Government bucks ACCC advice on 5G spectrum limits

Sets higher spectrum limits in regional areas

The government is pushing forward with the auction of spectrum expected to play a key role in the first wave of services based on the new 5G mobile standard.

Communications minister Senator Mitch Fifield today revealed that he had directed the Australian Communications and Media Authority (ACMA) to set spectrum limits for bidders in the upcoming auction of the 3.6GHz band — a pioneer band for 5G services.

“The next generation of mobile services, 5G, will deliver significantly faster mobile data speeds and allow for millions of new devices to connect,” Fifield said in a statement.

“The 3.6 GHz band is recognised internationally as a key band for telcos to roll out new 5G networks.”

The minister has directed the ACMA to impose spectrum allocation limits of 60MHz in metro areas and 80MHz in regional areas. These limits will include existing spectrum holdings in the broader 3400-3700MHz band, the government said.

The ACMA is preparing to auction off 125MHz of spectrum in the band later this year.

The government said that the spectrum limits were set following consultation with the Australian Competition and Consumer Commission (ACCC). However, the ACCC recommended somewhat different limits for the auction.

“The government supports many of the principles in the ACCC’s advice, but considers it important to set limits which promote the efficient allocation of spectrum via a competitive auction process, and also encourage investment in infrastructure – particularly in regional areas,” a spokesperson for the minister told Computerworld.

The ACCC recommended a cross-band limit of 60MHz for metro areas, with the exception of Sydney and Melbourne metropolitan areas, where the competition watchdog recommended a 45MHz limit for all bidders in the upcoming auction. The government has decided to set the same limit of 60MHz across all metropolitan areas.

“The minister’s decision is largely consistent with the ACCC’s advice, except that he has decided to treat all metropolitan areas equally,” Fifield’s spokesperson said.

The ACCC said that for most areas a 60MHz limit would achieve a balance between allowing mobile network operators (MNOs) to “deploy early 5G networks of a sufficient quality and ensuring that all MNOs have the opportunity to acquire a sufficient amount of spectrum”.

However for Sydney and Melbourne the ACCC recommended the lower limit of 45MHz, which would prevent NBN Co and Optus from bidding.

“The expected bidders, Telstra, TPG and VHA [Vodafone Hutchison Australia] could bid up to a maximum of 45 MHz each,” the ACCC said.

The ACCC’s advice adds: “In assessing the appropriate allocation limits, the ACCC acknowledges that demand for spectrum in both Sydney and Melbourne is likely to be strong. TPG has announced its intention to build a fourth mobile network covering 80 per cent of the population. If a limit of 60  MHz was imposed, it would increase the risk that TPG would not be able to acquire sufficient spectrum to launch a strong entry into the mobile services market and to compete effectively with the incumbents over the longer term. This is because Telstra and VHA have incentives to preclude TPG from acquiring sufficient spectrum in these areas. The ACCC considers that such an outcome would not promote competition.”

In regional areas, the government has said it will impose an 80MHz limit on bidders — higher than the 60MHz recommended by the ACCC.

“Given that competition is less developed in these areas and lower population densities can make it difficult to attract telecoms investment, the minister has decided on a limit of 80MHz,” Fifield’s spokesperson said. “This is designed to promote an outcome where regional Australians can access the same 5G services as metropolitan areas.”

The ACCC noted that that in regional areas, Optus, Telstra, VHA and TPG may seek to pick up spectrum and that NBN Co may participate in the auction of spectrum in regional WA.

“The ACCC considers that even though not all MNOs may have the same demand for regional spectrum, all MNOs are likely to be interested to some extent in acquiring the regional lots as they are likely to contain more populated regional centres where commercial incentives to deploy mobile services are higher,” the ACCC advised.

“The ACCC considers that ensuring there is sufficient spectrum available for all MNOs to deploy services in regional areas would promote investment in mobile infrastructure, providing more choice to regional consumers.”

The ACCC warned that a limit higher than 60MHz may mean some of Telstra’s rivals “may only be able to acquire a small amount of spectrum, or no spectrum, in the auction”. “This would not promote competition in wireless markets,” the ACCC said.

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Tags governmentTelecommunicationsAustralian Communications and Media Authority (ACMA)Australian Competition and Consumer Commission (ACCC)spectrum5G

More about AustraliaAustralian Communications and Media AuthorityAustralian Competition and Consumer CommissionHutchisonNBN CoOptusVHAVodafone

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