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Digital Dividend auction set for April 2013

Digital Dividend auction set for April 2013

Telstra, Optus and Vodafone say they’re eager to bid for spectrum to be relinquished by broadcasters converting to digital.

The Digital Dividend auction for spectrum highly sought by Australian wireless carriers will occur in April 2013, said Senator Stephen Conroy, minister for broadband, communications and the digital economy. The auction will determine who gets Australia’s 700MHz and 2.5GHz spectrum after TV broadcasters shut off analog broadcasts at the end of 2014.

The date is four months later than expected. The wireless industry has been planning on an auction in November or December this year.

Conroy said the Australian Communications and Media Authority influenced the date change. "The ACMA has advised that an April 2013 auction would maximise product certainty for bidders prior to the auction and provide new licensees with adequate lead time to plan and deploy networks before their licenses commence."

“The sale of this spectrum is a unique opportunity to pave the way for next generation mobile broadband services in Australia, such as 4G mobile services," Conroy said. "The Australian Government committed $143.2 million in the 2012-13 Budget to ensure that the spectrum is released in a timely fashion with minimal disruption for viewers.”

The wireless industry said the announcement provided much needed certainty as they prepare for the auction.

The Australian Mobile Telecommunications Association plans to work closely with the government to achieve access to the spectrum “no later” than 1 January 2015, AMTA CEO Chris Althaus told Computerworld. That date is critical because data traffic is expected to increase 300 percent between now and the end fo 2014, he said.

Althaus said he expects ACMA to release a paper with more details about the auction in the “coming days.”

“The auction of this spectrum is important for meeting the rapid growth in demand for mobile broadband data from Australian telecommunications consumers and businesses,” a Telstra spokeswoman said.

“Should Telstra secure allocation of spectrum through this auction, Telstra would use the additional spectrum to further develop its mobile network built today on world leading 3G HSPA+ and 4G LTE technology.”

Demand for data doubles every 12 months on the Telstra network, and one of the drivers “is businesses going mobile and integrating smartphones, tablets and mobile broadband into their operations,” she said.

“Timely access to digital dividend spectrum is critical to Australia's future competitiveness and economic prosperity, Optus vice president of corporate and regulatory affairs, David Epstein, said in a statement.

He reaffirmed Optus’s plan to participate. “We hope the government can provide early access to 700MHz spectrum for mobile broadband in areas where the digital switchover has occurred and capacity can be made available.”

“Confirmation of the timing of the auction process gives us the certainty we have been seeking," said Matthew Lobb, Vodafone general manager of public policy. "This is good for competition and an important step forward that will greatly assist our network planning and investment forecasting requirements.”

There should be “a fair bit of contention” for the 700MHz spectrum available under the auction, Telsyte analyst Chris Coughlan said. The government is making 2x45 MHz (45MHz uplink plus 45 MHz down) of the spectrum available, but each of the three top carriers wants 2x20MHz. “You can expect some pretty high bidding.”

Digital Dividend spectrum brings the opportunity for “better services,” particularly in rural areas where network coverage is poor, said IBRS analyst Guy Cranswick. But it’s unclear whether that will translate into more revenue for carriers, because the Australian market is already oversaturated with more phones than people, and average revenue per user is not great for even top carriers Telstra or Optus, he said.

Data traffic is expanding at the expense of suppliers who are subsidizing the price to keep prices low for customers, Cranswick said. Prices have to go up in order to improve average revenue per user, he said.

“Yes, we’ve got a lot more capacity” once Digital Dividend spectrum is deployed, said Cranswick. But the analyst said he’s not sure about the “financial opportunity in terms of additional services which are not subsidised by the suppliers.”

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