Government Sets Allocation Limits in Latest Spectrum Auction

The process for the auction of the 850/900MHz spectrum has been kicked off by the Department of Communications. 

Set-aside Spectrum for Optus and TPG

However, in an exposure draft, 10MHz each was set aside for Optus and TPG. In parallel to this, operators would then be restricted to hold more than 82MHz, which is approximately 40% of all spectrum in the sub-1 GHz band. This would have a significant impact on Telstra’s bidding because currently, the telco holds 60MHz in urban areas and 70MHz in regional areas across those frequencies.

Nevertheless, the new restrictions imposed are aligned with the advice of the Australian Competition and Consumer Commission advice. According to the latter, the 4G network of Telstra is mainly dependent on the 700MHz spectrum while those of Optus and TPG are dependent on the 900MHz spectrum. Among these bands, it is the 900MHz spectrum that is being re-allocated and auctioned.

According to the ACCC, Telstra holds 46% of all sub-1GHz spectrum which are currently available for mobile use in most metropolitan areas and 54% in regional areas. On the other hand, TPG holds 38% in metropolitan areas and 31% in regional areas while Optus only has 15% in both metropolitan and regional areas.

Prior to the 850/900MHzauction, the auction for the 2400MHz spectrum in the 26GHz band already raised a total of $647M.

Department of Communications Memorandum

In a memorandum released by the Department of Communications, they explained in detail that: “Spectrum-licensed bands in the sub-1 GHz band, of which the 850/900 MHz band is part, is closely substitutable for the 850/900 MHz band. This spectrum is well suited to providing wide-area and in-building coverage due to its unique propagation characteristics and is therefore highly sought after by mobile network operators. Disparity in sub-1 GHz spectrum-licensed holdings between MNOs currently exists. If this disparity is not addressed, or asymmetry in sub-1 GHz band holdings further increases it could constrain the ability of some MNOs to compete effectively in the downstream consumer mobile market.”

Goals of the Reallocation

Some of the main goals of the reallocation of frequencies in various bands are to support the deployment of 5G technologies, as well as promote competitive market outcomes for the long-term benefit of the subscribers. The re-allocation also aims to encourage infrastructure investments, even in the regional areas in the country. In addition to this, it also intends to support the continuity of services, as well as the national public safety mobile broadband (PSMB) capability. In terms of the latter, the frequency ranges 809–814 MHz and 854–859 MHz would be used, which is why these were not declared to be re-allocated.