Italian WiMAX auction proving wider sector interest
As has become common across Europe in recent years, the Italian government sees WiMAX as a key technology for expanding the availability of broadband, particularly in underserved rural areas. WiMAX in the 3.4GHz - 3.6GHz band was slow to gain traction in Italy because the Ministry of Defence controlled the spectrum in most parts of the country. Starting in February 2005 the Ministry gradually transferred these frequencies to the regulator region by region. Nevertheless, WiMAX remained a poor proposition in Italy because of the perceived high cost of freeing up the spectrum (transfer costs to Defence) and rolling out a network. In October 2006 the Ministry of Communications was forced to reassure players that a national WiMAX network could be built for around €200 million, less than half the sum proposed by one of the main WiMAX providers, Alvarion.
The 3.4GHz spectrum release enabled the regulator in October 2007 to pursue plans to auction 35 WiMAX licenses in this band. By the time of the auction some of the main broadband players, including FASTWEB, Mediaset and Wind, had pulled out.
In March 2008 the government awarded WiMAX licenses to 11 companies, raising €136 million. This was the highest price yet realised in the EU, and a full 176% more than the base price set for the auction. The 15-year licenses must be used within 30 months (the ‘use or lose’ condition). Frequencies can be sold to third parties with the agreement of the Ministry for Economic Development, which took over the responsibilities of the Communications Ministry in May 2008.
AriaDSL and AFT secured the two licences at the national level, while Telecom Italia has chosen to concentrate mostly on central and southern Italy and Sardinia, with a view to fulfilling its universal access targets without having to invest in fixed-line infrastructure in sparsely populated regions: about 4.2 million citizens, or 7.5% of the population, still have no access to broadband. Retelit gained coverage in several regions in northern Italy, while Tourist Ferry Boat took a single license to offer Internet access on ships travelling between the mainland and Sicily, as well as services on the island itself.
The cost of the spectrum reflected the high demand and value attached to it (particularly when compared to 3.5GHz auctions in France and Germany - €126 million and €56 million respectively), even though the band is not best suited to mobile broadband and Internet services. Most of the licensees plan to deploy WiMAX to provide broadband to underserved rural regions. The greater demand for 3.4GHz-3.6GHz frequencies was driven by the increasing willingness of regulators across Europe to allow mobile applications in what was traditionally a fixed-only band. In addition, Italy’s auction was the first undertaken with a standards-based technology (WiMAX) for the band.
See also:
- Italy - Broadband Market - Overview, Statistics & Forecasts;
- Europe - Broadband Market - Overview & Statistics.
Henry Lancaster - Senior Research Analyst - BuddeComm
