Editorial: High spectrum prices by accident or design
Oct 31, 2013 by admin_pt

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Are spectrum auctions designed to extort money from mobile operators?

T Mobile Austria’s Chief Executive, Andreas Bierwith told an industry event last week that the country’s multi-band 4G auction last week was “extortion.”

That auction saw Austria’s mobile operators pay over two billion euros for the spectrum that their businesses rely on.

Meanwhile, on the other side of the world, in Taiwan six bidders have paid over USD 4 billion (T$119bn) for 270 MHz in the 700 MHz, 900 MHz and 1800 MHz bands. Chunghwa Telecom paid T$ 25.6 bn (USD 0.9bn) for a single block of 2 x 15 MHz in the 1800 MHz band. In total, the government will receive over three times the reserve price for the spectrum.

Back in Europe, Latvia’s regulator has today announced the results of its digital dividend auction that happened two weeks ago. Its public relations department invites journalists to compare its revenue €4.7m with that of neighbouring Lithuania’s auction earlier this month which raised €2.3m.

These results raise a perennial question. Do mobile operators pay eye-watering sums of cash for spectrum because of the harsh realities of supply and demand or because governments are manipulating their reliance on spectrum to extract cash?

The Chair of Taiwan’s National Communication Commission, Howard Shyr, said bids from non-operators helped drive up prices while Austria’s regulator said their aim was an ‘efficient utilisation of frequencies”.

So the bidders blame the regulators and vice versa leaving us wondering who to believe. Brussel’s new telecoms package proposes syncronised auctions to keep a lid on prices, something which will take decades to prove.

We’ll all be wondering for many years to come!