Network operators happy about decision to auction 5G frequencies

A pylon.
A pylon. Source: Siim Lõvi /ERR

Mobile network operators welcome the decision by Minister of Entrepreneurship and Information Technology Andres Sutt (Reform) to put three 5G frequency authorizations up for auction instead of four. Telecom company Levikom was the only operator to say they will not participate in the auction.

IT minister Sutt decided on Thursday that Estonia will auction off three 5G frequencies and the auction will be announced in February. The government also approved a regulation on the security of communication networks that specifies the security requirements for 5G and other telecoms networks.

Although network operators are critical of the process taking three years, they are happy about the final decision and that there are as many frequencies as there are operators on the market.

"This process has taken three years. Estonia was supposed to be one of the first countries to implement 5G, but now we are among the last. But we support the decision, it was a good decision by the government so we are pleased," Tele2 Chris Robbins said.

Telecom operator Levikom, which looked at the 5G frequency band tender for a way out of debt and has faced the state in court, has now said they would not challenge the government's decision. "We no longer have anything to argue. It is an economic policy decision and these things are not solved in court, so it is not a legal issue, but rather an economic one. You must explain your positions to decision-makers and, well, we have nothing to argue about," Levikom CEO Peep Põldsamm said.

Levikom will also not participate in the tender. "It is no longer a contest. If there are three established client bases and major companies (Telia, Elisa and Tele2 - ed), it is no contest. The state could provide the frequencies directly, which has previously been done, I think," Põldsamm noted.

"Vodafone and Deutsche Telekom will not come here, because they will not be able to counter the companies with existing cash flow. It is not a matter of capital, but each invested euro must bring something back and you cannot offer anything against companies with existing cash flow and revenue," the Levikom CEO said.

Levikom Eesti OÜ initiated a lengthy lawsuit against the state's previous decision to divide the frequency band into three. The company has not been able to involve investors for three years, since it cannot offer any guarantees. How could the company participate in the tender?

"The first GSM frequency permits were handed out in 1995 and things are not done that way. You must first get a permit and then you need capital to create the network. EMT, Radiolinja nor Q-GSM did not have the capital on their bank account in 1995 and there is no lack of capital in today's world," Põldsamm said.

Levikom would have liked to provide internet access in rural areas through 5G, but the company said it would not give up on the idea. It is also possible to implement the idea on higher 5G frequencies, which the tender does not affect.

"We intend to solve the Estonian rural internet issue, which mobile networks, whether it be 5G or 6G, cannot solve. You need a fixed wireless network," Põldsamm said.

IT Minister Andres Sutt said three frequencies being put up for auction does not mean there cannot be more than three companies involved in the contest.

"That one frequency range will be large enough to develop completely functional 5G across Estonia. 130 MHz, which we can provide, will be optimal if we do a three-sided contest. The reason for this is the lack of a coordination contract with Russia, which is why a large part of the frequency range will not be used and there is no faith and security for such a contract to be drawn up," Sutt said.

Elisa, which has used Huawei technology will now begin developing a 5G network with Nokia.

"Firstly, the good old faster speeds, larger rates. The next step is certainly the internet of things. And that will likely take some time, not in the sense of there not being technological readiness, but there must be economic and environmental demand for it," Elisa director Andrus Hiiepuu said.

The company has calculated the costs of developing a network to be around €50 million and the development will likely take years. The first stage should be completed within a year.

Elisa is awaiting for state compensation to stop using Huawei networks. The company also does not rule out a claim for damages through court.

"It is not a chapter, which we have closed. One stage is certainly over, but it is clear that we will lose money as a company and we hope the state will eventually reach a regulation, which will give companies, such as Elisa, rightful compensation in a situation, in which they are forced to drop infrastructure, which has not yet reached the end of its usage," Hiiepuu said. "Court is not our first choice."

Tele2 hopes to complete a 5G network in the first half of next year. "We are already actually testing the network below our office building, so work is ongoing," Robbins said.

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Editor: Kristjan Kallaste

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