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TKK postpones frequency assignment procedure for 800/900/1800 MHz bands

On September 19, 2011, the Telekom-Control-Commission (TKK) adopted a preliminary schedule for the joint assignment of frequencies in the 800, 900 and 1800 MHz bands. According to the original plan, the tender documentation was to be published in April 2012, and the auction was slated for September 2012. The TKK has completed all preparatory activities and could therefore carry out the assignment procedure (as originally planned) at any time.

However, in its session on April 23, 2012, the TKK decided to postpone the invitation to tender due to the planned takeover of the network operator Orange. Before making this decision, the TKK carefully weighed the potential negative effects on competition and the risks to the assignment procedure which would result from adhering to the original schedule against the delayed nationwide introduction of LTE due to the postponement.

As H3G’s planned takeover of Orange and A1’s planned takeover of the YESSS! mobile network directly involve three of Austria’s four active mobile operators, putting the frequencies out to tender at the present time would probably lead to the disqualification of at least one of the companies involved in each takeover. This would violate a key principle of the procedure, that is, the need to ensure sustainable competition by allocating frequencies to operators which are independent in terms of competition. At present, the TKK cannot judge whether or not the merger will be approved.

Key objective in frequency assignments: Safeguarding competition

Mobile communications markets involve high or even insurmountable barriers to market entry. In general, operators can only enter the market if they are assigned frequencies. On such a market, a reduction from four to three operators may have negative effects on competition. Against this backdrop, the early disqualification of a potential mobile operator from the assignment procedure would run counter to the objective of ensuring sustainable competition. Moreover, the TKK wishes to retain the possibility of reviewing whether the approval of these mergers might require adaptations in the terms of the tender procedure and the terms of frequency usage. As a result, the TKK has decided to diverge from the original schedule.

The TKK is fully aware that postponing the assignment procedure will bring about delays in the introduction of LTE, especially in rural areas; at the same time, the authority is of the opinion that the economic disadvantages arising from a minor delay in the frequency assignment procedure will be less severe than the disadvantages that would result from a potential reduction of competition.

TKK keeps all options open in case of extended delays caused by merging companies

The TKK cannot currently predict how long the approval procedures for the planned acquisition of Orange will last. Excessively long procedures may lead to excessive delays in the assignment procedure and thus also to a change in the TKK’s assessment. The actual duration of the delay will also be determined by the decisions of the operators involved, among other factors. Due to the current uncertainty with regard to the duration of the merger procedures, the TKK currently reserves the right to launch the assignment procedures at any time.