Telcos do battle over data
When Communications Minister Stephen Conroy directed the Australian Communications and Media Authority to set higher reserve prices for the spectrum auction last year he described the invisible asset as waterfront property.
But the interest of the buyers has been closer to something like a plot in the suburbs.
Conroy's intervention was greeted with howl of protests from mobile carriers. Optus and Vodafone threatened to pull out of the spectrum auction. Vodafone made good on its threat and Optus only spent about $650 million on spectrum.
Even cashed-up Telstra didn't bid for the maximum allocated spectrum in the 700 MHz band.
Analysts believe the high reserve price, which was about 30 per cent more expensive than average prices paid at similar global auctions recently, deterred bidders from buying more spectrum or participating in the 700 MHz spectrum auction.
So the government is left with about $1 billion worth of valuable spectrum sitting idle on its shelf. Senator Conroy's attempt to squeeze more money out of telcos backfired and spectrum will not be available for another two to three years.
Significantly, Telstra, Optus and TPG snapped up all available spectrum in the 2.5 GHz band, which is prime real estate for carrying data.
This shows the future battleground for telcos is data. With the introduction of the 4G network, the demand for data is set to explode. All major telcos are working on pricing strategies to capitalise on the anticipated greater demand for data.