news The Australian Communications and Media Authority this morning revealed that the majority of its auction of wireless spectrum, as expected, was snapped up by Telstra and Optus to fuel their 4G mobile broadband rollouts, with surprise bidder TPG also picking up a tiny portion of spectrum. The total raised from the sale was $1.9 billion.
According to a statement released this morning by the ACMA, Telstra bought 2x20MHz lots in the 700MHz hand and 2x40MHz lots in the 2.5GHz band for a total of $1.3 billion. Optus bought 2x10Mhz lots in the 700MHz band and 2x20MHz lots in the 2.5GHz band, for a total of $649 million. TPG bought only 2x10MHz lots in the 2.5GHz band. It is believed that Telstra and Optus intend to use their spectrum rights to continue to fuel their rollout of 4G mobile broadband throughout Australia. It is not clear what TPG intends to do with its allocation. Australia’s other major mobile telco, Vodafone, did not bid, due to what many believe to be its current poor financial situation.
“The auction process itself ran smoothly and resulted in the allocation of spectrum to the companies that valued it the most,” said ACMA Chairman Chris Chapman. “The auction tested the market and the auction’s conclusion is another important step toward realising Australia’s digital dividend.” The so-called “digital dividend” refers to spectrum freed up by the switch away from analogue television in Australia.
Chapman added: “This decades-long process of spectrum reform has already transformed the television industry, delivering greater diversity and better technical quality of television services to viewers. It will be complete when the new licences in the 700 MHz band become operational at the beginning of 2015. By making spectrum previously required for analog television transmissions available to meet rising demand for high-speed wireless broadband, the digital dividend auction will well position the Australian telecommunications industry to deliver fast, ubiquitous and symmetrical mobile broadband connectivity to consumers and industry.”
The sale was immediately hailed as a success by Communications Minister Stephen Conroy, despite the fact that 30MHz in the 700MHz band was not sold in the end, meaning that the Government may not have made all the income it planned from the auction.
“The spectrum purchased in the digital dividend auction and the resulting network developments will greatly advance Australia’s mobile services in coming years,” Conroy said in a separate statement. “15 MHz paired of the 700 MHz spectrum, worth in the order of $1 billion, remains in the Commonwealth’s hands for now, and we intend to return it to the market in the next two or three years. The ACMA has previously stated that it should not be assumed any unsold spectrum would be returned to market in the short term, or at a price that is lower than the reserve price set for this auction.”
“I endorse that as a sensible view and intend to provide the ACMA with a formal Direction that supports that approach, following public consultation.”
Optus chief executive Kevin Russell said in a statement that the spectrum Optus acquired in the 700 MHz band would provide stronger 4G coverage across both metropolitan and regional Australia, allowing the company to expand its 4G services to more customers than ever before.
“The additional spectrum purchased in the 2.5 GHz band, when combined with our already substantial holdings in 2.3 GHz, will enable Optus to provide unparalleled network capacity for 4G data services to our metropolitan customers,” Russell added.
Optus said its approach reflected the growing global trend for multi-band 4G networks, which combines low band 4G frequency for strong coverage with high band spectrum to increase network capacity. With a variety of bands and different Long Term Evolution (LTE) technologies, Optus will gain the flexibility, it said, needed to deal with the growing demand for additional capacity and faster network speeds.
Russell said, “Today’s announcement means Optus is well placed to execute a major combined network rollout that will deliver a strong and sustainable business moving forward. We now have the right mix of spectrum and network components to ensure a brilliant customer experience that delivers extensive coverage and super-fast speeds.”
For its own part, Telstra issued similar sentiments. Telstra CEO David Thodey said the auction result was “a significant outcome for Telstra customers as it would help ensure the company remained at the forefront of mobile connectivity”.
”This additional spectrum represents a major investment in the future of telecommunications in Australia and means we can continue to deliver a superior mobile experience for our customers,” said Thodey. “The spectrum will be used to enhance our network to help support extraordinary demand growth for mobile services and data. With the 700 MHz and 2.5 GHz spectrum we will be able to deliver faster speeds, more capacity and expansive wide area coverage of 4G LTE technology on our Next G network.”
“The low-frequency nature of 700MHz means the mobile signal can travel relatively longer distances, which is ideal for improving the services we can offer to customers in rural and regional areas. It also means better in- building coverage in metro and suburban areas.
“Together with ongoing investment in our wireless network, which will total $1.2 billion in 2012-13 Financial Year, and the application of next generation LTE-Advanced 4G technology that we announced earlier this year, the additional spectrum will help ensure we continue to deliver Australia’s leading mobile network for our customers.”
TPG, for its own part, was relatively taciturn about its own plans for its small package of spectrum, saying: “TPG believes that the 2.5GHz spectrum is a valuable asset which, with developing technologies, will bring TPG the opportunity to offer innovative and value-adding products to its customers, particularly in the increasingly important wireless broadband market.”