On 8 March 2018, the Government took one step forward in the march towards the rollout of 5G networks in Australia, announcing that 125 MHz of spectrum in the 3.6 GHz band, which is a key band for the rollout of 5G services, will be auctioned in October 2018.
Consultation processes and recommendation
The Australian Communications and Media Authority (ACMA) undertook a consultation process regarding the future use of the 3.6 GHz spectrum band in mid-2017 (see here).
Under the Radiocommunications Act 1992 (Cth) (Radcomms Act) ACMA is required, among other things, to ensure the efficient allocation and use of spectrum to maximise the public benefit. As a result of the consultation undertaken by ACMA, ACMA formed the view that the public benefit would be maximised by re-allocating the 3.6 GHz band for spectrum licences. Given this view, ACMA prepared a draft recommendation to the Minister for Communications that he make reallocation declarations in relation to that spectrum and, as required under the Radcomms Act, consulted on that draft recommendation in October 2017.
Following finalisation of the declarations consultation process, in late 2017, ACMA recommended to the Government that the spectrum should be reallocated for 5G uses and that a seven-year re-allocation period should apply for the 125 MHz of spectrum in the 3.6 GHz band. That spectrum is currently used for satellite and regional fixed wireless services. The incumbent users of the band in Adelaide, Brisbane, Canberra, Melbourne and Sydney will have two years to vacate the band, users in Perth will have five years and users in regional Australia will have seven years.
ACMA has proposed that, if the incumbent users of the spectrum cannot reach agreement with the new spectrum licence holders to continue to use the spectrum under a sharing model, those holders will be transitioned to site-based, coordinated licensing arrangements in the 5.6 GHz band or potentially to other bands.
Government acceptance of recommendation
The Minister for Communications has accepted ACMA’s recommendation, issuing re-allocation declarations under the Radcomms Act for the 3.6 GHz spectrum on 8 March 2018. This means that ACMA is able to move forward to reallocate that spectrum via an auction process under section 60 of the Radcomms Act.
Mobile network operators, currently Telstra, Optus and Vodafone (with TPG Telecommunications to shortly be a fourth mobile network operator), have – to a greater or lesser extent – publicly stated that they are pleased with the Government’s announcement.
The Government’s acceptance of ACMA’s recommendation has not met with uniform approval. Regional wireless internet service providers (WISPs) continue to argue that the seven-year time period for transition of their services is not sufficient. Although the Federal Australian Labor Party opposition has shown sympathy for the concerns of regional WISPs, the Government has expressed confidence that regional interests will be adequately protected under ACMA’s proposals.
The Australian Competition and Consumer Commission (ACCC) has expressed its concerns that it will be necessary to ensure that competition is addressed in the process for auctioning spectrum that is able to be used for 5G. Under section 60(10) of the Radcomms Act, the Minister for Communications may direct ACMA to impose limits on the spectrum licences that may be acquired by an entity (and its related group) through an ACMA allocation process to protect competition. The Minister has indicated that such limits will be imposed for this auction and that he has asked the ACCC for advice on this issue. The ACCC’s advice will be made public in due course.
Other details of the auction process
It is anticipated that the auction of the spectrum will commence in October 2018. Although further consultation is required in relation to the terms of the allocation instruments for the auction, ACMA has indicated that its initial views are that:
- the auction will be in 5 MHz segments and ACMA proposes to divide the metropolitan and regional areas of Australia into 7 different geographic areas for the purpose of the auction
- an enhanced simultaneous multi-round ascending (or ESMRA) auction, which has a price discovery stage and then an assignment stage, would be the most appropriate auction methodology
- the spectrum licences will have terms of approximately 12 years, expiring on 20 December 2030, which will align with licences of spectrum in the adjacent 3.4 GHz band.
Consultation on the allocation instruments is expected to occur in the short term.