The case against technology-neutral spectrum

Rewheel showed that 'independent challengers' add a lot to competition in mobile markets in Europe. The E5 (DT, FT, TEF, TI, VOD) have a combined market share of 80% across 27 nations. There are indie challengers in 14 of those. In the other 13, minimum prices can be 140% higher.

Competition in telecoms is limited as a result of an extremely high entry barriers. In fixed markets, it is legacy infrastructure held by the incumbents. In mobile markets the scarcity of licenses is added. Hence regulation.

Take note that Vodafone is an incumbent on the mobile market, just like Bouygues and SFR. Tele2 also is an incumbent, at least in markets where it joined when 2G (and 3G) licenses were tendered. Now Tele2 is entering the Dutch market on the back of winning a 4G license (not counting its presence as an MVNO). So, Tele2 NL will most likely act as an indie challenger. Hutchison 3G was a challenger in the 3G era, but may not act like one when 4G licenses are issued and a new entrant appears.

Now, there's always scope for an incumbent/E5 operator to behave like a challenger. One could call this atypical, in light of the Rewheel study. For instance, at the latest strategy update, DT told T-Mobile NL to behave like an 'unconventional attacker'. Hence, T-Mobile NL may display atypical behaviour as well.

Back to the entry barrier. It has been lowered considerably by allowing the timing of issuing new licenses to coincide with rise of new technology (4G/LTE). So, Tele2 NL enters the market as an MNO and at the same time can use all the advantages of LTE.

The question now is: is it wise to make spectrum technology neutral? The regulator decided to do so, which at first sight seems to make a lot of sense. However, by the time the next auction will take place (2029 - not counting the 1900/2100 auction probably taking place in 2016), new technology will be around (5G) and all 4 MNOs will have introduced it. So, the new entrant coming to the market in 2030 will not have a technology advantage like the current wave of 4G entrants have.