A few days ago, China announced the newly revised Radio Regulations of the People's Republic of China, which established bidding and auction as a system, and clarified that commercial frequencies such as mobile communication on the ground can be allocated by means of bidding and auction. Fan Bin, deputy director of the Policy and Regulation Department of the Ministry of Industry and Information Technology, said in an interview with the media that the bidding and auction methods for the future 5G spectrum allocation will also be an option.
In China's terrestrial public mobile communications, 2G/3G/4G has allocated spectrum and is commercially available. Only 5G needs to allocate a large amount of spectrum resources to meet the needs of future commercial markets. This time, the relevant person in charge of the Ministry of Industry and Information Technology's answer to the 5G spectrum allocation also indicates that the spectrum allocation of China's commercial market will shift from full administrative approval to market-based auction.
If the 5G spectrum is auctioned, the three major operators in China will spend hundreds of billions of dollars on spectrum resources.
The amount of foreign spectrum auctions is increasing year by year.
Although spectrum auctions are new in China, they are already normalized market behaviors abroad. The world's first spectrum auction was conducted in New Zealand in 1989. Since then, the United States, Germany, Italy, the United Kingdom and other separate spectrum auction activities. The main spectrum auction institutions in the global market are OFCOM and FCC.
Take the United States and India, which have similar land areas to China, as an example. Not only are auction prices constantly rising, but high frequency bands are increasingly favored by operators.
The US spectrum auction ended in January last year amounted to 44.9 billion US dollars. The auction amount is 2.4 times that of the 2008 700MHz spectrum of 18.6 billion US dollars.
At the same time, the entire high frequency band has increasingly become the focus of interest of operators. For example, this year’s Indian spectrum auction covers a total of 2200 MHz of bandwidth in the 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2.1 GHz, 2.3 GHz and 2.5 GHz bands.
Vodafone, BharTI Airtel, etc. spent a total of 657.9 billion Indian rupees (about 9.6 billion US dollars) to capture part of the spectrum in the 1800 MHz, 2.1 GHz and 2.5 GHz bands. The spectrum in the 700 MHz and 900 MHz bands is unattended at all.
Domestic 5G spectrum auction price will reach 100 billion
Since 5G networks will target large-traffic, high-density services, they require continuous spectrum support above 300MHz. This means that 5G is not only very demanding for spectrum, but also has high requirements.
At present, although China has no final conclusion on the 5G spectrum division, the Planning Department of the Ministry of Industry and Information Technology has officially issued the “National Radio Management Plan (2016-2020)†that explicitly proposes spectrum resources with a 5G reserve of not less than 500MHz.
But this 500MHz spectrum resource is far from enough for 5G commercial demand, for example in the United States, which is the world's first to divide 5G spectrum. The four high frequency bands planned by the US Federal Communications Commission (FCC) for 5G include: 3 licensed bands (28 GHz, 37 GHz, and 39 GHz bands) and 1 unlicensed band (64 GHz to 71 GHz band). The above 11 GHz high-band spectrum is available for mobile and fixed wireless broadband, with a licensed spectrum of 3.85 GHz and an unlicensed spectrum of 7 GHz.
It can be seen that in the future, China needs to prepare spectrum resources of more than 10 GHz for 5G. This means that if a spectrum resource auction is performed in the future, each operator needs to purchase at least 300 MHz of continuous spectrum resources.
Regardless of the special nature of domestic policies, and in full accordance with the amount of foreign spectrum auctions, the three major operators will pay 100 billion yuan for 5G spectrum.
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