June 13, 2021

The Government lowers the starting price of the 5G auction after pressure from the ‘telecos’ to 995 million

The Government has reactivated the agenda for the deployment of 5G technology this Monday. The Ministry of Economic Affairs, led by Nadia Calviño, has set a date and published the bases for the bidding of the radioelectric spectrum necessary for the development of this new telecommunications technology. The process brings a novelty with respect to the previous steps taken by the Executive, fundamentally in the price. After pressure from the ‘telecos’ sector, the Government has assumed a 15% reduction in the starting price, to put it at 995.5 million euros, compared to the 1,170 million that had been initially raised.

5G faces the year of its commercial takeoff amid doubts from investors about its short-term usefulness

5G faces the year of its commercial takeoff amid doubts from investors about its short-term usefulness

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This starting price of the process had been set in the public consultation of this tender, published at the end of 2020. However, since it was published, different large companies in the sector had charged against the Government, considering that this starting point represented a Too high a price that made the development of the new connection technology more expensive.

The auction that must mark the final price of the 5G concessions will be held before July 21. The process has suffered two delays. The first was caused by the pandemic, since it was initially contemplated for years before this auction was held in the summer of 2020. In fact, freeing up this radioelectric space has already caused the famous digital dividend, which caused DTT to retune in homes. The second delay occurs due to its celebration in July and not in the first quarter, as the Government had contemplated at the end of last year.

The Government defends that the change in the price and in other technical points of the auction occurs with the aim of “favoring the investments necessary to ensure that Spain continues to be a European benchmark in connectivity and that its digital infrastructures allow society in its set to effectively benefit from digital transformation. ” Another point that had raised the protests of the sector such as the duration of the concessions, is set at a minimum of 20 years, extendable for another 20. The coverage obligations that have been detailed in a “more precise way” are also limited. according to a statement from Economic Affairs, by including a list of specific municipalities, airports, ports, railway stations and highways to which operators must extend coverage with each concession. Likewise, the exact dates of the time milestones in which these coverage obligations must be met are included.

The process consists specifically in the auction of seven blocks, whose prices will range from 8.5 million euros to 350 million. It will be carried out through the internet and interested telecommunications companies must present themselves at the beginning of July. Usually, due to the high cost of these auctions, it is usually the large companies in the sector that are made with these spectra.

Together with the tender for the 700 MHz frequency band, to which this auction refers, and other reforms, the Strategy for the Promotion of 5G Technology designed by the Government foresees a public investment of 2,000 million euros until 2025 for encourage the deployment of networks and services, of which 1,500 million are included in the Recovery, Transformation and Resilience Plan.

Some operators had begun to develop their 5G commercial offering in recent months. Although, it is with this auction that will be held in July when the technology can be fully operational. To date, the 5G services offered correspond to a minor auction held a few months ago and that did not allow a full deployment of the technical conditions that, it is expected, the new technology will bring with it.

Generally speaking, the new technology is called to improve connection capacity, enabling hyperconnectivity, with higher speed and lower latency, which allows greater capacity for devices that are connected at the same time. The example is often given of stadiums or large groups of people, unthinkable now in the COVID-19 era, where the connection will be able to resist better than it did with 4G. This greater stability of the connection means for the technology industry the explosion of some of the tools that have been developed in recent years. The connected home, the internet of things or the autonomous vehicle are some of the technologies whose growth has been linked to the expansion of 5G.


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