AIRCOM calculates that by re-using existing 2G and 3G spectrum for LTE, operators can make significant cost savings, extend the lifespan of existing spectrum assets for another three years, and reduce the amount of additional spectrum they require by up to a third. While significant, these benefits can only be realised if operators follow a careful planning process to minimise service degradation for existing 2G and 3G services.
After calculating prices paid for new LTE spectrum in North America and Europe, AIRCOM International believes that existing 2G and 3G spectrum (5MHz) could be re-allocated to LTE deployment for less than 0.5% of the cost of buying new spectrum at auction. By following a meticulous planning process for re-farming, operators can facilitate a measured migration path to LTE. Furthermore, operators can reduce demand for new additional spectrum and ensure sufficient funds are set aside to invest in the provision of quality LTE services.
“Given the economic pressures that mobile operators face, and the urgency in which they need to find additional network capacity, spectrum re-farming has become a key cost effective enabler of LTE migration,” says Fabricio Martinez, Services Director at AIRCOM International. “Not only does re-using existing spectrum deliver substantial cost savings, it reduces demand for new spectrum in the short-term and could help bring down the cost of new licenses. This will be crucial in ensuring the mobile industry learns from the mistakes of 3G and ensures there is sufficient cash available to deliver the quality service experience LTE networks have promised.”
AIRCOM International has calculated that there is sufficient re-farmed spectrum available to sustain quality LTE service delivery for a period of up to three years. While operators will still need to purchase additional spectrum at forthcoming auctions, by re-using what they have, they can significantly reduce initial capital outlay purchasing new licences. This ensures that additional money can be set aside for ongoing network investment and development of LTE network infrastructure and services, driving best possible throughput and quality of service. AIRCOM International is keen to stress however that this must not be to the detriment of existing 2G and 3G services.
“Effective spectrum re-farming techniques remove existing spectrum allocated to 2G and 3G service delivery,” continues Martinez. “Operators must plan spectrum re-farming very carefully to ensure minimal service degradation. Careful planning will enable operators to build additional capacity in a more measured way, ensuring spectrum efficiency is maximised for new and existing services.”
The spectrum re-farming calculations
AIRCOM International has arrived at its cost saving figures by analysing indicative fees paid for LTE spectrum in recent auctions in the US and Germany (the only countries where this spectrum has been purchased). These auctions saw operators in the two regions pay large amounts for 10MHz of new spectrum (as outlined in the “LTE” column below).
Typical spectrum re-farming techniques, are currently focused on freeing up 5MHz of spectrum they already have allocated to 2G and 3G services, to LTE (the associated costs of doing this are outlined in the “re-farm” column).
In order to make a fair comparison therefore, AIRCOM has calculated the market value of buying new 5MHz spectrum (UMTS column) by halving the amounts paid for 10MHz spectrum (LTE column). The percentage difference between re-farming 5MHz of spectrum is then compared to the cost of buying new 5MHz spectrum at auction today (UMTS column).
This reflects why the vast majority of global mobile operators are contemplating re-farming. The requirement is being driven by the need to drive spectrum efficiency, speed up LTE deployment and cut cost through a more measured approach to new spectrum acquisition.