In absolute terms, the auction is being considered a failure for the Government, as it was expected to raise $3 billion rather than the $1.964 billion that was achieved. However, it was a windfall for the telcos, as they only had to pay just above the reserve price.
The 700 MHz spectrum band was previously used by soon to be obsolete analog TV services, while the 2.5 GHz band was used for wireless electronic news gathering, including video and voice links.
The 700 MHz band is considered more valuable for wide coverage, making it suitable for regional areas, while the 2.5 GHz band is considered best suited to high density metropolitan areas.
Vodafone Hutchison Australia was originally scheduled to participate in the auction which started on 23 April 2013 but withdrew.
Telstra was by far the biggest bidder, spending more than $1.3 billion on 120 MHz of bandwidth in both bands, while Optus took exactly half the amount spectrum as Telstra for $649 million. TPG secured only a minor share of the 2.5 GHz band for $13.5 million.
The results of the auction are summarised in the table below:
|Total spectrum sold|
|Total spectrum unsold|
‘The auction process itself ran smoothly and resulted in the allocation of spectrum to the companies that valued it the most,’ said the ACMA’s Chairman, Chris Chapman.
Demand in Clock Round 1 of the auction led to three unsold lots in the 700 MHz band. In the 2.5 GHz band, demand exceeded supply in the first round but reached equilibrium at the end of Clock Round 3, at which point the clock rounds closed. This level of demand during the clock rounds meant prices payable by bidders are only marginally above reserve prices.
‘The auction tested the market and the auction’s conclusion is another important step toward realising Australia’s digital dividend,’ said Mr Chapman.
‘This decades-long process of spectrum reform has already transformed the television industry, delivering greater diversity and better technical quality of television services to viewers. It will be complete when the new licences in the 700 MHz band become operational at the beginning of 2015.’
‘By making spectrum previously required for analog television transmissions available to meet rising demand for high-speed wireless broadband, the digital dividend auction will well position the Australian telecommunications industry to deliver fast, ubiquitous and symmetrical mobile broadband connectivity to consumers and industry,’ Mr Chapman said.