What are the reasons why carriers don't participate in 4G and 5G frequency auctions?

DNHN - When the Law on Radio Frequency goes into effect, operators who want to provide customers with good frequency bands will be required to participate in a public and transparent auction.

On May 15, May 25, and June 2, 2023, the Ministry of Information and Communications held an auction of the 2300MHz band, including three blocks of the A1 (2300-2330 MHz), A2 (2330-2360 MHz), and A3 (2360-2390 MHz) bands, according to a Ministry of Information and Communications source. On the contrary, by the end of the deadline for applying for registration to participate in the auction of each block A1, A2, and A3, no business had applied and paid the registration deposit. Consequently, the frequency use rights auctions for the A1, A2, and A3 band blocks are unsuccessful.

Previously, on February 24, 2023, the Ministry of Information and Communications issued and made public a plan to hold an auction for the right to use the 2300MHz band.

The ministry also confirmed that four carriers, namely Viettel, VNPT, MobiFone, and Vietnamobile, have submitted documents to participate in the 2300-2400MHz band auction. By the provisions of Decree 88/2021/ND-CP, only businesses that have been certified by the Ministry of Information and Communications as eligible to participate in the auction may submit their dossiers.

Previously, state agencies approved the licensing of frequencies for businesses, followed by auditions to obtain frequencies. The band's license is essentially free for businesses. By the Ministry of Finance's regulations, carriers are required to pay the band fee annually. Even the management agency at the time talked extensively about the need to collect franchise fees from carriers.

However, the rules have changed now that the Law on Radio Frequency has taken effect, and operators who want to provide customers with good frequency bands must participate in a transparent and public auction.

According to the Department of Radio Frequency's announcement, the starting price for the auction of 3 band blocks of 2300-2400 MHz frequency is 17,394 billion VND. The A1 (2300 – 2330 Mhz), A2 (2330 – 2360 Mhz), and A3 (2360 – 2390 Mhz) band blocks start at VND 5,798 billion and have a shelf life of 15 years. With a starting price of VND 5,798 billion per band block and a shelf life of 15 years, each carrier will theoretically pay at least VND 386 billion per year in frequency fees.

The leader of a network operator stated that businesses could not afford the price. Due to the saturation of the telecommunications industry, operators are under intense competitive pressure from cross-border platforms and telecommunications over-the-top (OTT) services, while digital services have not been able to generate the anticipated revenue. In contrast, the difficult global economy slows the growth of carrier revenues. In addition to the amount mentioned above, if you win the auction, the network operator must invest a small amount to establish a service delivery network...

According to analysts, a nationwide mobile network requires an initial investment of several billion dollars from investors. Because traditional telecommunications services such as voice and SMS are declining and 5G revenue will be divided in the future, it will be necessary to invest a substantial amount of capital.

Phuong Ly (t/h)