Convergencia Research, Consultoría especializada en Latinoamérica y Caribe
Monday, May 16, 2022

Chronicle of a return of spectrum: the arguments between Enacom and Telecom

The operator has demanded compensation for disposing of those blocks. Enacom rejected it, arguing that the company has enough spectrum to meet its obligations. Now, the regulator has put the 2600 MHz band in the assignment-on-demand process, which opens new enquiries about who will be able to participate and if the legal limits on spectrum possession in the hands of each operator will be maintained.

Resolution 419/2022 of last March 11, with which Enacom accepted the return of spectrum at 900 MHz and 2600 MHz by Telecom, comprises a back and forth between the regulator and the operator from 2017 to today that reveals the complexity of returning frequencies.

Telecom's arguments point in two directions: the first is that, due to Nextel's refarming agreement, which the operator inherited after the merger with Cablevisión, it is obliged to extend coverage to a number of localities, which it can only do if it maintains the 80 MHz that exceeded the total 140 MHz that an operator may have in a locality and/or exploitation area. The second is that, due to the above, the 140 MHz cap must be eliminated. This plenary session brings the issue of spectrum caps back to the scene, shortly before the promised auction of new spectrum.

In its description, Telecom includes the two portions of 40 MHz that it returned: the first, in September 2019, and the second, last March, although the emphasis has been stronger after 2019. Between both deliveries, it returned 20 MHz in the 900 MHz band and 60 MHz in the 2600 MHz band.

The company points out that in decree 1,060/2017, of December 2017, the government authorized refarming in frequencies assigned and authorized for radioelectric service of concentration links (SRCE, trunking) as long as it was done to provide advanced mobile communications services. Nextel came from doing exactly that, in exchange for which it agreed to expand coverage in geographical and technological terms and leave a guarantee as a safeguard that it would meet those objectives. Cablevisión inherited this obligation which, in turn, passed to Telecom.

Despite the disagreements, Enacom noted in resolution 419/2022 that Telecom returned the spectrum in which it exceeded in 298 locations, most of them in the province of Buenos Aires and almost all in the north of the country.

Enacom has these frequencies in its possession, which are added to others that were already in the hands of the State, specifically 40 MHz for national exploitation of 4G (20 MHz in low bands and another 20 in medium bands), and another 60 MHz distributed in blocks of 20 MHz in each operating area (areas I, II and III), destined at the time to 3G services.

To complete its claim, Telecom proposed that, in exchange for the return of the 80 MHz, Enacom would satisfy one of its claims: a spectrum reserve to be auctioned in the future; the elimination of the obligation to extend coverage according to refarming; or a monetary consideration. The regulator rejected all of Telecom's proposals. “Telecom Argentina SA, in its capacity as continuator (of Nextel), can hardly argue that it does not have assigned bands to comply with coverage obligations,” Enacom said.

This back and forth, plus the reservation of rights made by Telecom in case of having to complete the return of spectrum, leaves a tone of concerns about the decisions to come.

What will come after 2.6 GHz. At the close of this edition, Enacom announced the allocation on demand at the locality level of the available spectrum in the 2.6 GHz band, which includes the one returned by Telecom in March of this year. Since these frequencies were made available, the sources consulted by Convergencia took it for granted that this band would be tendered on demand. They also rumored that the return was associated with the negotiation on increasing spectrum limits.

By advancing on these frequencies, Enacom partially complies with the announcement made during the summer, in which it assured that it would auction spectrum before June. The announcement takes place without publishing the promised spectrum plan and regulations that the old organization of the Undersecretariat was carrying out.

On-demand frequencies at 2.6 GHz will be available only to current carriers. It is estimated that, depending on the locality, in most cases Telefónica and Claro reach a maximum of 30 MHz. On the other hand, Telecom would in most cases reach around 40 MHz, so for this provider to participate, spectrum caps would have to be modified.

Movistar and Claro would only be interested in this band in areas of high population density, or in other words, in large cities. One of the issues that Enacom will have to analyze is what it will do if spectrum remains available in small towns.

The allocation of 2.6 GHz provides a partial solution to something that large operators, small providers and industry experts repeat -words more, words less- in one sentence: "There is still a lot to do in 4G". But behind the "much to be done" there is also the complaint of lack of 4G in small towns in the interior, the offer of small providers that they consider them as part of the solution to that problem and, more quietly, the need for state analysis compliance with the goals of the last stages of the 2014 4G tender specifications.

