The Czech telecoms regulator has taken the unusual step of suspending a 4G spectrum auction because bid prices had risen too high.
In a statement on its website, the CTU said that bid prices had reached about CZK20 billion ($1 billion), nearly three times the minimum amount of CZK7.4 billion established at the outset of the auction.
The regulator’s fear seems to be that operators will pass those costs on to 4G consumers, inhibiting the take-up of high-speed mobile internet services in the Czech market.
“Before publication of the conditions in the first half of last year, we pointed out that the main motivation for organizing the auction is quick availability of 4G networks for Czech citizens – not profit for the state,” said Pavel Dvorak, the CTU’s chairman.
“Moreover, such high prices would have [led to] exorbitant rates for high-speed mobile internet,” he continued. “We therefore consider it necessary to intervene and prevent future negative consequences for consumers.”
The CTU’s statement referred to comments made by EU commissioner Neelie Kroes about the recent 4G auction in the Netherlands, which raised several times the original estimates.
Kroes had reportedly complained that some EU member states saw frequency auctions purely as a source of income and had scant regard for the public interest and network investments.
Those remarks could also have been aimed at the UK, whose auction was expected to generate £3.5 billion by the government – helping it to relieve budgetary pressure – but fell £1.2 billion short of that target.
According to the CTU, operators that participate in such processes typically struggle to fund 4G deployments, which affects subsequent investment in network development and the affordability of services.
“It may seem that it would actually be good for new operators to pay the highest amount, said Dvorak. “Unfortunately, the reality is that under these conditions none of the new holders of the frequencies are able to properly deploy new technology.”
The CTU plans to review the tender rules before it continues with the auction.
National units of Telefonica (Madrid, Spain), Deutsche Telekom (Bonn, Germany) and Vodafone (Newbury, UK) are bidding alongside privately held PPF Mobile Services for the 800MHz, 1800MHz and 2.6GHz spectrum that will allow them to launch 4G services.