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Speculators not to receive frequencies, despite telecommunications tariff drop

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RU, Valdis Lokenbahs

Valdis Lokenbahs

Telecommunications services tariffs have even dropped down to a «zero»; however, the regulator still has much to do in the industry, ensuring that communications frequencies are not given to speculators, reducing inter-operator payments and monitoring the quality of electronic communications, considers Valdis Lokenbahs, the Chairman of the Public Utilities Commission (PUC).

Lokenbahs recognizes telecommunications prices are determined by fierce competition; yet, the PUC has much work left, mainly regarding the interconnection and call termination fees. They have to be pressed down to the European Union level.

In Latvia, these tariffs are recalculated every half-year; they are being lowered and the next reduction is set on July 1, explains the PUC Head. The interconnection and termination tariffs are paid by one operator to another for routing their calls through the other operator’s network, or for the call connection with other operator’s end-users.

There are also many issues on the quality of electronic communications, testing and meeting them. It is important to measure the quality of the Internet; within two months we have carried out 5 000 measurements. Latvia has relatively high quality indicators because of the existence and activities of the PUC, Lokenbahs says in an interview to Nozare.lv.

Asked about the recent failure regarding the 450 megahertz (MHz) frequency auction organized by the PUC, Lokenbahs concedes the regulator could change the auction price policy, yet is not going to sell frequencies to potential speculators.

The industry experts consider the auction of 450 megahertz (MHz) bandwidth – 457.5 MHz/460 MHz – 467.5 MHz two 1.25 MHz radio channel usage rights ended with no result, because the starting price of 200 000 lats was too high.

Operators want everything for free! They would be glad if they received extra payment. As I mentioned already, any speculator could buy the frequency at a low price, later selling it to an operator, who really wants to do something for those 200 000 lats, Lokenbahs indicates.

Asked whether the PUC cannot hinder the participation of dubious candidates at auctions, the PUC Head replies there are cases when the regulator can refuse a particular applicant, but for the most part it cannot. We can impose a participation fee, certain obligations. As regards the 450 MHz, we can say 200 000 lats was too much to ask. Okay, then let it be 100 000!

As concerns the second interrupted auction process regarding the 2.5 – 2.69 gigahertz (GHz) bandwidth intended for the fourth generation (4G) mobile Internet, Lokenbahs confirms the already published information in mass media that Lattelecom waivered from the requirement to hold an auction. However, the expert points out Lattelecom has not lost interest in the 4G and this bandwidth.

Lokenbahs was dismissive of applying the so-called «beauty contest» method in the allocation of frequencies, where the candidates are selected by assessing their business plans, offered tariffs and coverage, while the frequency would be given to the winner for a small price.

Latvia could organize a «beauty contest» if it were completely clear these plans are actually to be carry out. I am not saying this is impossible. But to avoid petty quarrels and speculations, we are setting these prices, which affect the end tariff by one santim, Lokenbahs clarifies, arguing that the price of frequency use rights makes up only a small proportion of the investments necessary for the mobile communications or mobile Internet business.


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