Czech regulator consults on 5G auction conditions

Czech regulator CTU has published draft conditions of the prepared auction for frequencies in the bands 700 MHz and 3.5 GHz. Based on the proposal, operators shall compete for a total of 60 MHz in the 700 MHz band and 200 MHz in the 3.5 GHz band. CTU has selected SMRA (Simultaneous Multi-Round Auction) as the auction format. The minimum proceeds are expected at CZK 6.3 billion.

The regulator began consulting on the whole selection procedure for the award of 5G frequencies back in June 2018. The current document, which is the draft invitation to tender, will be open for consultation until 26 July. After processing of the comments, CTU will notify the antimonopoly authority and the European Commission. The electronic auction is planned to be launched in January 2020, so that until April 2020 the spectrum blocks will have been awarded to auction winners. The spectrum will be available for 5G network construction from mid-2020, when the frequencies in the 700 MHz will be freed from the current DVB-T usage.

In the 700 MHz spectrum band, there will be a 2×10 MHz block available with the reserve price of CZK 1.72 billion, two 2×5 MHz blocks with the reserve price of CZK 860 million and one 2×10 MHz block with the reserve price of CZK 1.55 billion. In the band 3400-3600 MHz, there will be one 20 MHz unpaired block with the reserve price of CZK 100 million and nine 20 MHz unpaired blocks with the reserve price of CZK 140 million.

The auction conditions are based on the main objectives of the regulator, including promoting competition. Therefore, a new operator in the market shall be able to apply for a reserved 2×10 MHz block in the 700 MHz band. On condition of a low demand from the established operators, the new player will be able to compete also for another 2×5 MHz. Only after none of the new players expresses interest in this block during the first auction round, the block will be widely available to all the bidders. At the same time, in the 3.5 GHz band a newcomer will have a more generous spectrum cap available compared to the established operators.

Any of the established operators who bid for the 700 MHz band undertakes an obligation to offer national roaming. The national roaming shall be available during six years and it shall facilitate market entry to the potential new player. One of the conditions for providing the national roaming to the new player is that his network covers at least 20 % of the population.

To provide for efficient spectrum usage, the regulator proposed a set of network development criteria. Within 3 years from the award, operators must cover 95 % of the population in the so-called ‘white spot’ municipalities. In January 2025, the operators shall cover 100 % of railway corridors and highways and 95 % of the territory of municipalities with more than 50,000 inhabitants. Within 10 years, operators shall cover 99 % of population and 90 % of territory of each district.

The auction participants shall not be economically associated. This condition is to be met until the end of the licence period, i.e. until mid-2036 for the band 700 MHz and until mid-2032 for the band 3.5 GHz.

The reserve prices for respective auction blocks has been set based on the benchmark from other 5G auctions in Europe.

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