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Czechs check cheques, reject £680m 4G auction

Watchdog halts spectrum sale, fears high costs'll be pushed onto punters

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As bidding topped £680m, the Czech regulator pulled the plug on the 4G auction, saying that to continue would risk pushing cripplingly high prices onto the winner's customers as well as delaying deployments - both to the detriment of the country's citizens.

The Czech Republic was hoping for a fast deployment, and the regulator had placed a reserve of 7.4bn Czech Koruna (£250m) on the bands being auctioned off, but with four operators determined to divide the bands into three bundles, the bidding got out of hand and the regulator decided to pull the plug rather than taking the money.

"Such excessive prices of the auctioned frequencies would have to negatively translate into excessive charges for fast mobile internet,” says the surprisingly sensible regulator in a statement quoted by Bloomberg. “We therefore consider it necessary to step in and prevent future negative consequences for the customers."

Regulators rarely admit that spectrum auctions are a revenue-generating opportunity, their remit is generally to ensure spectrum is fully exploited and received wisdom is that this can most easily be achieved by auctioning it off to the highest bidder - money flowing into government coffers is just a happy side effect of the process.

But it's not hard to see auctions as an early tax on use, and one which delays uptake of the technology to the detriment of the economy. It's ironic that the ITU's general secretary Dr Hamadoun Touré spends most of his time touring the developing world telling governments not to tax telecommunications, while clever governments are taxing them in advance through auction revenue.

Even more telling is that the radio spectrum with the greatest utilisation is the ISM band at 2.4GHz, for which governments and regulators have never received a penny.

Regulators are starting to recognise their prime directive, as demonstrated in the Czech Republic, but one has to ask what the alternative is. The Czechs are still working on it, but some sort of beauty contest, where companies line up and promise to spend billions building networks, is most probable. If it works, it could force other regulators around the world to consider future auctions very carefully. ®

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