ACMA proposes forgoing auctions for spectrum licence renewals

The Australian Communications Consumer Action Network (ACCAN), Australia’s peak communication consumer organisation, has raised concerns that the federal government could miss out on billions of dollars if the Australian Communications and Media Authority (ACMA) goes forward with its proposed approach to the renewal of spectrum licences.

According to ACCAN, the proposed approach would see the majority of Australia’s spectrum licences renewed at a significant discount to a handful of established telcos, rather than publicly auctioned. If spectrum licences are not taken to auction, ACMA’s own estimates indicate that taxpayers and the Australian Treasury may stand to lose between $2 billion and $3.2 billion over the duration of the licences.

ACCAN holds concerns that this reduction in revenue will be reflected in cuts to investments in critical public interest communications programs. Furthermore, failure to auction public spectrum assets may reduce competition and risk the misallocation of spectrum assets that are fundamental to the delivery of existing and emerging communications services.

“If we get this decision wrong, it will have profound impacts on the services consumers can access through to 2044,” said ACCAN CEO Carol Bennett.

In expert advice commissioned by ACCAN, Professor Richard Holden from UNSW Business School warns that ACMA’s approach is based on “fundamental economic errors”.

According to Holden, the benchmarking analysis used to support a rollover of existing licences at a reduced price “is entirely without merit, based on a fundamentally flawed methodology, and provides no evidence in support of the conclusions drawn from it”. He added implementation of the proposal would “short-change the Australian public, erode trust in regulatory processes, and undermine competition in the telecommunications sector”.

Bennett is now calling for far greater scrutiny of ACMA’s proposal, citing its significant implications for public finances and market fairness.

“Spectrum is a public resource, and it is ACMA’s job to manage it in the public interest,” she said.

“Telcos should pay a fair price for access to spectrum. We are concerned that, by avoiding a competitive auction, ACMA is enabling spectrum to be sold at a steep discount.

“As Professor Holden has made clear, this decision risks entrenching market dominance by a limited number of Australian telcos, increasing barriers to entry for new players, and reducing innovation and value for consumers.”

ACCAN is urging Minister for Communications Anika Wells to ensure that the public interest comes before commercial interests, stating that the due process provided by an auction can ensure the maximum return and efficiency in the allocation of spectrum. This should not only provide a return to taxpayers, but also competition from new entrants to the market that can drive down prices for consumers while ensuring that emerging technologies are delivered in the form of new service offerings.

“The allocation of a precious and finite resource like spectrum should deliver dividends for taxpayers, consumers and the federal budget,” Bennett said.

The public consultation period on ACMA’s proposal is now closed and a decision is expected later this year.

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