:: 4G spectrum auction ::

Paul Prins – 4min. read

31st of october 2012, the auction for the ‘4G spectrum’ started in The Netherlands and finished 1,5 month later at the 13th of december 2013. This auction took longer and raised more money than expected. Both the Dutch market leaders, KPN and Vodafone, bided each about €1,3 billion, T-Mobile €911 million and Tele2 – a fairly new player in the market – €161 million. KPN paid (relatively) so much that the dividend payments for 2012 and 2013 were actually cancelled.

 Why did it take so long? And why is there so much money involved – almost 4 times more than was expected?

To put it shortly, all of these companies were aiming at getting access to chunks in (mainly) both the 800MHZ and 900MHz spectrum (more about these frequency bands later). The licenses for these spectrum bands are valid until 2030 in order to provide faster mobile data [LTE] services all over the Netherlands. The roll-out was, by then, planned to start in Q2 2013 until – expected – the end of 2014.

Shortly after the auction, the real rivalry between the companies took off. KPN was the first player that actually ‘launched’ it’s mobile 4G connection for her customers. But this was only for their premium data plans and they also didn’t foresee that some early adopters started to pick on KPN that their 4G was not compatible with the – just released – iPhone 5. On the contrary, Vodafone has recently fired a marketing campaign as a reaction to KPN, claiming that they are the first provider in The Netherlands offering a 4G connection for the iPhone 5 – truth to be told: just for now, only in the 4 main rural cities Amsterdam, Rotterdam, Utrecht and Den Haag.

 But what’s the fuzz all about? – Why emphasis on the iPhone 5?…let’s clear things up.

First of all – and without getting in too much details yet – the iPhone 5 is one of the most popular high-end mobile devices that, as it turned out, doesn’t support the initial 4G-rollout  frequency (800MHz) from KPN, whereas the Samsung Galaxy S4, HTC One and Nokia Lumia 920 do. Why? Because the iPhone 5 for the Dutch market doesn’t support 800MHZ, but only 1800MHZ. A great opportunity for the marketing departments of Vodafone to make public to their customers that they have already started rolling out their LTE services in the 1800MHZ band – for the record: KPN will also start to roll-out the 1800MHz band in 2014 as well.

 But what about these frequency bands?

Back in the days, when you went to a country abroad you needed a separate mobile device in order to connect to a local network – or you were one of the lucky fews, owning your own satellite phone – since all countries had their own ‘rules’. Luckily for us, things changed and international standards for the mobile spectrum have been adopted. Just like any international agreement, the real results of these standards are visible many years later. For example, in The Netherlands the 800MHz band was exclusively used for analog television. Therefore, this bandwidth was not available for telecommunications, otherwise nobody was able to watch television back in the days.

But for this new digital age, 800MHz is not exclusive for analog TV anymore. Why? The first reason is that probably nobody watches analog TV anymore, but more importantly because 800MHz main characteristic is that it can can cover a wide distance, whereas bands in the higher frequencies cannot. For the same reason the GSM network is provided through the 900MHz band.

So what does it mean for Telecommunications in the Netherlands?
The final results of the Dutch 4G auctions give a pretty clear overview:

At this point is not specifically known which provider will use what specific band, but a rough expectation shows the following:
2G / GSM: 900MHz
3G / UMTS: 2100 MHz
4G / LTE: 800, 1800, 2600 MHz

Back to the iPhone:
As mentioned before, the initial roll-out is focused on the 800MHz frequency, hence the fuzz about the iPhone 5 that ‘only’ supports the 1800MHz band. The good news is though, that the new iPhone models (5S and 5C) will support all three LTE bands

And that is exactly what it’s all about for LTE: device and mobile carrier support:
Band 20 (800MHz) – Vodafone, KPN, Tele2
Band 3 (1800MHz) – Vodafone, KPN, T-Mobile
Band 7 (2600MHz) – Vodafone, KPN, T-Mobile, Tele2, Zum (Ziggo)

Thus, the bottom line is: if you want to know wether you will see that new beloved 4G icon in the top of your screen, not only check if your provider supports LTE access (and you are actually paying for it) but also if your phone supports it.

Technology of the Week Team 15: Priceline.com versus Airbnb

Want to go on holiday? Instead of visiting an archaic travel agency (80/90s style), consider diving into an online auction where you might bargain your way into a luxurious 5-star hotel in Manhattan, New York City. Or stay at someones mansion in Kenya and take care of the giraffes in the backyard.

The former, Priceline.com applies a B2C business model offering exclusive hotels to offer up their otherwise vacant rooms on an anonymous basis, whilst the latter applies a C2C business (or, collaborative consumption – Botsman & Rogers, 2010) model offering consumer a means to earn some additional income whilst away from home themselves.

The anonymous feature of Priceline.com implies a higher level of uncertainty than normal for consumers in exchange for a lower price, i.e. the option to trade down, whilst still being relatively certain preferences (location, star-rating etc.) are fulfilled. Also, organisational learning is applied. Airbnb basically offers all available information, including house rules set by the host, reviews of hosts about guests and vice versa (word-of-mouth). Prices are fixed but fellow consumers can find something fitting their preferences in detail. A simple comparison: Priceline.com uses the information provided by consumers to search their database and find the consumer a match to bid on; Airbnb uses the information provided by consumers to offer a complete list of potentials where even more lodge-specific information can be found and allows the consumer to make up his/her own mind. However, both businesses aim to offer a solution to properties that would otherwise be vacant and have disrupted the hospitality-industry, offering consumers increasingly more options to choose from. In other words, the buying power of consumers has increased.

So, how would you book your holiday?