The planned 5G auction in Poland has already aroused quite lively industry discussions regarding the establishment of its basic regulatory assumptions.
The imbalance between the demand and supply of frequency resources makes it necessary to allocate them in the selection procedure in Poland, based on Polish legal regulations, e.g. on the European Code of Electronic Communications, which should be implemented by December 21, 2020 at the latest. The draft of the new Polish Act – Electronic Communications Law is already delayed, which is important for the conditions of the 5G auctions in Poland.
Polish law distinguishes three types of so-called selection procedures: competition, tender and auction. The competition does not apply in the case of 5G, the tender and auction come to the fore in this respect.
The basic difference between a tender and an auction is expressed in the method of evaluating the bids. Pursuant to the Polish Act – Telecommunications Law, the criteria for evaluating bids in the tender are compliance with the conditions of competition, the amount declared by the tender participant and other objective criteria. On the other hand, the criterion for evaluating the bids in the auction is only the amount declared by the auction participant.
The radio frequency spectrum can be broken down into certain frequency ranges called bands, extending from a certain lower cutoff frequency to a certain upper cutoff frequency. Next, each range is divided into sub-ranges to which a specific purpose and method of use are assigned. The frequency band should therefore be treated as a certain finite resource that is subject to rationing and therefore must be rationally and efficiently supervised and used.
The purpose and use of individual bands is defined in the Polish National Table of Frequency Destinations, issued on the basis of the Polish Telecommunications Law. The provisions contained therein comply with international regulations, including The European Frequency Allocation Table and the ITU Radio Regulations. A short glance at the Polish National Table of Frequency Destinations, which distinguishes over 600 frequency bands and another 30 pages of comments on the detailed conditions of their use, confirms that frequency management is a very complex issue, requiring precise coordination, both at the national and international level.
Certain frequency bands are intended to be used freely (in “unlicensed” manner) – i.e. without the need to obtain a permit from the national frequency regulator (in Poland it is the Office of Electronic Communications). An example can be the 433.92 MHz band, intended for devices such as remote controls for garage doors or car central locks, or the 2.4 GHz band, dedicated to, among others, for devices with Bluetooth or Wi-Fi interface, in which many consumer devices can work. Some of the frequency bands, however, have a completely different purpose, related to broadly understood security – they are reserved for use to ensure communication in the police, fire brigades, medical services and many others. There are also frequency bands that have been allocated to cellular communication at the stage of international agreements.
It should be mentioned that the purpose and the possibility of using a specific frequency band depend on its characteristics, including in particular two factors. The first factor is the signal propagation method, i.e. radio propagation that determines the possible ranges in radio transmission and coverage with the radio signal. The bands that provide good propagation conditions are called range bands. These include frequencies of several hundred MHz. The second factor is the capacity of spectral resources, equated to the available amount of bandwidth in a given frequency range that can be used. The bands providing a sufficiently “wide” range of frequencies are called capacitive bands. These include frequencies from several to several dozen GHz.
Conducting commercial activities by cellular operators is associated with the fact that their radio communication installations (i.e. base stations) use certain frequency resources called blocks in which they transmit / receive signals to / from subscribers. The block has a certain width, usually expressed in MHz, is within and part of the specified frequency range / band. One band can be divided into several or even several blocks. The wider the frequency block is, the more capacity a system implemented in that block can have.
In order for an operator to be able to use a specific frequency block, it must first have the right to dispose of the so-called frequency reservation. The frequencies are administered on the basis of an auction, tender or competition, the subject of which is the reservation of frequencies. In the case of an auction, it is announced and conducted by the Polish President of the Office of Electronic Communications, and the operators submit their bids.
The frequency auction, announced on March 6, 2020, enabling the development of the 5G network in Poland includes four continuous blocks of spectrum for the provision of modern wireless broadband services in the 3.6 GHz band, belonging to the so-called C band (3400 MHz to 4200 MHz). The 3.6 GHz band is capacitive – it provides the parameters required to support a large number of connected devices at the same time and can be successfully, in the first place, used to build a 5G network in large cities with high density of buildings for the transmission of large amounts of data in real time.
The regulator sometimes plans to introduce additional boundary conditions, which is understandable especially in the case of a tender, where the price is only one of the criteria. Even then, the additional conditions will be then subject to a thorough assessment.
In the case of an auction based on the price discovery principle, introducing additional boundary conditions that do not explicitly result from legal provisions (e.g. preventing excessive concentration of frequency resources), in the light of the Polish and EU regulatory environment, seems all the more risky.
This also applies to the issue of the possibility of excluding a given entity from the auction due to cybersecurity, discussed in EU countries. In Sweden, there is a legal battle between the regulator and one of the equipment suppliers, which was excluded by the Swedish regulator PTS from the 5G auction, and the operators were obliged to dispose of this supplier’s equipment. The excluded supplier (Huawei) has appealed to the Swedish Supreme Administrative Court.
There is no doubt that cybersecurity is a very important element in regulating telecommunications markets and new technologies. The Polish Telecommunications Law stipulates that in the case of issuing reservation decisions after the auction, they should include conditions regarding the security and integrity of telecommunications networks, taking into account the recommendations and guidelines of the European Network and Information Security Agency, after consulting the Council referred to in the Act on the National Cybersecurity System. However, all conditions related to the conduct of the auction must comply with the provisions of the European Code of Electronic Communications, in particular with the content of Annex 1 – List of conditions that may be attached to general permits, rights to use radio spectrum and rights to use numbering resources.
See the website of the Polish Office of Electronic Communications: https://www.uke.gov.pl/en/