Telco firm Elisa calls 5G bandwidth allocation to Tele2 'unfair'

A cellular mast (photo is illustrative).
A cellular mast (photo is illustrative). Source: Siim Lõvi /ERR

Telecoms provider Elisa has expressed dissatisfaction over the distribution of 5G mobile frequency licenses in respect of competitor Tele2, which it said had obtained extra bandwidth without having to go through the auction process, the second of which (of three) is currently ongoing.

Elisa says that Tele2 was the beneficiary of unequal treatment in that it obtained bandwidth following the acquisition of two firms over a decade ago but whose frequencies were altered, in 2017.

The state body, the Consumer Protection and Technical Regulatory Authority (TTJA) rejects this, saying that the change made no difference in overall bandwidth owned, adding that the 2017 change was made due to security considerations and to free up frequencies used by the defense sector.

Toomas Polli, board member and head of Elisa's technology unit, called the TTJA action "unfair", saying:  "If the state's investments are cut sharply due to a lack of money, then at the same time a gift of millions of euros has been given to a private company," adding that the TTJA had changed conditions for the use of frequencies in favor of Tele2 and expanded the scope of their use.

The TTJA rejects this, however.

TTJA communications manager Oliver Gailan said: "The TTJA considers Elisa's resentment unjustified, as the permits granted to Tele2 have been acquired legally," noting that Elisa itself has more frequency resources than its competitors.

In May, Elisa paid just over €7.2 million for one 3600 MHz section of frequency at auction, seeing off Tele2, Telia and Lithuanian firm Bite in the process.

Meanwhile Tele2, which is still in the running for bandwidth in the second, ongoing auction against Telia and Bite, and the third if the company does not win the current auction, received two free blocks of frequency in the 2300 MHz band but without an auction. 

Toomas Polli said this would be understandable if such frequency band changes were made temporarily, for instance in order to test the 2300 MHz frequency band before it goes under the hammer.

"However, we cannot in any way approve of a situation where a large frequency block is first created for one operator free of charge, and only the leftover scraps are put to the consultation and public auction that determines the use of the frequency band," Poll went on.

Oliver Gailan said that when issuing or altering frequency licenses in the 2300 MHz frequency band, the TTJA bases its activities on the currently valid Estonian radio frequency plan.

This, in turn, must be in accordance with EU legislation; if the latter changes, then so too does Estonia's frequency plan.

Poll also noted that auctioning all bandwidth would lead to additional tax revenue for the state and open competition for operators.

Smaller chunks of separate frequency range are also of less value to the consumer than consolidated ones, Poll added.

Oliver Gailan reiterated that state treats all applicants equally, adding that Tele2 had obtained the two blocks in question when it merged with companies that already possessed frequency licenses,, namely Televõrgu AS and ST-Network OÜ, making the acquisition legal when the mergers happened, in 2006 and 2010, though Poll states that these licenses no longer meet the same conditions as when issued.

Both the former ST Networks and the former Televõrgu AS ranges are smaller proportions of the 2300 MHz area than earlier was the case, again to Tele2's advantage, Poll said, after the two ranges were merged in 2017, with state permission but without auction.

Gailan agreed that the frequency range 2360-2390 MHz was indeed replaced in 2017 by the frequency range 2330-2360 MHz, but this was justified as the first of these ranges was being utilized for the purposes of national defense.

"The statement that in the meantime the conditions have been changed in favor of Tele2 is not true," Gailan said, "The frequency area 2300 MHz was divided into three ranges with nationwide use already in 2010," Gailan added.

Three 5G licenses were on offer; as noted Elisa won the first at auction for €7.2 million, while the second auction's bidding price had exceeded the €5-million mark earlier this week.

Only one license can be held by one company, meaning Elisa cannot bid on a subsequent license, while one of Telia, Tele2 and Bite will not win a license at all.


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Editor: Andrew Whyte

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