Media Release - Billions on the line - communications regulator's proposed approach to spectrum raises questions of regulatory capture

ACCAN

Peak communications body, ACCAN, today raised significant concerns that the Federal government could forgo billions of dollars if the Australian Communications and Media Authority (ACMA) goes forward with its proposed approach to the renewal of spectrum licenses.

The proposed approach would see the majority of Australia’s spectrum licenses renewed at a significant discount to a handful of established Telcos, rather than publicly auctioned.

If spectrum licences are not taken to auction, taxpayers and the Australian Treasury may stand to lose between $2 billion and $3.2 billion over the duration of the licenses, according to the ACMA’s own estimates. ACCAN holds concerns that this reduction in revenue will be reflected in cuts to investments in critical public interest communications programs.

Failure to auction public spectrum assets may reduce competition and risk the misallocation of spectrum assets which are fundamental to the delivery of existing and emerging communications services.

ACCAN CEO Carol Bennett said that, “If we get this decision wrong, it will have profound impacts on the services consumers can access through to 2044.”

In expert advice commissioned by ACCAN – now publicly available – Scientia Professor of Economics at UNSW Business School Professor Richard Holden warned that ACMA’s approach was based on "fundamental economic errors".

According to Professor Holden, “The proposed approach is prefaced on a “fundamentally flawed methodology and provides no evidence in support of the conclusions drawn from it”.

Professor Holden stated that rolling over the licences to existing telcos would “shortchange the Australian public, erode trust in regulatory processes, and undermine competition in the telecommunications sector.”

ACCAN CEO Carol Bennett called for far greater scrutiny of ACMA’s proposal, citing its significant implications for public finances and market fairness.

“Spectrum is a public resource, and it is ACMA’s job to manage it in the public interest.”

“Telcos should pay a fair price for access to spectrum. We are concerned that, by avoiding a competitive auction, ACMA is enabling spectrum to be sold at a steep discount.”

“As Professor Holden has made clear, this decision risks entrenching market dominance by a limited number of Australian telcos, increasing barriers to entry for new players, and reducing innovation and value for consumers.”

ACCAN is urging the Minister for Communications, Anika Wells to ensure that the public interest comes before commercial interests and that due process provided by an auction can ensure the maximum return and efficiency in the allocation of spectrum.

This will not only provide a return to taxpayers but competition from new entrants to the market that can drive down prices for consumers while ensuring that emerging technologies are delivered in the form of new service offerings. 

“The allocation of a precious and finite resource like spectrum should deliver dividends for taxpayers, consumers and the federal budget” Ms Bennett concluded.

The public consultation period on ACMA’s proposal is now closed and a decision from the ACMA is expected later this year.

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.

Alec Bennetts
Mobile: 0409 966 931
Email: [email protected]