Coverage, cost warning as telcos face $7.3bn spectrum slug
While carriers will avoid uncertain and potentially costly public auctions for spectrum, telcos will be slugged billions more than they had hoped to retain their existing licenses.
Telcos have warned they could be forced to delay network upgrades and hike mobile plan prices, after the industry regulator revealed it wants carriers to stump up billions of dollars more than they had expected to retain their expiring spectrum licences.
The Australian Communications and Media Authority (ACMA) on Wednesday announced its “preferred position” regarding how spectrum – the frequencies used by mobile carriers to carry calls and data – should be licensed to carriers.
More than 80 per cent of the spectrum licences supporting Australia’s 30 million mobile services are due to expire between 2028 and 2032, with the regulator’s decision set to determine how much Telstra, Optus and Vodafone owner TPG Telecom will pay to renew them.
Under its preferred position, ACMA now estimates the value of Australia’s spectrum licences at $7.3 billion – above its earlier projection of between $5bn and $6.2bn – delivering a significant revenue boost to Treasury coffers.
Reacting to the revised valuation, a Telstra spokesman said it was “considerably higher” than previously forecast and warned it would undermine network improvements.
“Higher costs make it harder for us to invest in the services customers count on, and this is a step in the wrong direction,” he said.
An Optus spokeswoman, meanwhile, said the company was “disappointed” by ACMA’s decision, adding that “affordable pricing” was essential to support sustainable competition in the sector.
Having previously paid $8.2bn in licences, carriers had urged ACMA to slash spectrum fees to below $2.5bn, arguing the savings would allow them accelerate network upgrades and deliver on a looming government mandate to provide mobile services in the bush via StarLink-style satellites.
ACMA chair Nerida O’Loughlin said that while the industry’s views had been considered, the revised estimate of $7.3bn represented a “fair price” for the public asset.
“The ACMA’s position on its future use has been made in the best interests of consumers, communities and our economy,” Ms O’Loughlin said.
ACMA will now seek a final round of stakeholder feedback on its pricing methodology.
Given the significant impact on the budget, industry sources had tipped the government would take a particularly close interest in the decision, and feared it might intervene at a time when public sentiment towards the sector had been hammered after Optus’ triple-zero outage.
A TPG spokesman warned that treating spectrum as a “cash cow” rather than a national asset, would undermine investment in better coverage, reliability, or innovation.
“If spectrum costs are set too high, Australians will pay through higher bills and slower upgrades,” he said.
In reaching its decision, ACMA had also rebuffed calls from the Australian Communications Consumer Action Network, who had lobbied for spectrum to be put to a competitive public auction, warning the full value of finite spectrum would not be realised.
ACCAN chief executive Carol Bennett said although ACMA’s revised valuation marked a “material improvement” on its earlier position, it also raised serious questions about the regulator’s initial approach.
“ACMA has clearly shifted its approach in response to strong evidence and increased public scrutiny, but consumers are entitled to ask why this decision is so different from its original position,” Ms Bennett said.
