Address to AMTA Member Networking Forum

Sydney
Wednesday, 3 March 2010

Thank you and good afternoon everyone.

It is a pleasure to have the opportunity to speak you about the Government’s policy-approach to a number of key spectrum issues.

At a time when the Global Financial Crisis has cut a swathe through most industries across the globe, it seems the wireless communications sector has hardly missed a beat.

Looking to the future, in terms of demand for wireless broadband, it looks like there will be exponential growth for some years to come.

Of course, servicing this demand won’t just happen.

We need to put in place critical pieces of national infrastructure to deliver those services and this includes both fixed and wireless infrastructure.

The importance of fixed services to provide backhaul and handle very high bandwidth services is vital to the delivery and reliability of wireless services.

Equally, the massive growth of mobile services will drive greater use of fixed services, particularly if the trend towards centralised processing of data occurs in the internet cloud.

In this way, the growth in wireless services does not have to be at the expense of fixed broadband, or vice versa.

There is no reason to restrict either – they are major productivity-drivers and critical parts of the national infrastructure.

At a more technical level, wireless and fixed broadband technologies are complementary.

In fact, it is more than this.

Wireless and wired communications networks are interdependent and have a symbiotic relationship.

The Government’s massive expansion of the fixed line capacity through the National Broadband Network will dramatically increase development of wireless services.

This will particularly benefit mobile broadband, through the provision of additional competitively-priced backhaul.

Together, decisions on wired and wireless communications will provide the critical infrastructure that will be a cornerstone of productivity growth for decades to come.

Spectrum

From the outset, the Rudd Government has been acutely aware of the pressures that wireless-service growth is placing on the radio-frequency spectrum requirements that underpin these wireless services.

We recognised that to respond to this pressure we were likely to need to make spectrum available in larger allocations than we have ever seen before.

We will also have to be smarter in how we approach the management - and use - of such an important asset.

The Government has been working on this for some time.

With such a complex issue and with multiple stakeholders, these processes always take more time than you would want.

However, I can report that substantial progress has been made and the Government is now facing big decisions regarding spectrum licence reissue and reallocation.

We recognise that these decisions will have implications for the structure of the communications market beyond 2020, and that industry is keen for those decisions to be made as soon as possible.

Meeting the demand for more spectrum

The Government has recently announced several processes that will assist in meeting the ever-increasing demand for more spectrum.

These processes include the release of the Digital Dividend Green Paper and the Australian Communications and Media Authority’s discussion paper on the 2.5GHz band.

I can announce today that the Government has made decisions on the way forward for reissuing 15-year spectrum licences.

Digital Dividend

The Rudd Government is committed to maximising the benefits to all Australians from the digital dividend.

Digital dividend spectrum could support a range of productivity-enhancing next generation communications technologies, including mobile broadband, telephony and broadcasting services.

Digital dividend spectrum can rightly be considered as the ‘waterfront property’ of spectrum.

I recently released a Government green paper which sought comments on the size, location and possible uses of the digital dividend.

It identified a target of 126 megahertz for the dividend.

The period for comment was to have closed last week however, in response to several requests for extensions, the Department has indicated submissions will be accepted until cob Friday 5 March.

The submissions will be analysed and considered before the Government makes any further announcements in relation to the Digital Dividend, including the possible timing of the auction.

2.5 GHz band

In January, the ACMA released a discussion paper as part of its review of the pricing, planning and licensing arrangements for the 2.5GHz spectrum band.

You will be aware that the 2.5GHz band has 190 MHz of spectrum that is currently licensed almost exclusively to the three commercial free-to-air TV broadcasters and the ABC for outdoor broadcasting and electronic news gathering, including live sport and news events.

As most of you are aware, the band has been identified internationally for the deployment of future wireless services.

I realise that, like the Digital Dividend spectrum, access to this particular band is highly coveted, especially by certain members of this audience.

The harmonization of the band for international roaming gives great weight to the calls for it to be harnessed to address emerging demand for broadband wireless access services in Australia.

I’m sure you won’t need any prompting to provide your comments to the ACMA on its discussion paper which closes next Friday – March 12.

While I emphasise that this is an issue for the ACMA, I support a balanced approach for the re-planning of this band.

The ACMA’s discussion paper points to possible solutions for the accommodation of electronic news gathering, and the ACMA will continue to consult with broadcasters to determine their future spectrum requirements for this purpose.

15-year licences

While I have already outlined a number of processes the Government is undertaking to make additional spectrum available in the future, progress is also being made in the consideration of key existing spectrum licences that are due to expire in the period between 2013 and 2017.

These licences are primarily used to provide 2G and 3G mobile phone and wireless services to millions of Australian consumers.

Australia is leading the world on spectrum licence reissue.

In the late 1990s, Australia was among the first countries to adopt auction mechanisms to allocate long-term spectrum licences.

Such an approach has since become commonplace in many countries.

