Press release
C. 26-13 th
El Salvador, October 17 , 2013
CS objects to auction of radio-electric spectrum The Board of Directors (BD) of the Competition Superintendence (CS) recommended to the General Superintendence of Electricity and Telecommunications (SIGET, its Salvadoran acronym) that the auction of 40MHz of the radio-electric spectrum recently announced should insure the participation ”exclusively of new operators not related to any mobile operator currently participating in the market,
in order to promote competition amongst economic agents in identical conditions and to guarantee the probabilities of increasing the number of competitors in the market, generating dynamism and rivalry. If the aforementioned is not possible, suspend the auction”. nd
1.
On October 2 , the SIGET requested the Board of Directors of the Competition “Since 2011 in the Superintendence an opinion “on the potential risks, from competition point of view, analysis of CLARO – that might arise as a consequence of the possible adjudication of the radio-electric spectrum to one of the mobile operators existing in the market”. Before said opinion DIGICEL acquisition th th authorization request, had been issued, on October 8 and 10 , the SIGET published announcements of the auction. this Board has
pointed out the risks of an inconvenient accumulation of the radio-electric spectrum by the operators currently participating in the mobile telephony market”, asserted the Board of Directors of the Competition Superintendence.
The SIGET´s communication literally states: “the spectrum will be acquired by the operator who offers the highest bid in the auction process, regardless of the portion of spectrum he currently has or his participation in the market”. The terms of the auction create considerable disadvantages for potential new operators who face numerous barriers to enter the mobile telephony market (economic, structural, and strategic). Furthermore, an open auction (to the highest bidder) responds to an economic purpose and not to a competitive one, because it annuls the probabilities of competition amongst equals. In the opinion of the BD of the Competition Superintendence, the aforementioned expressly contradicts one of the purposes of Provision 2 of the Telecommunications Law, which states in its letter c): “Development of a competitive telecommunications market in all levels”. th
Since August 30 , 2011 in the analysis of CLARO – DIGICEL acquisition authorization request, the Board of Directors of the Competition Superintendence has warned about the risks of an excessive accumulation of the radio-electric spectrum: the only limited and indispensible input of the telephony industry. Therefore in order to authorize CLARO – DIGICEL acquisition, the BD of the CS set, amongst others, the prior structural remedy to return 20MHz of the spectrum CLARO had; condition which was rejected by said operator. In said analysis, the Board of Directors concluded that: “it is feasible for the current operators to use more efficiently the radio-electric spectrum they have in concession, and it is not advisable that the existing operators continue accumulating said spectrum”. Pursuant to the aforementioned since then the BD of the CS has recommended to the SIGET: “In order to promote competition in the sector, to auction the concession for the exploitation of radio-electric spectrum destined for mobile telephony amongst operators not related to any mobile telephony operator currently participating in the market” and “to regulate and create incentives for the efficient
use of the radio-electric spectrum destined for mobile telephony in order to avoid the accumulation of said spectrum for strategically anticompetitive purposes�. th
Moreover, the ruling issued on September 25 with respect to CLARO-DIGICEL third acquisition authorization request, in accordance to the analysis of the radio-electric spectrum´s situation, the Board of Directors of the Competition Superintendence concluded that the scarcity of appropriate segments of continuous radio-electric spectrum (over 10MHz) to render mobile telephony and other services constitutes a barrier to entry. In addition, the BD stated that in the medium-term only 40 MHz were available and are to be auctioned. Hence, considering the scarcity of the spectrum, if a concession was to be granted to any of the participants existing in the market, the possibilities for the entry of new competitors would disappear. The auction called by the SIGET has been temporarily suspended. The Board of Directors of the Competition Superintendence expects that its opinion is taken into account in order to encourage a more efficient use of the radio-electric spectrum and avoid its anticompetitive accumulation. The opinion issued by the Superintendence may be reviewed at: http://www.sc.gob.sv/pages.php?Id=1345