The Czech regulator, the CTU, is determined to stick to plans to reserve two blocks of 800MHz LTE spectrum for a new entrant, even though this helped cause the collapse of its first attempt to auction the frequencies, back in March.
It halted the auction because prices had got too high, and it feared that would lead to unaffordable LTE charges for consumers. One reason for the inflation of bidding was the presence of a new contender, private equity giant PPF. The CTU will restart the auction process next month, setting aside the blocks for a newcomer in order to inject new competition into the market. It will also stick to its earlier policy of imposing a spectrum cap of two blocks of 800MHz/900MHz spectrum on all bidders.
Its approach is deeply unpopular with the existing cellco ‘ Vodafone, T-Mobile and Telefonica O2 – which last month requested that it halt its auction plans while simultaneous measures were ongoing to regulate the cellular market. Vodafone said it was unreasonable for firms to bid for new licences when market regulation rules were uncertain, while all three operators have criticized the auction rules.
In Marhc, the CTU suspended the auction because the bids were going too far above the base price of CZK7.4bn ($377m) for the three bands on offer ‘ 800MHz, 1.8GHz and 2.6GHz, all suitable for LTE. Total bidding rose to CZK20bn before the regulator called a halt. It feared that, if the prices were too high, cellcos would pass on those costs to their customers, which could restrict uptake of 4G services.
‘When announcing the conditions in the first half of last year, we stressed that the main motivation of the auction was the quick availability of a 4G network for Czech citizens and the possible entry of a fourth operator ‘ never about profits for the state,’ CTU chief Pavel Dvorak said in a statement at the time.
Four operators were in the running – the three incumbents plus PPF, one of the largest private equity firms in the central/eastern Europe region. None would have been allowed to end up with more than 2 x 22.5MHz of spectrum in sub-1GHz bands (800MHz and existing 900MHz combined), while a block in 1.8GHz was reserved for a new entrant. All licence winners would have been required to open up their LTE networks to MVNOs and to launch commercial services within two years.
Analysts at Analysys Mason questioned whether the Czech regulator may have been hasty in cancelling its sale, arguing that the prices seem reasonable. The consultancy’s senior manager Mark Colville noted that the prices reached at the point where the auction was cancelled equate to about €75 per head of population, or €0.25 per MHz/pop.