Editor’s Note: Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry.

Despite all the efforts of the Colombian ICT ministry, Mintic, to award LTE spectrum in December, this may be an ambitious deadline, considering the polemic debate regarding the participation of dominant mobile operator Claro in the tender. Initially, scheduled for September, the spectrum auction was postponed because of concerns that Claro could extend its monopoly to mobile broadband services, if it is allowed to participate in the upcoming auction. Claro currently holds more than 60% of the mobile market, and some senators and other operators claim that Claro should be forbidden from participating in the tender.

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The government is evaluating several options for the spectrum auction bidding rules, including an open auction with all operators participating in the spectrum tender of AWS band (1,710-1,755MHz and 2,110-2,155MHz); reserving some spectrum for new entrants in the 2.5GHz band; reserving spectrum in both the 2.5GHz and AWS bands; and leaving AWS spectrum only for new entrants. On the other hand, operators have proposed an open auction with the exclusion of Claro in either the AWS or AWS and 2.5GHz bands.

However, only assigning spectrum to new entrants will not necessarily increase competition in the market. If the government aims to promote more competition, it also has to ensure that new players are committed to investing in network infrastructure; otherwise, a scarce resource will be wasted, and the goal will not be achieved. It is important to highlight that network coverage and quality are critical to attracting new customers, mainly high-end users, who are likely to be the initial targets. In addition, many industry regulators and competition authorities have accepted that three to four local operators are likely to be sufficient to achieve effective competition.

In order to ensure equal market conditions for LTE service competition, the government has to impose a spectrum cap for operators, not  prevent Claro from participating in the auction. LTE will be the globally recognized standard for mobile technology and preventing Claro from participating in the tender would be regressive for the country’s telecommunication development.

Data traffic is increasing rapidly and the lack of 4G offers from Claro would have a direct impact on the quality of services, and thus on the customer’s experience. Additionally, it is in the government’s best interest to prevent Claro from participating in the auction, as it would substantially reduce the bidding competition, limiting the fees received for LTE spectrum.

Reducing the mobile termination rate (MTR) is one way to re-balance the market and reinforce competition. The 50% reduction in mobile termination rates (MTR) approved in October 2011 is a big step toward improving competition in the mobile sector.

Undoubtedly, Claro is in a strong position in the market; however, it is important to note that the company started its operations under the same market conditions as its rivals. Claro reached leadership only in the early 2000 due to a well implemented strategy and heavy investment in network coverage and upgrades, which were crucial for its growth.

The robust economic growth that Colombia has experienced in recent years is also reflected in the telecom industry. If the government aims to continue evolving this industry, it has to make LTE spectrum available to cope with the ever growing demand for data services. Also, it has to allow all operators to bid on the 4G spectrum.

Marceli Passoni is research analyst at Informa Telecoms & Media.