Bulgaria: Turmoil in telecommunications operator market

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The telecommunications market has always been dynamic and brutal unless you are constantly in the game. The splitting of that big cake is sometimes unfair, but often, the fastest (or those who are the most convincing) grab the largest piece.

The entry of a new operator thus always enhances competition in that market since other participants are in some way forced to create attractive offers in order to acquire new and retain existing customers. However, what if they get the same opportunity at the same time? And then, how does the state react to that? Is a monopoly necessary?

Somewhere in the world we are already on the 5th generation of mobile electronic communications, which brings with it large capacities for data transmission, which inevitably leads to existing operators making deals with video content owners and thus increasing the set of services they offer to users. Frequencies are grabbed.

That is exactly why a scandal of sorts broke out in Serbia's neighborhood, when a regulatory body gave licenses to the biggest companies, and did it - without a tender. Reportedly, there was pressure behind the scenes.

Spas Rusev, a member of the supervisory board of Vivacom, a telecommunications operator owned by United Group, allegedly tried to put pressure on Bulgarian Prime Minister Boyko Borisov because of the regulator's decision to legally divide radio frequency bands to three mobile operators in order to develop 5G networks, Bulgaria's Glasove portal has reported.

Despite the fact that the regulator followed the procedure flawlessly, Vivacom was not satisfied, and Rusev told Prime Minister Boyko Borisov during a meeting that all media owned by United Group, the owner of Vivacom, would turn against the government in the upcoming election campaign.

The company, which recently bought Nova TV media group, includes ten TV and four radio stations, as well as the online platform NETINFO, which is visited by 80% of Bulgaria's population.

The scandal erupted after the Communications Regulatory Commission (CRC) on March 10, after reviewing applications, granted each of the three major telecommunications operators a license in the 3.6 GHz spectrum, without a tender.

The frequency bands allocated in this way "completely coincide with the frequency bands currently given for use to companies with temporary licenses, which will further facilitate the transition from temporary to permanent licenses," the regulator said in a statement.

Vivacom submitted a request for three bands, A1 for two, Telenor for one. All three operators received one band each out of those they were interested in, and that correspond to the temporary licenses they had been given to test the technology.

However, that was not accepted by United group that owns Vivacom, and after the expiration of the deadline on March 8, it requested a change in the distribution of frequencies. A CRC expert commission rejected this request, because it was submitted after the deadline, and then pressure began, which culminated in the attempt to blackmail the prime minister, according to the said Bulgarian media.

A1 and Telenor Bulgaria told Reuters that they were satisfied with the allocated frequencies.

"We are witnesses to how the regulator can be a victim of brutal businessmen in Bulgaria, regardless of the fact that they did their job well.

The actions that the regulator will take from now on will be used against the government, either through claims that they incurred damages to the state because an auction was not held or that they hinder the development of 5G technology and digitization, which are crucial for future economic development to the degree that, if they change their decision, they will  be accused of serving someone else's business interests," the Glasove article concludes.

Chronology of events:

- On March 10, the CRC made a decision and granted each of the three major telecommunications operators a license in the 3.6 GHz spectrum without a tender, after considering their applications. The frequency bands thus allocated "completely coincide with the frequency bands currently given for use to the three companies with temporary licenses, which will further facilitate the transition from temporary to permanent licenses," the regulator said in a statement.

- Initially, the CRC had a plan to sell three 20-year licenses at an auction (for use of the 3500-3600 MHz, 3600-3700 MHz and 3700-3800 MHz bands), each with an initial price of BGN 4 million with a bidding step of 100,000. After reviewing the applications and rules of procedure, the CRC allocated frequency bands and canceled the tender.

- Vivacom submitted a request for three bands, A1 for two, Telenor for one. They were each given one band out of those they were interested in, corresponding to the temporary licenses they were given to test the technology.

- Applications for participation in the tender were submitted by all three operators. After the March 8 deadline, BTK requested a change in the distribution. A CRC expert commission rejected this request, because it was submitted after the deadline. And then the attack on the process and institutions in Bulgaria started.

- The CRC pointed out that according to tender rules, it was not possible for a telecommunications operator to receive more than one frequency slot. At the same time, if there is only one candidate for a band, an auction is not held and the requested band is awarded. If a candidate were allowed to make several offers, it would mean that they would get two bands, which is unacceptable. Therefore, as the only candidate in the race for the lowest frequency resource, Vivacom did not have the opportunity to submit bids for the other two, leaving two candidates for those - A1 and Telenor. In fact, the lack of competition for the first frequency band led to the CRC decision to grant permits to use the appropriate bands - from 3500 to 3600 MHz for Vivacom, from 3600 to 3700 MHz for A1 and from 3700 to 3800 MHz for Telenor.

- A1 and Telenor Bulgaria told Reuters that they were satisfied with the assigned frequencies.

- According to unofficial information, Spas Rusev was seen at the prime minister's office several times where he insisted that the CRC decision should be revoked, as well as that he would use all means in the pre-election period to cancel the distribution of frequencies.

- Again, according to unofficial information, A1 also talked to Borisov, insisting that the procedure be conducted according to the rules and saying Spas Rusev's demands were unfounded.

- From a business point of view, A1 has the greatest interest in the frequencies that are now being distributed, because they are ready to launch 5G in this spectrum immediately. A1 says that only they provide real 5G, because they work at 3.6 GHz. Vivacom is currently working with technology that is considered to be 5G, but uses existing frequencies. Vivacom had announced that they would be the first to launch 5G at the end of 2020. Telenor has not yet made any announcements concerning 5G.

(Telegraf Biznis)