Analysis: 3G spectrum holdings cloud Voda-Hutch merger

Is share of spectrum a competition issue?

Nick Ingelbrecht, research director for consumer mobile services at Gartner, told iTnews that spectrum ownership is a "very interesting issue" with regards to the future shape of the Australian mobile industry.

 "If VHA is found to be over the line, it may be required to return some spectrum or sell some spectrum to another party," he said.

The question that needs to be asked is whether VHA can compete with Telstra in terms of having enough spectrum to take the path to 4G, he said.

Spectrum will be a 'hygiene factor' that may determine who wins the 4G race, he said.

"There is an important commercial issue for VHA. Telstra is putting pressure on in terms of network speed with Next G. While it is fine for VHA to own the value space, operating at lower network and operational costs and passing that on to customers, I expect market forces will dictate that they need a reasonable amount of coverage."

"Long Term Evolution [of 4G] is where this new company will need to set their sights. Technologies based on the LTE standard will be available in various spectrum flavours, but at the end of the day, vacant spectrum is required. The important thing is having sufficient spectrum to set up a new network."

But telecommunications analyst Paul Budde doubts spectrum ownership will be a stumbling block.

"While it is the ACCC's decision at the end of the day, the proposed merger is not anti-competitive - if anything it is pro-competitive," he said. "Also, the whole spectrum issue needs to be reviewed anyway. Long Term Evolution (4G) requires a totally new approach to spectrum."

A spokesperson for Optus said the competitor immediately welcomed the merger but "wouldn't want any outcome that saw one company have too much control of spectrum."

Telstra chief technology officer Hugh Bradlow told iTnews that he is confident spectrum issues will "cross the regulator's mind". But wary of over-regulation, Bradlow warned that any analysis of mobile spectrum with relation to competition should be handled "in a mature way, and not a simplistic, ham-fisted way".

Regardless of regulation, VHA may volunteer to sell off spectrum assets.

A spokesperson for Vodafone said it is "far too early for Vodafone or Hutchison to comment on what the future holds for our spectrum assets. Post reviews by the Foreign Investment Review Board and ACCC, we will have a much clearer idea of where we stand on the issue."