blog Australia’s long-awaited ‘digital dividend’ auction kicks off today, but may be a relative non-event with the reserve set relatively high and Telstra expected to dominate proceedings as it rushes to snap up as much spectrum for its 4G LTE services as possible. And while the results of the weeks-long auction won’t be known until mid to late May, most of the 700MHz spectrum band – one of many on auction throughout the process – is expected to go completely after just one round of bidding.
That’s the conclusion of a number of analysts, according to a report in industry journal Computerworld, which offered a rundown of the expected bids and revenues as part of an analyst straw poll (read all the numbers here across two pages) about the auction’s prospects:
Telstra will seek at least 2x20MHz of the spectrum and may go for the maximum 25MHz, Ovum analyst David Kennedy said earlier this month at the CommsDay conference. Telstra has a stated strategy of seeking network and spectrum “supremacy,” but the high price of the spectrum could keep Telstra from buying the full 2x25MHz, he said. “Supremacy means more than superiority,” Kennedy said. “It means being so powerful you can act virtually without regard to what your enemies are doing.”
That sounds menacing – and likely, given that Optus and Vodafone are revenue-constrained from taking the fight all the way to Telstra. However, there may be some surprises as Vodafone recently laid down the gauntlet by promising that its 4G would be fastest in Australia – no small claim since Telstra has apparently tested its network up to 90Mbps. Those companies are by no means out of the running, but with analysts expecting them to struggle to match Telstra’s bidding – could this be the beginning of the end for Australia’s 4G network diversity? Or will our number-two or number-three telcos pull a rabbit out of their respective hats and beat Telstra to the punch?
Image credit: Chris 73, CC BY-SA 3.0
It’s a shame Google aren’t in on this, a Google 3/4G data network (similar to the Kindle one) would be awesome.
From a consumer point of view, sure. But where’s the benefit to Google getting involved in Australian network provision? It’s far more risky and much lower margin than their traditional business areas.
So yea, nice idea, but failing a bout of altruism I don’t see this as an area Google would want to touch.
Sadly, I agree. Google’s network forays in the US have been largely experimental, localised stimulus projects, although I do recall them floating a figure in the billions during that country’s 700MHz auction. They could certainly shake up the Australian marketplace with a sizeable enough allotment of spectrum – and in the end they could probably sell it off to Telstra, Optus or Voda to recover their costs.
They (or anybody else wanting to see a fair fight or an eventual return) could function as a sort of spectrum escrow, to withhold crucial allotments until the major networks are well-developed and then sell it to the one that needs the extra spectrum involved. But the figures involved, and the limited potential return from what is still a relatively small market, probably support the argument that ain’t gonna happen.
Having said that, I would love to be shown to be wrong.
Don’t know how they are handling this allocation but with a lot spectrum ACMA do take a use it or lose it approach to spectrum allocations so squatting on the spectrum to sell later might not be an option.
I’m extremely disappointed there doesn’t appear to be any real regulation of this spectrum sale. Allowing any company to control so much spectrum just because they have deeper pockets seems quite anticompetitive in the long term. I really hope Optus and Vodafone can find the funding to secure a reasonable share in this round of spectrum sales – there isn’t going to be much opportunity to fix this later.
If there isnt any regulation of the spectrum auction, then what is the limit on purchases by each bidder?
+1. It could really be a lopsided result with very real effects on competition – nobody will benefit if Telstra can lock in a dominant share of spectrum. Particularly the case as Telstra is unlikely to open up any spectrum it buys to competitors via VMNO arrangements. Optus must shell out big or risk ceding a major potential business line, but even it has limits. And Voda has been playing coy but I’m sure they realise they have to find funding from somewhere or it will be yet another nail in their coffin.
Come on, Google, you can do it :-)
Indeed it’s a wee bit like the privatisation of Telstra all over again.
Sell at top dollar and worry about the consequences later :(
The Telstra Monster will truly have us in a stranglehold .
Plus
http://www.businessspectator.com.au/article/2013/4/22/infrastructure/coalition-copper-will-fill-telstra%E2%80%99s-coffers
Note TPG has apparently registered for the auction. HMMM cats and pigeons ??
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