On Monday, August 17, Subtel published the basis for calling four public competitions and granting various concessions for high-speed telecommunications services in the 700 MHz, 2,100 MHz (AWS), 3.5 GHz and 26 GHz bands, after the President of the Republic – in an unusual apotheotic ceremony – gave the initial tip to 5G technology in the country.
Certainly these competitions are necessary to facilitate the development of telecommunications, and thus the development of the country, but there are a number of issues that concern Conadecus, academics, experts, some operating companies and various political sectors, to the point that the full Senate is beginning to take cards on the matter.
A first aspect of concern to Conadecus is that this time Subtel – unlike what it did in the 2,600 MHz (2011) and 700 MHz (2013) contests – does not require mandatory considerations, and predict in return the coverage of certain polygons (mainly urban) and roads (several of which already have mobile phone coverage), in circumstances that in the 700 MHz contest , for example, the considerations allowed telephony and Internet coverage to be provided to more than 1,200 rural communities that lacked these services, and to more than 500 rural schools, the latter with a demand for free for two years, which Conadecus managed to extend to four years.
To justify this new Public Policy for the sector, Subtel has said that considerations would have been outlawed by the Supreme Court (in the 700 MHz trial, which conadecus promoted and won), as a barrier to entry, and that they are also very difficult to monitor.
Conadecus agrees that rural considerations can become a barrier to entry, as happened in the 700 MHz and 2,600 MHz public competitions, but in no case have they been outlawed by the Supreme Court, and if implemented appropriately, they introduce few economic distortions.
Moreover, considerations are not so difficult to monitor, as that today could even be done remotely.
Then remove the considerations in those contests, and reward in return the coverage of polygons that apparently favor, among others, airport ports or universities, is meaningless, because those will never require forced coverage, since the market will attend to them naturally, as it is a good business (unlike rural areas). In addition, the polygons that Subtel defined do not seem to consider the people or companies that are located adjacent to them.
Therefore, Conadecus recommends that Subtel again demand considerations in the next four competitions, to improve rural coverage.
However, after these competitions and as a long-term solution, it would be appropriate to amend the General Telecommunications Law (LGT), and the Telecommunication Development Fund, so that the latter has more resources and better mechanisms to cover the provision of services in rural areas.
Another issue that is very concerned with Conadecus is the following. In its recent ruling on new spectrum limits, the Supreme Court provided that before conducting a competition to award radio spectrum for new technologies, Subtel should analyze whether operators that already have spectrum can implement these new technologies in their pre-existing frequencies, in reasonable timeframes and costs, and that if so, the awarding of spectrum to new entrants to new entrants is privileged , or smaller operators.
To respond to the above, Subtel then developed and disclosed what it called the Relevance Report. However, that report does not contain a cost analysis, and is based mainly on presumptions, and even errors, which allow Subtel to conclude that the three current dominant operators (Entel, Movistar and Claro) can participate in the next four competitions. In our view, Subtel’s conclusion is inappropriate, as dominant companies today have generally sufficient spectrum to implement new technologies such as 5G.
Another aspect that the Relevance Report does not address is how Subtel intends to reorder the 3.5 GHz band, which is indispensable to ensure a more efficient use of it with 5G technology.
Therefore, Conadecus also recommends that Subtel reformulate the Relevance Report in a complete and well-founded manner.
Conadecus is also concerned that Subtel has omitted from the terms that the successful bidders have the obligation to develop offers of viable facilities, for Virtual Mobile Operators (operators without their own spectrum), and for national roaming, an obligation repeatedly laid down by the Supreme Court, which until now is dead letter in several segments of the market, when the wholesale prices offered by dominant operators to their competitors exceed the prices in detail that those same operators offer to their customers.
We are also concerned that the contest is artificially forcing the tie of the participants, which apparently seeks to increase tax collection, but without any benefit to telecom users, but quite the opposite. The forced tie is also contrary to the spirit and letter of the LGT.
Conadecus is also concerned about any health risks that mobile 5G technology might entail, which have been warned by doctors from several countries (we suspect these risks are low, but we do not have enough knowledge to dismiss them outright). Therefore, it is recommended that Subtel commission medical and biological studies, to rule out that this technology could cause damage to health.
Due to the principle of technological neutrality, which governs our country’s telecommunications, we believe that Subtel should only require minimum quality levels to be met, without imposing certain technologies, such as 5G or LTE Advanced Pro. Universal experience indicates that the market is much more accurate when establishing which technology is most appropriate, in each case. Moreover, if the market is trusted, it is likely that in several cases, and for a long time, 4G technology may be more efficient (and lower cost) than 5G.
As a result of the above, we do not think it is advisable to rush or force the implementation of 5G mobile technology in Chile.
However, it is urgent to provide solutions to operators who now lack sufficient spectrum, so that they can cope with the growth of traffic caused by quarantine, and since the observations made by Conadecus and other actors, can cause delays, Subtel should already have the allocation of experimental spectrum – with the technology that these operators deem most appropriate – , in the 700 MHz, AWS, and 3.5 GHz bands.
Before finishing, I would like to point out that in the discussions these days, some people have stated that in Chile the spectrum would be given to the operators, for not auctioning this resource to the highest bidder. However, this is not necessarily the case; spectrum in Chile is not given away, but according to the LGT, the State provides it to the operator presenting the best technical project in a public competition (only in case of a tie an auction is held), which in turn translates into lower prices for users, if there is sufficient competition in the market. Auctions, on the other hand, can make spectrum more expensive, a major that will end up paying not the operators but consumers in one way or another.
Finally, and amid the discussions and statements that have emerged these days, the Minister of the Sector, Ms. Gloria Hutt, has pointed out that her portfolio has not received formal suggestions to improve the basis of these public competitions, and that they only have opinions issued by the press, which would correspond rather to value judgments or unfounded suggestions.
As far as Conadecus is concerned, what Minister Hutt said is wrong, as our organization has raised points very similar to those I have pointed out above during the discussion of new limits before the Court of Defense of Free Competition, in the citizen consultations on 5G conducted by Subtel and in the Civil Society Council of this body , and has always done so formally and well-founded.
In any case, Conadecus will continue to work and provide its views to improve public policies, for the benefit of consumers, and therefore we reiterate our continued readiness to dialogue – without dogmatismos – with Congress and with all the authorities, in order to contribute to the improvement of telecommunications and the country.
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