ANACOM approves minimum increments of 5% in 5G auction

ANACOM has approved an amendment to the 5G auction Regulation, which determines minimum increments of 5% in the 5G auction. The amendment now approved, which follows analysis and consideration of the comments received in response to the regulatory public consultation, will enter into force on the 5th working day following its publication in Diário da República (Official Journal).

The auction of 5G and other relevant bands started in November 2020. The bidding phase for new entrants has concluded and the main bidding phase has been ongoing since 14 January. In this phase, the 1% increment has been widely used (whereas provision was made for the use of 1%, 3%, 5%, 10%, 15% and 20% increments), so that lot prices have evolved very slowly without obvious gain in terms of price discovery, delaying conclusion of this bidding phase and the auction.

This excessive delay to the completion of the auction is severely harmful to national interests. As such, ANACOM approved this amendment to the auction rules to speed up the procedure, while ensuring that bidders retain flexibility in determining pricing, given that the 5%, 10%, 15% and 20% increments remain available. This change does not undermine the future strategies of bidders and does not affect price discovery already achieved during the auction; and because it does not give any bidder an advantage over another, it does not lead to any discrimination between bidders.

This amendment follows on from the previous amendment shortening the duration of each round and enabling an increase in the number of daily bidding rounds to twelve rounds per day. 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 continued to be slow, resulting in an excessive delay to is conclusion, ANACOM would then resort to barring use of the lowest minimum increments (1% and 3%) by bidders in a given round.

Now that more than 600 rounds have been conducted since the amendment to the Regulation, it appears that, although the current rules allow bidders to proceed with the auction more quickly, if they so wish, the pace of progress remains very slow. Simply increasing the number of rounds has not been enough in terms of resolving the very low level of excess demand, and 12 daily rounds has, therefore, not achieved the speed intended.

Likewise, it can also be seen that recurrent use of lower percentage increments has largely continued.

The slow pace of progress and a delay to the auction’s conclusion would have 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.

This delay also affects the 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 some of the targets for accomplishing some of these obligations are maintained, as they are not directly dependent on the duration of the auction procedure.

Additionally, as has been shown, this delay could also have a significant impact on the conditions of competition existing in the market, given the measures provided for in the Auction Regulation to create a level playing field for all market participants.

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. This is the situation which the present decision is intended to avert.