Forthcoming award of up to 40-year radio spectrum licences for 5G networks

The Official Journal of Spain of 28 April published Royal Decree-law 7/2021, of 27 April, on the transposition of European Union directives in the areas of competition, anti-money laundering, credit institutions, telecommunications, tax measures, environmental damage prevention and remediation, posting of workers in the framework of the transnational provision of services and consumer protection. By means of this instrument, the Spanish government aims to transpose “as a matter of urgency” various EU directives whose transposition deadline has already expired, thus avoiding European Commission penalties.

As regards telecommunications, Royal Decree-law 7/2021 amends the Telecommunications Act 9/2014 of 9 May (Art. 9 RDL 7/2021). Although a new statute that will repeal the current Telecommunications Act is passing through Parliament, the government declares that it is bringing forward the amendment due to its intention to hold "very soon" a new auction of licences for the use of spectrum in the 700 MHz frequency band (from the second digital dividend), which is one of the priority bands for the implementation of 5G technology.

Following the amendment, the titles awarded in this new auction will be granted for a minimum period of twenty years with the possibility of extension subject to the conditions determined by the award document, not for a maximum of twenty years (without the possibility of extensions or renewals), as was previously set out in Article 64(2) of Act 9/2014. As a novelty, Directive (EU) 2018/1972 of the European Parliament and of the Council of 11 December 2018 establishing the European Electronic Communications Code (whose transposition period ended on 21 December 2020) allows rights of use for radio spectrum to have an unlimited duration, and in the event that a limited duration is established, it must ensure an initial minimum period of twenty years, with the possibility of extension (Articles 49(2) and 50).

In accordance with its new wording, Article 64(2) of Act 9/2014 establishes that the rights of exclusive use of the radio spectrum in limited numbers will have a minimum duration of twenty years and, if necessary to encourage efficient and profitable investment in infrastructure, the auction document may provide for a one-time extension for a minimum duration of five additional years and a maximum duration of twenty additional years. The extension shall not be automatic but shall be conditional on compliance with the conditions set out in the auction document (efficient use of the spectrum, contribution to the deployment of new technologies, quality and coverage, among others), in the opinion of the Ministry of Economic Affairs and Digital Transformation, following a report by the Spanish Markets and Competition Authority.

The amendment, which is part of the Recovery, Transformation and Resilience Plan, presented on 13 April, seeks to incentivise investment in high-capacity fixed and mobile networks, in particular 5G networks, considering the large investments required to deploy this type of network and the depreciation and return on investment periods.