​Poland's heated LTE spectrum auction may be over but it's just kicked off a fresh row

Bidding for LTE mobile network bands has just finished in Poland after a bumpy process. But the controversy is far from over.

The high prices paid for mobile spectrum in Poland could drive up the cost of LTE services -- and limit their availability to the general public. Image: iStock
After two years of delays, muddled procedures, and controversy, bidding in Poland's LTE auction for the 800MHz and 2,600MHz bands has finally ended.

The affair would have taken even longer had the Polish ministry of digitization not decided last month to change the procedure and put a time limit on the whole process. That step has left some high-profile bidders dissatisfied and even threatening legal action against the state.

When the auction eventually got under way in February this year, after a year of delays, officials reckoned on yielding about PLN 1.8bn (€420m or $480m) total for the five blocks in the 800MHz band and 14 in the 2,600MHz band - frequencies that would allow operators to expand their LTE networks outside urban areas.

But by April, the figure had already reached PLN 2.8bn (€660m or $750m), and the Polish telecoms regulator UKE put the final total at PLN 9.2bn (€2.17bn or $2.46bn) after the end of bidding last Thursday.

While the UKE has not yet announced the exact outcome of the auction, Polish telecoms provider P4 has already announced that it has acquired one of the highly sought after 800MHz blocks, as well as four blocks in the 2,600MHz band.

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Unofficial reports suggest Orange got its hands on two 800MHz blocks. However, the company has declined to comment until the UKE publishes the full results.

The auction threatened to drag on, as telecoms companies kept raising their bids to secure the potentially lucrative Polish market - with 38 million inhabitants - for mobile high-speed internet. The limited space in the much-coveted 800MHz band proved to be a major driver of the buying frenzy among the main telecoms operators in the country.

Formally, bidding had to go on until none of the six bidders - Orange, T-Mobile, P4, Polkomtel, NetNet, and Emitel - raised their offers. But as the large telecoms companies are not planning to let go easily, the whole affair turned into a true bidding war.

While this might sound like gold for the Polish authorities, this has raised fears that the sheer cost of the bands will force the providers to raise their prices to compensate, limiting the availability of LTE to the general public.

The government has drawn criticism from experts, who question the decision to hold an auction instead of a regular tender.

"The government has simply been too greedy," telecoms analyst Maciej Bebenek told the TVN24 Biznes i Swiat TV station. "One element of the auction was that bidders had to show where they were planning to add LTE coverage, so UKE had a vision on what needed to be done. However, there was no vision about who had to carry it out. In the end, there are five frequency blocks with at least six interested parties."

He also said the auction has been poorly prepared as no mechanism was added to the documentation that would allow for ending the auction.

In September, minister of administrative affairs and digitization Andrzej Halicki decided to limit the main bidding procedure to 115 days. That move has drawn the ire of two bidding operators in particular: P4, which is the operator behind mobile provider Play, and Polkomtel, the network operator for market leader Plus.

Supported by the opinion of legal experts, both parties argue that changing the rules mid-game goes against the country's constitution.

Telco Holdings, one of the main shareholders of P4, has threatened legal action against the Polish state.

"Telco Holdings notified that an upcoming change of the rules of the ongoing LTE auction will result in irreversible infringement of interests of P4 and potential tangible damages exceeding €500m [$566m] to this investment," the company wrote in a statement sent to ZDNet.

"Should the Polish government insist on solutions that met with strong criticism from almost the entire Polish telecoms industry and which violate rights of auction participants, Telco Holdings shall seek compensation by initiating an arbitration process in front of the relevant international arbitration court."

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