If the initial trading period were to be successful, the impact that spectrum price has on spectrum efficiency would be consistent with Option 2. If trading were to fail and an auction process invoked, the impact that spectrum price has on spectrum efficiency would be consistent with Option 3, albeit realised at a later date (owing to the delay attributed to the initial trading period). 5. Hybrid (reform Conversion to spectrum licensing As with all reform options the All incumbent licensees retain All incumbent licensees would retain option) would confer improved certainty of licensees would be provided with access to at least one lot, so this access to at least one block, so this tenure and improve investment spectrum licences, which would option is unlikely to reduce option is unlikely to impact customer confidence. confer improved property rights competition in downstream market. convenience. and investment certainty (relative This option would result in While it would be feasible for a to Option 1). fragmentation, which is not the most to bid for the 2 x 10 MHz efficient (and by extension the highest This option would provide subject to price-based allocation, value) use of the band. incumbents with certainty of they would be at a significant ongoing tenure within at least part (potentially prohibitive) The coexistence between of the band. disadvantage with respect to administratively and market-set prices incumbents. This owes to inequities would put new market entrants at a However, the likely fragmented resulting from mixing significant disadvantage, possibly to band configuration that would administratively-priced the extent that they would not result from this option would be to incumbents) and participate in the price-based allocation likely to undermine investment market-priced (through price-based process for the two lots not confidence. allocation) blocks in the band. administratively allocated. Disenabling a new entrant may inhibit spectrum being used in its highest value use. Administrative pricing of blocks would likely achieve a lower price than market value, therefore reducing the incentive to use these blocks efficiently.
If the initial trading period were to be successful, the impact that spectrum price has on spectrum efficiency would be consistent with Option 2. If trading were to fail and an auction process invoked, the impact that spectrum price has on spectrum efficiency would be consistent with Option 3, albeit realised at a later date (owing to the delay attributed to the initial trading period). 5. Hybrid (reform option) Conversion to spectrum licensing would confer improved certainty of tenure and improve investment confidence. This option would result in fragmentation, which is not the most efficient (and by extension the highest value) use of the band. The coexistence between administratively and market-set prices would put new market entrants at a significant disadvantage, possibly to the extent that they would not participate in the price-based allocation process for the two lots not administratively allocated. Disenabling a new entrant may inhibit spectrum being used in its highest value use. Administrative pricing of blocks would likely achieve a lower price than market value, therefore reducing the incentive to use these blocks efficiently. As with all reform options the licensees would be provided with spectrum licences, which would confer improved property rights and investment certainty (relative to Option 1). This option would provide incumbents with certainty of ongoing tenure within at least part of the band. However, the likely fragmented band configuration that would result from this option would be likely to undermine investment confidence. All incumbent licensees retain access to at least one lot, so this option is unlikely to reduce competition in downstream market. While it would be feasible for a to bid for the 2 x 10 MHz subject to price-based allocation, they would be at a significant (potentially prohibitive) disadvantage with respect to incumbents. This owes to inequities resulting from mixing administratively-priced to incumbents) and market-priced (through price-based allocation) blocks in the band. All incumbent licensees would retain access to at least one block, so this option is unlikely to impact customer convenience.
18-17-0005-00-0000-australia-reconfiguring-900mhz-band-consultation-paper.docx