Pavel Sistek International Relations and Strategies Department RSPG/BEREC WS, 11 November 2014 Czech Telecommunication Office Spectrum triband auction.

Pavel SistekInternational Relations and Strategies Department

RSPG/BEREC WS, 11 November 2014

Czech Telecommunication Office

Spectrum triband auction Spectrum triband auction 2013 in the Czech 2013 in the Czech RepublicRepublic

Agenda• Aim of the auction• Considerations of packaging• Packaging and lots• Choice of auction format• Procedure timeframe• Spectrum caps• Coverage obligations, QoS• Support of competition• Minimum prices• Auction results• Result – our lesson

Spectrum triband auction 2013

Aim of the auction

• Authorise spectrum in 3 bands: 800 MHz, 1800 MHz and 2600 MHz

• Create and support competitive environment

• Deployment of 4G mobile broadband services

• Implement Goals of Digital Czech (and RSPP)

• National policy: Auction initiated based on Government Decision No. 78 issued on 26 January 2011


Considerations of packaging• Question 1: Shall we auction all 3 bands together or separately?

– Together, because the bidder has the possibility to optimise its portfolio.• Question 2: Abstract blocks versus concrete blocks?

– Concrete blocks:• In the 700 MHz band,

– the first 2x5 MHz pair could suffer from coexistence with the DTT

– Reserved block of 2x10 MHz: Priority for a newcomer.• In the 1800 MHz band:

– 2x15.8 MHz for a newcomer (reserved through spectrum caps)• Question 3: Fragmentation of continuous blocks in the 1800 MHz band:

Yes or no? => discussion about the final „symmetry or asymmetry“ of the spectrum among operators.– Our decision: Blocks fragmented (1 MHz blocks), market decides


Packaging and lots• Inputs:


800 MHz: 2x30 MHz

Category A1.1 A2.1 A2.2 A2.3 A3.1 A3.12x5 2x5 2x5 2x5 2x10

concrete blocks

2600 MHz: 190 MHz

Category C, D5 MHz channelling

1800 MHz: 2x25 MHz

Category B1.1 B2.1 B2.2 B2.3 B2.4 B2.5 B1.1 B2.6 B2.7 B2.8 B2.92x0.2 2x1 2x1 2x1 2x1 2x1 2x15.8 2x1 2x1 2x1 2x1

concrete blocks

Choice of auction format• SMRA chosen with regard to

– Analysis of results of previous auctions (both the CCA and SMRA),– The fact of partially complementarity and substitutability of 4G lots exist in the 800,

1800 and 2600 MHz,– Final decision was made after the successful German multiband auction, therefore

– SMRA,– The fact that the SMRA format was preferred by potential applicants.

• Auction Phase – main principles– Eligibility of the 1st auction round: Based on the amount of the Warranty deposited

during the Qualification phase– The increase of bids: By 5% of the minimum price of the Auction Lot– Highest Bid Withdrawal: Max. 2x, but resulting in decrease of activity points– The Abstention option: Max. 4x without changing the amount of eligibility points– If no Highest Bid during last 2 rounds: Possible reduction of the price by 10%


Procedure timeframe• First auction:

– September 2011: Provisional principles of tri-band auction published

– Spring – summer 2012: Consultation of principles

– End of 2012: Auction and bidding.

– A strong newcomer induced auction competition.

– Auction STOPPED on March 2013, after 240 bidding rounds (bidding prices exceeded € 740 mil.). Why? Excessive price could have been reflected to high prices of mobile services.

• Spring 2013: AUCTION RESTART – „second auction“.– New consultation with supporting conditions for possible „4th

operator/newcomer“.

– December 2013: New bidding started. 4 operators entered the Auction, after 14 bidding rounds 3 operators successfully completed bids.

– Remaining (=unsold) frequencies are in the 1.8 GHz and 2.6 GHz band.


Spectrum caps• 800 MHz:

– First attempt (auction 2012), SC 22.5 MHz incl. 900 MHz bands licenses

– In 2013, after „restart“, a 2x10 MHz block was reserved for a newcomer.

• 1800 MHz:– SC 2x23 MHz in order to reserve the contiguous block 2x15.8

MHz for a newcomer (i.e. 2x9 MHz available for existing operators).

