Auction criticised for focus on revenue

Governments should not use spectrum auctions to extract revenue from telecommunications companies, a top executive from the US global technology giant Cisco has warned.

Governments should not use spectrum auctions to extract revenue from telecommunications companies, a top executive from the US global technology giant Cisco has warned.

It comes as Canberra prepares for the so-called digital dividend auction, which includes spectrum used for the 4G fast mobile network.

The spectrum is in the 700 MHz band and 2.5GHz band, currently occupied by analog television signals. Next month's auction is expected to fetch billions for the federal government as it attracts bids from carriers including Telstra and Optus.

Robert Pepper, who was also the head of policy development at the US Federal Communications Commission, told BusinessDay: "From a spectrum policy perspective, the benefit is getting the spectrum into hands of these people who are going to build out and use it, provide services and compete. It is not about maximising revenue from auction.

"My philosophy, when I was running and designing spectrum auction at the FCC, was not about the money ... In fact, in the US, we are prohibited by law to take into account how much money is raised from spectrum," Dr Pepper said.

However, in contrast to the US policy, the Australian government has a stated policy objective to raise revenue from the spectrum auction. Before the government abandoned the goal of returning the budget to surplus, forecast revenue from the spectrum auction was expected to boost revenue this financial year.

Communications Minister Stephen Conroy last year described the spectrum as a premium public asset. "This spectrum is seen as the 'waterfront property' of spectrum and the government has made a significant investment to free it up. It is important that we get a reasonable return on this valuable public asset."

In January, he announced the formula outlining the minimum floor price for spectrum. At the time, analysts and telco operators said it was too expensive by international standards.

Vodafone, the third-largest telco, said it would not participate because of the high price.

On the topic of the national broadband network, the Cisco executive said any roll-out plan needed to be future-proofed.

"The best global practice is to have a network that is future-proofed that can support very high bandwidth and low latency (delay)," he said.

There has been an ongoing dispute between the government and the Coalition over the national broadband network roll-out strategy. The government wants to connect premises with fibre-optical cable while the Coalition believes the network should use part of Telstra's existing copper network for the "last mile" connection to the premises.

Dr Pepper doubted whether copper connection could handle the growing data demand.

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