Austria consults on another 5G auction with a bonus element

Austrian regulator RTR has published draft auction conditions for the second 5G auction planned for the spring 2020. The auction design is innovative in incorporating bonuses as investment incentives. The pool of frequencies for sale includes: 6 blocks in the 700 MHz band, 12 blocks in the 2100 MHz band and 8 blocks in the 1500 MHz band.

This will be already the second 5G auction in Austria. The first one, in the pioneer bands 3.4-3.8 GHz, was organised in March.

To boost the development of 5G networks, the government plans to distribute now additional spectrum in the bands 700 MHz, 1500 MHz and 2100 MHz. In the first auction stage, the 700 MHz and 2100 MHz spectrum will be distributed. The distribution of frequencies in the 1500 MHz band will be subject to the subsequent second stage of the auction.

The 700 MHz band frequencies are especially well suited for coverage of large areas. The government intends to guarantee coverage of white spot areas, i. e. municipal areas with insufficient broadband coverage. Therefore, with the acquisition of the 700 MHz band operators will be obliged to cover 900 underserved districts as comprehensively as possible with the data rates of at least 30 Mbps downlink and 3 Mbps uplink according to clearly defined conditions.

The regulator has developed a bonus system to cover with 5G significantly more than 900 of the total of 2,000 underserved or moderately served municipalities in Austria. The bonus mechanism consists in the ‘bidding’ for serving municipalities. For each won municipality the operator will be provided a rebate on the bids placed in the auction stages 1 and 2. To grant this bonus, a substantial amount has been reserved from the pool of reserve prices.

In order to provide innovative services such as autonomous driving, the Internet of Things or mobility in trains, the auction conditions provide for coverage of traffic routes in addition to the population and area coverage. According to this, 98% of highways, expressways and selected railway lines as well as 90% of federal and state highways are to be supplied with data rates of 10 Mbps downlink and 1 Mbps uplink.

The regulator wants to set as investment-friendly framework conditions as possible, so the reserve prices are proposed at a moderate amount (€295 million). The licences shall be awarded for more than 20 years.

Active and passive infrastructure sharing shall be allowed to facilitate coverage requirements. For the coverage of highways, expressways and railways, RTR relies on cooperation between operators of these traffic routes and mobile operators.

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