Optus and Vodafone call for caps on 1800MHz allocations in forthcoming auction

29 Apr 2015

Optus and Vodafone Australia, the country’s second and third largest cellcos in terms of subscribers respectively, have reportedly called on the government to restrict the amount of spectrum in the 1800MHz band that market leader Telstra will be able to acquire in a forthcoming auction. According to The Australian, as part of submissions made to an Australian Competition and Consumer Committee (ACCC) consultation on the matter the duo voiced concerns over Telstra possibly increasing its regional advantage in the frequency sale – it is currently the only cellco with 1800MHz spectrum in regional areas.

Earlier this month the ACCC was asked to advise on whether the state should introduce limits to the Australian Communications and Media Authority’s (ACMA’s) November auction for licences covering parts of the 1800MHz band in regional Australia. In their submissions both Optus and Vodafone, as well as mining corporation Rio Tinto, suggested that a cap on the total amount of spectrum any single operator can be licensed should be implemented. Vodafone actually recommended two limits to the auction; firstly, an in-band limit for the 1800MHz, which takes into account existing holdings in the band in question, as well as a total holdings limit across all bands. It did not specify caps. Optus meanwhile has suggested a 20MHz paired cap on 1800MHz spectrum, while also agreeing with Vodafone that the ACCC should consider existing 1800MHz holdings in a company’s auction bid. Such a cap, it has argued, would provide a level playing field, enable individual telcos to acquire the optimal channel size for Long Term Evolution (LTE) services, and provide non-telcos the opportunity to acquire spectrum.

In its thoughts on the planned spectrum sale, Optus was cited as saying: ‘There is currently a significant inequality of 1800MHz holdings in regional areas … Telstra as the incumbent beneficiary of this (owning 100% of the existing 1800MHz spectrum licences in regional areas) also has had a significant first-mover advantage in the deployment and utilisation of this spectrum band.’ For its part, Vodafone noted: ‘Telstra’s excess concentration of spectrum holdings within this geographic area distorts incentives for competitive investment to the detriment of regional mobile consumers … Competition limits must be set for the allocation of regional 1800MHz spectrum to promote the long-term interests of end-users by promoting competition in the regional mobile services market.’