IMT-2000/UMTS mobile radiocommunications licences: decisions on acceptance of applicants and auction rules

Berne, 29.08.2000 - The Federal Communications Commission (ComCom) is allowing all ten applicants to take part in the IMT-2000/UMTS auctions. All of the candidates fulfil the extensive pre-selection criteria and are currently sufficiently independent of one another in economic terms. The IMT-2000/UMTS radio frequencies will be allocated from 13 November 2000 by means of simultaneous auctions on the Internet. ComCom has two main considerations regarding the award of licences: the economically efficient allocation of the radio frequencies and the maximisation of fairness, but not the maximisation of profits.

The Federal Communications Commission (ComCom) has decided to allow all applicants to take part in the auction of four mobile telecommunications licences for the provision of IMT-2000/UMTS telecommunications services. The following ten candidates are admitted: Cablecom Management AG, dSpeed AG (sister company of diAx), Hutchison 3G Europe S.à.r.l., Orange Communications SA, Sunrise Communications AG, Swisscom AG, Team 3G (Telefonica, Sonera, One.Tel), Teldotcom AG, Telenor Mobile Communications AS and T-Mobile International AG.

This decision is based on evaluation of the application dossiers submitted by 31 May 2000 which was performed by the Federal Office of Communications (OFCOM). During this process, OFCOM checked the fulfilment of legal licensing requirements, in particular technical capabilities, business plans and the influence of the awarding of licences on competition. In addition, the fulfilment of specific pre-selection criteria, such as coverage guidelines, national roaming and co-use of locations were to be demonstrated. These criteria were fulfilled by all of the applicants.

Adequate economic independence of applicants

One of the basic principles of the Law on Telecommunications is the promotion of effective competition. This is to be achieved by putting four IMT-2000/UMTS licences out to tender and by checking the sufficient economic independence of the applicants. Within the context of these clarifications, OFCOM not only examined direct involvement between applicants, but also possible dependencies based on shareholder contracts (e.g. by right of veto) and other influential factors (e.g. seats on boards of directors). OFCOM also carried out a more detailed examination of the links regarding capital between the applicants Cablecom, Orange and Hutchison on the one hand and Sunrise and diAx on the other. ComCom, in agreement with OFCOM and the Competition Commission ("Weko”) who were consulted in this respect, established that at the time, all applicants were sufficiently independent of one another so that no harmful influences on fair competition can be expected. The licensing and competition authorities will ensure that both before and after the auction, sufficient independence is maintained between the licensees and that no arrangements are reached which could impede fair competition.

Awarding of licences by auction

ComCom has two main considerations regarding the award of licences: the economically efficient allocation of the radio frequencies and the maximisation of fairness, but not the maximisation of profits.Frequencies, as public property in short supply, will be allocated in a market highlighted by competition in the most efficient manner possible, by means of an auction. The price will not be set by the authorities, but by the market itself. To this end, the companies have at their disposal more varied and more detailed grounds for making a decision than the state has.

An auction guarantees a fair, open and transparent award procedure, which is also comprehensible for outsiders. In Europe, therefore, a number of countries have decided to hold an auction (e.g. England, Holland, Germany, Belgium, Denmark and Austria). In France and Italy, special procedures with very high licence fees are used.

Strict conditions attached to licences

It is to be noted here that, even in the case of IMT-2000/UMTS licences awarded by means of an auction, extensive planning, environmental and consumer-protection obligations, as well as conditions relating to coverage obligations and national roaming, must be included. In particular, strict location co-ordination and co-use obligations are prescribed.

Auction rules

The auction rules that have been approved by ComCom were put together by OFCOM in co-operation with Charles Rivers Associates, a company with experience of auctions from the USA, so as to be sufficiently flexible to prevent price distortion brought about by the procedure and to ensure that the best possible levels of transparency prevail. The IMT-2000/UMTS licences will be auctioned off from 13 November 2000 in parallel simultaneous auctions, which will be carried out electronically and decentrally via the Internet, thus making internal consultation easier for the applicants. After the completion of each round, all bids will be published on an Internet site accessible to the public. The minimum bid for a licence is CHF 50 million. ComCom has commissioned OFCOM, which is responsible for the complete management of the auction, to adapt the increments and the timing of the rounds to auction events in such a way that a fair auction process is guaranteed.

Sale by auction of three GSM licences: decisions on acceptance of applicants and auction rules

A further three licences for the provision of GSM telecommunications services will be sold by auction. One of these licences includes the right to use the former Natel C frequencies (8.2 MHz bandwidth in the GSM 900 MHz band), as well as two further licences for frequency blocks in the so-called "extended” GSM 900 band (4.8 MHz bandwidth each). These licences will be sold off from 11 October 2000, under the management of OFCOM, by means of an "English" auction, i.e. the licences will be awarded individually one after another (starting with the former Natel C frequencies). ComCom has allowed all five applicants to take part in these auctions. diAx AG, Orange Communications SA, Swisscom AG and Telenor Mobile Communications AS will be taking part in all three auctions, whereas One.Tel Global Wireless AG will only participate in the auction for the former Natel C frequencies. These auctions are public and can be followed live on the Internet.


Federal Communications Commission ComCom