Australian Communications and
Submission by: Australian Mobile Telecommunications Association
1. Introduction and overview
1.1 The Australian Mobile Telecommunications Association (AMTA) is the peak industry
body representing Australia’s mobile telecommunications industry. AMTA’s mission is to
promote an environmentally, socially and economically responsible, successful and
sustainable mobile telecommunications industry in Australia. AMTA members include
mobile Carriage Service Providers (CSPs), handset manufacturers, retail outlets,
network equipment suppliers and other suppliers to the industry. For more details about
AMTA, see http://www.amta.org.au.
1.2 AMTA welcomes this opportunity to comment on the Australian Communication and
Media Authority’s (ACMA’s) Spectrum Trading: Consultation on trading and third party
authorisations of spectrum and apparatus licences paper (ACMA’s Paper).
1.3 AMTA notes that it has made a number of submissions to ACMA in relation to spectrum
issues over recent months in response to various discussion papers, including the Five-
year Spectrum Outlook 2009-2014 and Spectrum Principles Paper. A number of these
submissions touched on secondary trading issues. AMTA also provided relevant input to
the Department of Broadband, Communications and the Digital Economy in relation to its
recent consultations on spectrum licence reissue.
1.4 AMTA supports a robust secondary trading market. As ACMA recognises in its paper,
the level of trading activity to date has been limited. AMTA believes that there are two
key reasons for the poor functioning of the secondary trading market in Australia: licence
tenure and the transaction costs associated with trading.
2. Key issues impeding secondary trading
2.1 There are two key barriers to the effective functioning of the spectrum secondary trading
market in Australia: licence tenure and transaction costs associated with trading. These
issues are examined below.
2.2 A significant impediment to spectrum trading is uncertainty regarding the security of
licence tenure beyond licence expiry. As stated in ACMA’s Paper, the length of tenure
affects the dynamism of trade in secondary markets as well as the willingness of
AMTA Submission: ACMA Spectrum Trading Consultation, Jan 09. 2
operators to continue to invest in the network with limited remaining tenure when there is
currently no certainty of licence re-issue.
2.3 The need for greater certainty is highlighted by the current situation in which spectrum
licensees face considerable uncertainty about how the licence renewal process will work,
likely licence length, the cost of reissue and other attached conditions.
2.4 This uncertainty of tenure for spectrum licences is likely to be greatly amplified for
secondary markets and is therefore likely to limit trading. This is because it is even less
clear how renewal would be handled for secondary holders.
2.5 To address this issue and promote trade in secondary markets, there must be some
level of business certainty or presumption of continuity at the end of the tenure for both
primary and secondary holders.
Competing users, new technologies and changing market opportunities impose a
discipline on incumbents to use the spectrum efficiently or sell or lease it to others who
can. Certainty of tenure would make it more attractive to those wanting to gain access to
additional spectrum to make long-term investments.
Fully tradeable spectrum property rights – with a level of certainty beyond licence expiry
– would result in a good outcome in spectrum use and management.
2.6 AMTA does not consider that the length of a licence should be restricted to an arbitrary
fifteen year period and would support the Government having the flexibility to offer
licences for greater periods of time.
2.7 Another issue relates to the ability of interested parties to plan investment decisions.
Strategic planning, including the need to trade (whether selling or buying) is dependent
on an understanding of what spectrum is currently available and what is likely to be
available in the future. For example, the World Radiocommunication Conference in 2000
designated the 2500-2690MHz band for IMT technologies. In early 2007, ACMA
consulted on the 2.5GHz band and its potential availability for wireless access services.
To date, there has been no decision announced.
In the absence of an efficiently functioning secondary trading market, and given
difficulties in planning as noted above, an incumbent spectrum licence holder will be
even less likely to trade or relinquish spectrum that they are not currently using if they
have no certainty about opportunities to access spectrum at a later date.
AMTA Submission: ACMA Spectrum Trading Consultation, Jan 09. 3
2.8 AMTA suggests that the following steps would assist to address these issues and
increase the efficient functioning of the market:
(a) To assist interested parties plan their investment decisions, it is essential that ACMA
ensures that the market is advised as early as possible of decisions in relation to
spectrum availability. As such, AMTA requests from ACMA clear planning and early
advice on spectrum releases;
(b) At the time of re-issue, spectrum holders who have acquired spectrum through
secondary trading should be subject to the same conditions as primary spectrum
(c) There should be a presumption of continuity of licence with incumbents given first
right of refusal at the time of licence re-issue.
2.9 The second critical issue impeding the secondary trading of spectrum licences is
2.10 Taxation imposts currently vary across states, are complicated and are subject to
inconsistent application. There is clear evidence that transaction costs are inhibiting
trading, resulting in significant inefficiencies in spectrum use as illustrated below.
