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Broadcasters say 700MHz auction showed lack of demand

Adam Bender | May 15, 2013
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.

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.

 

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