Czech 4G Auction Fails to Bring New Competition

Communications regulators and lawmakers frequently have incentives to “do something” about competition in communications markets. Whether or not such efforts succeed in the long term, there is value in being seen to “do something” in the near term.

In other words, what is eminently rational in political terms does not have to be equally rational in economic terms. It still is quite rational to “do something” widely viewed as promoting competition, even if there are reasonable expectations that the policies will not work.

Set asides for new competitors, spectrum caps or spectrum limits are some of the steps regulators can take to promote market entry by new competitors.

It isn’t so clear whether such tactics work, even in the short term.

The Czech Telecommunications Office, for example, had set aside rules for some blocks of Long Term Evolution spectrum in recently-held spectrum auctions. Only new entrants could bid for those blocks, initially.

Still, the auction, which raised CZK 8.5bn (EUR  311 million), was won by the three existing mobile phone companies (Spain's Telefonica, T-Mobile--the mobile arm of Germany's Deutsche Telekom AG and the U.K.'s Vodafone Group).

Telefonica CR and T-Mobile CR bought two 800 MHz blocks, while Vodafone bought one 800 MHz block.

The three mobile companies also bought spectrum in the 1,800 and 2,600 MHz bands.

Revolution Mobile and Sazka Telecommunications dropped out of the bidding, even though
a 2x10 MHz block of spectrum was made available exclusively for new operators.
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