Maltese mobile telephony market could face a shake-up

The Maltese mobile communications market could be completely re-shaped next year as the Malta Communications Authority is to re-assign the 900 MHz and the 1800 MHz frequency bands. These bands are currently used by Vodafone Malta and Go, who between them have over 90 per cent of the local mobile telephony market. The rights of use of these frequencies that they have enjoyed for many years are expiring right now.

While these two major operators can re-apply and have the necessary frequencies to continue providing their mobile telephony service for another 15 years, there is no guarantee that they will be successful in doing so as the process is also open to new entrants.

Indeed, the MCA has just announced the process with which these particular frequencies used for mobile telephony in Malta will be re-assigned. Each applicant will have to make a strong case to use what the MCA describes as a limited and precious resource.

The 2.1 GHz band, also used for mobile telephony, was assigned to Melita in 2005 following the 3G spectrum assignment process. This particular band is not affected by this spectrum re-assignment exercise.

Three companies own temporary rights of use of the 900 and 1800 MHz bands: Vodafone Malta, Mobisle Telecommunications (Go), and Telepage Limited. Vodafone’s rights were granted in July 1990 and expired last month. Go’s rights were awarded in September 2000, three months before its commercial launch, and expire next month. Telepage limited actually does not provide a commercial public mobile telephony service and its rights expire in March 2011.

The licenses of Vodafone Malta and Mobisle Communications Ltd are being extended until March 2011 to align the termination dates.

The authority emphasised that the assignment of spectrum is based on a set of fundamental principles. For example spectrum is a limited national resource and must be used carefully and operators have time-bound rights of use of spectrum and not ownership.

“It is impossible to foresee the number of successful operators prior to the actual conclusion of the process,” an MCA spokesman told i-Tech. “The MCA has established spectrum caps, thereby ensuring a number of licence holders and hence competition, to the benefit of the end user.

“The call for applications will be open to any interested party. Applications will be subject to a qualification stage that will ensure that successful applicants have the necessary standing to establish and operate state of the art networks and fulfil the licence obligations. The final outcome will ultimately depend on the value the applicants place on the spectrum,” the spokesman explained.

If the demand exceeds supply the MCA will meet the applicants and try to reach an agreement. If this fails, then an auction will be held.

Rights of use will be granted under the technical conditions stipulated in the EU decision 2009/766/EC on the harmonisation of the 900 MHz and 1800 MHz bands. The rights of use will therefore enable holders to deploy either GSM and/or UMTS (3G) technology over the awarded frequencies.

The companies interested in obtaining the right of use of these frequencies will have to pay the Maltese government €224,000 for every 5 MHz block. Indeed the new fee structure as well as the channeling plan are totally different from those currently established for the 900MHz and 1800 MHz band.

“Market-based prices for this spectrum being paid in other countries was therefore taken into consideration along with the fees paid for other bands capable of offering similar services which were assigned in Malta in recent years, namely the UMTS (3G) 2.1 GHz band spectrum.

“ In establishing the fees consideration was also given to the local market size and the physical characteristics of the 900 and 1800 MHz bands that provide for better network performance and efficiency and as a result should command a higher price than the 2.1 GHz band,” the MCA spokesman said.

Industry observers told i-Tech that Vodafone Malta and Go are the two biggest players in the local communications market with a track record and substantial investment and therefore the extension of their rights of use of the frequencies should not be a problem for both of them. However, there is nothing from keeping new players attempting to enter the mobile market.

According to the latest MCA market review, at the end of 2009 there were 422,083 mobile telephony subscriptions in Malta, an increase of approximately 9.5 per cent over the previous year. The increase in the number of mobile subscriptions translated into a higher mobile penetration rate for Malta, from 93.2 per cent as at the end of 2008 to 102.1 per cent at the end of 2009. This means there are more mobile subscriptions than people living in the Maltese Islands.

Vodafone Malta is the largest operator with 49.6 percent of all mobile subscriptions, followed by Go Mobile with 43.2 per cent, Melita with 5.6 per cent, and Redtouchfone with the remaining 1.7 per cent. Since then other smaller mobile operators like Redtouchfone, known as mobile virtual network operators (MVNO), have also launched.

“While to date the assignments in the 900 and 1800 MHz band were the result of an administrative process carried out over the years, the assignment process is based on the principles of openness, transparency, proportionality and non-discrimination and is intended to reflect the requirements of the market,” the MCA spokesman reassured.

In an interview with i-Tech a few months ago, the chief executive officer of Vodafone Malta, Iñaki Berroeta, had expressed his reservations over the commercial viability of three national mobile operators in Malta. The same opinion had been expressed by other parties a few years ago when the 3G mobile licenses where in the process of being awarded.