Austria outlines 4G spectrum auction plans

Austrian regulator the Telekom-Control Commission (TKK) will begin auctioning the country’s 800MHz, 900MHz and 1800MHz spectrum bands in September 2013. A total of 28 frequency blocks of 2x5MHz will be on offer.

The Commission has set the starting bids for spectrum in accordance with the statutory requirements on the basis of national and international benchmarks, it said. The sum of the minimum bids is approximately €526m, it added.

The Commission stated that it is holding the auction in September to give operators six months to carry out preparatory work, as the multi-band auction is the largest allocation of frequencies that has ever taken place in Austria. Companies must develop a variety of scenarios, in order to calculate the economic value of the spectrum for their companies to provide their expert teams and their strategy for the auction, it said.

The TKK is also keen on attracting a new entrant into Austria’s telecoms sector and said that two blocks of spectrum in the 800MHz band will be reserved for a newcomer, aimed to strengthen competition in the market. The starting bid for this spectrum will be €45.6m, the TKK added.

The commission has also put together a “newcomer package” for a new entrant to combine their purchase of spectrum in the 800MHz range with 2.6GHz spectrum, and the ability to facilitate national roaming. The commission added that the package was put together in close coordination with the European Commission.

The auction will take the form of a combinatorial clock auction (CCA). The CCA format has clock and supplementary rounds where bidders bid on indivisible packages of spectrum. Prices paid are determined by a “second price rule”; the price a winner of a particular package pays for its spectrum is determined entirely by competitors’ bids.

The auction format is best suited to the needs of multi-band auction, argued the TKK, and has been used in the award of the 2.6 GHz frequencies in Austria.

Comparable multi-band auctions in the Netherlands, Switzerland, Denmark, Ireland, the UK, Canada and Australia are also using this auction format.

Last week, Czech regulator CTU pulled the plug on its auction for 800MHz, 1800MHz and 2.6GHz spectrum after bids rocketed out of control. At the time of cancellation, bids had already topped CZK20bn (€780m) and were still rising. The regulator reined in spend to stop the charges being passed on to consumers. A new auction will likely take place within a couple of months, when the CTU has had to opportunity to put pricing safeguards in place.