The Federal Government may have tightened competition in the 3G telecommunications arena by limiting the amount of spectrum available to any one player. But is it biting the hand that feeds it?
"[Telecommunication] companies are short of cash," industry expert Paul Budde told ZDNet. "And with a share market not favouring any more spending, whatever the government does it will not get the amount of money it expects from the [3G] auctions," Budde said.
The government had grandiose plans to bolster its budget surplus with AU$2.6 billion raised when 3G spectrum is auctioned next year. However, telecommunications experts estimate the final offer from the auction will be no more than AU$1 billion.
With a lot of uncertainty shrouding the share market at the moment, the auctions do not provide a "good business case to spend a lot of money," Budde said.
In a move to create diversity in the market rather than a monopoly, the government has decided to limit the amount of spectrum in metropolitan areas to two times 15MHz of paired spectrum and 5MHz of unpaired spectrum per player.
In regional areas, the government draws the line at no more than two times 10MHz of paired spectrum for any one participating bidder.
This will allow a minimum of four competitors in metropolitan areas and two competitors in regional areas.
"These limits will allow metropolitan and regional consumers to benefit from competition in the delivery of 3G services," the Communications Minister Richard Alston said.
"This means a faster rollout of the next generation of mobile services and their availability at the cheapest possible price," he added.
Scheduled to come into force in the first half of 2001, the restrictions will ensure smaller carriers aren't out-competed by Telstra, which otherwise "could get all the spectrum," Budde said.
Committed contenders to the 3G spectrum auctions include Telstra, Vodafone and Cable & Wireless Optus.
One.Tel claims it has no intentions to bid and other telcos, including Hutchison and AAPT are taking a "wait and see" approach.
