By: Jan Lembas

Jan Lembas — Thu, 21 Mar 2013 13:55:51 +0000

I can provide an insider view from the Czech Republic:
Pavel Dvorak contributed substantially to the creation of a mobile oligopoly since he was first appointed chairman of CTU back in 2006. One of his first decisions was to declare mobile services as fully competitive and ceased to regulate the market of mobile voice origination. As a result of this decision, all foreign investors withdrew from the country with the exception of mobile operators Telefonica, T-Mobile and Vodafone. When the crisis hit the Czech Republic, margins of mobile operators continue growing while they were falling elsewhere in Europe. Besides high prices, we have one of worst 3G networks in Europe which is a result of a low level of investments over several years. Between 2006 and 2011, Telefonica and T-Mobile, the leading two operators, were generating an average oligopoly margin of US$ 1 billion per year, including an average investment deficit of US$ 200 mil. By the time the auction was opened last year, the oligopoly margin had accumulated to US$ 6 billion and the investment deficit to at least US$ 1 billion.
Although the official objectives of the auction included increasing competition, technological innovation, removing digital divide etc., detailed terms and conditions were carefully designed to discourage any potential new entrant so that the spectrum on offer can be distributed among incumbent operators. Indeed, there was no interest in the auction from abroad but the unexpected participation of PPF, the largest local private equity group, disrupted Dvorak’s plans.
The fact that he decided to cancel the auction without prior consulting his decision with the Council of CTU and without informing the Minister of Industry and Trade as well as the Minister of Finance support a speculation that he had received a request to cancel the auction from one of the incumbents who could not effort to continue bidding for the most coveted 800 MHz spectrum against PPF. While this is a pure speculation, although widely spread among local insiders, consequences of his decision are entirely different from his press statement. The main beneficiaries of his decision are incumbent operators who can extend their oligopoly position and launch LTE in re-farmed 1800 MHz band without facing a new competition and without having to meet roll-out criteria. In fact, Telefonica and T-Mobile have already announced such plans. They have an ideal opportunity to capture lucrative markets in large towns before any new competition arrives after the auction, if this ever happens.
While I share the view that operators’ cash should be rather spent on investments than on additional spectrum fees to the government and Dvorak’s decision appears to be in line with this approach, his real objectives are far from being that enlightened and consumers are not in the centre of his interest.
jan.lembas@cet.cz

By: ʞǝɹɐɯ sɐɯoʇ

ʞǝɹɐɯ sɐɯoʇ — Mon, 11 Mar 2013 17:31:32 +0000

While the auction cancellation might be praised by many, the supervising Minister of Industry and Business dares to differ, and has warned not to support Dvorak at the CTU head ballot which takes place in April when Dvorak’s second term finishes. The reason, minister Kuba says, is failure of the auction, which started back in November. Many experts agree, pointing out the screwed auction setup. Consumers whine, however, as the LTE network deployment will be significantly delayed.

By: economitech

economitech — Mon, 11 Mar 2013 16:29:58 +0000

Great call by CTU. Focusing too much on spectrum auction revenue is partly to blame for the lack of competition, inefficient use of spectrum and poor wireless services offered here in the US.

http://www.economitech.com/2012/03/optimal-spectrum-use-for-whom-certainly.html

Comments on: Czechs pull plug on 4G spectrum auction after carriers bid too much

By: Jan Lembas

By: ʞǝɹɐɯ sɐɯoʇ

By: economitech