Taxpayers in Australia could potentially miss out on over $3 billion if the Australian Communications and Media Authority (ACMA) proceeds with its proposal to renew 69 expiring spectrum licenses without holding an auction. These licenses, originally purchased for $8.2 billion, could be renewed for a significantly lower price of between $5 billion and $6.2 billion, sparking concerns about the financial implications for the public purse.
The proposal has drawn criticism from economists and consumer advocates alike. Richard Holden, a scientia professor of economics at UNSW Business School, expressed skepticism about the decision, questioning why the government would forgo an auction that could potentially yield higher returns. “If we get $5 billion, then fair enough. But if we get $10 billion or $12 billion, then that’ll be better for the taxpayer,” he stated. “We’re just leaving money on the table.”
Consumer Concerns Over Spectrum Pricing
Carol Bennett, CEO of the Australian Communications Consumer Action Network (ACCAN), echoed these concerns, emphasizing that the spectrum is a valuable public asset. “Spectrum is worth billions and the consumer should be getting the best possible price,” she said. Bennett argues that bypassing an auction could short-change Australian consumers by up to $3.2 billion.
The absence of an auction could also stifle competition, as it would prevent new entrants from challenging established players like Telstra and Optus. “If we don’t have new entrants into the market, we don’t have increased competition and therefore we don’t drive down prices,” Bennett added.
ACMA’s Justification and Industry Reactions
The ACMA defends its proposal, suggesting that renewing the licenses without an auction could allow telecommunications companies to maintain service continuity and invest in infrastructure without passing on higher costs to consumers. The agency’s assessment considers five public interest criteria: competition, service continuity, innovation, emerging technology developments, and connectivity in regional, rural, and remote Australia.
“Spectrum is a public asset for which industry should pay a fair price and from which consumers should gain maximum benefit,” ACMA stated in a release.
However, the Australian Mobile Telecommunications Association (AMTA) warns that any increase in spectrum costs could lead to higher consumer prices. “There’s a direct relationship between the price that’s paid for spectrum and ultimately the price the consumers pay for their services,” said AMTA chief executive Louise Hyland.
International Trends and Expert Opinions
Globally, the trend in spectrum auctions has seen a decline in revenue, as noted by Jochen Zenthöfer from Save Our Spectrum (SOS). He points out that Germany has moved away from auctions, opting instead for regulations that require telecommunications companies to expand their networks in exchange for license renewals.
“Prices at spectrum auctions have dropped internationally. There is less revenue,” Zenthöfer noted, adding that auctions still offer a competitive way to allocate frequencies.
Professor Holden remains critical of the financial analysis supporting ACMA’s proposal, arguing that it relies on data from auctions conducted during the volatile early years of the COVID-19 pandemic.
Future Implications and Government Oversight
As ACMA concludes its public consultation process, the future of spectrum allocation in Australia remains uncertain. Communications Minister Anika Wells, part of the re-elected Albanese government, could potentially intervene in the decision-making process.
ACMA deputy chair Adam Suckling emphasized that the agency’s proposal aims to provide the “greatest benefit” to the community, considering long-term public interest and the needs of all Australians who rely on mobile and broadcasting services.
The outcome of this decision will not only impact the telecommunications landscape but also set a precedent for how public assets are managed in the future. As stakeholders await the final policy, the debate highlights the delicate balance between maximizing public revenue and fostering a competitive, innovative market.
