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Italy's 4G Spectrum Auction

22 September 2011

Italy is on its way to assigning 4G frequencies within the mobile telecommunications market. Bids in the on-going auction already have exceeded government expectations.

By Thomas Micarelli in Rome

Italy s 4G Spectrum AuctionItaly is on its way to assigning 4G frequencies within the mobile telecommunications market. The demand from operators is high and has recently grown with the increase in sales of smartphones and Internet keys that occupy the bandwidth and often cause service interruptions. Bids in the on-going auction already have exceeded government expectations.

The 4G frequencies (i.e. 800, 1800, 2000 and 2600 MHz) include those currently used by television networks. Such frequencies will be used by telecommunication operators once the transition to digital TV is fully completed. In this way 4G technology will allow Italian customers to receive and upload data to their mobile devices more quickly, encouraging a new range of services such as high-definition mobile video.

On 30 August the Italian Ministry for the Economic Development disclosed the offers made by the four operators allowed to participate in the 4G frequency auction: Telecom Italia, Wind, Vodafone and H3G. The companies’ initial offers for the 4G frequencies hit €2.3 billion. However, according to the Minister of Economic Development, Mr. Paolo Romani, by the end of the auction (which is set to conclude on September 30) the Government expected to receive a minimum overall amount of €3.1 billion.

Since the start of the tender the bidders have been required to increase their bids in 3% increments. Offers or single raises can also be made for a single generic block of bandwidth (e.g., only for the 800 MHz frequency). For the time being the total amount of the bids has already exceeded the Government's expectations, reaching €3.5 billion as of September 21.  (The government is keeping a running count of the bidding.)

In particular, the auction assigns 6 blocks for 800 MHz frequencies, 3 blocks for 1800 MHz frequencies, 3 blocks for 2000 MHz frequencies and 18 blocks for 255 MHz frequencies. This constitutes the most important frequency auction ever launched in Italy and a step further towards reducing the digital divide and implementing the Digital Agenda for Europe.

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