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Spectrum auction for fourth telco could be held in October: IDA

SINGAPORE — Ahead of the highly anticipated auction to determine the Republic’s fourth mobile operator in the third quarter of the year, interested parties have asked if the spectrum allocation imposed on telcos can be raised, according to final auction rules published on Friday (July 15) by the Infocomm Development Authority of Singapore (IDA).

Spectrum auction for fourth telco could be held in October: IDA

A man uses his phone in the central business district in Singapore. Photo: Channel NewsAsia

SINGAPORE — Ahead of the highly anticipated auction to determine the Republic’s fourth mobile operator in the third quarter of the year, interested parties have asked if the spectrum allocation imposed on telcos can be raised, according to final auction rules published on Friday (July 15) by the Infocomm Development Authority of Singapore (IDA).

The spectrum auction will take place in two stages later this year, with the auction for new entrants to be held first. The auctions could start as early as October, and the fourth telco could be rolling out its services as early as April next year.

In queries sent to IDA after the auction rules were first published in April, the interested parties requested for an increase in the global spectrum cap from 75 MHz to 80 MHz, if there is a new entrant bidder. They did not call for changes to the 100 MHz cap set if there were no new entrants joining the auction.

The global spectrum cap refers to the maximum amount of mobile spectrum in all frequency band — 700 MHz, 900 MHz, 2.3 GHz and 2.5 GHz — that telcos can bid for in the auction.

The interested parties argued that it was common for mobile network operators to acquire about 40 per cent of the total spectrum share.

They also pointed out that IDA’s proposed spectrum cap would not be consistent with international practices.

Majority of the European countries with multiband auctions, for example, did not set global spectrum caps.

And countries with caps usually set them significantly higher — at least 50 per cent of spectrum available — with the United Kingdom the only country with caps below 40 per cent, they highlighted.

In their clarifications, the IDA reiterated that the proposed spectrum caps are “reasonable”.

The objective of the cap was to prevent any telco from hoarding the available spectrum, and ensure all operators obtain enough spectrum needed to deliver viable mobile services, said the agency.

If the global spectrum cap is increased to 80 MHz with a new entrant bidder, it could lead to three operators contending for 95 MHz of spectrum in the General Spectrum Auction, once an operator maximises the amount of spectrum it can acquire under the spectrum cap, the IDA said.

“This could result in some of the operators having insufficient spectrum to provide viable mobile broadband services, which would be contrary to IDA’s policy objective,” the IDA added.

Similarly, allowing an operator to have 40 per cent of the allocated spectrum would also lead to an “untenable and unsustainable outcome”.

Furthermore, IDA noted that in jurisdictions including France, Hong Kong and the Netherlands with four operators, an operator with the largest spectrum holding may hold 29.2 per cent to 36.1 per cent of the total allocated spectrum for mobile services.

“With a global spectrum cap of 75 MHz, the maximum spectrum holding an operator can obtain is 34.4 per cent, which is in line with the above-mentioned international examples,” the IDA added.

There was also a request by a telco to offer each existing mobile network operators one lot of 700 MHz at a reserve price of S$20 million, before the auction starts.

The IDA declined to do so, on the grounds that it would “strengthen incumbency and distorts the market mechanism which ensures that scarce spectrum resources are allocated to parties that are best able to utilise them efficiently”.

These requests come on the heels of the IDA’s earlier announcement that aspiring new entrants would have a lower starting bid price of S$35 million for 60 MHz of spectrum up for auction, which is half of what an incumbent might pay.

Any potential new entrants will have to submit their application forms by Sept 1.

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