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ANCOM Submits to Public Consultation the Documents of the Spectrum Auction to Be Held This Year
14.03.2012
This year, ANCOM will hold an auction for the usage rights of the radio frequencies in the 800, 900, 1800 and 2600 MHz bands in view of the provision of mobile communications services (voice and data), for a period of 15 years. This is the first time in Romania when the spectrum licences are awarded through a competitive selection procedure.
“The auction is the best solution for maximizing the economic and social benefits of the Romanian users, through an efficient allocation and use of as many available frequencies as possible, as well as for the development of broadband service offerings. By means of this auction, ANCOM aims to derive and obtain the real value of this limited resource of the Romanian state and to stimulate competition, investment and innovation in the communications market. Furthermore, the mechanism was designed to offer equal conditions to all the players present in the Romanian market and to the potential new-entrants, and will be consulted both at a national and an international level with maximum transparency and openness”, Catalin Marinescu, the president of ANCOM, stated during a press conference held on Wednesday.
An amount of 42 paired blocks of 5 MHz each will be auctioned out, 6 of which in the 800 MHz band, 7 in the 900 MHz band, 15 in the 1800 MHz band and 14 in the 2600 MHz band, as well as 3 unpaired blocks of 15 MHz each in the 2600 MHz band. Licences for all these frequencies will be awarded for a period of 15 years, starting 6 April 2014. Moreover, ANCOM will award licences for a shorter period, valid between 1 January 2013 and 5 April 2014, for the frequencies in the 900 and 1800 de MHz bands which are currently used by Orange and Vodafone, respectively 5 paired blocks in the 900 MHz band and 6 paired blocks in the 1800 MHz band. Consequently, all the frequencies in discussion will become available at the same time, and the auction for the usage rights spanning over 15 years will be equitable for both the current market players and the potential new-entrants.
ANCOM has also elaborated a draft Government Decision establishing the reserve price for each block in the four bands. Pending approval by the Government, each 15 years block in the 800 MHz band should have a minimum price of EUR 35 million, those in 900 MHz EUR 40 million, respectively EUR 10 million per block in the 1800 MHz band, EUR 4 million per paired block and EUR 3 million per unpaired 15 MHz block in the 2600 MHz band. The values for the blocks to be allocated for 15 months have been set at EUR 3.4 million in the 900 MHz band and EUR 0.8 million in the 1800 MHz band.
In view of establishing the minimum values of the licences, ANCOM has analysed several sources of information and has thoroughly examined the outcomes of the auctions recently held across the European Union. The values proposed by ANCOM reflect a multitude of factors, including: the physical properties of the bands, the spectrum demand and implicitly the spectrum caps applicable within the auction, the existing rights in the frequency bands, the duration and conditions of use of the rights to be awarded, as well as the international harmonisation of the frequencies subjected to the procedure and the national specificity. The reserve prices have been proposed by ANCOM, but will be set by the Government and approved by Government Decision.
The winners of the blocks in the 800 and 900 MHz bands will have obligations related to the priority coverage, within a certain term, of a minimum percentage of the population living in certain pre-established areas, identified as being poorly covered or not-covered with mobile communications services, as well as obligations related to the coverage with mobile communications services of a minimum percentage of Romania’s population, by way of the operators’ own infrastructure.
ANCOM proposes that the spectrum allocation is made by a competitive selection procedure, which means that each interested operator submits an initial bid stating the number of blocks it intends to acquire in each of the available bands. The initial bids will show whether the demand of frequencies exceeds the supply in certain bands, whether certain blocks are not bid at all or whether the demand is similar to the supply.
If demand exceeds the spectrum available in a frequency band, then primary bidding rounds are scheduled. In each primary round, the bidders wishing to bid further will communicate to the auction Commission the blocks for which they remain in competition, the price being automatically increased in each round for the blocks whose demand exceeds the supply. The primary rounds are held until the number of requested blocks is equal to, or smaller than, the number of available blocks for all types of blocks.
If, after this round, there still are un-awarded blocks, additional rounds will be scheduled, offering the bidders the opportunity to submit bids exclusively for these blocks. The additional bids may not be lower than the last bid for the respective block or the initial bid.
If there are no more un-awarded blocks or bids for the un-awarded blocks, the assignment round may take place. Since in the previous rounds the bidders have submitted bids for abstract frequency blocks (without specific placing in the frequency band), the position of each block in the band is determined during this round. Nominal financial bids can be made in this round as well, if several winning bidders wish a certain positioning of the blocks won in that band.
Should all the frequency blocks be allocated at the reserve price proposed by ANCOM, the total value of the auctioned spectrum could raise to EUR 700 million.
The draft auction documents are available for consultation here. The interested persons are invited to submit their comments and suggestions, by 17.04.2012, to the ANCOM headquarters in 2 Delea Noua Street, Bucharest 3, directly to the ANCOM Registry Office or to the ANCOM regional divisions. Comments may also be sent by fax to +40 372 845 402 or by e-mail to consultare@ancom.org.ro.
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