ACCC proposes 700MHz allocation cap ahead of upcoming auction

14 Dec 2016

Australia’s Department of Communications and the Arts (DCA) has published an executive summary of recommendations made by the Australian Competition and Consumer Commission (ACCC) related to the upcoming auction of previously unsold 700MHz digital dividend spectrum.

The key call from the regulator is for the imposition of an allocation limit on the sale process under which ‘no person or specified group of persons’ would be able to hold more than 2×20MHz in the 700MHz following the auction. Arguing that such a cap is in the long-term interest of end-users and would help prevent the monopolisation of the spectrum, the suggestion is notable as it will effectively exclude mobile market leader Telstra from the sale process. Indeed, with the ACCC noting that Telstra already holds over 50% of available low band spectrum, it said it believed that allowing it to acquire additional 700MHz frequencies would ‘increase its dominance of the available spectrum for use in mobile markets’. Adding to that, the regulator said it did not consider that Telstra being unable to acquire additional 700MHz spectrum would constrain its ability to compete.

By comparison, the ACCC has said that if either Optus or Vodafone Hutchison Australia (VHA) were to acquire at least 2×10MHz of 700MHz spectrum, it would allow them to offer better capacity and quality of mobile services, and achieve better depth and breadth of network coverage. Meanwhile, should TPG Telecom acquire between 2×10MHz and 2×15MHz in the band in question, the regulator has argued this would see it better placed to deploy a new 4G mobile network in the country. In the ACCC’s opinion, it has said it believes 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’.