Let Optus, Vodafone, and TPG pick up 700MHz spectrum: ACCC

Restraining Telstra from acquiring additional 700MHz spectrum would help competition, the ACCC has advised the Australian government.

The Australian Competition and Consumer Commission (ACCC) has advised the Minister for Communications Mitch Fifield that an allocation limit be placed on the upcoming April auction of remaining 700MHz spectrum.

In advice released by the Department of Communications on Wednesday, the ACCC recommended the minister limit each mobile carrier to no more than two 20MHz spectrum blocks in the 700MHz band.

"Given Telstra currently holds over 50 percent of available low band spectrum, we consider that if it was able to acquire additional 700 MHz spectrum, it would increase its dominance of the available spectrum for use in mobile markets," the consumer watchdog said. "Further, we do not consider that being unable to acquire additional 700MHz spectrum will constrain its ability to compete."

The ACCC said if Optus or Vodafone picked up 2x10MHz of the 700MHz band, the existing Telstra competitors would increase the capacity and quality of their networks, and thus help competition.

If TPG were to acquire a pair of 10MHz spectrum blocks, or even the entire unallocated 2x15MHz blocks, the ACCC said it would allow the telco to create a new 4G network.

"We consider that Optus, VHA, or TPG acquiring at least 2x10MHz of spectrum would promote competition in markets for mobile services, an allocation limit that would allow any of these potential bidders to acquire spectrum would be in the long-term interests of end-users," the ACCC said.

Fifield has subsequently followed the ACCC advice and imposed an allocation limit for the upcoming auction, as well as announcing on Wednesday that he had set a reserve price of AU$1.25 per MHz, per head of population covered.

"The ministerial direction will allow successful bidders to pay for spectrum in instalments, as long as certain conditions are met," Fifield said in a statement. "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."

Speaking at TPG's annual general meeting last week, executive chairman David Teoh said it was unavoidable that the company would become a mobile carrier.

"We stated quite clearly that we would like to be the fourth mobile operator ... it is a difficult project, and we have to be careful in our implementation," he said.

"What you have in this company, a lot of things are in place: The extensive fibre infrastructure, the backhaul that we own; there is one key cost to run a mobile network, the customer service; the core network; the billing systems; they are all in place today.

"What we lack are the towers -- acquiring tower space is very difficult in this country."

TPG is also looking at spectrum in Singapore, where the company will enter an auction with MyRepublic to become the island nation's fourth mobile operator in the first quarter of next year.

"Is there risk to set it up? In my view that is quite minimal on the Singapore side, but then the future, the long-term future is very exciting," Teoh said.

"So mobile is very important to us."

The Australian Communications and Media Authority will sell off the unsold 30MHz from the 2013 digital dividend auction as one lot of 2x10MHz and one lot of 2x5MHz, with the former to be auctioned off a few days before the latter.

Both will be nationwide lots, with the 2x 10MHz lot to be comprised of the frequency ranges 738-748MHz paired with 793-803MHz, while the 2x 5MHz will comprise the frequency ranges 733-738MHz paired with 788-793MHz.

During the original 700MHz auction, Telstra picked up 2x20MHz of the 700MHz band along with 2x40MHz pairs of spectrum in the 2.5GHz band for a total of AU$1.3 billion, while Optus bought 2x10MHz of 700MHz and 2x20MHz in the 2.5GHz band for a total of AU$649 million.