• 2600 MHz:– FDD max. 2x20 MHz (min. 2x10 MHz)– TDD min. 15 MHz.


Coverage obligations, QoS• Coverage obligations, QoS: Priority given to cover lower density

population areas.

– 800 MHz band:• 30 months to start „low coverage“; 2 years to offer „good

coverage“; 5 years to reach „excellent coverage“.• Specific coverage conditions apply for railways and highways.

– 1800 MHz and 2.6 GHz: soft conditions with respect to local reach.

• QoS: At least 2 Mbit/s during first 7 years, then 5 Mbit/s. (Note: 3G coverage on „other bands of the licence holder“ accepted).


Support of competition(in provision of mobile services in “new bands”)

Conditions applied to licence holders:

•„National roaming“ in the 2G or 3G networks for a newcomer: If a new operator were to win some frequencies, it would have been allowed to enter the networks of the other operators (with further conditions).

– However, roaming was not applied – since no newcomer took part in the auction. (Note: New future auction could bring it into effect.)

•„Wholesale offer“ in 4G networks for any MVNO, MVNE should be available for 12 years. (It is part of the “voluntary commitments“ of licence holders).

Future after the 12 years?

•After the obligations of NR and WO finishes, NR/WO applicants will be strong enough and standard commercial agreements will apply.


Minimum prices

Band Block (lot) Minimum price per block

800 MHz 2x5 MHz First block € 39 mil.other blocks € 43 mil.

1800 MHz 2x15.8 MHz9 blocks 2x1 MHz

€ 19 mil.€ 0.039 mil.

2.6 GHz 2x5 MHz FDD5 MHz TDD

€ 3 mil.€ 1.2 mil.

Note: Extracted, simplified information

• Benchmarks were based on results of other European auctions. Observed prices (EUR/MHz/pop) showed huge variations.

• Starting prices set rather higher due to expected possible absence of competition in bidding.


Auction resultsWinners: After 14 bidding rounds, the 3 existing operators acquired the same amounts of frequencies in all three bands (symmetry). 200 MHz sold.

Remaining spectrum (Note: subject of future auction):1800 MHz: 2x15.8 MHz2.6 GHz: FDD - 2x10 MHz

TDD - 50 MHz

Auction income (11/2013): € 331 Mil.

1200 LTE BTS‘s in operation (October 2014)

Further positive side effect:Price revolution: In April 2013 (after the first stoping the 2012 Auction), all mobile operators introduced new and LOWER mobile prices.

LTE starting operation 10/2014


Result – our lesson

• Block reservations for „newcomers“ is matter of strong discussions and needs good arguments.

• During bidding, withdrawal of highest bid should result in some limitation in activity points during further bidding rounds.

• Strong newcomer could force the price to excessive levels.

• Minimum or market price cannot be calculated – it is an academic issue; therefore, in reality, the starting price is a matter of market and/or „socio-political“ circumstances.

• Proven approaches welcomed.


CTU websitewww.ctu.cz

Triband auction 2013 (Czech, English)http://www.ctu.cz/ctu-online/elektronicka-uredni-deska/vyhlaseni-

vyberoveho-rizeni-na-kmitocty-v-pasmech-800-mhz-1800-mhz-a-2600-mhz-2013/vyhlaseni-vyberoveho-rizeni-2013.html

Map of LTE 800 MHz _ BSs starting operationhttp://start-lte.ctu.cz/

Useful links


http://www.ctu.cz/

http://www.ctu.cz/ctu-online/elektronicka-uredni-deska/vyhlaseni-vyberoveho-rizeni-na-kmitocty-v-pasmech-800-mhz-1800-mhz-a-2600-mhz-2013/vyhlaseni-vyberoveho-rizeni-2013.html

Thank you for your attention

Pavel SistekCzech Telecommunication Office

International Relations and Strategies Department

[email protected]

Pavel Sistek International Relations and Strategies Department RSPG/BEREC WS, 11 November 2014 Czech Telecommunication Office Spectrum triband auction.

Documents

auction competition

auction round

auction restart

choice of auction format

spectrum caps question

bidding rounds bidding

concrete blocks

smra format