On 15th July 2019, interestingly a day after the Bastille Day, French regulator Arcep launched a public consultation on a draft decision that sets out the procedure and conditions for awarding licences to use frequencies in the 3.4 – 3.8 GHz band, in Metropolitan France. The contributions to this public consultation, which will run until 4th September, will enable Arcep to finalise this procedure and the terms of allocation. Arcep will then submit its final text to the Government in the weeks that follow.
Several bands were identified in a coordinated fashion in Europe for future 5G rollouts. The Arcep draft decision presented on 15 July concerns 3.4 – 3.8 GHz band frequency allocations – identified in Europe as the “core” 5G band. Thanks to a combination of its physical properties and the amount of spectrum available, this band provides a good trade-off between coverage and speed. Use of this core band will be completed by other bands of varying properties, each of which will help unleash the full potential of 5G. These include the 700 MHz band, which was already allocated to operators in France in 2015, and the 26 GHz band which will be allocated at a later date.
In the draft document being submitted for public consultation, the allocation procedure is for 310 MHz of frequencies, covering Metropolitan France. The rearrangement of the band’s current users will be decided before the procedure begins.
Arcep is proposing a two-part allocation procedure that is not based solely on financial bids. The procedure will include a first part whereby up to four operators will be able to obtain additional blocks of spectrum in exchange for additional commitments, before the auctions carried out in the second part allow them to obtain additional frequencies.
If in the first part four or fewer candidates agree to make the specific commitments when filing their application, each will be able to obtain a block of spectrum at a set price. If their number is equal to or over five, the applicants will bid for the four blocks in a separate auction. The size of the block, which is the subject of one of the questions in the consultation, will be at least equal to 40 MHz.
Next, an auction will be held to allocate the frequencies that are still available after the commitment phase. The qualified applicants, regardless of whether or not they obtain a block in the previous phase, will thus have the possibility of acquiring additional frequencies, divided by 10 MHz block. The initial price set for the first block of 10 MHz is determined by the reserve price set by the government, after which Arcep will conduct this multi-round auction as follows
During each round, Arcep indicates the price of one 10 MHz block. Each applicant then indicates the number of blocks they want at that price. As long as the number of blocks requested by the operators is greater than the number of available blocks, Arcep will hold a new round and increase the unit price of each 10 MHz block, by previously established increments. The auction ends when operators’ demand matches the number of blocks available. All of the 10 MHz blocks will then be allocated at the final price bid. In a situation where the number of available blocks exceeds operators’ demand, a mechanism is in place for deciding between the last applicants to have withdrawn from the bidding.
Once the amount of spectrum allocated to each winner is known, there are multiple combinations for positioning them on the band. A new (single-round, second highest bid) auction will be held to determine each of the winners’ positions. They will thus have an opportunity to express their preferences on position on the band, and their position with respect to the other winners.
In the public consultation, Arcep plans to set a cap on the total amount of spectrum any one applicant can obtain (during phases 1 and 2):
- the planned minimum is a topic addressed in public consultation. It will be at least equal to 40 MHz;
- the planned maximum is 100 MHz.
The draft procedure stipulates that all applicants, regardless of whether or not they have chosen to make optional commitments, will be subject to a series of obligations, particularly with respect to regional coverage. The obligations for all operators include:
- 5G rollouts in the 3.4-3.8 GHz band that prioritise urban areas and economic zones;
- increasingly ubiquitous 5G punctuated by steadily increasing speeds;
- roadways;
- slicing;
- IPv6;
A set of commitments is being proposed for candidates taking part in the first part of the allocation procedure. These commitments will then become legally binding obligations in the terms of the winning candidates’ licences:
- 5G to foster competitiveness in other sectors of the French economy;
- indoor coverage;
- fixed access products;
- transparency;
- innovation and competition;
The frequencies will be allocated for a period of 15 years. The procedure also provides for a possible 5-year extension.
In addition, two interim reviews are scheduled for 2023 and before 2028 to verify operators’ implementation of their obligations, along with market requirements, notably in the areas of mobile network coverage and quality of service. Obligations could be revised based on the findings of these reviews, after having reached an agreement with the licence-holder.
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