ANACOM has approved the amendment to the regulation governing the 5G auction, so that, as from 5th July, it will be possible to hold 12 bidding rounds each day, instead of the current seven. The amendment is published today in the Diário da República (Official Journal). With this measure, ANACOM intends to speed up the process.
The auction was begun in November 2020. With the bidding phase for new entrants completed, the principal bidding phase started on 14 January and remains ongoing. To date, this phase has involved more than 700 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 thereafter.
Although the auction is taking place on a regular basis, the main bidding phase has still not concluded, even while the current rules allow bidders to proceed more quickly. 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 (See Figure 1).
With the majority use of other increments, the auction could progress much more quickly. In fact, as illustrated in Figure 2, in category J (3.6 GHz), it is estimated that the current value of the lots (around 5 million euros) would have been reached in a much smaller number of days:
- approximately 5 days, with 20% increments,
- approximately 10 days, with 10% increments, and
- approximately 20 days, with 5% increments.
Figure 1 - Daily trend in the average price of each category over the more than 100 days of the main bidding phase
Figure 2 - Hypothetical trend in the price of category J with different minimum increments
In fact, there is a serious risk that, if the bidding pattern observed so far is maintained, that the auction will carry on far longer than initially envisaged (taking far longer than the normal duration of these 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 in Portugal, 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, with this delay, the benefits arising from the fulfilment of the obligations 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 required in the light of the collective interest. These obligations relate to coverage, as well as the development of networks and the strengthening of the voice signal.
In this regard, it should be noted that, among other aspects, there is 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 low-density municipalities and in the Autonomous Regions, but also, when requested, in hospitals and health centres, educational establishments, ports and airports and entities managing business and industrial parks. Accomplishing these obligations is essential to enable urgent use of the ample opportunities offered by 5G, but depends on the prior allocation of spectrum usage rights in this band, which, in turn, depends on timely conclusion of 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, ANACOM considers it 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. It should be noted that following publication of the notice to commence the regulatory amendment procedure, the duration between rounds was reduced in order to accommodate an additional daily round - this took place from 10 May. However, this measure was insufficient in providing the streamlining that was desired. For this reason, ANACOM is now implementing a reduction in the duration of the rounds and an extension of the daily bidding period, enabling the performance of 12 rounds each day.
An adjustment of this nature does not change the information already revealed and does not undermine the feasibility of the bidding strategies used on an ex post basis, either in the case of bidders who have not yet reached the valuation they will have attributed to the lots and that continue to undergo price discovery, nor for bidders who have already withdrawn from bidding because the price has already exceeded the value they attribute to the spectrum, that is, they have already reached discovery of the final price. Accordingly, this alteration does not affect or impact the review of the price discovery process.
Furthermore, since there is no change in the rules governing the structure of the auction, nor in the information revealed at the end of each round, and since neither is affected by an adjustment to the duration or number of rounds, this change is not considered as likely to affect the strategies of the bidders.
At this time, it is considered that the proposed streamlining is appropriate and proportional, and ANACOM expects that it will be sufficient to prevent the auction from becoming excessively lengthy. These are amendments that focus purely on practical, logistical and procedural aspects, based on reasons of public interest that can be clearly addressed in specific terms, linked to an emerging set of factors and decisions external to ANACOM, including the behaviour of participants in the auction, which justify the need to expedite procedures.
In a scenario where the auction is delayed further, ANACOM may consider other options, including prohibiting the use of the minimum 1% and 3% increments that bidders can indicate in their bids.
Consult:
- Approval of the Regulation amending Regulation no. 987-A/2020 of 5 November https://www.anacom.pt/render.jsp?contentId=1669741
- Consultation on the Draft Regulation amending the Auction Regulation for the allocation of rights of use of frequencies in the 700 MHz, 900 MHz, 1800 MHz, 2.1 GHz, 2.6 GHz and 3.6 GHz bands https://www.anacom.pt/render.jsp?contentId=1663628