Evidence that transaction costs are impeding trade: 1800 MHz band
2.11 The spectrum auction for the 1800MHz spectrum conducted in 2000 was highly
contested and undesirably resulted in non-contiguous lots being allocated and isolated
2.5MHz lots being held by various operators. This is illustrated at Attachment A.
2.12 The allocation of contiguous spectrum is important to reduce the need to maintain
inefficient guard bands at the boundary of each spectrum lot. The non-contiguous lot
allocation of the 1800MHz spectrum has therefore resulted in significant inefficiencies.
Further, in the case of the 2.5MHz isolated lots, these lots may only be useful in a 2G
2.13 In late 2000 the 1800MHz spectrum holders sought to arrange the rationalisation of the
non-contiguous lot holdings. The methodology of swapping lots was agreed upon and a
Memorandum of Understanding prepared but the rationalisation was not implemented
because of significant taxation issues, with both capital gains tax and State stamp duty
to apply to the swaps.
AMTA Submission: ACMA Spectrum Trading Consultation, Jan 09. 4
2.14 AMTA understands that submissions were made to the Australian Taxation Office to ask
that relief be granted from capital gains tax when spectrum licences were swapped.
Unfortunately, these submissions were unsuccessful.
2.15 As identified in the ACMA Paper, stamp duty is also acting as a barrier to trade. AMTA
understands that the States and Territories have agreed to support the abolition of stamp
duty on non-land business conveyances and notes that some states already have an
effective stamp duty tax rate of zero. This is encouraging. However, New South Wales,
the last State to comply, will not abolish stamp duty until 1 July 2012. Thus stamp duty
will continue to severely inhibit trade for another three years.
2.16 These taxes serve as direct barrier to spectrum trading and mean that industry is left
with spectrum lots that are inefficiently utilised and may inhibit their use for more
Removing the transaction cost barriers
2.17 AMTA urges ACMA to work with the Australian Tax Office and relevant State and
Territory Governments to remove these barriers to secondary trade by:
(a) Fast-tracking the removal of stamp duty;
(b) Introducing tax legislation to specifically deal with the swapping of spectrum licences
to ensure a tax neutral outcome.
3.1 If a secondary trading market is working efficiently, and spectrum is treated in a similar
way to other tradeable assets, it is unnecessary for the regulator to have a role to
prevent spectrum hoarding – the non-utilisation of spectrum licences.
3.2 In AMTA’s view, anti-competitive conduct – such as spectrum hoarding – is the remit of
the Australian Competition and Consumer Commission (ACCC). The Trade Practices
Act has an important and continuing role to play in ensuring that secondary trading does
not result in anti-competitive outcomes.
AMTA Submission: ACMA Spectrum Trading Consultation, Jan 09. 5
Other ways to improve secondary trading conditions
3.3 In its Spectrum Trading discussion paper, ACMA references a proposal to increase
participation in (and therefore the thickness of) the market by increasing the ability and
incentives of government spectrum users to trade1.
AMTA supports this proposal and suggests that the resultant increased transparency of
government spectrum holdings would be beneficial to spectrum management overall,
assisting ACMA meet its obligation under the Radiocommunications Act 1992 (the Act)
to ensure that that the allocation, use and full value of spectrum is understood and
accords with ACMA’s spectrum management principles.
Flexibility in licensing
3.4 Flexibility in licensing is necessary to encourage trade and AMTA is supportive of this
aspect of the current regime. That is, AMTA regards technology-neutral spectrum
licences as essential to a spectrum trading regime.
To illustrate the benefits of such a regime, consider the expected upcoming digital
dividend. Flexibility of spectrum allocation in that band could bring substantial community
benefits through the potential re-allocation of digital dividend spectrum to technologies
and applications other than broadcasting.
Spectrum licence trading rules
3.5 The changing wireless technology environment inevitably leads to opportunities for the
introduction of higher data rates and richer service applications. Such developments
demand wider spectrum channels for efficient operation. This leads to the need for larger
Minimum Contiguous Bandwidths (MCBs) in some bands. AMTA submits that bands
suitable for the deployment of expected high-speed wireless 4G/LTE or similar should
have increased MCBs – to 10MHz, for example. AMTA notes that this would prevent the
undesirable fragmentation that occurred in the 1800MHz band.
3.6 AMTA recognises the potential for market failure in spectrum allocation and supports in
principle ACMA’s desire to facilitate the operation of the market by reducing information
asymmetry, including the publication of information on current spectrum use and trading.
In practice, however, AMTA does not believe that the additional time and cost imposition
Reference to proposal by M Bykowsky, P18, ACMA Spectrum Trading Consultation Paper.
AMTA Submission: ACMA Spectrum Trading Consultation, Jan 09. 6
required to fill and maintain such an information register would be justifiable, particularly
given that any published data would have to protect commercial sensitivities. The current
market structure suggests that even publishing data in aggregate form would often not
be sufficient to protect the source, leading AMTA to conclude that the little information
that could be published would likely be of limited value to potential trade seekers.
