December 2024
The Kingdom of Saudi Arabia successfully completed its latest spectrum auction in November. It carried out the assignment of the 3.8-4.0 GHz band to mobile operators for their macro-cell networks and became the first country in EMEA / ITU Region 1 to assign capacity in the 600 MHz band.
The auction puts KSA at the forefront of spectrum assignment thus far. CST has now assigned spectrum in nearly all mid-bands and has made more 3.5 GHz available than any country other than Japan. The 600 MHz award, of which 2 x 20 MHz will go to STC and 2 x 15 MHz will go to Zain, is pioneering and will support further development of rural mobile. Mobily had 2 x 10 MHz of additional 700 MHz spectrum assigned as well.
While upfront fees and payment terms were reasonable, with annual payments starting in up to July 2025 for all bands except the 600 MHz band which will commence in July 2026, operators are concerned about meeting strong coverage and QoS obligations (see below).
The 600 MHz band allows for 2 x 35 MHz of spectrum and is an important capacity supply in rural areas. It is also used by MNOs to deliver better in-building coverage. 600 MHz is widely used in North America and is partly responsible for the high 5G availability in the region. It is a valuable tool in helping to lower the digital divide between rural and urban areas (which can rely on mid-bands).
Download speeds are intrinsically linked to spectrum capacity. In EMEA, adding 600 MHz (which provides an extra 35 MHz of downlink capacity) to existing low-band spectrum, will increase potential speeds by 37%, even using the same technology.
Spectrum for industry and consumers
Delivering spectrum capacity to support enterprise digitalisation is a priority for all regulators. CST’s decision to expand the 3.5 GHz range available to operators up to 4.0 GHz mirrors similar progress in other 5G-leading countries such as the US (which uses the band up to 3.98 GHz) and Japan (which goes up to 4.1 GHz). STC and Mobily both had an extra 100 MHz of 3.5 GHz spectrum assigned in the auction, bringing the total amount of 3.5 GHz spectrum allocated to IMT services to 500 MHz. With wide channels also present in 2.3 GHz and 2.6 GHz there is a strong supply of mid-band spectrum in KSA.
A common-sense approach to setting aside lower-power spectrum for local use supported this decision. While some regulators have set-aside wider segments of core spectrum, KSA has limited it to 200 MHz from 4.0 – 4.2 GHz, assisting wider contiguous channels for macro-cell use. This restricted local-use tranche helps cater for any bespoke local or trial needs while minimising the damage done to public mobile through constraining spectrum. In Saudi Arabia, where there is no anticipated use of the 6 GHz band for macro-cell mobile, maximising 3.5 GHz was of particular importance.
The practice of setting aside spectrum for local/industrial use does not have any impact on the digitalisation of enterprises in a country (as originally anticipated). Moreover, it does constrain the quality and/or affordability of public mobile. The needs of industry have been met in different ways. China has no set asides and uses capacity slices or bespoke installations from the public operators to deliver its digitalisation programme, which is one of the strongest in the world. By contrast, Germany had a set-aside in the 3.7-3.8 GHz band which excluded public mobile operators and constrained mobile spectrum. Both Germany and China have private mobile networks – both have the strong, high-tech industrial bases that would drive this – but despite its lower GDP per capita, China has much stronger 5G uptake. The KSA approach represents middle ground at a time when the success, or otherwise, of spectrum set-asides is being watched closely.
The price of coverage
In the KSA auction, there was a focus on coverage and QoS conditions which requires scrutiny. Delivering spectrum to the market at a low initial cost in exchange for coverage conditions and commitments to network investment is an emerging best practice from regulators. While upfront fees and payment terms were reasonable, with annual instalments starting as outlined above, the severity of the coverage conditions has onlookers querying when such stipulations become an obstacle.
The low population density of Saudi Arabia causes significant challenges in meeting the stringent coverage and QoS obligations. CST will be monitoring compliance based on 4km2 pixels which will take significant investment from MNOs in uninhabited areas with minimal RoI. 5G signal strength criteria are also felt by operators to be a difficult obstacle to overcome.
Future development
As QoS and coverage obligation requirements rightly overtake high auction prices as the best means of ensuring that spectrum is put to good use, scrutiny is required as to what level of coverage obligation is sustainable.
Saudi Arabia has amongst the highest measured 5G speeds (according to recent Opensignal data) and has some of the lowest reliance on legacy technologies. Its continued growth will depend on CST’s ability to find the next tranche of spectrum for mobile development in the 2030s, and on its MNOs’ ability to meet the targets asked of them while delivering sustainable connectivity growth.