• CTÚ to launch another bid to disrupt three-player cosiness.
  • Quid pro quo  for 700MHz and 3.4GHz-3.6GHz availability.

Czech Republic market

Czech Republic market

Source: Tomas Kohl / Flickr CC BY-SA 2.0

Vodafone Czech Republic (VfCZ) inched closer to the possibility of securing 5G-enabling spectrum rights in the 700MHz and 3.4GHz-3.6GHz bands, although the OpCo could also face competition from a new market entrant.

Regulator Český Telekomunikační Úřad (CTÚ) published draft rules for the upcoming auction, with a 30-day consultation period, and indicated that the sale will likely take place in January 2020 – not during 2019, as previously speculated (Vodafonewatch,#173). That means spectrum licences should be granted by April 2020 and spectrum in the 700MHz band released for mobile networks by the middle of the year.

The call for tenders is expected to take place in the autumn of 2019.

The fourth dimension

The CTÚ confirmed that a 2×10MHz block in the 700MHz band will be reserved for a potential fourth mobile network operator, in order to stir up competition on the Czech mobile market and bring down prices in what is one of Europe’s most expensive markets for mobile broadband services. That means VfCZ could find itself competing with three operators, instead of just O2 Czech Republic and T-Mobile Czech Republic at present.

Speculation has already been rife about the identity of a fourth player.

Earlier in 2019, local online news service iDnes.cz mooted the possibility that AT&T might enter the market, citing discussions held at the January 2019 World Economic Forum in Davos in between the Czech Prime Minister Andrej Babiš and John Donovan, Chief Executive of AT&T.

iDnes.cz has subsequently reported that Babiš and Karel Havlíček, Minister of Industry & Trade, had indicated that the new entrant would be backed by a leading Czech entrepreneur in cooperation with a foreign operator, and said they were in talks with several interested parties.

The Czech authorities have long sought to bring in a number-four mobile operator to compete with the current trio, including via 2013’s 4G frequency rights auction, where potential new players did not take up the opportunity to gain spectrum set aside for them in the sale (Vodafonewatch, #117 and passim). In recent months, the Czech government appears to have shown renewed enthusiasm for a market shake-up, and to have been applying pressure on VfCZ and its two rivals to introduce cheaper mobile data services. Although VfCZ is said to have denied being influenced by any political manoeuvring, the OpCo has now launched new unlimited mobile data tariffs, albeit with the condition that customers also subscribe to a home internet plan. The government is also said to be planning an amendment to the Electronic Communications Act from 1 January 2020, in order to strengthen the position of mobile users.

5G spectrum auction: key rules in draft

  • A new spectral limit will be established for the new entrant in the 3.4GHz-3.6GHz band, compared to other players.
  • As well as the 2×10MHz block being reserved in the 700MHz band, the new entrant will be allowed to bid for a 5MHz block of 3.4GHz-3.6GHz spectrum if there is little interest from existing players.
  • If no new entrant shows interest in the reserved block, it will be opened up to the other auction participants.
  • Those bidding for 700MHz licences will be subject to a national roaming commitment for six years.
  • Any newcomer will have to cover at least 20% of the population with its own network, to qualify for national roaming.
  • Operators will be required to cover 95% of populations in municipalities where high-speed internet is not already available within three years of the allocation.
  • The CTÚ indicated that total auction proceeds should not be less than CZK 6.3bn (€247.6m/£222m).

Vodafone’s 5G shopping list remains lengthy, although big items ticked off

With both Vodafone and national governments continuing to feel the pinch, financially, 5G spectrum rights auctions remain a strategic minefield for Group leadership, with sensitivities heightened by the operator’s near-€4.3bn recent outlay on new rights in two major markets: Germany and Italy (Vodafonewatch, #169 and see separate report).

The proposed 5G auction in the Czech Republic is just one of several such events on Vodafone’s spectrum agenda for 2019 and 2020, and there are ongoing concerns that other European governments could mimic Italy (and to a lesser extent Germany) by designing auction rules to inflate bidding. Romania is one that has indicated it is seeking to hit operators with as big a bill as possible when it auctions 5G rights later in 2019 (Vodafonewatch, #171).

Vodafone’s current line on future spend is that, with conclusion of the German auction, it has “largely completed ” the task of gathering up 5G rights in the key (or “pioneer”) 3.4GHz-3.8GHz band within the Europe Region (its core geographical focus area). Currently, Vodafone Albania, Vodafone Greece, Vodafone Portugal, and VodafoneZiggo remain without holdings in this range, while Vodafone Malta’s rights are due to expire in 2020.

Vodafone also expects general spectrum acquisition demands to decrease from 2021, once the below processes have been completed, and many of its gaps at 3.4GHz-3.8GHz and 700MHz (another 5G band) have been filled.

Not yet fully on the radar, however, is microwave frequency rights distribution for high-capacity, short-range 5G deployments, where Europe has been in less of a rush to prepare groundwork than the USA, and other regions. In May 2019, the European Commission mandated member states to harmonise technical conditions for use of the 26GHz band for 5G systems by 31 December 2020.

Spectrum bills in pipeline: Vodafone’s Europe Region spectrum agenda, 2019–2020
MarketBands mooted for liberalisation or renewalExpected end of award procedure
(some tentative and prone to slippage)
Notes: * Spectrum selection yet to be firmed up. Based on recent signals, Vodafone appears to expect an auction drawn from 700MHz, 2.1GHz, 2.6GHz, and 3.4GHz–3.8GHz rights.
Sources: Regulators; Vodafone; and Vodafonewatch.

Czech Republic

700MHz / 3.4GHz–3.6GHz

Q22020

Greece

3.4GHz–3.8GHz

Q42019

Hungary

700MHz / 1500MHz / 2.1GHz / 2.3GHz / 2.6GHz / 3.4GHz–3.8GHz / 26GHz *

Q32019

Netherlands

700MHz / 1500MHz / 2.1GHz

Q22020

Portugal

700MHz

Q22020

Romania

700MHz / 800MHz / 1500MHz / 2.6GHz / 3.5GHz

Q42019

UK

700MHz / 3.6GHz–3.8GHz

Q22020