Major spectrum auction in Netherlands holds appeal for variety of bidders

The deadline to apply for participation in the auction was 16 July, and the spectrum agency Agentschap Telecom has just confirmed it will hold the auction on 31 October with five unnamed participants. Based on the reserve prices for the frequencies on offer, the auction should raise at least around a half billion euros. Whether the bids will reach the billions is highly uncertain, but the big players will be starting with several hundred million at the ready for the licences alone, not even counting the costs of network roll-out and expansion. 

The names of the bidders will be kept secret until after the auction. Given how important the auction is to the sector, a great deal of speculation on the auction's participants can be expected. The existing three mobile operators (KPN, Vodafone, T-Mobile) are certain to participate, but the focus will be on whether any new players can enter the market. Any newcomer has the double advantage of no 'legacy' assets, such as an existing 2G/3G network and eroding revenues from voice/SMS, and the technological advances offered by LTE qua efficiency and capacity. There are disadvantages of course too: no customers, no existing cashflow and the expensive cost of rolling out and launching a network. 

Tele2 can't escape a bid for the frequencies, as this is it's long-stated aim of evolving from a MVNO to a MNO. Tele2 has repeatedly said the Dutch mobile market is lacking in competition, so now is it's chance to show what it can offer. Cable operator Ziggo has developed a mobile strategy based on widespread Wi-Fi coverage, complemented by roaming on the Vodafone network. But Ziggo, as well as its counterpart UPC, are unlikely to let the chance of acquiring spectrum pass them by, even if it's just to keep all their options open. 

There is a strong likelihood that six major players on the Dutch telecom market will participate. Who else could be interested? We offer a few names, even if some may be highly speculative:

• Foreign mobile operators: Belgacom (already active in the Netherlands through Scarlet), China Mobile, Wind Telecom, Hutchison Telecom, NTT DoCoMo, SK Telecom, KT Corp. Major European players, such as Telefonica, France Telecom and TeliaSonera, are less likely due to the high costs and their fragile balance sheets.
• Suppliers: Huawei (jointly bid for Caiway), Fujitsu (active in England in FTTH) and Datang Telecom (holds a licence in Belgium) are just a few possibilities.
• Entrepreneurs: Dik Wessels (of Reggeborgh and Reggefiber, which he has sold to KPN) and Xavier Niel (the man behind French group Iliad, who has recently launched mobile operator Free in France and Golan Telecom in Israel and also bid for Belgian operator Base).
• Existing MVNOs: the step from MVNO to MNO is attractive to a mobile provider taking the business seriously, seeking higher margins and ways to differentiate. However it's difficult to see a serious candidate among the existing players. It could be an idea for a major retailer such as AH, but it has little interest in owning its own spectrum. In other countries, players such as Carphone Warehouse and Best Buy are active in the market.
• Greenet: a start-up that offers a fixed-line replacement in outlying areas as a reseller of KPN HSPA and radio connections. Evolving from MVNO to MNO could be a possibility.
• Liander and other energy grid companies: by 2020 all electricity meters need to be 'smart', a requirement easily solved with a Sim card.
• Internet companies: rumours have regularly emerged of companies such as Google, Apple and Amazon planning their own networks.

With the date of the auction now known, the speculation can get into full swing over which companies will bid.

The auction and its implications will be discussed at Mobiel 2012, a conference organised by Telecompaper on 14 November in Laren, Netherlands.