Tele2 has strongly indicated that it will bid for 800MHz spectrum in the Netherlands, and that it may become a mobile network owner seeking to disrupt the businesses of the three incumbent operators by combining its fixed and mobile assets to best effect.
Tele2’s Market Area Director for Western Europe, Günther Vogelpoel, said that favourable legislative and regulatory decisions have presented the operator with a “unique” opportunity to make the move from MVNO to MNO.
The Netherlands has mandated that 2x10MHz spectrum at 800MHz be reserved for new entrants, just as it did for the 2.6GHz spectrum band. Parliament has gone further and said that it also wants to see 2x5MHz for new entrants at 900Mhz. It can ask for this because in the Netherlands, not only is 800MHz being auctioned, but 900, 1800 and some 2100MHz spectrum is also being re-auctioned.
Vogelpoel said that with a reserve price for a 2x5MHz block of €35 million and a rollout obligation of 40% within 5 years, Tele2 needs to evaluate closely the benefits of bidding. But with a 17 year license, he said that “either we do it now or that window of opportunity is gone.”
“We have a very weak competitive situation in The Netherlands – with prices at the highest levels, and mobile broadband penetration at the lowest levels, in the area. We have our fibre network that is perfect for backhauling already – we have the capacity. All these elements look good, and over the next months we are working hard to evaluate this, but we are pretty serious,” Vogelpoel said.
As well as the favourable auction terms for a new entrant, Vogelpoel said that The Netherlands’ net neutrality laws were good news for disruptive players – and would enable Tele2 to push new business models into the market.
“For existing MNOs it [net neutrality] is not a good thing, but when you’re a new player on the market and there’s net neutrality we can use a new business model compared to MNOs. The cannot charge for Skype or Whatsapp users; and those people are reducing revenues to the current MNOs and they are struggling with how to solve that,” he said.
Vogelpoel said that Tele2 would be able to offer discreet data packages, without tying them to voice tariffs, for example. Incumbents cannot do that, he said, because they would quickly cannibalise their revenues.
“We will come with disruptive elements, with new business models, and would allow OTT voice with no voice package attached. That will be confrontational to current MNO business models, and to them it will be very difficult to follow us as it will cannibalise quickly on their legacy business models. That’s why they are frightened of this. KPN is investigating a lawsuit protesting the auction rules. You do that when you feel threatened.”
The Tele2 added that the operator would most likely look for a network sharing agreement to keep costs efficient for network rollout and operation.