The auction of 5G and other relevant bands started in November 2020. Following conclusion of the bidding phase for new entrants, the principal bidding phase has been ongoing since 14 January. In view of the auction's slow progress and the successive and repeated use of the lowest value bidding increments (recurrently 1%), an excessive delay to the auction’s conclusion is severely detrimental to national interests. For this reason, with the aim of expediting auction proceedings, ANACOM has approved a new amendment to the rules which govern the auction, barring use of the lowest value increments that bidders can select (1% and 3%).
This amendment follows on from the previous amendment which shortened the duration of each round, so that the number of daily bidding rounds was increased to twelve. It should be recalled that when ANACOM announced its intention to increase the number of daily rounds, with the expectation that this would be sufficient to prevent the auction from taking an excessive amount of time to conclude, it was made clear from the outset that, if auction's progress remained slow, resulting in an excessive delay to is conclusion, ANACOM would resort to barring use of the lowest minimum increments (1% and 3%) by bidders in a given round.
While more than 450 rounds have taken place since the previous amendment to the Regulation, it appears that, although the rules in force allow bidders to speed up auction proceedings, if they so wish, progress remains very slow, resulting in a delay to the auction's conclusion that will cause a disastrous delay in the development and entry into operation of 5G networks. This results in serious harm to citizens and businesses, denying them the economic and social benefits resulting from the 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.
This conclusion is corroborated by the way in which some of the operators in the national market have publicised, in a wide range of formats, the advantages arising from the implementation of 5G.
The delay also affects enjoyment of the benefits arising from the fulfilment of coverage obligations, the development of networks and the strengthening of the voice signal, which will not reach populations and businesses as quickly as required by the collective interest. The longer it takes for the auction to conclude, the longer it will be before the population and businesses are able to benefit from the opportunities offered, even while the targets for accomplishing some of these obligations are maintained, as they are not directly dependent on the duration of the auction procedure.
Furthermore, the delay may have 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 players.
As such, while much of Europe converges to make quick use of 5G as a key instrument of digital transition and economic competitiveness, in Portugal, an excessive delay to the auction’s conclusion can only be considered, as has been publicly affirmed by different interests, as extremely harmful to national interests, affecting the Portuguese population, Portuguese businesses and the country in general, while jeopardizing rapid pursuit of the public interest objectives in question, particularly in more remote and less densely populated areas.
Therefore, it is urgent to advance with the adoption of measures that, duly considering all interests (public and private), minimise any excessive delay. Accordingly, on 26 August, ANACOM approved an amendment to the Auction Regulation, to bar use of minimum increments by bidders in each round (1% and 3%).
As seen from publicly available information, use of the 1% increment in the principal bidding phase has been widespread, so that the price of the lots has evolved very slowly, resulting in a delay to the auction's conclusion.
Barring use of the lowest increments (1% and 3%) will speed up the auction's proceedings, while continuing to provide the bidders with flexibility in determining prices, given that the remaining increment options remain available (5%, 10%, 15% and 20%).
In the auction, the sequence of bids presented by each bidder depends on the respective valuation given to the lots by that bidder and the value of the best submitted bids. The bidder responds to bids made by other bidders with bids of its own until the value of the best bid reaches the bidder’s valuation of the lot. In other words, while the exact value of the next bid must, of course, take into account the minimum increment required, the bidding strategy as a whole is not dependent on it.
Since bids are submitted by comparing the best offers for each lot with the valuation that the bidder itself attributes to the same lot, a bidder will make new bids for as long as the best competing bids remain below the value the bidder assigns to the targetted lot. The price rule (payment equal to the amount of the winning bid) means that a bidder will not bid an amount that exceeds the valuation which the bidder assigns, regardless of the value of the minimum increment.
It should be noted that elimination of the minimum 1% and 3% increments does not give any one bidder advantage over another, since the rule applies equally to bids submitted by all bidders.
It should also be noted that barring use of the minimum 1% and 3% increments does not have retroactive effects, so it does not affect the price discovery achieved so far.
In summary, barring use of these increments enables a reasonable balance between the objectives of efficient allocation (in terms of static efficiency) and of increasing dynamic efficiency, contributing to increased market competition, investment and quality of service, and network coverage.
With approval of the amendment on increments - which considered the contributions received on the proposed amendment, reflecting a range of non-convergent positions -, and given the circumscribed content of the amendment in question, ANACOM's draft regulation is now submitted to public consultation for a period of 5 working days.
Consult:
- ANACOM approves draft Regulation amending Regulation no. 987-A/2020 of 5 November, amended by Regulation no. 596-A/2021 of 30 June https://www.anacom.pt/render.jsp?contentId=1699524
