SHARING RADIO FREQUENCIES MAY REDUCE COMPETITION BETWEEN MOBILE OPERATORS

The Lithuanian competition authority’s experts expressed doubts whether the obligation for all operators acting in Lithuania to share radio frequencies of the 700 MHz band, which will be the main (or one of the main) frequencies for the development of 5G technology, would be necessary and proportionate to the objectives pursued.

According to the authority, prior to the implementation of the initiative, it is necessary to assess how the proposed obligations will affect the ability and initiatives of mobile operators to make individual decisions and compete with each other by offering higher-quality services to consumers, as well as how it will affect the ability of the suppliers of mobile network equipment to compete on the market.

Konkurencijos taryba drew the attention of the Ministry of Transport that depending on market conditions the sharing of radio frequencies may lead to reduced competition between mobile operators in terms of infrastructure, reduced incentives to invest in innovation and network improvement in the long term, which  would harm consumers.

In its letter to the Ministry of Transport the authority noted that cost savings, which could result from the sharing of radio frequencies, would not necessarily lead to lower prices of services if the reduction in prices would not be driven by competitive pressure between mobile operators.

Konkurencijos taryba highlighted that such risks are particularly relevant in concentrated markets where there is a small number of undertakings, high entry barriers, sufficiently homogeneous goods or services, the prices of which are made public. In this case it might be more beneficial for undertakings to adapt to their competitors by monitoring their conduct, and, even without making a direct agreement to restrict competition, maintain a high level of prices on the market, acting individually. Besides, competitors which have concluded cooperation agreements can coordinate their actions easier, as they need to make joint business decisions to a certain extent, exchange commercially sensitive information, etc.