Analyst slams ACA spectrum auction

Emerging wireless broadband providers may get "screwed" by the Australian Communications Authority's plan to auction off four additional radiofrequency spectrum licences for broadband wireless access use, an IDC analyst said today. The claim followed the release of the ACA's "Spectrum Management Strategy" yesterday.

Emerging wireless broadband providers may get "screwed" by the Australian Communications Authority's plan to auction off four additional radiofrequency spectrum licences for broadband wireless access use, an IDC analyst said today. The claim followed the release of the ACA's "Spectrum Management Strategy" yesterday.

The report stated that there has been an increased demand from wireless Internet providers for spectrum around the 2GHz frequency. However, it said "most of this spectrum has already been allocated for mobile telecommunications."

The ACA said it "recognises that WAS [wireless access services] is a fast-moving area with many emerging and competing technologies, and a definite trend towards BWA [broadband wireless access]", and as such has identified four blocks of spectrum for its expansion.

However, a senior analyst for wireless and mobility at IDC Australia, Warren Chaisatien, said that there is no doubt there will be more demand for spectrum from emerging wireless technologies.

"In the past 12-18 months we have seen a lot of wireless technology that needs spectrum coming to play," he said.

The ACA has identified four blocks of spectrum from 1880-2010 MHz for expansion of BWA services and, following confirmation that the additional spectrum is needed, the blocks may be auctioned late 2004 or early 2005.

The report states that if two or more applications are received for the same spectrum licence in one area then an auction will be triggered.

Acting ACA chairman Bob Horton said the ACA would be accelerating the "market-based" management of the spectrum.

"We will continue to use spectrum auctions in appropriate circumstances where demand exceeds supply," he said. "Several companies using spectrum won at auctions are achieving remarkable results that have only been possible because we adopted a market-based approach."

Chaisatien said this approach may make sense in an "economic text book point of view", however, in real terms consumers and service providers may suffer.

"From the government's perspective the most efficient way to manage the spectrum will be to auction it, to balance the supply and the demand and put the spectrum in the hands of those who need it," said Chaisatien. "However I see a drawback in this approach."

"At the end of the day service providers may have to spend all their money on getting spectrum access and have nothing left to start up the service," he said. "Then these costs may be passed on to consumers."

Chaisatien said that the government needs to regulate the spectrum market and should allocate a certain amount of spectrum for consumers in remote and regional Australia.

"Government will have to continue to keep a close eye on this otherwise smaller providers will get screwed and will have no opportunity to compete," he said.

Spectrum auctions open the way for heavyweights such as Telstra to purchase large blocks of frequency wholesale and rent it off to small service providers for an increased cost, Chaisatien said, and "from a government's perspective they don't care if you resell the spectrum once you've purchased the licence."

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