And we’re off: Australia’s digital dividend auction has begun

After much speculation and a couple of delays, the Australian Communications and Media Authority (ACMA) commenced the auction of RF spectrum in the 700MHz (the ‘digital dividend’) and the 2.5GHz bands on the 23rd of April 2013. There is speculation that that the spectrum auction, one of the largest ever held in Australia, will run over several weeks, and the results should be known around mid to late May. The digital dividend is becoming available as T.V. broadcasters turn off analogue television services at the end of 2014.

Now for some detail…

ACMA has decided to use a Combinatorial Clock Auction (or CCA) format for the auction. The CCA is an auction method used to sell multiple items in a single auction process. This format will allow bidders to bid on packages of spectrum in the 700MHz or 2.5GHz bands, offering them the opportunity to acquire the specific combinations of spectrum that they want.

The Minister in charge, Senator Stephen Conroy, has directed ACMA to set the reserve price in the 700MHz band at AUD$1.36 per megahertz per person. In the 2.5GHz band, the reserve price is $0.03 per megahertz per person; this means that a Telco needs to invest AUD$1.25B for a paired 20MHz of spectrum in the 700MHz band if it was sold at the reserve price.

So what does all this mean for those who are hoping to bid?

The 700MHz spectrum is perfect for either cellular or long-range wireless broadband. ”This spectrum is seen as the ‘waterfront property’ of spectrum and the government has made a significant investment to free it up. It is important that we get a reasonable return on this valuable public asset”, Senator Conroy said.

Industry analysts and Telco operators have all commented that the reserve price for the spectrum was expensive by international standards and this would impact on the capital investments of operators. But, what actually happens won’t be known until the end of the auction when the Australian Communications and Media Authority lifts its confidentiality rules preventing participants from speaking publicly about the auction.

All this may not sound very exciting to your typical phone user, but one thing is for certain, because of the combination of urban density and rural users in Australia, everyone will benefit from the availability of this spectrum. This auction will mean that crowded cities with oversubscribed networks, and more isolated users in rural areas should eventually see an improvement to their mobile connectivity. With mobile coverage often being referred to as the fourth utility, auctions such as this one play an important role in all our lives – whether we realise it or not.

And on a broader note, it is a big deal for the Australian economy too. “Economies will grow if people can move freely with their communication devices” Andrew Kerans, executive manager for spectrum planning at ACMA said.

For me personally, I can’t wait to get my hands on a multiband, multimode, high consistent data throughput handheld device. Perhaps if I wait long enough I may even be able to get my hands on portable device that can “beam me up”….

 

Alex_Blog Alex Dampier
ANZ Regional Sales Manager, Axell Wireless

Alex has 20 years’ experience in the Telecommunication industry across varied roles from engineering to sales and product management.

 

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