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
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
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.
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.