Limit 5G auction to three telecoms: Far EasTone

ECONOMIES OF SCALE::It said the bandwidth the NCC is auctioning is too small for five telecoms and could drive up costs due to aggressive competition

By Lisa Wang  /  Staff reporter

Wed, Jun 19, 2019 - Page 12

Far EasTone Telecommunications Co (遠傳電信), the nation’s third-largest telecom, yesterday urged the National Communications Commission (NCC) to limit the auction of 270MHz of 5G spectrum to the nation’s big three companies to better utilize the bandwidth while avoiding overpricing.

As the nation’s five telecoms have all pledged to bid for a 5G license, Far EasTone said it is concerned that most operators would not be able to obtain sufficient bandwidth to build a 5G network that offers ultra-high-speed Internet connection at an economic scale.

“To reach an economic scale, a telecom operator needs to get at least between 80MHz to 100MHz,” Far EasTone president Ching Chee (井琪) told reporters on the sidelines of the company’s annual general meeting in Taipei.

“That means the 270MHz spectrum is too little and only good for three telecoms to roll out 5G services. The commission needs to reconsider how to maximize the benefits,” Ching said.

One approach is to restrict the auction to the big three: Far EasTone, Taiwan Mobile Co (台灣大哥大) and Chunghwa Telecom Co (中華電信), Ching said.

The restriction would also prevent auction prices from overshooting, as smaller telecoms could make high bids for a block of 5G bandwidth to compete with bigger rivals, she said.

Citing Germany as an example, Ching said the 5G auction last week in the European nation raised 6.5 billion euros (US$7.28 billion) from four telecoms, with the price breaking the high end of the regulator’s initial estimates of 3 billion euros to 5 billion euros.

Inflated auction costs would undermine telecoms’ investment in 5G deployment, while local telecoms are still paying depreciation and amortization costs for 4G equipment, she said.

Far EasTone has to pay NT$40 billion (US$1.27 billion) in depreciation and amortization costs on its 4G equipment over the next 10 years, she added.

As the Telecommunications Management Act (電信管理法) was approved by lawmakers on Friday last week, Ching said she believes the nation’s big three telecoms would be open to sharing their 5G networks and frequency bands.

Shareholders approved a proposed cash dividend of NT$3.75 per share, with a payout ratio of 100 percent for the third straight year.