New spectrum is the fundamental underpinning of Long Term Evolution networks. Without new spectrum, mobile services cannot be in the business. But neither is it the case that contestants can afford to pay anything to acquire such spectrum.
In the just-completed Australian auctions, about 30 MHz worth of prime 700-MHz spectrum was not purchased, apparently because of the high minimum price. In the Australian auction, as in the U.K. auctions held in 2012, buyers exercised more discipline than bidders had in the auctions for 3G spectrum, when a “get it at any price” mentality nearly bankrupted the winners.
Telstra apparently needed new LTE spectrum more than Optus Mobile, and Vodafone Hutchinson Australia decided the prices were too high, and withdrew from the recent Australian auctions of 700-MHz and 2.5 GHz spectrum.
For Telstra, which garnered the largest blocks of spectrum, and paid an order of magnitude more than Optus, the spectrum is essential to its plans to lead the fourth generation mobile market.
The Australian Communications and Media Authority (ACMA) says three bidders — Optus Mobile, Telstra and TPG Internet — secured spectrum in the auction.
Vodafone Hutchison Australia withdrew before the auction, which started on April 23, 2013. The spectrum acquisitions hint at the strategies of all four companies, though. Telstra got the biggest allotment, part of its plans to reorient its business around mobility.
Vodafone either believes it might not own its Australian assets in the future, or can acquire spectrum more affordably some other way.
Optus won about half as much spectrum as Telstra, which likely reflects a determination that it will only require that much spectrum. TPG Internet, which won about 20-MHz in the 2.5 GHz band, probably plans a largely-urban niche strategy.
Also, some 700-MHz spectrum was not sold. Excessively-high “reserve prices” are likely the reason. But that also means another 30-MHz worth of 700-MHz spectrum will be available for auction later.
|
Bidder
|
Spectrum secured
|
Total price
|
|
700 MHz band*
|
2.5 GHz band*
|
|
Optus Mobile
|
2×10 MHz
(20 MHz in total)
|
2×20 MHz
(40 MHz in total)
|
$ 649,134,167
|
|
Telstra
|
2×20 MHz
(40 MHz in total)
|
2×40 MHz
(80 MHz in total)
|
$ 1,302,019,234
|
|
TPG Internet
|
Nil
|
2×10 MHz
(20 MHz in total)
|
$13,500,000
|
|
Total spectrum sold
|
2×30 MHz
(60 MHz in total)
|
2×70 MHz
(140 MHz in total)
|
$ 1,964,653,401
|
|
Total spectrum unsold
|
2×15 MHz
(30 MHz in total)
|
Nil
|
N/A
|
Edited by
Rich Steeves 
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