Federal Government looks to cash in on mobile spectrum

By Brett Winterford on Apr 18, 2009 9:24 AM
Filed under Mobility

The Federal Government has released a request for tender seeking a valuation of its mobile spectrum assets in the lead up to spectrum auctions.

The tender asks for a third party to assist the Department of Broadband, Communications and the Digital Economy (DBCDE) and telecoms regulator ACMA put a dollar value on 15-year Spectrum Licences in the 800 MHz, 1.8 GHz, 2.1 GHz, 2.3 GHz, 3.4 GHz, 20 GHz, 27 GHz, 28 GHz, 30 GHz and 31 GHz bands. 

A spokesperson for DBCDE said the main focus of the tender will valuing licences in the 800 MHz, 1.8 GHz, 2.1 GHz, 2.3 GHz and 3.4 GHz bands - the bands most often used in Australia for mobile broadband services.

The valuation is expected to provide the Federal Government with a view to how much money it might yield from new auctions pending when 15-year licenses auctioned between 1999 and 2001 come to an end.

"Value means the amount of money buyers may be prepared to pay the government to purchase the spectrum when it becomes available," the tender documents state.

DBCDE is asking to be presented with a range of "scenarios" ranging from "the reallocation of licences through an auction process to the renewal of licences held by incumbents."

"Associated issues, such as disruption costs that could result from an auction (because of the potential for new licensees and service discontinuity) will also need to be assessed," the tender documents state.

Most of the mobile telephony spectrum bands being valued were licensed in prohibitively expensive auctions between 1999 and 2001.

In 2001, 15-year licenses in the 2 GHz band (allocated for 3G mobile services) were auctioned off to several mobile carriers, earning the Federal Government some $1.16 billion. These licenses do not expire until October 2017.

The 800 MHz and 1.8 GHz bands, also used for mobile telephony, were auctioned off for some $350 million in 1998 and will potentially back on the auction table as soon as 2013.

The mobile telecoms industry, at both a local and global level, has called for Governments to take an approach to mobile spectrum allocation that considers more than the filling of their coffers with cash.

Telecommunications analyst Paul Budde is confident the current Federal Government will take a more balanced approach this time around.

"The Government can see on one side, the potential for generating cash from auctioning spectrum and on the other side a common good issue around the benefits of wireless broadband," he told iTnews.

"They can see that auctioning off spectrum to the highest bidder is not the most successful strategy if a party decides to sit on spectrum such that it is not used. I think that is a lesson they have learned.

"Future auctions are likely to be far more detailed and sophisticated process that we've ever seen before."

A discussion paper released by ACMA earlier this month reinforced that the regulator is entitled under Australian law to put spectrum coming to the end of a license up for auction again, unless the Minister for Communications (presently Senator Stephen Conroy) decrees that certain bands remain with incumbent holders "if deemed in the public interest."

"The Minister has not declared a class of services for which renewal would be in the public interest" to date, ACMA said.

Incumbent licensees will be informed "well ahead" of the expiration of existing licenses as to what path the Government will take on future licensing arrangements, ACMA promised.

New spectrum required

Beyond future auctions of wireless spectrum already used for mobile broadband, the Government is looking to make available new frequency bands to cater for the industry's growth.

Last month, ACMA released a 'five year plan' for mobile spectrum allocation (from 2009-2013), identifying that the 593 MHz worth of spectrum currently allocated to mobile broadband is unlikely to meet future demands.

"Significant growth is expected with the increased uptake of 3G services, as demand grows for the sharing of digital multimedia, mobile internet access and video streaming, as well as a range of other services," the plan stated.

There will be further demand for spectrum when radar technology is updated to allow for data rates of up to 100-1000Mbps, which ACMA sees as a possibility within the next 12 months.

ACMA also predicts the next generation of 3GPP mobile technology, Long Term Evolution (LTE), will require spectrum allocation in the 2.5 GHz and/or 700 MHz bands, while WiMAX services will demand spectrum in the 2.3 GHz, 2.5 GHz and 3.4 GHz bands.

ACMA says it is a decision for the Minister as to what the Government will do with the 'Digital Dividend' of 700 MHz spectrum once Analogue Television is switched off in 2013.

The mobile industry is calling for some 150 MHz worth of this spectrum to be allocated to consumer use, but it may come up against some competition from other interested parties.

This spectrum, ACMA says, is "seen by proponents of [wireless broadband] and law enforcement, defence and security agencies to have optimum characteristics for new broadband wireless services, with the possibility of high data rates to mobile terminals, longer propagation characteristics for extension of services to regional areas, and superior building penetration in urban environments, along with the added consequent advantages of being of being able to utilise internationally harmonised spectrum."

The 2.5 GHz band, meanwhile, is the subject of an ACMA review to determine "how the band can be planned and reallocated to permit maximisation of the overall benefit derived from that spectrum."

 
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