Stuck in an infinite loop: Finland's 4G auctions suspended over bid resetting

After eight unsuccessful months of trying to auction off the 800MHz spectrum for 4G use, Finland's communications watchdog has called a halt to proceedings while it adjusts the rules.
Written by Olli Sulopuisto, Contributor on

Finland's telecoms watchdog Ficora had high hopes for the country's 4G spectrum auction when it began in January. Eight months and some 900 bids later, no winning bids have emerged and the auction is being temporarily suspended.

The problems began when bidders in the auction, whose identities are kept secret until the auction has finished, turned a provision into a loophole.

The sale, overseen by Ficora, involves 800MHz spectrum split into six paired frequency blocks — up to three of which can go to the same bidder. During the auction, each participant is able to switch any bids from one frequency block to another, which cancels their previous bid at the same time.

And that's exactly what has been going on since January. As winning multiple adjacent frequency blocks will be more useful to the companies bidding in the auction, they've been repeatedly resetting their bids trying to get a better result, meaning in some cases, the bidding on some blocks has gone back to the starting price.

The 800MHz frequency band was previously used in Finland for analogue television broadcasts, but will be made available for LTE from the beginning of 2014 following a switchover to digital broadcasting. Right now, however, it's still being used by wireless microphones.

The 800MHz band is traditionally seen as more desirable than 2600MHz, also used for LTE, because its physical properties make it cheaper to build out 4G coverage using the equivalent infrastructure.

"This is a very valuable frequency band and mobile broadband is a growth business," Ficora director-general Asta Sihvonen-Punkka said.

Previous auction

While the 2013 auction has proved problematic, Ficora auctioned off a chunk of 2.6GHz spectrum in 2009 using the same rules — the auction opened with a price of €2.8m, and eventually raised €3.8m. For this year's 800MHz auction, bids started at €100m with target prices in the range of €130m to €230m.

"The participants are clearly operating in a different way than in 2009. The frequency, the pricing, and the number of frequency blocks is influencing their behaviour," Sihvonen-Punkka said.

She said that it's difficult to compare the Finnish auction with other European 4G frequency auctions, as they've been set up in different ways. To her knowledge no other country has included the possibility of switching bids to a different frequency block.

"But one can point out that the other auctions have ended sooner," she said.

In order to break the deadlock, Ficora has applied for a 30-day adjournment to adjust the rules of the auction.

The current auction will be put on hold until 19 September and restarted with the modified rules a month later. Ficora is still hoping the auction will finish in time for the companies to rollout 800MHz 4G networks in 2014.

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