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Terrible reception for Oz spectrum auction

Conroy calls it 'waterfront property', telcos call it a rip-off

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Australia's spectrum auction has found a terrible reception from those hoped to be most interested in access to the airwaves, with local carriers deciding not to bid.

The auction to be held in April next year is for Australia’s 700MHz and 2.5GHz spectrum, will reallocate the spectrum that becomes available when broadcasters switch off analog services at the end of 2014.

On Friday, Minister for Broadband, Communications and the Digital Economy, Senator Stephen Conroy, unveiled the settings for the spectrum auction, which included directing the Australian Communications and Media Authority (ACMA) to set the reserve price for 700 MHz spectrum at $1.36 per megahertz (MHz) per population.

The Minister has also increased the competition limits for any bidder from 2x20 Mhz to 2x25 MHz for spectrum in the 700MHz band. Minister Conroy said that the competition limits had been amended to enable greater flexibility in terms of different market scenarios, without precluding a new entrant.

Despite a lengthy consultation process with the industry, Optus almost immediately issued a statement rejecting the government's settings, insisting that the reserve price announced is too high compared to those on offer in comparable economies.

Optus VP corporate and regulatory affairs, David Epstein said, “it is likely to have the effect of restricting investment significantly, raising prices as costs are passed through to consumers and reducing consumer choice.”

Vodafone has also indicated that it will not bid at the offered prices, in part because it thinks it has enough spectrum already. Australia's dominant telco, Telstra, has said it will sit on its hands for now.

Minister Conroy defended the settings stating, “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.” ®

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