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5G at the heart of Portugal's digital society

October 20, 2020

The right auction structure is crucial

The digital society places citizens at the center of a complex communications infrastructure that works as an access platform to hyper connectivity. The ongoing social revolution, based on the enormous flow of data, unrestricted mobility and permanent connectivity, will be further deepened by the new wave of technological transformation made possible by 5G.

While the implementation of 5G represents a new static stage of standardized technological advancement, value generation will only gradually unfold over the coming years, with different industrial sectors slowly jumping into this technological wagon whenever they feel they can benefit from its new capabilities.

In Portugal, the upcoming spectrum auction in early 2021 will be critical to the development of the 5G network that will support the Portuguese digital society. Notwithstanding, the existing auction rules call into question the feasibility of the deployment targets set by the government. Roland Berger has thus identified a set of critical requirements for the 5G spectrum auction structure to ensure the success of the digital society in Portugal:

Recognize the focal role of telecom operators in the digital society

5G will be an enabler of 5% of the world´s economic value by 2035, with significant value creation across all industrial sectors (an estimated value of USD 35 bn just in Portugal), placing telecom operators at the crossroads of the emerging digital value chain.

The upcoming spectrum auction will be critical to the development of the 5G network in Portugal.
The upcoming spectrum auction will be critical to the development of the 5G network in Portugal.

Consider that the level of investment needed in the deployment of 5G relies primarily on operators

In the recent past, operators have not been able to monetize the increased data usage, facing a new round of heavy investment to enter the 5G paradigm. The diminishing returns on invested capital has put a strain on a telco's ability to access the necessary funding to execute the investments required in 5G infrastructure. Hence, with one of the lowest revenue per capita and ROIC in Europe, introducing unfair competition in the Portuguese market would further undermine the overall goal.

Maintain and promote the competitive fairness of the Portuguese telecom market

Market dynamics have allowed Portugal to reach a prominent place in the telecom sector, displaying supply indicators above the global average. The effect of forcing new entrants with unprecedented competitive advantages might disrupt the sector's economic sustainability and therefore jeopardize Portugal's global positioning concerning the hyperconnected society.

Guarantee non-discriminatory access to potential new entrants

The quality of 5G infrastructure will be crucial to the success of the digital society. Hence, it is essential that the rules of the frequency auction align incentives with the investment needs, opening space to operators with proven track records and, therefore, with the ability to guarantee tighter quality levels.

Ensure the sustainable economic development of Portugal

The auction rules should be structured in a way to foster value and job creation. If the 5G spectrum auction is to be carried out in the foreseen manner, it could compromise the sector's worth to the overall economy.

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5G at the heart of Portugal's digital society

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Critical appraisal of the rules for the coming 5G spectrum auction and its implications to the digital society in Portugal

Published October 2020. Available in
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