The Australian Communications Media Authority (ACMA) is proposing to renew spectrum licences for up to $3.2 billion less than what they bought them for.
ACMA is proposing not to hold auctions for the 69 expiring spectrum licences they bought for $8.2 billion but instead renew them for between $5 billion and $6.2 billion.
However, the move has been met with controversy by consumer advocates, the Australian Communications Consumer Action Network (ACCAN).
According to the ACMA’s own calculations, the Australian Treasury stands to lose between $2 billion and $3.2 billion over the duration of licences if they aren’t taken to sale.
In advice commissioned by ACCAN, Scientia Professor of Economics at UNSW Business School Richard Holden warned that ACMA’s approach was filled with “fundamental economic errors."
The proposed approach is prefaced on a "fundamentally flawed methodology and provides no evidence in support of the conclusions drawn from it,” he said.
Holden said 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 warns that the reduction in revenue will be reflected in cuts to investments in critical public interest communications programs.
ACCAN CEO Carol Bennett said failure to auction could reduce competition and risk the misallocation of spectrum assets, which are fundamental to the delivery of existing and emerging communications.
“Spectrum is a public resource, and it is ACMA’s job to manage it in the public interest,” she said.
“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.”
However, ACMA maintains that the rollover is the best option as it would allow telecommunications firms to invest rather than forcing them to raise consumer prices.
"Spectrum is a public asset for which industry should pay a fair price and from which consumers should gain maximum benefit,” ACMA said in a statement.
"The ACMA's preliminary view is that the expiring spectrum licences that underpin Australia's three mobile networks should be renewed."
The agency says the assessment takes in five public interest criteria:
- competition
- service continuity
- innovation
- emerging technology developments
- connectivity in regional, rural and remote Australia.
