ANACOM moves to prevent an excessive delay to completion of the auction of 5G and other relevant bands

The 5G auction in Portugal began in November 2020 and is a procedure that remains ongoing. While the bidding phase for new entrants was completed at the beginning of January 2021, the principal bidding phase is currently in progress with 348 rounds having already taken place (up to the end of yesterday). To prevent an excessive extension to the duration of the auction of 5G and other relevant bands, ANACOM has decided to initiate a procedure to amend the Regulation governing the auction, allowing the introduction of procedural mechanisms to expedite the process, including an increase in the daily number of rounds and, if necessary, increased bidding increments. Until this amendment procedure is concluded, which involves consultation of interested parties, the auction will continue to proceed according to the rules currently in force, which already allow bidders to speed up the auction process if they so wish.

As seen from the daily information released about the auction’s progress, a maximum of six rounds have been held each day and there has been successive and repeated bidding with the lowest possible price increment (often 1%). This makes the progress of the auction particularly slow and, if the bidding patterns seen so far are maintained, there is a serious risk that the auction will take far longer to conclude than initially envisaged.

A delay to the conclusion of the auction would inevitably lead to a postponement in the development and entry into operation of the networks concerned. This would be detrimental to citizens and companies, denying them the economic and social benefits resulting from 5G-driven digital transition, in terms of the development and competitiveness of the Portuguese economy, social and territorial cohesion, social innovation and improvement to the quality of services of public interest. A delay would also impact the benefits derived from the bolstering of existing 3G or 4G networks and the development of new networks, postponing the benefits arising from the fulfilment of coverage obligations, the development of networks and the enhancement of the voice signal.

For these reasons, ANACOM concluded that there was an urgent need for measures that, taking due account of all the interests in question, would minimise any excessive extension to the auction’s duration by streamlining its processes. For this reason, ANACOM decided to initiate a procedure to amend the Regulation governing the auction of 5G and other relevant bands, to enable an increase in the number of rounds taking place each day, by reducing the duration of each round (from 60 to 15 minutes) and/or by extending the daily bidding period. It was also decided to enable the option of excluding use of minimum increments by bidders in a given round (1% and 3%) where deemed necessary. In the principal bidding phase that is taking place, the 1% increase has been widely used, so that lot prices have evolved very slowly. With no evident gain in terms of price discovery, conclusion of the principal bidding phase and the auction itself has been delayed. In this context, it is deemed appropriate to provide for the option of disallowing use of the lowest increments (1% and 3%). If necessary, use of this option will make the auction process faster, while continuing to provide the bidders with flexibility in selecting bid prices, as the remaining increments continue to be available (5%, 10%, 15% and 20%). Flexibility in the determination of permissible bidding increments is a rule that has been used in other multiple-round spectrum auctions, particularly in ascending auctions, which have taken place recently in Europe, such as in Germany (2018), Finland (2018), Italy (2018) and Slovakia (2020).

Neither of these proposed changes distort the auction procedure or undermine the bidding strategies of the companies involved; they do however enable a faster outcome, to the benefit of the country and society in general.

With the temporary suspension of deadlines in the practice of acts in administrative procedures, with regard to the practice of acts by private individuals, applied in response to the Covid-19 pandemic, ANACOM considered that conditions did not allow it to initiate this amendment procedure. With the lifting of this suspension of deadlines, interested parties could be given opportunity to comment, and ANACOM was able to proceed.

In order to have an effect on the speed of the current bidding process, it is important to advance with these measures immediately. And given the limited content of ANACOM’s proposed amendments to the Regulation, which aim merely, on a precautionary basis, to introduce mechanisms that might prevent an excessive prolongation of the auction, ANACOM gives interested parties a period of 5 working days (ending on 15 April), to send contributions and suggestions which they feel should be considered in the preparation of the draft amendment to the Regulation, as will subsequently be submitted to public consultation.