Price set for 'digital dividend' spectrum auction

The reserve price and competition limits for an upcoming auction of 700 MHz digital dividend spectrum has been announced by the federal government.

The spectrum band is designed to allow mobile network operators to provide high-speed mobile voice and data coverage across Australia.

Minister for Communications, Mitch Fifield has directed the Australian Communications and Media Authority (ACMA) to set a reserve price of $1.25 per MHz, per head of population covered. This is the equivalent of the 2013 ‘digital dividend’ auction reserve price, adjusted for a shorter licence term.

The blocks of 700 MHz spectrum to be auctioned remained unallocated following the ‘digital switchover’ of TV broadcasts from analog to digital. The first 700 MHz blocks were sold by auction to Telstra and Optus in 2013. However, 30 MHz (2 x 15 MHz blocks) of spectrum remained unsold.

Acting on the advice of the Australian Competition and Consumer Commission (ACCC), the Minister has also directed ACMA to set an allocation limit of 2 x 20 MHz blocks of spectrum. This means that no mobile network operator can own more than two 20 MHz blocks of spectrum in the 700 MHz band, ensuring that the auction promotes competition and that the spectrum is allocated in the long-term interests of end users.

The Ministerial direction will allow successful bidders to pay for spectrum in instalments, as long as certain conditions are met. The direction also allows for a subsequent allocation process, open to all bidders regardless of their existing spectrum allocation, should any spectrum remain unsold. This will help ensure that valuable spectrum is not left unused at the end of the process.

ACMA is conducting the auction of 700 MHz spectrum on behalf of the government and has consulted on draft auction instruments. It is expected to call for applications in January 2017.

The executive summary of the ACCC’s advice to the Minister on allocation limits is available on the Department of Communications and the Arts website.

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