BONN (WiMAX Day). The Federal Network Agency (Bundesnetzagentur) in Germany last week announced the elements of the competitive bidding procedures for the auction of spectrum in the 3.4–3.6 GHz range in December.

This announcement follows the auction earlier this year that failed due to too many applicants. Final bidders were selected in August. There were 1,221 requests for applications to the auction which will result in approximately 100 final bidders in December. It is expected that the auction will be completed “before Christmas” according to the Bundesnetzagentur.

As with most European countries, due to the scarcity of radio spectrum, the telecommunications act in Germany prescribes that a competitive bidding procedure is applied to the BWA frequencies that will be auctioned.

The Bundesnetzagentur announced that the spectrum is intended to be used for wireless broadband with a broad scope of use and technology neutrality. The spectrum is divided among 16 regions which cover the territory of the Federal Republic of Germany. Bidders will be able to submit applications for single or multiple regions, or for national coverage. In each region, the spectrum is available for up to three operators, with up to 28 MHz per region. It is estimated that the lowest bid for a national license will be €21.4 million Euro, and the lowest bid for a population region will be €2.6 million Euro.

Market Opportunity for WiMAX
Germany has one of the lowest penetration rates in Europe for broadband. According to research firm Strategy Analytics, broadband penetration reached only 28% in 2005 and is forecast to reach only 44% in 2010. According to Pyramid Research, the average German consumer is not entirely satisfied with DSL offerings in Germany, which comprise the main source of broadband and come mainly from Deutsche Telecom and alternative telcos. Earlier this year Vodafone and O2 attempted to offer 3G services for home use, but users balked at the slow speed and faulty service, and overall 3G has barely made a dent on the market.

Naysayers abound
Despite the obvious market opportunity for improved broadband access to urban as well as remote areas, the announcement from the Bundesnetzagentur last week unleashed considerable debate about the auction, stemming mainly from supporters of the UMTS standard.

Amongst the most vocal opponents of the spectrum auction was Roman Friedrich of consulting firm Booz Allen and Hamilton. While Booz Allen is a member of the WiMAX Forum, and is involved globally in several WiMAX integration projects, Herr Friedrich told reporters on Friday in Dusseldorf that UMTS and DSL were clearly the more favourable broadband options for the German market, and that “for the network carriers it makes no sense to participate in the auction.” Despite the comment from Friedrich, Deutsche Telecom unit T-Mobile applied to bid in the December auction, as have several other DSL local loop operators.