5G Auction Likely to Spur Competition

Analysis

This June, the National Media and Infocommunications Authority (NMHH) opened the process for selling 5G frequencies. With the auction itself scheduled for this fall, no results have been announced thus far, but how will the new frequency be relevant for users and market players?

Bálint Végh

There are a host of services in Hungary you can complain about. Luckily, broadband connection is not one of them. In fact, the 4G network in Hungary is outstanding worldwide, both in terms of coverage and average speed.  

Even during high-traffic hours, in the evening, for example, there is no slow-down. Although people rely more and more on their smartphones, Hungary is still below the average in terms of data usage. Monthly traffic per SIM-card is 2.41 GB on small-screen devices, which is at the lower end of European and OECD countries, according to a report by National Media and Infocommunications Authority (NMHH).

Non-industry users, therefore, are not in desperate need for the rollout of a 5G network. However, for service providers and the country, developing the network is crucial from a competition viewpoint.

“In order to keep the advantage and continue developing the mobile infrastructure necessary for the country’s competitiveness at a desired pace, this tender must be done properly during the autumn,” says Bálint Végh, senior manager of telecommunication, media and technology at PwC Hungary.

No Guarantees

According to the expert, the upcoming 5G tender is relevant for the domestic telecom industry in several ways. Frequency capacities are limited, so there is no guarantee that the auctioned usage rights will be evenly divided between players, Végh says.

In order to increase its broadband coverage, Digi, a market player whose mobile service was launched not long ago and is currently in a pilot phase, will also likely look to enter the bidding process. As a result, more players and more competition is expected, and the execution of the tender itself is also likely to bring about price competition, Végh notes.

“We are not ruling out the possibility of frequency sharing either, a practice which can be traced abroad and here as well.” Frequency sharing comes with certain risks though, as an ongoing investigation by the Hungarian Competition Authority proves, the expert adds.

The tender also aims to provide coverage for major tourism and transportation routes in line with the EU’s 5G roadmap. As a result, Hungary can improve not only its 5G coverage but also develop innovative services based on 5G.

Total lots available in the 5G auction:

•    two 25 MHz lots in the 700 MHz frequency band (to be used in a pair because of the access method);

•    two 15 MHz lots in the 2,100 MHz frequency band (to be used in a pair because of the access method);

•    15 MHz in the 2,600 MHz frequency band;

•    310 MHz in the 3,600 MHz frequency band.

The winners will receive the usage rights for a 15 year period, which may be extended once for an additional five years.

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