Blackberry Mobility Featured Article

If you’re a wireless network operator it’s one thing to have precious wireless spectrum available to you, quite another to have the capital needed to lease it, develop a new mobile network and turn a profit on it – especially in a down economy.

Such is the dilemma for mobile operators in Europe: According to an article in the New York Times, the mobile operator market in Europe has matured and flattened, due to the recession as well as market saturation. As a result, many operators are slowing down on network investment and wireless auctions are yielding much less interest. What’s more, market saturation has significantly changed operators’ business models. Some operators are not currently willing to take the risk on building new networks and developing new services that only deliver a mild incremental improvement over the current user experience.

As a result, an upcoming wireless spectrum auction in Germany -- to sell 700-800 megahertz spectrum freed up when the country switched over from analog to digital television signals -- is attracting less interest from operators than might normally be expected. As the article points out, ten years ago operators would have been clamoring to drop tens of billions of dollars to scoop up precious wireless spectrum to facilitate the development of next generation mobile services. But today, even with the advent of 4G technologies facilitating much coveted high speed “mobile broadband,” the auction in Germany scheduled to start April 12 is expected to see bids top out at only $7 billion.

What’s more, there’s only enough spectrum to support the 4G build-out needs of three of the four major operators in the region – and it is unlikely that the smaller operators in region will be able to pony up the cash needed to stay in the bidding (that is, unless they “band” together).

Britain and France have similar wireless spectrum auctions coming up in 2011. The question is, which operators are willing to layout the capital needed to secure wireless spectrum for the deployment of new 4G (LTE (News - Alert)) networks -- and how quickly will they be able to monetize those efforts? The other big question is, with so much M&A activity in the space -- and the smaller operators with so much less money to spend -- how will regulators respond to larger operators scooping up this wireless spectrum, thus strengthening their market dominance and reducing competition.