Australian regulator hits back at auction "failure" accusations

The head of the Australian telecoms regulator has hit back at allegations that the recent spectrum auction was “damaging to the economy” and dismissed claims that one of the country’s three operators was deterred from participating by high reserve prices. The criticisms were levelled at ACMA by the CEO of spectrum auction planning specialist Coleago Consulting on Wednesday.

Coleago’s Stefane Zehle suggested that, by setting too high a reserve price for the 700MHz spectrum auction, ACMA had deterred one of the three Australian mobile operators, Vodafone’s VHA, from bidding. “ACMA’s failure could hardly be more complete,” Zehle said, arguing that the price had resulted in a 2x15MHZ swathe of 700MHz spectrum going unsold.

But ACMA chair Chris Chapman has hit back at Zehle, telling Telecoms.com that, in October 2012, Vodafone announced it did not need to buy the spectrum that was being offered in the digital dividend auction because it has sufficient spectrum to provide LTE services in the future. “Vodafone’s CEO, Bill Morrow, made this announcement two months before the Minister directed the ACMA to set the reserve price for the 700MHz band at A$1.36/MHz/pop,” Chapman said.

He added that Vodafone had also refrained from bidding for licences in the 2.5GHz band, “even though it is hard to characterise the reserve price for this band (A$0.03 per MHz/pop) as extremely high, and indeed all 2.5GHz lots were sold.”

The auction generated revenues of nearly A$2bn, yet Zehle claimed that “potentially several billion dollars of benefit to the economy had been lost,” given that the auction was estimated to deliver a net benefit to the Australian economy of between A$7bn and A$10bn.

Chapman argued that Zehle’s assessment of net benefit was well beyond figures quoted for expected auction revenue in the media and seem to be based on speculations about the overall economic benefits resulting from subsequent network rollout and operation. “Such benefits would, of course, be hard to calculate from the auction results alone,” he said.

“The ACMA expects that consumers will benefit from the substantial increase in spectrum holdings for Telstra and Optus resulting from this auction.  Telstra and Optus would not have bought this spectrum if they didn’t believe it would improve their position in offering competitive services to consumers.  Vodafone says it also intends to compete vigorously in the mobile broadband market using its existing spectrum assets.  In addition, the auction has brought a new entrant to the market (TPG Internet ) with its own spectrum holding.

“The ACMA is optimistic that all these companies will invest in the community when they commence 4G services, which will further transform the way Australians communicate and do business,” Chapman said.

On the matter of unsold spectrum, ACMA confirmed that three continuous lots, or 15MHz paired, of 700MHz spectrum remains vacant and available for allocation to the Australian industry at some future date.

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