TPG could potentially pick up a significant chunk of spectrum in the 700MHz band, boosting its ability to roll out a 4G mobile network, under rules set by the government for an upcoming auction.
The federal government today released the reserve price and spectrum limits for the upcoming auction of spectrum in the 700MHz band.
The government revealed in October that it would auction off the 2x15MHz spectrum left over from the 2013 Digital Dividend auction.
The government had previously indicated it was considering selling 2x10MHz of the spectrum directly to Vodafone Hutchison Australia (VHA) but after a public consultation communications minister Senator Mitch Fifield announced a competitive auction for the spectrum.
The proposal to sell spectrum directly to VHA was opposed by Telstra, Optus and TPG, with TPG confirming that it is keen to get its hands 700MHz spectrum.
TPG along with Vodafone, Optus and Telstra scored spectrum in the 1800MHz band earlier this year. In the 2013 auction, Telstra, Optus and TPG also picked up spectrum in the 2.5GHz band. In addition, Telstra picked up 2x20MHz and Optus 2x10MHz of 700MHz spectrum.
The government said today that it would set a reserve price of $1.25 per MHz per head of population covered, which it said was equivalent to the Digital Dividend reserve pricing adjusted for a shorter licence term.
Fifield has also set an allocation limit of 2x20MHz blocks of spectrum in the 700MHz band, which will rule out Telstra's participation in the new auction.
In its advice to the government, the Australian Communications and Media Authority noted that Telstra holds over 50 per cent of the available low band spectrum. If Telstra “was able to acquire additional 700 MHz spectrum, it would increase its dominance of the available spectrum for use in mobile markets,” the ACMA said.
“Further, we do not consider that being unable to acquire additional 700 MHz spectrum will constrain its ability to compete.”
On the other hand, if Optus or VHA acquired at least 2x10 MHz it would “allow them to offer better capacity and quality of mobile services, and achieve better depth and breadth of network coverage”.
“If TPG were to acquire 2x10 MHz or 2x15 MHz of 700 MHz spectrum, it would be better placed to deploy a new 4G mobile network in Australia,” the ACMA said in its advice.
“We consider that a new entrant in the mobile market would promote competition for mobile services, place competitive pressure on the existing operators and fundamentally change the structure of the market.”