Media Briefing - 'errors and misrepresentations' abound in telco spectrum licence debate
ACCAN
Heated debate has surrounded the issue of spectrum licence value in recent months, and while the subject matter is technical, the implications for the services consumers can access and competition will be profound through to 2044.
Today, communications consumer peak body, ACCAN, have published a response paper by Professor Richard Holden to an array of ‘errors and misrepresentations’ made in recent weeks by some vested telco interests about ACCAN’s position on spectrum allocation.
Alongside the OECD, we consider auctions to be the gold standard. But if ACMA persists in pursuing renewal with steep discounts to industry offered – industry needs to clearly commit to additional investment or retail price reductions for Australians.
Background
In a consultation this year, communications regulator ACMA proposed rolling over telco spectrum licences, rather than allocating them through a competitive auction, as has been done in the past and consistent with international best practice.
Major telcos and industry groups broadly welcomed ACMA’s proposal - although some argued that renewal charges should be lower.
ACCAN made a dissenting submission, which we published alongside an expert report by Richard Holden, Scientia Professor of Economics at UNSW Business School.
Following Holden’s critique, ACMA commenced an additional ‘reply to comment’ period. During this stage, Optus commissioned Coleago Consulting to write a critical submission about ACCAN and Professor Holden’s contributions.
Today’s report
The report published today makes clear that Coleago’s criticisms are variously incorrect, non-substantive, irrelevant, or based on misunderstandings of the evidence.
Professor Holden’s paper responds point-by-point to criticisms made by Coleago and clarifies the economic principles underpinning our position.
The paper is now available on the ACCAN website, and attached to this briefing.
The path forward
ACCAN calls upon ACMA to reconsider its proposed approach to the renewal of spectrum licenses.
Given the wildly varying estimates of spectrum value, ACCAN recommends a transparent, competitive auction to deliver the best value for the public and efficient use of spectrum.
Industry has not committed to passing through any potential savings to consumers from discounts that they would receive from the proposed approach, nor have they committed to further investments in poorly served communities across Australia.
Comments attributable to ACCAN CEO Carol Bennett
“I understand why telcos would like to pay less to use the public resource that is spectrum. Any Australian renter would appreciate a reduction in rent - that would mean more cash in the bank; and that is exactly what telcos are hoping for.”
“But telcos must be made to ‘rent’ spectrum at a fair market price – precisely because it is a public asset that will impact consumers hip pockets and access to future technology, not an opportunity for a cash grab.”
“As Professor Holden has outlined, ACMA are proposing to gift some of Australia’s largest companies a steep discount on the basis of reasoning riddled with ‘fundamental economic errors.’”
“A discount shouldn’t be offered at the expense of taxpayers and consumers so that industry can pad out their EOFY results.”
“There is significant confusion about the value of spectrum licences. Is spectrum worth the previous nominal value of $8.2 billion, Telstra's estimate of $1.75- $2.17 billion, or Coleago’s far-fetched assertion that it may be worth nothing at all?”
“We can only know for certain what spectrum is worth through a transparent auction, which has proven time and again around the world to allocate spectrum to its best and highest use.”
“If we get this decision wrong, there will be profound impacts on the services consumers can access through to 2044.”
About us:
The Australian Communications Consumer Action Network (ACCAN) is Australia’s peak communication consumer organisation. The operation of ACCAN is made possible by funding provided by the Commonwealth of Australia under section 593 of the Telecommunications Act 1997. This funding is recovered from charges on telecommunications carriers.
Contact details:
Alec Bennetts
Mobile: 0409 966 931
Email: [email protected]
