In a bid to raise more money from a 4G spectrum auction slated for August, the Brazilian government is reportedly urging regulators to either ease coverage requirements or offer fewer licences.
According to a Reuters’ source, a slackening of rules when 700MHz spectrum goes under the hammer this summer could boost the minimum licence price from BRL6 billion ($2.6 billion) to between BRL12 billion and BRL15 billion.
“When you set requirements the auction price falls, because you swap money that would go to the treasury in exchange for investment in better service,” said the source. “[Removing obligations means] the auction raises more money.”
Brazil’s mobile operators have already splashed out heavily on 4G spectrum.
Anatel, the country’s regulator, went ahead with an auction of 2.5GHz and 450MHz spectrum in June 2012.
Brazil’s big four mobile operators, however, had expressed fears that the 4G spectrum process was too soon after the award of third-generation licences, and that to invest in 4G did not allow enough time for a 3G return.
For all their misgivings, however, the auction raised more money for government coffers than analysts expected, raking in BRL2.72 billion.
Telefonica’s Vivo paid the most (BRL1.05 billion) – more than two-thirds higher than the reserve price – followed by America Movil’s Claro (BRL844.5 million), TIM Brasil (BRL375 million) and Oi (BRL345 million).
The extra wireless frequencies were trumpeted by Anatel at the time as a way for operators to roll out high-speed broadband to cities playing host to upcoming major football tournaments: the Confederations Cup (2013) and this year’s World Cup.
However, 450MHz has little 4G support from suppliers, making 700MHz spectrum more attractive for in-building coverage and mobile broadband rollout in wider areas.
2.5GHz spectrum requires about three times as many towers to cover a given area compared with 700MHz spectrum.