Govt sets buyer limits for 5G spectrum

Australia’s mobile telcos hoping for a slice of prime 5G spectrum will have their existing holdings assessed to determine how much extra they can own.

Much like the 700MHz and 2.5GHz digital dividend spectrum auctions for 4G, telcos will be limited in how much 3.6GHz spectrum they can own for forthcoming 5G services.

In preparation for an auction due to begin in late October, communications minister Mitch Fifield directed the Australian Communications and Media Authority “to impose allocation limits of 60 MHz in metropolitan areas and 80 MHz in regional areas.”

“These limits account for existing spectrum holdings in the broader 3400-3700 MHz band (which is all suitable for 5G), meaning that carriers which already have significant holdings in this band would be limited in the amount of new spectrum they could bid for, or may not be able to participate in the auction,” Fifield said in a statement.

“These allocation limits will allow for a competitive auction process while preventing any one bidder from acquiring an amount of spectrum which could preclude other telcos from rolling out 5G networks.”

There have already been hints that prime 5G spectrum could fetch record prices at auction.

All three existing mobile operators have been jostling for leadership position on 5G in recent months, with Telstra talking up its play as a central plank of its business recovery strategy.

At auction late last year, Telstra paid $50 million - or $0.50/MHz/pop - for 32.5MHz of prime 5G spectrum in Brisbane.

There have been fears voiced in parts of the industry that some telcos could try to drive up auction prices to block rivals from being able to launch 5G services.

Given demand for prime 3.6GHz spectrum looks set to outstrip supply, one option floated by Vodafone last year was to take back 3.6GHz spectrum holdings from NBN Co and re-auction it, though the idea was met with a lukewarm reception from both the government and NBN Co.

While some precursor 5G services are likely to be launched next year, mainstream 5G isn't expected to appear before 2020, as standards are finalised and compatible devices are created.