Mast-ering 5G

Chile leads the race for 5G in Latin America but some aren’t happy.

On 1 August the Ministry of Transport and Telecommunications in Chile announced four public tenders for 5G concessions. They have been fielding inquiries since 17 August and expect to provide answers to these questions online from 28 September. The application deadline is 19 October.

It certainly sounds great: trailblazing Latin American country is the first to bring latest generation telecommunications technology to the region. The government will dine out on it for some time but as with most tenders in Latin America, there are some criticisms …

Some consumers are unhappy that the technology is not being rolled out into rural areas, an executive at a large Chilean telco told us, “although there is consensus between government and industry, rural consumers are annoyed as there is already a large gap in access to wireless technologies between urban and rural areas.” A senator who participated in the planning of the programme told us frankly, “There will be little benefit for the end user, 5G is primarily for industry to improve production, automation and traceability.”

“There will be little benefit for the end user, 5G is primarily for industry.”

Chilean Senator with knowledge of the auction preparation.

Several sources we spoke to would prefer to see greater investment in the roll-out of fibre optic lines rather than 5G as it would be more likely to close the access gap between urban and rural areas.

As for the tender itself, it is likely that it will be dominated by the 3 to 4 large telco groups already present in Chile according to a leading competition lawyer, “The law recognises that free competition has limits and the best interests of the users must come first, therefore, the probability of small companies trying to compete is low.” This obviously concerns small and medium sized telcos who are concerned that a concentrated market could effectively price them out of access.

“The law recognises that free competition has limits and the best interests of the users must come first.”

A leading competition lawyer.

For larger global groups with no presence in Chile, the tender setup is also frustrating says an executive at a global telco, “They’re asking you to be in operation within 18 months which is hard for companies that do not already have a presence in the country. This is quite a common problem in telco auctions.”

Finally, telcos have also criticised the part of the tender where points will be awarded for ‘positive externalities’, read ‘free stuff’, which have no clear judgement criteria. The executives and lawyers we spoke to were in general agreement that this element of the tender, “makes it more difficult for companies to design their offerings and also exposes a risk of future criticism.”

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