Fears large players will take them over to gain capacity
TrueMove is concerned that if the planned licensing of the 2.1-gigahertz spectrum promotes the emergence of small players in the third-generation cellular market, they might be taken over by the bigger players as a way of acquiring additional bandwidth capacity.
The cellular operator recently sent its opinions on the planned spectrum auction to the National Broadcasting and Telecommunications Commission’s 2.1GHz spectrum management subcommittee, which is gathering telecom operators’ views on the issue.
As The Nation has reported previously, TrueMove has also recommended that the watchdog set the 2.1GHz spectrum licences at equal bandwidth proportions of 15 megahertz to ensure fair competition.
TrueMove said that as TOT was already allocated 15MHz of the 2.1GHz spectrum block, the NBTC therefore ought to allocate the remaining bandwidth at 15MHz per licence. If the bandwidths are not equal, those that can grab the biggest chunk would enjoy the highest advantage.
The now-defunct State Frequency Allocation panel granted the 1,900MHz spectrum band, of which the 2.1GHz spectrum is a part, to be jointly owned by TOT and CAT Telecom in 2000. Subsequently, TOT took over the spectrum rights from CAT to become sole spectrum owner.
It now uses the 2.1GHz spectrum to provide 3G wireless broadband service.
Currently the NBTC owns 45MHz of the 2.1GHz spectrum, which it plans to auction off in the third quarter. TrueMove also noted that in many countries that have auctioned the 2.1GHz spectrum, they determined the bandwidth at 15MHz per licence.
It added that if the NBTC decides to cap the maximum bandwidth each player could bid for at 20MHz, the winners of smaller bandwidths would be unable to compete, and this would lead to domination of the market by a few major players.
While the NBTC has mulled capping the bandwidths at 5MHz to give a chance for small bidders to get licences, True said these small players could opt for licences as mobile virtual network operators (MVNOs) instead. An MVNO leases airtime from network operators to market telecom services.
Though the Frequency Allocation Law bans spectrum transfers among licence holders, it does not forbid shared acquisition or business transfers.
Though the NBTC has regulations governing mergers, acquisitions and cross-shareholding, TrueMove said there was room for the watchdog to use its judgement in enforcing the regulations.
It added that the NBTC should set an appropriate licence reserve price and there should be no N-1 condition in the auction. If the watchdog set a high reserve price and with an N-1 condition, the auction will end up with the bid winners paying a high price that they would inevitably pass on to consumers.
The reserve price is the licence price NBTC thinks is appropriate. The N-1 condition means three licences will be auctioned if there are at least four bidders, two licences if three bidders, one licence if two bidders, and no auction held if there is one bidder.