The Federal Government has set allocation limits on the sale of the prized spectrum that will facilitate new 5G networks in an attempt to ensure competition in the market for 5G services.
The government has directed the Australian Communications and Media Association to auction 125 megahertz of available spectrum in the 3.6 gigahertz spectrum band by the end of the year.
The spectrum is a “highly value and finite resource” that will be used to facilitate the rollout of new 5G networks from next year.
“The next generation of mobile services, 5G, will deliver significantly faster mobile data speeds and allow for millions of new devices to connect,” Minister for Communications Mitch Fifield said.
“The 3.6 megahertz band is recognised internationally as a key band for telcos to roll out new 5G networks.”
ACMA has revealed the limits it will impose on the telecommunications companies looking to bid for the coveted spectrum, with an allocation limit of 60 megahertz in metropolitan areas and 80 megahertz in regional areas.
Fifield said this limit would account for telcos’ existing spectrum holdings in the 3400 - 3700 megahertz band, which is most suitable for 5G. Telcommunications providers that already have a significant holding in this band will be unable to participate in the upcoming auction.
“Australians have a voracious appetite for mobile data, and our competitive telecommunications market means that Australians already enjoy some of the fastest mobile broadband speeds in the world,” Fifield said.
“These auction limits promote competition in the telecommunications industry while ensuring this scarce spectrum is put to its highest-value use.”
The new limits will lock out Optus and NBN Co from most of the auction as they already hold amounts over the threshold.
The limits have been imposed following concerns that the large telcos will be able to buy a large majority of the new spectrum, blocking out potential emerging competitors.
The government said it had come to the decision following “careful consideration of advice from the Australian Competition and Consumer Commission”, but its final verdict goes against some of the competition watchdog’s recommendations.
In an earlier report, the ACCC recommended that a lower threshold of 45 megahertz be applied for Melbourne and Sydney, and that the 60 megahertz limit for other metro areas also be applied to regional areas.
The government has instead opted to use the same limit of 60 megahertz across all major cities, and increase this to 80 megahertz in regional areas.
The ACCC said that because demand for the spectrum will be highest in Melbourne and Sydney, a reduced limit would better promote competition.
“The expected bidders, Telstra, TPG and VHA, could bid up to a maximum of 45 megahertz each,” it said.
“TPG has announced its intention to build a fourth mobile network covering 80 percent of the population. If a limit of 60 megahertz was imposed, it would increase the risk that TPG would not be able to acquire sufficient spectrum to launch a strong entry into the mobile services market and to compete effectively with the incumbents over the longer term.
“The ACCC considers that such an outcome would not promote competition.”
The watchdog added that an increased limit in regional areas may mean that telcos “may only be able to acquire a smaller amount of spectrum, or no spectrum, in the auction”, and this would “not promote competition in wireless markets”.
“The ACCC considers that ensuring there is sufficient spectrum available for all MNOs [mobile network operators] to deploy services in regional areas would promote investment in mobile infrastructure, providing more choice to regional consumers,” the ACCC said.