After 19 rounds of bidding in the 3G (third generation) spectrum auction, the federal government's expected revenue fell short by $1.2 billion Bids totalled $1.168 billion and added two new players to Australia's mobile phone market in the auction, which started on March 15 and ran for six days.
3G Investments, owned by Qualcomm, won 10MHz of paired spectrum in each capital city, and ArrayComm, which bid under the name of CKW Wireless, took 5MHz of unpaired spectrum in capital cities.
Telstra spent the most at the auction (more than $300 million), and picked up 20MHz of spectrum in capital cities and 10MHz of paired in regional areas.
Optus and Vodafone took the same amount of paired spectrum, while Hutchison Telecommunications took 15MHz of paired spectrum in Sydney and Melbourne and 10MHz of paired in Brisbane, Adelaide and Perth.
AAPT, which had initially signalled its intention to bid at the auction, pulled out before it started.
Of the 58 lots on offer, only 48 attracted bids with some lots allocated at their reserve prices and others seeing strong competition.
The Australian Communications Authority (ACA) said unsold lots would be available for allocation at a later date.
The successful bidders now have 30 working days to pay for their 15-year licences, which take effect from October 2002.
Vodafone announced that it expects to start offering 3G services in 2004. It anticipates handsets offering both 3G and existing networks will be available at this time.
ACA chair Tony Shaw said the prices paid at the auction represented a fair outcome for both the taxpayer and the successful bidders.
"The auction outcome means that there will be real competition in the provision of third-generation mobile services. It is particularly pleasing that all spectrum in regional Australia has been allocated and that there has been keen bidding on many of the regional lots."
"In addition, the spectrum acquired by successful bidders and the overall level of prices paid mean that services should be able to be rolled out quickly."
Shaw said the choice of technology to be used in the spectrum is a matter to be decided by the bidders. Probable choices include wideband CDMA (code-division multiple access) and CDMA2000.
Earlier worldwide 3G auctions, such as those in Germany and the UK last year raised $80 billion and $50 billion respectively. However, more recent auctions in Europe have been disappointing and have failed to attract a substantial number of bidders.
3G is expected to include features such as enhanced multimedia (voice, data, video, and remote control), usability on all popular modes (cellular telephone, e-mail, paging, fax, videoconferencing, and Web browsing), broadbandwidth and high speed (upwards of 2Mbps), routing flexibility (repeater, satellite, LAN), and operation at about 2GHz to transmit and receive frequencies.