Albanese keeps high price on 700 MHz spectrum

Communications Minister Anthony Albanese will maintain reserve prices on unsold 700 MHz spectrum, keeping Telstra happy but ignoring calls by Vodafone to delay future pricing decisions.

Albanese quietly issued directions to the Australian Communications and Media Authority (ACMA) on Friday last week that set out how and when a 30 MHz portion of unsold spectrum in the prized 700 MHz band might be re-offered for sale by the Federal Government.

Based on reserve prices set for this year's auction — which attracted bids from Telstra, Optus and TPG Internet — the unsold portion could be worth up to $1 billion.

Former Communications Minister Stephen Conroy began consulting with industry on what to do with the unsold spectrum on June 24.

Submissions from the three major telcos were published last Friday, alongside formal Ministerial directions to the ACMA on how to handle the unsold lots.

The directions are largely the same as the June 24 drafts; though industry views were taken into account, recommendations from the telcos did not make the final texts.

Price was a key theme of the industry submissions.

Telstra's executive director of corporate affairs, Jane van Beelen, said in a submission (pdf) that keeping the reserve price set at no less than $1.36 per megahertz per population was necessary to ensure recent bidders weren't "disadvantaged by the unsold 700 MHz lots being offered at a reduced price in a future allocation process".

"It is also important for maintaining the integrity of the recent auction process and the broader market based spectrum allocation regime in Australia, so that investors have confidence about participating in future ACMA spectrum allocation processes," van Beelen said.

Vodafone Hutchison Australia (VHA) — which did not participate in this year's 700 MHz auction — had urged the Government to relax the reserve, especially given the high price had meant portions of the spectrum hadn't sold.

"There is no reason for the Minister to direct the ACMA fix spectrum access charges for the 700 MHz band at 'no less than the amount of $1.36/MHz/pop'," Vodafone said. (pdf)

"The imposition of a minimum value above the recently observed market value of the spectrum seems premature.

"Instead, the matter of defining a minimum value for the relevant spectrum should be within the scope of the ACMA's post-auction review."

The Ministerial direction to maintain the reserve price on 700 MHz spectrum presents a fresh stumbling block for emergency services, which have made a play to get access to the unsold spectrum for free.

Three days before Albanese issued the formal directions, a Senate Committee recommended that leftover 700 MHz spectrum be given over to emergency services to host a private 4G network. However, the formal directions mean that prospect is once again looking unlikely.

The Government has long maintained that the emergency services network should operate in the adjacent 800 MHz band.