Telstra warns of higher bills, stalled investment as spectrum decision looms

Telstra has cautioned that any move to lift spectrum renewal charges would force it to raise mobile prices and delay network upgrades.

Telstra has pushed for spectrum licences to be renewed rather than sold via public auction. Picture: NCA NewsWire / Luis Enrique Ascui

Telstra has warned that any move to raise spectrum fees would ultimately force it to hike prices for its mobile services and delay network investment, as the industry regulator finalises plans for renewing billions of dollars worth of licences within weeks.

The Australian Communications and Media Authority is in the final stages of consultation on how existing spectrum – the frequencies used by mobile operators to carry calls and data – should be licensed to Australia’s telcos.

More than 80 per cent of current licences used by Australia’s 30 million mobile phone services are up for renewal between 2028 and 2032, and the regulator’s decision will determine whether those licences are renewed ­directly or auctioned.

Alongside Optus and TPG Telecom, Telstra has backed ACMA’s preliminary view that existing licences should be renewed for a benchmark fee rather than via a competitive auction.

“We’re not asking to pay less, we’re asking for the government and regulators to consider how to get the best outcome for Australia,” Telstra’s group executive for global networks and technology Shailin Sehgal said.

“When spectrum costs are inflated, it limits our ability to invest in the infrastructure and innovation that drive better connectivity for Australians.”

ACMA’s decision could have substantial implications for the federal budget. It has estimated renewing existing spectrum ­licences would generate between $5bn and $6.2bn, less than the $8.2bn telcos previously paid for licence fees at auction.

Given the budgetary impact, industry sources expect the government will take a close interest in the decision, which will likely coincide with December’s mid-year budget update, fearing that it could intervene.

When asked whether the government planned to hold a spectrum auction and if it was concerned about the potential revenue impact of not doing so, Communications Minister Anika Wells would not be directly drawn on the matter.

“A decision is still to be made on the future of these licences and the Australian Communications and Media Authority’s consultation is ongoing,” a spokesman for Ms Wells said.

But Carol Bennett, chief executive of the Australian Communications Consumer Action Network, said that plans to renew spectrum licences, rather than put them to a competitive auction, risked forfeiting billions in public revenue.

“This would be a bonanza for the bottom line of our largest telcos – and it would come at the cost of competition, innovation and, ultimately, higher prices for consumers,” she said. “At the very least, telcos should make binding commitments that savings from licence renewals will flow back into improved networks and lower prices for consumers.”

Richard Holden, a professor of economics at UNSW who authored an ACCAN-commissioned report backing the auctioning of spectrum, said telcos’ claims should be tested through an open bidding process.

“What are they afraid of? If their arguments hold up, what have they got to fear?” Professor Holden said, warning that cutting spectrum prices would further damage the industry’s credibility following Optus’s catastrophic triple-0 outage.