CTU launches consultation on T&Cs of upcoming 5G auction; sets reserve at CZK6.3bn

28 Jun 2019

The Czech Telecommunication Office (CTU) has published the draft plan of the forthcoming auction of frequencies in the 700MHz and 3.5GHz bands, suitable for 5G services. In the 60-page document, it establishes that the call for tenders is scheduled for this autumn, while the e-auction itself should take place in January 2020. If all goes to plan the regulator hopes that frequency allocations can be granted in April, allowing the successful bidding operators to start using their frequency blocks by mid-2020 – when the 700MHz frequencies currently allotted for DVB-T broadcasts will be released.

The terms and conditions of the auction are based on previously published principles, which the regulator documented over the past year in its efforts to maximise the transparency of the selection process. The CTU notes that, in order to fulfil one of the main objectives of the auction – which is to deepen competition on the electronic communications market – it is reserving a 2×10MHz block of spectrum at 700MHz for a new operator(s). Further, it will be allowed to compete for another 5MHz, but if none of the new entrants in the first auction round show interest in this reserved block, the CTU will open it up and offer it to all auction participants. Concurrently, in the 3.5GHz band the CTU says it will set ‘a new spectral limit for the new operator compared to the existing operators’.

Additional terms and conditions include the rule that any existing operators participating in the 700MHz band auction will assume a national roaming commitment, valid for six years, to allow any newcomer to offer their services through a competitors’ network to meet other conditions (e.g. coverage requirements). One of the conditions for national roaming is that any new operator covers at least 20% of the Czech population with its 5G network. Further, the CTU – in its drive to boost competition – also confirmed the validity of the wholesale offer commitment from the 4G auction for the bands offered.

The terms of the auction further set out what the CTU terms ‘development criteria that ensure that frequencies are handled efficiently’. Specifically, successful bidders will have to cover municipalities where high speed internet is not available and are currently identified as ‘white spaces’. They must cover 95% of the population of all these communities within three years of the allocation. In addition, by January 2025 100% of the backbone network of railway and road corridors, and 95% of municipalities above 50,000 must be covered. Ultimately, within ten years the winning operators must cover 99% of the population and 90% of the territory of each district of the Czech Republic.

Finally, the CTU sets out that only entities that are ‘economically independent of each other’ can participate in the auction and that the successful winners ‘must fulfil this condition for the entire period of the allocation, i.e. by the middle of 2036 (700MHz band), and mid-2032 (3.5GHz band).

The minimum price for individual auction blocks has been determined on the basis of an analysis of the prices achieved in the relevant European countries. Taken together, the reserve fee on all auction blocks to be sold is CZK6.3 billion (USD281.6 million).

Czech Republic, Czech Telecommunication Office (CTU)