3.4 to 3.8 GHz: Austria’s first 5G tender document published

From now on, interested parties can apply for the upcoming tender. The first 5G auction in Austria is scheduled for the first quarter of 2019.

Press release dated 19 September 2018

• Division into regions: 12 regions offer new business opportunities;
• Low minimum bids: totalling € 30 million;
• Transparent and simple: intensive and open dialogue, simple auction design.

Today, the Telekom-Control-Commission (TKK) published the tender document for the frequencies 3.4 to 3.8 GHz. The auction will take place in the first quarter of 2019. "This time we have done a lot differently," says Austria’s telecoms regulator Johannes Gungl. "The auction of this 5G pioneer band is not comparable to the last multi-band auction. In keeping with the government's programme, we are creating the best possible conditions for the 5G rollout, thereby establishing an ideal basis for the Austrian economy."

Compared to the Multiband Auction 2013, the minimum bids are much lower, the auction design simpler and more transparent, and there were three consultations with the interested parties. Immediately before the auction, there will be bidder trainings and mock-auctions. Fair prices, a large amount of frequencies and facilitated infrastructure sharing will promote investments in the expansion. The division into regions makes it possible for smaller operators on site to provide tailor-made offers for the local economy.

Minimum bids

In contrast to the "valuable" 4G frequencies of the past multi-band auction, this award procedure will bring to market the 5G pioneer band of 3.4 to 3.8 GHz, consisting of high frequency spectra with relatively unfavourable propagation characteristics. These spectra will on the one hand support mobile telecoms in providing high bandwidths (especially in urban areas). On the other hand, regional providers can use them to supply broadband services to customers in peripheral areas. The market price for the rights of use of the frequencies is determined objectively in the context of an auction by supply and demand. “We do not expect a result as in the previous auction 2013,” says Gungl.

This time, the total of the minimum bids of € 30 million is in no comparison to about € 530 million in 2013. "We set the minimum bids very carefully," says the telecoms regulator.

Product and auction design

The rights of use will be granted for approximately 20 years until the end of 2039 and in 12 regions. The division into regions should give local broadband providers the opportunity to enter the mobile high-speed internet market. The frequencies are assigned technology neutral, but the product design offers flexibility to adapt the terms of use to future 5G standards. The tender in form of the "Simple Clock Auction" (SCA) is designed that the three major mobile network operators can bid for continuous frequency bands nationwide. In addition, they can bid for more spectra in metropolitan areas, where more bandwidth is demanded.

The auction consists of two phases. First, in the award phase, the parties bid in several clock rounds for the desired amount of MHz in the twelve regions. If spectra remain unsold after the clock rounds, this can be awarded in another betting round. The winners of the award phase then bid in the assignment phase for the actual blocks that they need within the spectrum range 3,410 to 3,800 MHz.

Coverage obligations

With its 5G strategy the Austrian Government set itself the goal to promote a rapid roll-out of 5G infrastructure. Coverage obligations support this, and both ensure effective use of spectrum and prevent any hoarding of it. “Depending on the spectrum range and the region, a successful bidder must provide up to 1,000 locations. Around a third of them by the end of 2020," explains Gungl. The operator of the frequencies must provide proof of this. The TKK reserves the right to review and may impose penalties for non-compliance.

Spectrum restrictions

Spectrum caps indicate how many MHz of spectrum a bidder can maximally be awarded. This restriction prevents individual bidders from obtaining an unreasonable amount and thereby distorting or monopolizing competition. A total of 390 MHz is available in each of the twelve regions. In the clock rounds the cap for A1 and T-Mobile is 150 MHz and for all others 170 MHz. If spectra remain after the clock rounds and there is another bidding round, the auctioneer can loosen the restrictions. Therefore, if there are no competition concerns, the absolute maximum is 160 MHz for A1 and 190 MHz for all others (in each region).

Infrastructure sharing: facilitated and economical expansion

To further promote a rapid roll-out of 5G infrastructure and make it more cost-effective, the tender document allows sharing of infrastructure. However, this possibility is restricted in the core network and partly in the active parts of the access network, such as transmitters. The aim is to secure competition.

At the same time as the tender document, TKK published its updated "Position Paper on Infrastructure Sharing in Mobile Networks". It intends to provide the bidders with the clearest possible legal framework for the upcoming awards and the associated investments.

Timeline

The auction is expected to start in February 2019 (approximately four months from now). At least two months until the deadline for applications and another about two months for authorisations, trainings and mock-auctions. This ensures a legally secure, uncomplicated and transparent allocation. The spectrum assignment decision usually is served within one month after publication of the auction results by the TKK.

Based on existing usage rights, the licences for frequency blocks within the 3,410–3,600 MHz range (L01 to L19) will be awarded for the period of 1 January 2020 to 31 December 2039. The licences for frequency blocks within the 3,600–3,800 MHz range (L20 to L39) will be awarded as of when the spectrum assignment decision is served to the individual licensee. The usage rights pertaining to this frequency range are also valid until 31 December 2039.

What is RTR and what are its tasks?

On April 1, 2001, the “Austrian Regulatory Authority for Broadcasting and Telecommunications” (RTR) was established under Austrian law. RTR consists of the two divisions “Media” and “Telecommunications and Postal Services” and provides operational support for the “Austrian Communications Authority” (KommAustria), the Telekom-Control-Commission (TKK) and the Post-Control-Commission (PCK).

As experts in various fields such as law, technology, frequency management, business and economics, RTR's employees prepare the decisions of the two authorities with the overall objective of securing Austria a top position in the information society and ensuring sustainable competition on the country's communications markets. At the same time, RTR's employees also work in RTR's independent areas of activity.