution and set meaningful rebates.

The most challenging part of this step was not only to predict the most cost efficient network densification path and the total number of sites that would be needed to cover the minimal municipality coverage requirement with the different obligation thresholds, but also what it would take for a mobile operator to cover additional municipalities. This, remember, was before we knew which ones of the 5 MHz licences and their attached set of underserved municipalities each operator would bid for.

Among the variables under consideration we needed to look at were which uKGs would be the easiest and quickest to cover, and where a site, if correctly planned, might be able to cover more than one uKG at the same time, thus saving money by meeting multiple coverage obligations.

Nonetheless, these were far from the only variables, but the basic aim was to find a densification approach taking into account the fact that mobile operators would try to find the cheapest approach to meet these targets. We then presented our RF, densification and cost modelling results to both RTR and all Austria’s mobile operators.

Armed with this information and an investment-friendly auction system, this part of the 5G auction attracted bids that, as we have said, took the 700 MHz coverage number for uKGs up to about 1,700 – almost double the minimum requirement and about 81 per cent of all the underserved municipalities in Austria.

It’s an elegant approach, and, given that most governments are keen to ensure wide coverage, perhaps it’s an approach that should be taken by other countries to secure universal mobile coverage. This novel approach was co-created between RTR and Real Wireless and, for us, exemplifies the innovative ways in which spectrum release should be addressed in the coming years.

It isn’t simple – hence the role of the engineers, physicists, economists, security advisors, experts in regulation and spectrum, business strategists and deployment specialists that make up Real Wireless. On the other hand, with the right partners and great collaboration – which was the case with RTR and Real Wireless– it can be highly effective.

This model successfully balances revenue acquisition with maximum achievable coverage and social and economic benefit – which is what most governments should aim for.

Given the results, the question, we feel, shouldn’t be: Why go with this model? It should be instead: Why not?