Govt puts low reserve on 5G spectrum

The government has set an auction reserve price of between $0.03 and $0.08 per MHz per member of the population for prime 5G spectrum.

The price - particularly the $0.08/MHz/pop minimum reserve in metropolitan areas - is well below the $0.50/MHZ/pop paid by Telstra for similar spectrum in Brisbane at the end of last year.

At that same auction last year, NBN Co paid even more for 3.5GHz spectrum in Tasmania, coming in at between $1.29 and $1.61/MHz/pop.

The ACMA also said today that it would set a minimum reserve for some Perth lots at $0.053/MHz/pop, while the starting price in regional areas is $0.03/MHz/pop - which is the same price NBN Co is allowed to use adjacent spectrum for its fixed wireless network.

Telstra, Vodafone and TPG are likely to be the three main players in the upcoming 5G auction.

Optus already has substantial spectrum holdings in the proposed 5G bands, and NBN Co also has first right over a substantial amount of similar spectrum.

Competition limits set by the Australian Communications and Media Authority (ACMA) last month effectively preclude Optus and NBN Co from much of the bidding.

The very low reserve prices for 5G spectrum represent a large change from the strategy that the then-Labor government pursued with the 4G spectrum auction.

Then communications minister Stephen Conroy set a reserve price of $1.36/MHz/pop for what was considered ‘waterfront’ 4G spectrum in the 700MHz band, leaving telcos outraged.

The strategy appeared to backfire at auction, with the government left holding $1 billion of spectrum it had hoped to sell.

However, it did eventually get more money than expected when the remaining 700MHz spectrum was re-auctioned in mid 2017.

Of the 5G auction, ACMA chair Nerida O’Loughlin said the auction process - including starting prices has been designed “to maximise efficiency, competitive outcomes and the full utility of this spectrum for 5G.”

Telcos wanting to buy the 5G spectrum in this year’s auction must lodge an application by the end of the month.