Australian reviews on spectrum management recommend whole-of-government approach

On February 2, the Australian Government announced the outcomes of reviews on spectrum pricing and Commonwealth-held spectrum. The allocation and pricing of spectrum affects the realisation of benefits from spectrum, which is a finite resource and is essential to a digitally-networked economy.

The recommendations in the two reviews were informed by industry consultation last year. They will be implemented by the Department of Communications and the Arts and the Australian Communications and Media Authority (ACMA) as the independent regulator.

The press release states that the Government continues to progress the modernisation of Radiocommunications legislation and will undertake further consultation with industry in coming months.  The Government expects to introduce a package of Radiocommunication Bills into the Parliament in 2018.

Recommendations on Commonwealth held spectrum

The Commonwealth Government is the largest holder of spectrum in Australia. The Government is also the regulator of spectrum in Australia through the ACMA.

The review recommends the establishment of an advisory committee comprising relevant Commonwealth government agencies to provide advice to the Minister for Communications on issues of spectrum policy and identify and implement whole-of-government efficiency improvements.

It is also recommended that the Government publish a consolidated report outlining the value and use of Commonwealth spectrum holdings every two years. To facilitate this portfolio agencies should provide information on their spectrum holdings by value (price paid) and number of licences; the utilisation-over-time and purposes for which spectrum holdings are used; and future spectrum requirements including the timing of new spectrum allocations.

The final recommendation is that the Government should explore the implementation of a whole-of-government approach to the identification of sharing and trading mechanisms. This would include the examination of foreign government approaches and emerging technologies and processes to determine if there are opportunities for the Government to engage in sharing and trading of Commonwealth held spectrum.

Recommendations on spectrum-pricing

The review recommends that the ACMA should publish guidelines on how it approaches its spectrum pricing decisions. To ensure efficient use of spectrum, the Government and the ACMA should endeavour to charge users of similar spectrum at the same rate. In cases where spectrum fees are determined other than by auction or by the administered pricing formula, the reasons for the decision should be published.

Another recommendation is for the ACMA to further identify bands to transition from administratively set fees to competitive market-based allocations in its annual work program. In setting reserve prices, the ACMA and the Government should consider the influence of the reserve price on competitive behaviour, and the scope for price discovery through upward movement toward the market value of the spectrum.

According to the review, the ACMA should generally require upfront lump-sum payments for spectrum access charges determined by auction and should assess the risks to the state of default and the potential impact on competition, when considering instalments.

It was also recommended that the ACMA undertake a detailed review of the administrative pricing formula’s parameters, including density areas, the number of pricing bands, and the number of power categories and implement regular updates to reflect changes in density, demography and demand.

The application of opportunity cost pricing to a greater number of spectrum bands should be identified in the ACMA’s annual work program.

One of the key recommendations is the consolidation of the three existing spectrum tax Acts into one tax Act. In addition, provisions of the separate Radiocommunications Taxes Collection Act 1983 and the Radiocommunications Taxes Collection Regulations 1985 should be consolidated with the remaining legislation according to the review.

The apparatus licence taxes and spectrum access charges for spectrum licences should be combined into a single spectrum access charge, while the spectrum licence tax and the minimum tax constraint of the apparatus licence taxes should be subsumed into one radiocommunications licence tax. 

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