Canberra warned over spectrum sale

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

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

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

The spectrum is in the 700Mhz band and 2.5Ghz band, at present devoted to analog television signals. Next month's auction is expected to fetch billions for the federal government as it takes bids from carriers such as Telstra and Optus.

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

"My philosophy, when I was 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."

In marked contrast to the US policy, the Australian government has a stated policy objective to raise revenue from the spectrum auction. Communications Minister Stephen Conroy described the spectrum last year 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 for the minimum floor price for spectrum. Industry analysts and telcos at the time said it was too expensive by international standards. Vodafone, the third largest telco in the country, said it would not bid at the price.

Dr Pepper said spectrum should be cheaper.

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

"Globally what we will see is fibre either to premise or fibre very close to premise," he said. "The best global practice is to have a network that is future-proofed that can support very high bandwidth and low latency [delay]."

There has been an ongoing dispute between the government and the Coalition over the NBN. The government wants to connect premises with fibre-optic cable, while the Coalition believes the NBN should use part of Telstra's existing copper network for the "last mile" connection to the premises. Dr Pepper doubted whether copper could handle the exponentially growing data demand.

"If you are going to bring fibre all the way up to the neighbourhood, you want to be able to bring that capability to the premises."

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