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New Czech auction rules look to prevent price escalation

After cancelling the auctions of wireless frequencies due to concerns that competition was too fierce, the Czech regulator CTU has revised the terms of the licensing process.

Under the new rules, certain blocks of spectrum in the 800MHz and 1800MHz frequencies will only be available to operators entering the market for the first time. A 2x10MHz has been made available exclusively for new operators, while the previously reserved 1800MHz block has been increased from 2×15.6MHZ to 2×15.8MHz.

Additionally, bidders are now required to stipulate their “minimum required portfolio” – the minimum amount of spectrum they would need to justify submitting a bid. CTU chairman Pavel Dvorak noted that the new terms of the tender encouraged “new operator[s] to come to the market, while maintaining the limit on the amount of spectrum that can be obtained by [a] new operator.”

CTU expects the auctions to raise “billions of crowns” in additional income for the exchequer, while annual licence fees will be charged once the networks have been rolled out.

The original auctions were cancelled due to frenzied bidding on the 800MHz, 1800MHz and 2.6GHz blocks. The starting price of CZK7.4 billion ($375 million) was dwarfed – almost tripled – by some of the bids, raising concerns that consumers would be overcharged for services in order to make recoup costs for the operators.

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