Optus calls for 4G spectrum auction clarity

Optus has called on the Australian Communications and Media Authority (ACMA) to provide definite dates for the auction of the 700MHz spectrum band and the availability of that spectrum for use in long-term evolution (LTE) networks.

The ACMA this week published draft rules for the "digital dividend" auction and allocation of the 700MHz and 2.5GHz spectrum bands, which is to be held towards the end of this year. The ACMA also said that it will hold a further discussion with industry about when the auction will be held and when telcos will be able to get their hands on this spectrum for LTE or "4G" networks.

"A number of stakeholders expressed concern to the ACMA during its preliminary consultation about restack timing, spectrum availability and product certainty in the 700MHz band. They stated that there is currently insufficient certainty for prospective bidders about the timing of restack, and therefore the timing of access to the spectrum by new licensees," the ACMA said.

"In response to these concerns, the ACMA will conduct a further, separate consultation process on the suite of issues that are relevant to the timing of access to the spectrum. The ACMA anticipates releasing this separate paper for comment in the second quarter of 2012."

This isn't good enough, according to Optus, which has previously called for the 700MHz spectrum to be made available in areas where it has already been freed up as analog television signals are switched off. Optus said in a statement that there needs to be more certainty and detail around the auction.

"Key issues, including auction timing and spectrum availability, have still not been sufficiently addressed," Optus said. "We call on the ACMA to confirm a 2012 auction date and spectrum-access date for the 700MHz band without delay, as key investment decisions in relation to new mobile infrastructure are being impacted."

The 700MHz spectrum is viewed in the telecommunications industry as being "waterfront" spectrum for LTE services, and is already being used in the United States for LTE. The government is working to switch off analog television around the country, to be finished by the end of 2013 and to be freed up for use by 2015. Telstra and Optus have begun deploying their LTE networks in the 1800MHz spectrum, which was previously used for 2G services.

The lack of a definite date on when the auction will be held and when the spectrum will be made available puts carriers in a difficult position as they embark on LTE roll-outs in the 1800MHz spectrum. If the 700MHz spectrum is released earlier, it will allow carriers to avoid multiple upgrades to the same tower by being able to handle both 1800MHz services and 700MHz services.

The draft rules propose that the 700MHz spectrum band be divided into nine paired lots of 10MHz that will be sold nationwide, while the auction of the 2.5GHz spectrum band will be divided into metro and regional across Australia.

Ovum research director David Kennedy said that all of the spectrum in the 700MHz bands will now go directly to Optus, Telstra and Vodafone, because only they can afford to buy national coverage.

"The decision to make the key 700MHz spectrum available in national lots, rather than regional ones, will favour the three incumbents. A new entrant would probably want to purchase 700MHz spectrum just in key metropolitan markets. Under this scheme, it's all or nothing at 700MHz, so only operators with deep pockets and national scope will be interested," he said.

But this isn't bad for competition, he said.

"This is probably wise. Australia has recently gone from four mobile operators to three, on the grounds that four operators was too many for efficient, profitable operation."

Kennedy said that breaking the 2.5GHz spectrum up into geographical areas will allow the bidders of the 700MHz spectrum to supplement their capacity in high-density areas, such as metropolitan Australia.