Government looks to spectrum sharing

After releasing a consultation paper almost two years ago, the Australian government has finally announced its recommendations to improve the efficiency and transparency of spectrum management and pricing.
Written by Corinne Reichert, Contributor

The federal government has announced the outcome of its review of Australia's spectrum pricing and management, suggesting that it investigate the implementation of spectrum sharing arrangements used in other countries.

In all, the Department of Communications outlined 14 recommendations for changes to be made, including consolidating several laws into one Act, making pricing decisions public, and combining two spectrum taxes.

"Spectrum is a finite resource that is essential to a digitally networked economy and a major contributor to Australia's economic and social wellbeing. The extent to which these benefits are realised will depend on how it is priced and allocated," Communications Minister Mitch Fifield said.

Commonwealth-held spectrum review [PDF] contained three recommendations, including establishing a committee with federal government agencies to advise the minister on spectrum issues and implement efficiency improvements for all Commonwealth spectrum holdings; and improving transparency by publishing a report on the value and use of all Commonwealth spectrum holdings every two years.

The government then recommended that it investigate implementing a whole-of-government approach to identifying sharing and trading mechanisms for spectrum. This would include looking at how the governments of other countries handle emerging technologies and processes, it said.

"In the face of increasing demand for spectrum from public and private users, spectrum sharing and trading is essential to the efficient use of spectrum," it explained.

"The committee will consider if there are opportunities and mechanisms for Commonwealth users to share and trade spectrum. Stakeholders support the committee commencing further work to identify opportunities and mechanisms for spectrum sharing and trading."

The Spectrum pricing review [PDF] then made 11 recommendations across four categories.

In regards to the first category of allocation, the government said the Australian Communications and Media Authority (ACMA) should publish guidelines on how it makes pricing decisions; the ACMA and government should charge users of similar spectrum at the same rate; and the ACMA should publish reasons for any bespoke pricing arrangements.

For market-based allocations, the government suggested that the ACMA identify bands to migrate from administratively set fees to competitive market allocations; the ACMA and the government should "consider the influence of the reserve price on competitive behaviour" in setting reserve prices; and the ACMA should require upfront lump sum payments for spectrum access charges determined by auction.

"There may be circumstances where instalment payments are warranted shortly after the beginning of a licence term. In considering use of instalments, the ACMA should assess the risks to the state of default and the potential impact on competition," the government said.

In terms of administered allocations, the government recommended that the ACMA review the parameters of the administrative pricing formula, such as the number of pricing bands, power categories, and density areas; the ACMA should regularly update these to show changes in demographics, demand, and density; and the ACMA should use opportunity cost pricing across more spectrum bands.

For the fourth category of legislative and cost recovery framework, the government suggested that it consolidate the three existing spectrum tax laws into one Act; combine apparatus licence and spectrum access charges for licences into one access charge; and combine spectrum licence and apparatus licence taxes into one radcomms licence tax.

Fifield reiterated that the government is aiming to introduce a Radiocommunications Bill package into Parliament during 2018, with the modernisation of legislation to undergo further industry consultation over the next few months.

Fifield in November said that thanks to submissions following the release of a consultation paper in March 2016 and the subsequent draft legislation in May 2017, the government had recognised that the existing framework is too slow, rigid, and complex, making continuing consultation with industry a necessity.

"The consultations have, it's fair to say, highlighted what we already knew, and that is just how complex this area is -- and due to the complexity of the existing legislation and the impact on industry, there will need to be ongoing feedback and consultations to inform the design of the new legislation," Fifield explained.

"We do need to reach a balance between the pace of process and ensuring that the new system is fit for purpose, and that's why we intend to release another exposure draft for industry consideration, and this will include provisions relating to broadcasting and also on transitional tax arrangements."

Australian Competition and Consumer Commission (ACCC) chair Rod Sims, meanwhile, has been arguing for a move away from auctions in separate bands to a more holistic spectrum holdings approach.

"The value of spectrum lies in the economic and social benefits it can provide to citizens and consumers, not in financial returns to the Budget," Sims argued in November.

"When governments downplay competition to sell monopoly assets for the highest price, the economy loses out."

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