Telstra has rebuked the federal government and regulators over a proposal that would promise Optus and TPG – but not it – some re-farmed cell spectrum in a forthcoming auction.
The telco said it is also “very concerned” that its present spectrum holdings in adjacent bands could preclude it from acquiring up as much additional spectrum as it would like in upcoming auctions.
Telstra was pressured onto the defensive by the federal government, which encouraged guaranteeing Optus and TPG a slice of 900 MHz spectrum in approaching auctions for them to proceed to run 3G providers.
The federal government did not promise Telstra a identical slice of spectrum but asked the Australian Opposition and Buyer Fee (ACCC) if there were being “grounds” to do so. [pdf]
There is a rift amongst the telcos not only over irrespective of whether spectrum should really be assured in the 1st location, but then over the cost to be paid out for it.
Both TPG and Optus say unequivocally that Telstra should really not be assured any 900 MHz spectrum.
Additional, TPG argues it should really get the assured spectrum at the auction’s “starting price”.
Telstra is incensed at that prospect.
“This would be an unprecedented and particularly intense regulatory intervention, basically distorting the current market and totally inconsistent with the proposition current market forces should really decide the highest-benefit use for spectrum,” Telstra said [pdf]
If TPG and Optus were being handed assured spectrum at decrease prices, Telstra prompt any bids it built should really receive a identical price cut.
“In the occasion that ‘guaranteed’ spectrum is priced at anything considerably less than the remaining unit cost accomplished at auction for the appropriate band (excluding any assignment bids), equivalent downwards adjustments have to be built to the remaining unit cost payable by the other effective bidders in order to location all individuals attaining spectrum in the auction on a reasonable and even footing – noting that even a slight difference in cost/MHz/pop can result in the cost payable to differ by millions of bucks,” Telstra said.
But the forthcoming auction – of 850 MHz and 900 MHz spectrum, which may be utilised for 4G or 5G providers – poses an additional issue for Telstra: its potential to invest in much more spectrum could be constrained by the sum of identical spectrum it by now owns.
The ACCC said that Telstra holds 46 per cent of sub-1 GHz spectrum in metro parts and 54 per cent in regional parts.
“TPG also holds a substantial sum of low-band spectrum. By contrast, Optus holds drastically considerably less lowband spectrum (only 15 per cent of complete low-band spectrum accessible) than Telstra and TPG,” the ACCC said.
“Given the substitutability amongst the sub-1GHz bands, this would suggest that a crossband restrict that applies to over-all holdings in the seven hundred MHz band, 850 MHz band, as very well as any spectrum obtained in the approaching 850/900 MHz allocation would be a affordable alternative.”
Unsurprisingly, Telstra is in opposition to this notion, and Optus and TPG are in favour.
“We are very worried that which includes present holdings in any allocation restrict established could lessen, fairly than enhance, opposition in the downstream cell current market, particularly if these limits are intended to lessen asymmetry amongst MNO [cell community operator] holdings,” Telstra said.
“No MNO at the moment holds a spectrum monopoly, and there is absolutely nothing inherently anti-aggressive about asymmetric holdings”.
Telstra argued that other telcos were being “spectrum-wealthy, and arguably spectrum inefficient, relative to rivals who may have numerically better holdings”, however it redacted its proof of this.
Both Optus and TPG lifted fears about Telstra’s dominance, and observed limits in the 850/900 MHz auction as vital to addressing historical imbalances in spectrum amongst the major telcos.
“The historic imbalances in sub-1 GHz spectrum, alongside one another with significant subsidies for website deployment from point out and federal governments, have been major contributors to Telstra’s aggressive edge in regional and remote Australia,” TPG said. [pdf]
“The latest holdings of low-band spectrum are not balanced and there is a danger that absent allocation limits, low-band spectrum could be concentrated in the hands of a solitary participant,” Optus included. [pdf]
The ACCC have to deliver guidance on these issues to Communications Minister Paul Fletcher by February 19.