Court Allows Anatel 7 Days to Explain Inconsistencies in WiMax Auction

Brazil's federal accounts court (TCU) has extended by seven days the deadline by which telecoms regulator Anatel must explain the errors that forced it to delay this month's auction of WiMax spectrum, local newspapers reported.

The auction, for 3.5GHz and 10GHz spectrum licenses, was originally slated to take place on September 4 but the TCU ordered Anatel to suspend it due to alleged inconsistencies in the bidding terms, such as the use of an outdated exchange rate.

The TCU ordered Anatel to explain the inconsistencies and submit new calculations by September 18 but has now extended this deadline to September 26 at the request of Anatel president Plínio de Aguiar.

The miscalculation could potentially cost Brazil 23mn reais (US$10.6mn) in lost revenues from the auction, according to TCU. Aguiar has admitted that Anatel expects a higher minimum bid figure, although the calculations have not been finalized.

UNCERTAINTY REMAINS

The suspension has led to a lot of uncertainty in the market about the outcome of the auction for 3.5GHz and 10GHz spectrum licenses.

"A few months ago everything was clear and we expected a result before the elections. Now there are serious delays," according to Adlane Fellah, a senior analyst at US research firm Maravedi, which specializes in wireless broadband technology.

"These delays are creating uncertainty in the roadmap," Fellah told BNamericas.

"Right now it looks as if the auction rules will be modified, rather than scrapped," Thomas Abreu, an analyst at consultancy Pyramid Research, told BNamericas.

NEW PLAYERS

The auction has been tainted by criticism on the part of fixed line operators, which object to Anatel's insistence on banning them from bidding for spectrum in their existing concession areas. But Anatel has said it will not budge on this issue.

Whatever the outcome of the TCU decision, Anatel's priority is to introduce new players to encourage better prices to help spread WiMax as a viable alternative to DSL or cable, said Fellah.

However, where two players win a license in the same region, they often agree on price, at the cost of the consumers, he warned.

"If existing broadband providers gain spectrum by using the argument that they want to extend coverage, this will not increase competition because it is the same player," he said.

"The regulator needs to establish requirements to ensure that if you acquire spectrum you cannot sit on it. These tactics have been observed in other countries - they are a waste of resources," he said.

Some 100 companies including fixed line operators Brasil Telecom, CTBC Telecom, Telemar, long distance operator Embratel and Sercomtel presented preliminary bids on September 4.

Other bidders include TIM, Oi, Telemig Celular, Amazônia Celular and GVT.

BNAmericas.com"

Posted to the site on 20th September 2006