ANACOM creates conditions to speed up 5G auction, enabling 12 daily rounds

The auction to allocate spectrum for 5G and other relevant bands started in November 2020 with the bidding phase for new entrants. The main bidding phase of the auction remains ongoing. This phase began on 14 January 2021 and, to date, has involved in excess of 580 rounds, with a maximum number of 6 rounds per day up to the 81st day of the main bidding phase and a maximum of 7 daily rounds since then.

Although the auction is taking place on a regular basis, the main bidding phase has still not concluded, despite the fact that the rules of the auction allow bidders to proceed more quickly if they want. However, as is clear from the daily information published on ANACOM's institutional website, there has been successive and repeated use of the lowest price increments in bidding (often 1%). For this reason, the auction's progress has been particularly slow. In fact, if the bidding pattern observed to date is maintained, there is a serious risk that the auction will carry on far longer than initially envisaged (taking far longer than is normal for such procedures in the vast majority of EU Member States).

This could result in a delay with a severely negative impact on the development and entry into operation of 5G networks to the detriment of citizens and companies. A delay would deny citizens and companies 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 improving the quality of services of public interest. A delay would also impact the benefits that could be derived from the strengthening of existing 3G or 4G networks or the development of new networks, regardless of the associated technology. In a situation where the pandemic persists over time, the impact could be even more significant.

In particular, it should be noted that, as a result of this delay, the benefits arising from the fulfilment of coverage obligations, the development of networks and the strengthening of the voice signal - which are attached to the allocation of rights of use of frequencies under the terms of the Regulation - will not reach populations and businesses as quickly as the collective interest requires.

Notably, in this regard, there will be an impact on the obligations to install base stations supported by the 3.6 GHz band, on the one hand, with a view to providing services compatible with 5G, especially in municipalities with low population density and in the Autonomous Regions, but also, when requested, in hospitals and health centres, educational establishments, ports and airports and entities managing business parks and industrial estates. Accomplishment of these obligations, which is essential to enable urgent use of the ample opportunities offered by 5G, depends on the prior allocation of spectrum in this band, which in turn depends on the speed of concluding the auction procedure.

Also at stake are the benefits which are due from the implementation of obligations to provide coverage in each of the low density parishes and in each of the parishes in the Autonomous Regions of the Azores and Madeira, as well as parishes which are not considered low-density but which are located within municipalities with other parishes which are considered low-density. Although these obligations, which seek to remedy the current lack of coverage and capacity in these areas, are established by reference to specific dates, in the short term, operators will need to initiate network investments long before they come into force, since installing the network infrastructure required to provide coverage of the populations and areas concerned with the required speed of service is a lengthy task.

In this context, an excessive delay to the completion of the auction makes execution of these investments in the short term less likely, denying the population and the companies in these areas access to the benefits inherent to this progressive investment. This means that the opportunities provided by digital connectivity will not reach a larger percentage of the population and national territory in the shortest possible time. Furthermore, there would be an impact on the conditions of competition in the market, given the measures in the Auction Regulation that are designed to create a level playing field for all market participants.

As such, while much of Europe converges quickly to make use of 5G as a key instrument of digital transition and economic competitiveness, in Portugal, an excessive delay to the auction’s conclusion would be extremely harmful to national interests, affecting the population and Portuguese companies, the country in general and jeopardizing rapid pursuit of the public interest objectives in question, particularly in more remote and less densely populated areas.

In these exceptional circumstances, it is urgent to promote the adoption of measures that, with due consideration of all the interests in question, minimise any excessive delay by enabling a streamlining of procedure.

Accordingly, on 31 May 2021, ANACOM approved a draft amendment to the Auction Regulation which, as indicated in the notice given upon commencement of the regulatory procedure, aims to increase the daily number of rounds in the main bidding phase. This change will make it possible to speed up the auction without affecting bidder strategies, enabling performance of 12 daily rounds. At this time and under the current circumstances, it is considered that this is the appropriate measure to achieve the intended objective, and ANACOM expects that it will be sufficient. In a scenario where the auction is subject to further delay, ANACOM may consider other options, including prohibiting the use of the minimum 1% and 3% increments in bids.

The draft amendment to the Regulation will now be submitted to public consultation for a period of five working days.