3.7 Similarly, while AMTA considers that the publication by ACMA of information on third
party authorisations might be useful in informing all interested parties that an
authorisation for use of existing licensed spectrum is being considered in a specific
situation, the benefits need to be considered against the commercial reasons behind
such authorisations. The existence of public information of this nature is quite unlikely to
generate additional authorised use agreements and indeed could inhibit such initiatives.
It would also create additional costs for industry.
In summary, AMTA does not support the collection and publication of third party
3.8 AMTA is supportive of electronic submission of the necessary paperwork associated with
trading or leasing, noting that electronic lodgement of paperwork is usually more efficient
and cost-effective than requiring posted hard copies.
4.1 There are two major barriers to the secondary trading of spectrum licences: licence
tenure and the transaction costs associated with trading.
4.2 AMTA contends that it should be relatively simple to address the barrier created by
trading transaction costs and urges ACMA to work with the Australian Tax Office to
introduce tax legislation to specifically deal with the swapping of spectrum licences to
ensure a tax neutral outcome, and with relevant State and Territory Governments to fast-
track the removal of stamp duty on non-land business conveyances.
4.3 To address the barrier to trade created by uncertain licence tenure, AMTA suggests that
ACMA make it clear that there is a presumption of continuity of licence with incumbents
given first right of refusal at the time of renewal, and that spectrum holders who have
acquired spectrum through secondary trading will be subject to the same conditions as
primary spectrum holders. AMTA also strongly encourages ACMA to advise the market
about spectrum availability as early as possible to enable businesses to effectively plan
their very significant investment decisions in the most appropriate timeframes.
AMTA Submission: ACMA Spectrum Trading Consultation, Jan 09. 7
4.4 AMTA thanks ACMA for the opportunity to comment and would be pleased to participate
in further discussions on any of the issues raised.
AMTA Submission: ACMA Spectrum Trading Consultation, Jan 09. 8
1800 MHz Capital City Spectrum Holdings
Lower Upper Lower Upper Bandwidth Sydney Melb Brisb'n Adel Perth
1710 1712.5 1805.0 1807.5 2.5MHz paired Telstra Telstra Telstra Telstra Telstra
1712.5 1715 1807.5 1810.0 2.5MHz paired
1715 1717.5 1810.0 1812.5 2.5MHz paired
1717.5 1720 1812.5 1815.0 2.5MHz paired
1720 1722.5 1815.0 1817.5 2.5MHz paired Vodafone Vodafone
1722.5 1725 1817.5 1820.0 2.5MHz paired Optus
1725 1727.5 1820.0 1822.5 2.5MHz paired Optus Optus Vodafone
Rail Corp QR
1727.5 1730 1822.5 1825.0 2.5MHz paired
NSW VIC Rail Telecom TransAdelaide PTA WA
1730 1732.5 1825.0 1827.5 2.5MHz paired Vodafone Telstra Vodafone Vodafone
1732.5 1735 1827.5 1830.0 2.5MHz paired Vodafone OneTel
1735 1737.5 1830.0 1832.5 2.5MHz paired
1737.5 1740 1832.5 1835.0 2.5MHz paired
1740 1742.5 1835.0 1837.5 2.5MHz paired Optus
1742.5 1745 1837.5 1840.0 2.5MHz paired Optus Optus
1745 1747.5 1840.0 1842.5 2.5MHz paired Optus Optus
1747.5 1750 1842.5 1845.0 2.5MHz paired
1750 1752.5 1845.0 1847.5 2.5MHz paired
1752.5 1755 1847.5 1850.0 2.5MHz paired
1755 1757.5 1850 1852.5 2.5MHz paired
Telstra VIC Rail Hutch TransAdelaide Hutch
1757.5 1760 1852.5 1855.0 2.5MHz paired Hutch
1760 1762.5 1855.0 1857.5 2.5MHz paired
1762.5 1765 1857.5 1860.0 2.5MHz paired Vodafone
1765 1767.5 1860.0 1862.5 2.5MHz paired Hutch Vodafone Vodafone
1767.5 1770 1862.5 1865.0 2.5MHz paired Telstra
1770 1772.5 1865.0 1867.5 2.5MHz paired
1772.5 1775 1867.5 1870.0 2.5MHz paired Hutch Hutch
1775 1777.5 1870.0 1872.5 2.5MHz paired
Telecom PTA WA
1777.5 1780 1872.5 1875.0 2.5MHz paired
1780 1782.5 1875.0 1877.5 2.5MHz paired
1782.5 1785 1877.5 1880.0 2.5MHz paired
NSW VIC Rail TransAdelaide
Formerly ONE.TEL - State
AMTA Submission: ACMA Spectrum Trading Consultation, Jan 09. 9