Conroy caps 'waterfront' spectrum buys

Communications Minister Stephen Conroy has set limits on how much spectrum telcos can pick up from the Digital Dividend auction at the end of this year, in order to prevent telco heavyweights from gobbling up all of the spectrum.

Conroy has today directed the Australian Communications and Media Authority (ACMA) to limit the amount of spectrum that telcos can bid on to 2x20MHz in the 700MHz spectrum band, and 2x40MHz in the 2.5GHz spectrum band.

The spectrum that is slowly freeing up as the TV networks switch over to digital is due to be auctioned off at the end of this year. The spectrum is ideal for the deployment of next-generation mobile networks by telcos that are using technology like long-term evolution (LTE).

According to Conroy, the limitations he has imposed on the auction are designed to ensure a level playing field, not only for the three most likely bidders — Telstra, Optus and Vodafone — but also for other potential bidders that may be looking to secure some parts of the spectrum.

"These limits are designed to ensure there is a choice of providers in the mobile sector for the advanced services that will be provided over the digital-dividend spectrum. This is a good outcome for Australian consumers," Conroy said in a statement.

He said that given the spectrum is so valuable, cashed-up telcos may be keen to buy as much as they can to gain a competitive advantage.

Vodafone's general manager of public policy and regulatory affairs Matthew Lobb said that the limits on the amount of spectrum that telcos can buy are "appropriate to prevent an anti-competitive concentration of ownership of spectrum resources".

Optus also welcomed the announcement.

"The application of competition caps for digital-dividend auction will encourage greater competition in the mobile market, which will ultimately benefit consumers," Optus said in a statement.

Given its relative size, and the incoming cash flow from the $11 billion National Broadband Network (NBN) deal, the limitations are most likely to impact Telstra. The telco has not yet responded to requests for comment; however, this morning Telstra CEO David Thodey said that Telstra plans to fund its spectrum purchases through borrowing.

Spectrum licences for the 1800MHz and 2.1GHZ spectrum bands are also up for renewal this year, and Thodey said that there is "nothing surprising" about the prices the government is seeking for this spectrum. He also thinks that the negotiations with the government will be finalised shortly.

"The renewal should be concluded very shortly. [There is] nothing in the renewal that you should be concerned about. We're just waiting for the government to finalise the last little bit," he said.