The Australian Communications Authority will auction 10 personal communications services licenses totaling 230 megahertz sometime in April, and the Australian Communications Authority is encouraging U.S. companies that currently use digital Advanced Mobile Phone Service and Code Division Multiple Access technologies to apply. Those companies have the best chance of interconnecting to Australian carriers Telstra, Optus Communications and Vodafone plc.
The application window closes March 13 at 5 p.m. Australian Eastern Standard Time, and applications must be covered by a $10,000 entry fee and an upfront payment based on bidding activity.
The following licenses will be on the block:
Two 20-megahertz licenses in the 825-845 MHz band and the 870-890 MHz band in metropolitan areas
Two 5-megahertz licenses in the 825-830 MHz band and the 870-875 MHz band in regional and outback areas
Two 10-megahertz licenses in the 835-845 MHz band and the 880-890 MHz band in regional and outback areas
Two 45-megahertz licenses in the 1,710-1,755 MHz band and the 1,805 MHz-1,850 MHz band in metropolitan areas
Two 15-megahertz licenses in the 1,710-1,725 MHz band and the 1,805-1,820 MHz band in regional areas.
The ACA has chosen to auction these licenses in a simultaneous ascending format and, following the U.S. model, bidding will be done electronically. However, unlike the U.S. auction methodology, “if the preference of all applicants can be satisfied without conducting an auction, licenses may be allocated for a pre-determined price.” According to preliminary auction rules, no winning bidder may control more than 1.5 megahertz in any metropolitan area that will be covered by 1.8 GHz service.
“It is likely that in rural areas, part of the 800 MHz band will be retained, but exactly how much is not certain,” the ACA said in its auction announcement. The government wants to phase out analog services in rural areas, but it wants to make sure there is some sort of coverage until a D-AMPS or digital system is built out. A study relating to this is due by June 30.
There are no mandated roaming rules in Australia, but the government is considering using D-AMPS or CDMA for such a purpose. L.M. Ericsson unveiled a D-AMPS demonstration site in Melbourne and, according to the government, is pushing for this solution. Others, including GSM carriers Telstra, Optus and Vodafone, are against mandated roaming and the possible requirement to build out into rural areas.
A January study conducted by Factotum Research in Canberra projected that the Australian telecom market is worth some $24 billion in current revenues and that the pickings could be good for those companies that want to enter the growing wireless field via a U.S.-emulated auction. However, the Australian consumer marketplace is different from that in America, Factotum wrote, and this could have some impact on the auction, future regulation and the ensuing network buildout.
Auction revenues have been projected fairly conservatively. The Australian government reportedly expects to garner approximately $700 million from this auction, perhaps a more realistic number than some that were projected for American auctions. “One rough, high-range estimate for the value of Australia’s 1.8 GHz spectrum was $2.4 billion, using a comparative value/pop/MHz figure as was derived for the early PCS auctions in the United States,” the report said. “The same authors estimated the value of the current D-AMPS and GSM spectrum licenses as $931.5 million over a 10-year period.”
Many questions still surround the Australian auction process, including what other types of spectrum will be released in the future and will there be a glut, how will incumbents be handled, license renewal timeframes, how will dominant carriers be treated, what about universal service and how will Australian authorities handle international spectrum carriers? Without answers to these and other questions, investors may be less willing to commit capital to a new venture.
Factotum wrote that no new 1.8 GHz spectrum is expected to be released by the government until 2000; however, spectrum in the 1.9 GHz band, also suitable for PCS, was not mentioned. This may or may not affect spectrum values, but it is something bidders and investors consider.
“None of these decision areas is impossible to resolve,” Factotum concluded. “And while they remain unresolved, any claims that the spectrum allocation method is technologically neutral-an oft-repeated assertion-is an empty claim. There is no good reason why the government could not reduce uncertainty. The fact that it hasn’t leaves open to speculation why.”
The auctions originally were set for the end of 1997, but the Ministry for Communications and the Arts postponed them until the first half of 1998, citing the need to resolve policy issues that included the retention of a regional AMPS network after 2000, inter-carrier roaming rights and the operation of access rights.
