So far I always thought that high 3G license costs like the 50 billion euros that were spent in Germany would inhibit growth, deployment and use of 3G networks and services. I am not so sure anymore as according to the ITU, 3G licenses were given out for free in Finland with only a modest administration fee of 1000 euros per 25 kHz (per year I assume according to this article).
Even if you consider the difference in population (roughly 80 million Germans vs. roughly 4.3 million Finns), 0.2 million euros for 5 MHz a year is still next to nothing. While Germany has a widespread deployment of 3G networks in 2006, Finland seems to be far behind with only a few major cities covered (take a look here at the GSMA coverage maps). Also, there doesn’t seem to be a big difference in 3G pricing. Only recently, Finish carriers seem to have introduced interesting data tariffs which let you surf the web for 20 euros a month with a bandwidth limited to 128 kbit/s. Full speed access is available for 40 euros a month. Similar offers are available in other countries as well these days where operators have paid a lot more for the licenses.
So to me it looks almost the other way around from what I have initially thought if you only look at these two examples. The more expensive the licenses, the more eager companies seem to be to deploy the technology. After all, if you have spent more money for the licenses then what is necessary for buying and deploying a network it doesn’t seem to hurt that much anymore.
Two more examples to make the confusion perfect:
- Japan: 3G licenses were given out for free as well according to this Gartner article. But contrary to Finland, 3G is a major hit in Japan these days.
- France: Only two companies have deployed a UMTS network, with a third operator slowly starting in 2006. Cost for the licenses were 4.5 billion euros per operator. 3G coverage, however, is still limited to major cities in France (see the link to the map above again). Cities below 100.000 inhabitants usually don’t have UMTS coverage by the end of 2006. So in this country, 3G coverage is quite limited despite very high licensing costs.
Strange, though, that end user prices seem to be pretty much on the same level, no matter how much operators had to spend on licenses. Anyone’s got an explanation for this?
Summary: I think it’s pretty obvious that licensing fees do not have the same impact in each country as far as coverage and end user pricing is concerned. There seem to be other factors which are different in each country which have a much more profound impact.