To close the 4G cycle, we still have to see what is done with the remainder of the 4G auction and with the rest of the frequencies that Telecom returned. As for 5G, there is unanimity: the "gold band" is 3.5 GHz.

For whom will be the next spectrum to auction? In this sense there are at least two issues to resolve. One is the modification of spectrum caps so that large operators can participate. The other is to decide whether or not there will be spectrum for small providers.

The Argentine Satellite Law (2015) establishes -Article 11- the "reserve" of frequencies for Arsat. From the first moment, voices were raised to explain that “reserve” is a definition that does not exist in the regulatory framework. DNU 58/2019 modified that article indicating that Enacom can directly assign to Arsat "the frequencies it requires to fullfill its purposes", while instructing Enacom that, when assigning the remaining frequencies of 2014, should grant participation to regional, local, public or private ICT providers, in no less than 20%.

The interpretation of that article, crossed with political operations, gave rise to media rumors ranging from the idea of ??reviving the mobile operator project "libre.ar" to the possibility that an Asian vendor contributes capital for Arsat to build a network shared on which both large and small providers would be drawn together.

Rumors aside, the truth is that, if they decide to tender these bands, it will be necessary to decide what to do with the 20% for regional providers.

If in the rest of the year the government decided to compete for the remainder, several issues would open up to be resolved: how to calculate that 20% -for example, considering only some of the bands-; how this spectrum is regionalized -in other words, think about how the ideal combination between client scale and investor backs is achieved-; if the remainder of the 4G tender is added to locations in which 2.6 Ghz will probably remain available after the assignment on demand; or if a contest is made only for the three big operators and the assignment of spectrum for small companies is "kicked away" for the next government.

And 5G? When it comes to frequencies, everyone points to 3.5 GHz as the one necessary to open this technological cycle. In terms of business models, they agree in completely ruling out Fixed Wireless Access, and when it comes to predicting when the first commercial deployments will be, the most daring point to the end of 2023 and the most conservative to 2024-25.

This band has a complex history. In the 1990s, licenses were granted for different services without bidding (See Convergencia’s Telematics 5th anniversary). Then, between 2000 and 2007, mergers and acquisitions caused some to go to other companies. As a result, there would be several hundred files to review to determine the status of 3.5 GHz.

Specifically, in some areas, Silica (Velocom), DirecTV (ex Alphatel), Telefónica, Telecom and Claro provide different types of services. The authorities will have to determine if there will be compensation, what the migration of users will be like, or if by enabling rules for the secondary market of spectrum, part of this ends up being resolved between private parties.

If the band were cleaned up and put out to tender, large mobile providers would be willing to submit offers with the expectation that what is at stake will seek a model that moves away from collection or even analyzes the model of infrastructure sharing. This "will" could be indicating that the political negotiation for 3.5 GHz is more advanced than the technical solutions necessary to deliver this band in order.

In the complex macroeconomic scenario, the question arises as to what will be the origin of funds for the payment of frequencies and investment in networks: surely not fresh dollars, sources consulted said; dividends that cannot be repatriated, for some, it may be.

Last news and analysis

América Latina · Convergence

28/03/2024

Convergencialatina returns on Wednesday, April 3

Puerto Rico · Fixed Broadband

28/03/2024

Puerto Rico must deploy fiber optics in more than half of the island's homes

The data came from a Fiber Broadband Association webinar that revealed the island's situation in FTTH services. There is a plan for the footprint to reach one hundred percent of homes in 2027 financed by federal funds and privately executed.

Puerto Rico · Fixed Broadband

28/03/2024

Puerto Rico must deploy fiber optics in more than half of the island's homes

The data came from a Fiber Broadband Association webinar that revealed the island's situation in FTTH services. There is a plan for the footprint to reach one hundred percent of homes in 2027 financed by federal funds and privately executed.

Uruguay · Pay TV · Internet & OTT · Operators

27/03/2024

Through agreements with Claro and Movistar, cable operators expand their Internet offer

These are agreements of different types, which include leaving the last mile for the cable operator or contracts for available bandwidth. Antel could join with infrastructure leasing. Some cable operators are already building their own networks.

Paraguay · Operators

26/03/2024

Government analyzes partial privatization of Copaco

The state operator is going through a delicate moment. Its income does not cover operating expenses and it must fulfil a debt obligation of US$110 million. Furthermore, the lack of investments led to the obsolescence of its infrastructure. Oscar Stark, president of the firm, states that alternatives are being evaluated to obtain the necessary funds, including the possibility of adding private partners. And he believes that in 18 months "the situation will be resolved."

Search news