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4G auction: competition may revert to consumer benefits

The auction for the 700 MHz band that is likely to take place in August, gained a special flavor this week. According to sources at the Ministry of Communications, two multinational mobile phone companies have expressed interest in participating in the auction, now in the public consultation phase.
According to information from the Ministry of Communications, the companies have capital in the international stock market and, apparently, the financial power to acquire lots at the national level that enable an operation in the national territory. If companies really confirm their interest in participating in the auction, the consumer of telecommunications services may have a glimpse of improvement in the quality and prices of service tariffs.
But, after all, what is different about this auction from the others? The most relevant features are: the possibility of acquiring lots of frequencies in a significant amount nationwide, the frequency range is extremely favorable for 4G technology – because unlike the current 4G at 2.5 GHz, the same technology at 700 MHz is able to cover larger areas with fewer towers. This fact will allow the operator to return the investment in a shorter period. Another relevant factor is the possibility of sharing towers from current operators, which would also substantially decrease investment in infrastructure.
Another strategic advantage for a new “player” in the mobile telephony scenario would be to enter the market at a time of technology transition. While current operators are migrating 2G and 3G networks to 4G, the new operator would be the only one to have for a considerable time 100% of the network in 4G. This would give a considerable competitive advantage and could, in theory, reverse benefits for the consumer.
Last year, a new operator in the French market, to gain customers from traditional operators, offered a free upgrade for those who wanted to migrate from a data plan to their service. Another untapped market in Brazil is prepaid for 4G, which has very large potential due to the huge number of consumers who choose this type of service.
The Ministry of Communications plans to publicize the auction to the international market in order to further promote competition, after all Brazil is now the third mobile phone market in the world, behind only the USA and China. A difficult fact to enliven possible new players is the Brazilian tax burden, the bureaucracy and slowness of environmental agencies due to the profusion of legislation at the federal, state and municipal levels and the credibility of the current government vis-à-vis the international community, which, according to information from the international press, it was much better. As consumers, we can only hope that despite these internal scenarios, new operators want to establish themselves in Brazil.
* Dane Avanzi is vice president of Aerbras, superintendent director of the Avanzi Institute, lawyer specializing in telecommunications and author of the books “Digital radio communication: synergy and productivity” and “How to manage projects”.
4G auction: competition may revert to consumer benefits

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