The Portuguese government approved its strategy and calendar for 5G rollout on 7 February 2020 (Council of Ministers Resolution 7-A/2020). This strategy includes requesting the Portuguese telecom regulator ANACOM to approve the rules on attribution of individual rights to use frequencies, and aggressive dates for effective coverage. For example, all cities with over 75,000 residents need to be covered by the end of 2023.
On 10 February, ANACOM published a draft Regulation for an auction for the attribution of individual rights to use frequencies. This draft is currently open to comments until 25 March 2020. A decision is expected shortly after this deadline, and the auction should be held in April.
Frequencies for 5G will be made available in the 700 MHz and 3.6 GHz bands. The auction will also make available rights to use frequencies in the following bands: 900 MHz, 1800 MHz, 2.1 GHz and 2.6 GHz. This is to allow new market entrants to obtain frequencies adequate for 4G and other technologies.
The draft Regulation clearly provides for the existence of four operators. As Portugal currently has three licensed mobile telephony operators, there is an explicit intention of attracting a new market entrant.
We summarize below the main rules applicable to the auction, based on the draft Regulation.
- Application: 12 business days from the day the Auction Regulation enters into effect.
- Requests for clarification: within six business days from the day the Auction Regulation enters into effect.
- Analysis of the applications and decision on admission/exclusion: within five business from the date applications need to be made.
- Start date of the auction: ANACOM will notify the date to the candidates admitted.
- Only legal entities (existing or to be incorporated) may apply, both Portuguese or foreign.
- Documents must be in Portuguese or accompanied by a certified translation.
- Requires the delivery of a bank guarantee payable on first demand to ANACOM of up to EUR15 million; the actual amount will depend on the frequencies bands applied for.
C. Benefits for new market entrants
- Specific bidding phase (prior to the main bidding phase) for categories B and D below.
- 25% discount applied to final prices of the batches in the specific bidding phase.
- 25% discount applied to final prices of the batches of categories B, C and D in the main bidding phase.
D. Categories, batches, reservation prices and eligibility points
|Categories||Bands||Available batches||Number of batches||Reservation prices per batch (EUR M)||Eligibility points per batch|
|A||700 MHz||703-733 MHz / 758-788 MHz||6 batches of 2 × 5 MHz||19.20||5|
|B||900 MHz||880-885 MHz / 925-930 MHz||1 batch of 2 × 5 MHz||30.00||5|
|C||900 MHZ||895.1-898.1 MHz / 940.1-943.1 MHz||4 batches of 2 × 1 MHz||6.00||1|
|914-915 MHz / 959-960 MHz|
|D||1800 MHz||1770-1785 MHz / 1865-1880 MHz||3 batches of 2 × 5 MHz||4.00||2|
|E||2.1 GHz||1954.9-1959.9 MHz / 2144.9-2149.9 MHz||1 batch of 2 × 5 MHz||2.00||1|
|F||2.6 GHz||2500-2510 MHz / 2620-2630 MHz||2 batches of 2 x 5 MHz||3.00||1|
|G||2.6 GHZ||2595-2620 MHz||1 batch of 25 MHz||3.00||1|
|H||3.6 GHz||3400-3460 MHz (until 5 August 2025 restrictions applicable to all regions, except the Autonomous Region of Madeira)||6 batches of 10 MHz||0.84||1|
|I||3.6 GHz||3460-3500 MHz (until 5 August 2025 restrictions applicable to the following regions: Leiria, Lisboa, Santarém, Setúbal (municipalities of Alcochete, Almada, Barreiro, Moita, Montijo, Palmela, Seixal, Sesimbra and Setúbal), Braga, Porto and Viana do Castelo)||4 batches of 10 MHz||0.94||1|
|J||3.6 GHz||3500-3800 MHz||30 batches of 10 MHz||1.23||1|
- Maximum applicable limits for spectrum allocation:
- Category A: 2 x 10 MHz.
- Categories H, I and J: 100 MHz. The current holder of the right of use of frequencies in the 3.6 GHz band (Dense Air) may obtain spectrum only in categories H and I.
- These limits are applicable to the bidders (category A), and to the bidders and to the holder of the right of use of frequencies (categories H, I and J), in both cases individually or jointly, if between them there is, directly or indirectly, a relationship of control or of significant influence.
E. Auction model and procedure
- Simultaneous: all the batches are made available at the same time.
- Upward: the price of the batch increases in each phase of the auction.
- Open: in each round, information on the prices of each batch is made available to all the bidders.
- Multiple rounds: successive rounds.
- On a dedicated electronic platform run by ANACOM.
- Phases of the auction:
- Bidding phase for new entrants
- Operating in a simple clock mode.
- Applicable to categories B and D only.
- Initial price: reservation price identified above.
- Price increasing determined (in each round) by ANACOM (between 1% and 20%) regarding the batches of the categories with excess demand in the previous round.
- Main bidding phase
- Applicable to all categories, simultaneously, with exclusion of the batches of categories B and D already acquired in the bidding phase specific for new entrants.
- Each bidder has two waivers that may be used only after the initial round, do not determine the loss of eligibility points, and cannot be used in the final round.
- Initial price: reservation price identified above.
- Bids (for each batch) in the initial round: 0%, 1%, 3%, 5%, 10%, 15%, 20%.
- Bids (for each batch) in the following rounds: 1%, 3%, 5%, 10%, 15%, 20% (exception: batches where no bids were made in any round will be subject to the rule applicable to the initial round).
- In the case of a tie between the highest bids for the same batch, the winning bidder will be decided randomly by the electronic platform.
- Assignment phase
- Batches in the 700 MHz, 1800 MHz, 2.6 GHZ and 3.6 GHZ frequency bands: the winners may choose the exact location of their batches in the corresponding band.
- Batches in the 900 MHz frequency band: winners of the auction and existing holders of the right of use of frequencies in the 900 MHz band may agree on the exact location of spectrum in this band. In the absence of an agreement, ANACOM will decide on the exact location.
- Allocation phase
At the end of the auction, and following notification from ANACOM regarding the allocation of the rights to use frequencies, the winners of the auction must deposit the final amount due in ANACOM’s bank account. Following the deposit, the bank guarantee will be released.
In the case of rights of use of frequencies in the 700 MHz, 900 MHz or 3.6 GHz bands, the winners may opt to pay only two-thirds of the price and defer the payment of one-third of the price, which must be paid within five years. A guarantee on first demand of the amount corresponding to one-third of the price must be provided to ANACOM.
F. Main conditions applicable to the right to use of frequencies
- Coverage: the holders of the right of use of frequencies holding 2 x 10 MHz in the 700 MHz band must comply with obligations of coverage until the end of 2023 and until the end of 2025. The scope of the obligations of coverage will depend on such holders having, or not having, rights to use frequencies in bands dedicated to terrestrial electronic communication services on the date of entry into force of the Auction Regulation.
- Coverage in low-density areas may be complied with recourse to national roaming with existing operators.
- Duration of the right of use of frequencies: 20 years.
- Assignment or leasing of the right to use of frequencies: unless exceptionally authorized by ANACOM, any assignment or lease cannot take place until after two years after the start of the offer of electronic communication services.