AGCOM’s investigation focuses on the technological, economic and regulatory aspects of the policy debate related to 5G deployment and aims at assessing any potential impact on AGCOM’s statutory duties and activities.
The review starts by describing the spectrum frequencies deemed to be necessary to develop 5G networks; in doing this, AGCOM considers both the “pioneer” bands and other bands that are potentially interesting for market players. The review then focuses on the technological innovation prospectively enhancing 5G networks and on the “Internet of Things” (IoT), which companies consider as the newest and most interesting market segment. Finally, AGCOM’s inquiry addresses and disentangles the complex interplay between the impact of 5G on network architecture, future business models, and the development of the so-called “vertical markets”.
As for spectrum frequency, market actors are mostly interested in frequency bands at 700 MHz, 3.6-3.8 GHz and 26.5-27.5 GHz, which will be assigned trough a competitive tender procedure defined by AGCOM (see par. 2) - a draft regulation subject to public consultation has been issued jointly with this market inquiry. Moreover, all spectrum frequency currently used by mobile network operators, i.e., 800, 900, 1500 (the so-called band L), 1800, 2100 e 2600 MHz, will be probably allocated to 5G. About spectrum frequency allocation, it is necessary to distinguish between those bands’ frequency already (or about to be) harmonised, i.e, the L band extension, the 2300 - 2400 MHz band, and the new ones. As an example of the latter, band 66-71 GHz (millimetre wave frequencies) has recently been considered by the RSPG (Radio Spectrum Policy Group) the most interesting band for 5G.
As for the technical issues of 5G networks’ deployment is concerned, the issue of network densification has been considered as the most crucial one. Installation of 5G equipment might be also implemented though flexible solutions such as “white-label”systems, where small-cells will be integrated by companies (not necessarily by traditional telephone companies) within buildings (e.g., sport arenas, train stations) or in specific urban areas (e.g, bus stops, electric poles). Those systems will be “lighted” and connected by one or more telecoms companies, creating a new business models (as the so-called “neutral host” use case).
As for the IoT market segment, the most relevant issue is the comparison of different licensing regime, such as licensed and exclusive spectrum rights, vs other side those technologies that can be used in collective or shared access regimes. Most market players taking part into the public consultation expressed their preference for the technologies using licensed spectrum, in order to enable high performance applications and services. In any event, AGCOM is of the opinion that it is necessary to stay tuned with the European policy as well as to keep going to incentivise innovation (e.g., within the existing AGCOM’s committee dealing with Machine-to-Machine - M2M).
As for the network architecture, it is of paramount importance to monitor how the “slicing” concept will impact on the net neutrality issue, as the surveillance on the net neutrality regulation is an AGCOM’s statutory duty. Among the “vertical markets”, at present, the transport sector (i.e., intelligent transport system, transport and traffic telematics services) and particularly the car industry, seems to be much more involved in the 5G revolution than other sectors. It is a matter of fact that the three main trial projects in Italy are extensively involve segments of the car industry, although different kind of partners, e.g., hi-tech industry, companies, university and research centres and municipalities, took part into the proposals.
Under a regulatory point of view, the review main outcome is the importance to progressively define spectrum frequency right of use in a “non-exclusive” way, for example by introducing new spectrum sharing arrangements, light licensing or club use, or unlicensed use of band frequency, also coupled with licensed bands (ie, Licensed Assisted Access – LAA).
This regulatory scenario is completely aligned with the draft provisions within the new European Electronic Communications Code, currently under scrutiny. The Code tends to limit exclusive rights of spectrum frequency use only where that is technically strictly necessary in order to avoid detrimental interferences.
AGCOM published a draft proposal of auction rules on 5G bands, and stakeholders have 30 days to submit their position papers.
This draft proposal envisages a multi-band auction, as established by the recent Italian Budget Law. The objective of the Budget Law on spectrum was twofold:
A public finance objective, setting a minimum revenue, namely at least 2.5 billion. The impact on Italian public finances is relevant, as the first check to be cut by telecom operators is equal to 1,25 billion already in 2018.
A social and economic development objective, as the rules of the 5G auctions should aim at “ensuring a very high coverage and nationwide access to 5G network to all italian consumers”.
Three frequency bands are going to be auctioned: the 700 MHz, 3.600-3.800 MHz and 26 GHz bands. Each of them has been identified as a 5G pioneer band by the EU Commission. Italy is the first country where all three 5G pioneer band are released in the same multi-band auction, even if the 700 MHz band will be available only after the end of the refarming process (presumably within July 2022), that will see broadcasters moving their transmission facilities to a lower band.
The structure of the multiband auction allows operators to plan ahead their 5G development strategies, as they will be able to evaluate synergies between different bands, and to allocate their budget accordingly.
Frequency bands eligible for auction have different characteristics:
30 MHz in the 700 MHz band (lower frequency band) are particularly suited for building 5G networks with high coverage, even in remote areas.
200 MHz in the 3.600-3.800 MHz band (intermediate band) have very good characteristics both in terms of capacity and coverage. They are currently used for 5G trials in some limited geographic areas (Milano, L’Aquila-Prato, Bari-Matera), sponsored by the Italian Minister of Economic Development (MiSe) and implemented by telecom operators and technology vendors.
1 GHz available in the 26 GHz. This band is useful for very high capacity services to be provided in limited geographic areas. These frequencies are to be made available by the end of 2018, however, commercial deployment will have to wait for the conclusion of the standardization process on equipment.
All spectrum rights on the three bands will expire in 2037.
AGCOM draft regulation envisages specific packaging, access and coverage obligation for each band, tailored made to their physical characteristic.
On the 700 MHz band, AGCOM proposal is structured as follows:
6 blocks of 2x5 MHz, with a 15 Mhz spectrum cap. Spectrum rights last 15 years and 1 half.
There is an option of reserving one or two 2x5 MHz block to a new entrant.
Minimum price is 2,1 billion for 2x30 MHz available.
Coverage obligation are both individual: (80% of the population to be covered in 36 months, with priority on urban areas) and collective, namely to be met by all beneficiaries (in 54 months they should be able to cover at least 100% of the population, even through mutual network agreements).
Coverage obligations along major national terrestrial transport paths (highways and railways).
Coverage obligation on touristic areas.
On the 3.600-3.800 MHz band:
Spectrum rights will last for 19 years, and spectrum blocks are all national.
Minimum price is equal to 300 millions on 200 MHz.
There are all 3 different options in block packaging:
2 blocks, 100 MHz each;
4 blocks, 50 MHz each;
2 blocks 80 MHz each, plus 1 block of 40 MHz;
Coverage/access obligation imposed to operators are the following:
They should cover a certain amount of small villages in the national territory
5G network coverage should be assured if a group of citizens, local authorities or industrial partners request for it.
Obligation to give access to 5G networks to actors to “vertical” operators (e.g.: automotive )
On the 26 GHz band:
5 national blocks, 200 MHz each. Spectrum cap equal to 400 MHz. Spectrum rights last for 19 years;
Minimum price equal to 140 millions euro for 1 GHz;
No coverage obligation;
Obligation to share spectrum in specific geographic locations, where operators can boost their capacity by requiring access to spectrum retained by competitors that do not use the frequency locally or in the very proximity (club use licence regime);