THE mobile phone industry is talking down the price to be paid for premium spectrum space soon to become available, warning a high price would starve telcos of funds to bring new services online.
The government is considering its options for the auction of 126 megahertz of spectrum that will become available beyond 2013 when free-to-air television completes its transfer from analog broadcasting to a less spectrum-hungry digital format.
Communications Minister Stephen Conroy is today expected to make a big announcement on the government's policy approach on current spectrum licences at an industry forum in Sydney.
The government is keen to auction the spectrum in a process industry sources say will be dominated by mobile telcos keen to use the space to launch 4G wireless services, and could be sold for more than $1 billion.
The Australian Mobile Telecommunications Association has warned the government to temper its expectations on price, saying a high price will hamper the development of new wireless services.
''There are examples where prices paid for spectrum have been very, very high, and in terms of available [capital expenditure] that has a major impact on what follows,'' said the group's chief executive, Chris Althaus, citing European auction sales of 3G spectrum.
''It's a concern that if there's an overinflated price, that might then impact on levels of flow-through investment.''
He said the industry was grappling not just with the auctioning of analog TV's 700MHz frequency, but also the allocation of the 2.5 gigahertz spectrum and the looming lapse of 15-year licences on existing frequencies.
A similar tract of 700MHz spectrum was auctioned two years ago in the US for a total of nearly $US20 billion.
In Australia, the government will need to decide how best to split the spectrum. Industry sources suggest the likely alternatives are three blocks of 40MHz, or two blocks of 50MHz, with both cases requiring the residual spectrum to act as a buffer to prevent interference. The most likely bidders for the spectrum are the three mobile phone operators in Australia - Telstra, Optus and Vodafone Hutchison Australia - meaning the government may struggle to achieve competitive tension in the auction if the spectrum is split three ways.
There is also industry concern over the timing of the auction, with all keen for the auction to be completed with enough time for the spectrum to be put to use immediately after the analog TV switch-off.
Australia's second-largest telco, Optus, has pushed for the government to have the auction completed by the end of next year.
