ACMA reveals 4G 1800 MHz resale fears

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ACMA reveals 4G 1800 MHz resale fears
1800 MHz assets underpinning early 4G networks are up for renewal.

Why expired 1800 MHz licenses could become unsaleable.

The Australian Communications and Media Authority has found itself with two empty portions of 1800 MHz spectrum and a resale deadline that threatens the contiguous nature of the range.

The authority revealed the issue — impacting the spectral range that now underpins initial 4G deployments by Australia's three biggest carriers — in a consultation paper late last week (pdf).

It noted that licenses in one of two "tranches" of 1800 MHz spectrum are to expire on 17 June this year.

"While all current spectrum licenses in the 1800 MHz band are likely to be re-issued, two licenses in that band have already been returned to the ACMA," the authority said, noting the return took place in January 2010.

Under normal circumstances, such chunks of spectrum can be "re-allocated" — sold or auctioned to a new buyer — either before or after the license expires on 17 June.

The legal instrument that allows this to occur is a re-allocation declaration, which comes from the federal Communications Minister.

However, such declarations for 1800 MHz and several other bands have lapsed, meaning the ACMA must resell any available blocks prior to 17 June.

If the blocks don't sell, and no alternative sale arrangement is made with Ministerial consent, they revert to unlicensable — unsaleable — assets.

The ACMA is concerned that more portions of 1800 MHz could be similarly voided if current owners fail to pay their renewal fees on time.

According to a price determination issued late last year, Telstra is up for a re-issue fee in excess of $127 million, VHA in excess of $94 million, and SingTel Optus over $110 million.

The ACMA is not allowed — except by mutual consent — to require full payment of the re-issue fees before 1 June (pdf), just two weeks before the licenses expire, though monies must be received "on or before" 5 June.

"In the event that licences are not re-issued due to non­payment of the spectrum access charge at that time, the ACMA will not have sufficient time to undertake the necessary re-allocation process prior to expiry," it noted, meaning they, too, could become unsaleable.

Hurdles to resale

The ACMA must seek a Ministerial designation for any chunks of 1800 MHz it wishes to sell or auction after the 17 June deadline.

Although it could apply now for a designation to cover the two already-surrendered chunks, it is wary of doing so in case carrier non-payment results in more slices of 1800 MHz becoming available, thus requiring more designations to be filed for.

The ACMA also wants to be able to offer all available 1800 MHz assets to any prospective buyers at one time, rather than in bits and pieces.

If it does not apply to the Minister to be able to resell these expired chunks, they will break up the currently contiguous nature of the 1800 MHz band.

The ACMA indicated in its consultation paper that it wants the Minister to designate "any 1800 MHz (tranche one) band spectrum that is not re-issued ... for allocation by spectrum licenses".

"This will enable the continuation of spectrum licensing arrangements in that spectrum space," it said.

However, the ACMA must first consult with the industry on the proposal before it can put it to the Minister. Submissions close 15 March.

iTnews contacted existing 1800 MHz spectrum holders — Telstra, VHA and Optus — to gauge their interest in bidding for extra spectrum in the band but did not receive responses by the time of publication.

The price for 1800 MHz spectrum is considerably lower than the reserve prices set for so-called 'waterfront' 4G spectrum in the 700 MHz and 2.5 GHz bands, which are expected to fetch around $3 billion.

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