Broadcasters say 700MHz auction showed lack of demand

But AMTA CEO says need for spectrum is "as compelling as it ever has been."

Broadcasters and the mobile industry had different takeaways about the level of demand for spectrum in Australia after the government failed to sell all of the 700MHz spectrum in the Digital Dividend auction.

In the auction completed last week, the government sold 30MHz of 45MHz available spectrum in the 700MHz band. The country's number three telco, Vodafone Hutchison Australia, sat out the auction completely.

“Given that this spectrum was not all sold, there is apparently not a great deal of demand and therefore would seem to be limits to the value the mobile industry places on additional spectrum,” said a spokeswoman for Broadcast Australia, representing the radio and TV broadcasters who gave up the 700MHz spectrum for the Digital Dividend.

However, Australian Mobile Telecommunications Association (AMTA) CEO, Chris Althaus, told Computerworld Australia that the auction results do not signify any lack of demand for spectrum by the mobile industry.

“The need for spectrum is certainly as compelling as it ever has been,” Althaus said.

“All the demand-side signals suggest that consumption of mobile broadband particularly along with an emerging machine-to-machine market and increasing diversity in applications and services available via mobile broadband ... support strong volume growth in mobile data. We expect that demand to continue.”

However, at $1.36 per MHz POP, the price was “significantly above expectations,” the AMTA CEO said. POP is a telecom term measuring the amount of spectrum owned in a region multiplied by the number of people reached.

An auction “is a straight-out market mechanism, so your pricing … affects people’s willingness to purchase [spectrum],” said Althaus, adding that the relatively low price for 2.5GHz spectrum resulted in its sell-out in the auction.

Telecom analyst Chris Coughlan agreed that price kept more of the spectrum from selling. "It was clear that the industry considered the reserve price set by the Minister as too high," he said. "I'm sure that Optus would have doubled their holdings if the 700MHz reserve was down near the 70-80 cents per MHz POP."

AMTA expects high demand for the remaining 700MHz spectrum when it goes up for sale again, said Althaus. Communications minister Stephen Conroy has said the government would return the leftover 15MHz of paired 700MHz spectrum to the market in the next two to three years.

“The 700MHz band remains highly valued and it remains a very attractive band for use in Australia,” Althaus said. “We wait with interest in terms of what the government will put in train by way of process for that particularly remainder of the spectrum band.”

The mobile industry will still require more spectrum after the rest of the 700MHz spectrum is sold, and it may once again come from broadcasters, said Althaus.

“The spectrum environment is a very challenging one because spectrum is fully allocated, so if someone wants more spectrum, somebody else has to got to be prepared to use less,” he said.

Changes to the way media is viewed could result in less spectrum required by broadcasters, he said. “In an NBN world, for example, consumers are consuming media in an increasingly online way, which could easily see further broadcasting spectrum being freed up.”

The Broadcast Australia spokeswoman said that there “are currently no plans to free up spectrum for a second Digital Dividend after the clearance of the 700MHz band.”

AMTA supports an ongoing review by the Australian Communications and Media Authority into where more spectrum may come from in the future, Althaus said. The ACMA has set a goal of another 150MHz spectrum for mobile broadband by 2015 and another 150MHz by 2020.

“The world of spectrum moves at a fairly slow pace, but it’s critically important that industry has reasonable levels of certainty about what the roadmap looks like for spectrum.”

The 1500MHz band is one range of frequencies being investigated for potential mobile use in the future, said Althaus. But the plethora of different players in the spectrum could make freeing this spectrum a complex task for the ACMA, he said.

A secondary trading market for spectrum could also be used to reallocate spectrum for mobile broadband, said Althaus. “If someone did want to divest themselves of some spectrum, then there’s a market to allow that to happen.”

However, that secondary trading market is not yet very active, he said. “Spectrum is expensive and a lot of planning and investment strategising goes into how you fit new spectrum into your operation.”

Follow Adam Bender on Twitter: @WatchAdam

Follow Computerworld Australia on Twitter: @ComputerworldAU, or take part in the Computerworld conversation on LinkedIn: Computerworld Australia

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags AustraliamobilewirelessspectrumauctionDigital dividend700Mhzbroadcasters

More about AMTAAustralian Mobile Telecommunications AssociationHutchisonOptusVodafone

Show Comments