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Mobile carriers face big ticket spectrum costs

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Australian mobile carriers are turning activist in the lead up to the Federal Government’s final determination on the pricing for retaining their 800MHz mobile licences.

According to a draft determination issued by communications minister Stephen Conroy late last year mobile network operators Telstra, Vivid Wireless and Vodafone Hutchison Australia (VHA) could be up for a combined $AU1.4 billion price tag to retain their allotted 800MHz spectrum.

In the late 1990s, the government auctioned the spectrum licences now used to deliver 2G and 3G mobile services, and which are due to start expiring from 2013.

What's getting the carriers excited is the potential price of their renewal. A report from Plum Consulting suggests a methodology based on a per-MHz, per-POP valuation between $AU0.50 and $AU1.20.

The report says that international benchmarks suggest the spectrum has a value much higher than the price originally fetched at auction.

The Australian Financial Review reports that the draft determination values the spectrum at $AU758 million to Telstra and $AU560 to VHA.

While the industry consultation period on the proposed pricing structure is still open to industry comment until January 16, the Australian Financial Review suggests that the draft determination will not be altered.

The Department of Broadband, Communications and the Digital Economy did not respond to queries on the issue.

Senator Conroy has the power under the Radiocommunications Act 1992 to specify classes of services for which it would be in the public interest to re-issue licences to the same licensees and to direct the Australian Communications and Media Authority regarding the value of the spectrum.

The ACMA will be holding a spectrum auction workshop next Friday for industry and media to discuss the issues surrounding the re-issuing of the licences. ®

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