Already marginalised regional areas could be left out of the benefits of costly 5G deployments, a telecommunications expert has warned as “concerned” competition authorities consider capping upcoming 5G spectrum auctions to prevent Telstra from monopolising the new services.
The Australian Competition and Consumer Commission (ACCC) floated the idea of caps as the Australian Communications and Media Authority (ACMA) prepares to auction off the 26GHz spectrum band – necessary to support the rollout of next-generation, superfast 5G mmWave technology – early next year.
5G mmWave supports high-speed, short-range communications and has been flagged as, among other things, an enabler for Internet of Things (IoT) sensors and in-office communications at up to more than 2Gbps.
“5G spectrum will allow for technological innovation across a variety of sectors, for example in mining, agriculture and manufacturing,” ACCC commissioner Cristina Cifuentes said in announcing the agency’s solicitation for public feedback.
“It’s important that this spectrum is allocated in an economically efficient way, to support the deployment of cutting-edge 5G technologies.”
Physical characteristics of the very high-frequency mmWave spectrum mean that signals can be interrupted by building walls, people’s bodies, and even raindrops.
This means rollout of the technology will likely require clusters of base stations that may prove to be too much for profit-minded carriers to handle on their own – and that is forcing the ACCC to consider whether individual companies should be prevented from purchasing large swathes of mmWave spectrum that could be used more effectively by other operators.
“Spectrum is a scarce resource and it is a critical input into the supply of many services in various downstream markets, including communications services,” the ACCC notes in a consultation paper that warns of the threat of “significant concentration in the ownership of high-band spectrum holdings” that could lead to “spectrum monopolisation”.
“Access to spectrum is a significant barrier to entry in many of these markets…. [that] can influence the network capacity and quality of service, as well as the geographic areas in which an operator can offer services.”
“We would be concerned if as a result of this allocation it was possible for one operator to obtain the majority of the spectrum available.”
The 4G precedent
The ACCC didn’t name Telstra specifically, but past experiences with 4G rollouts provide precedent for its concern.
Telstra’s early push into 4G saw it buying massive swathes of spectrum early on, allowing it to outpace its rivals and capture massive market share early on.
This also helped it dominate 4G services in regional areas by leveraging its incumbent 3G network.
Over Telstra’s howls of protests, the government limited individual companies from buying more than two 20MHz blocks of 700MHz spectrum.
Yet despite its broad spectrum ownership, much of that bandwidth has gone unused – especially in in regional areas where the capital expenditure to build networks simply hasn’t made sense.
Even with government support through the Mobile Black Spot Program – much of which has gone to Telstra – many regional areas continue to have little or no 4G coverage because carriers can’t justify the expense.
Telstra called for program funding to be increased, warning that current subsidies weren’t enough to justify further rollouts – and that caps on spending, as well as support for carriers’ ongoing operational costs, should be reconsidered to ensure ongoing rollouts are financially viable.
Building a 5G ecosystem
Dominance in spectrum ownership has left mobile virtual network operators (MVNOs), who depend on spectrum-owning mobile operators to deliver their businesses, at the mercy of commercial decisions such as Telstra’s refusal to provide wholesale access to its Next-G 4G network until 2016.
“For some time, MVNOs have been asking for some sort of possibility to better participate in this market,” BuddeComm telecommunications analyst Paul Budde explained, “and they had hoped for regulations that would force telcos to actually provide wholesale services.”
Telstra recently committed to extending its 4G network to match the footprint of its now-doomed 3G service – yet the company has more recently begun warning that further rollouts were becoming uneconomical.
MVNOs are only one of the parties that would benefit from tighter controls over the allocation of 5G-related spectrum.
Because 5G is at an early stage and 5G mmWave even more so, authorities are cognisant of the need to ensure that the spectrum might be critical for enabling entirely new business models.
Universities might want to deploy their own 5G mmWave services on campus, for example, while dedicated companies could develop managed in-building services to mobilise offices or manufacturing sites.
“There are new opportunities in the market and you can think that many organisations want spectrum themselves,” Budde said, “or that you get dedicated service providers looking at opportunities to tackle that market.”
The ACCC is accepting submissions on the potential caps through 27 March, and will provide its ministerial advice by mid-May.