Australia is now one of the first countries to face the issue of licence expiry.

We know that where some long-term licences have come up for renewal overseas, there has been a short term roll-over.

The Government has listened to industry concerns that this approach does not provide sufficient certainty … and so we have decided to undertake a process to provide long-term reissue.

That said, I am very aware that current licence holders are keen for the Government to make decisions on reissue of these licences as quickly as we can.

Reissue of the 15-year licences is an important and complex issue that will provide ongoing and future spectrum for current and next generation communications services.

It is important not only to the industry, but also to consumers and the taxpayer.

Reissue—reallocation versus renewal

In Australia, there is a presumption in legislation that when a spectrum licence expires, it will be reallocated by the ACMA via a price-based mechanism.

Auction is therefore the default option for licence reissue.

The legislation, however, does leave the door open to other licence reissue options.

ACMA has the power to renew individual licenses in special circumstances. There is also an ability for the Minister to issue a determination to ACMA specifying a class of services for which renewal of spectrum to the incumbent would be considered to be in the public interest.

The legislation limits ministerial-renewal powers to those licenses that have been used.

Government work undertaken in preparation for licence reissue

My Department has undertaken a number of processes to ensure that decisions on reissue are made on a fully-informed and considered basis.

This includes seeking advice on international experience and policy options from international experts, along with a detailed valuation of the 15-year spectrum licences.

In April 2009, public comment was sought on possible public-interest criteria that might form the basis of my decision to renew or reallocate spectrum licences.

The public-interest criteria, which were supported by the majority of respondents to the paper, were as follows:

• Promoting the highest-value use for spectrum;
• Investment and innovation;
• Competition;
• Consumer convenience; and
• Determining an appropriate rate of return to the community.

There was general support to this paper for me to use the ‘ministerial powers for renewal in the public interest’ and strong support for the public-interest criteria.

The discussion paper also canvassed additional measures to increase the efficient use of spectrum, such as coexistence and re-planning in the 1800MHz band.

This work has formed a useful framework on how to take this issue forward.

Announcement of a forward process for the reissue of spectrum licences

I am pleased to announce today that the Government has endorsed a forward process to address this important issue.

Licence renewal will be offered to those incumbents who are using their licences to provide services to significant numbers of Australian consumers … or have in place networks capable of providing services to a significant number of consumers.

That means we will offer license renewal to the major telecommunications providers – Telstra, Optus, Vodaphone Hutchison Australia (VHA) and Unwired (Vividwireless Australia).

The legislation does not allow me to use my ministerial renewal powers to those licenses that have not been used.

Consistent with legislative requirements, any decisions to renew licenses will be made considering all the public interest criteria I mentioned earlier.

Licences that are not renewed under this process will be considered directly by the ACMA in accordance with existing legislative requirements.

Licenses reissued in accordance with the public interest criteria will be subject to an agreement on price.

Accordingly, the Government will seek a fee that reflects the scarcity and value of this important public resource.

Renewal is not a certainty simply because a carrier services a significant customer base.

Licensees will still need to meet the public interest criteria.

An auction process remains a genuine option where I am satisfied that renewal is not in the public interest.

Additional changes to the reissue process

The Government will also use the opportunity presented by ‘licence expiry and reissue’ to implement a number of other measures designed to enhance the ACMA’s ability to manage and promote efficient use of spectrum.

These include:

• Re-planning the 1800MHz band.

Subject to proposed legislative amendments, all 1800MHz spectrum licences will be reissued in 2013 so that the expiry dates for this band will be aligned when they are next due for reissue in 2028.

• Co-existence

The introduction of coexistence to allow two or more wireless services to share the same spectrum is an issue that has caused some concern within industry. But co-existence is effectively being used overseas and offers the potential to greatly increase the technical and productive efficiency of spectrum.

Amendments will be proposed to the Radiocommunications Act to provide for coexistence that will allow for the introduction of future technologies

Implementation of coexistence will be subject to the development by the ACMA of regulatory provisions to ensure that interference concerns are fully considered.

This will be done in close consultation with industry.

• Legislative amendments are also proposed that will remove the current limitation which prevents the ACMA from considering licence reissue until two years before the licence expiry date.

This will provide the ACMA with greater flexibility to determine when licence reissue can occur, and provide licensees with greater certainty.

Timing and next steps

My Department is currently developing an engagement strategy, including the use of expert external advice in order to commence discussions with stakeholders for the possible renewal of their spectrum licences.

In anticipation of this process, I would urge licence holders to carefully consider how they will respond to the public-interest criteria, including identifying a renewal fee that reflects the scarcity and value of this very limited resource.

I can assure you that my colleague, Minister Tanner, will be expecting an appropriate rate of return to the community for the renewal of key spectrum licences.

So licensees that are eligible for renewal should expect a knock on the door from the Department in coming months.

The Government looks forward to working with the industry on this and other spectrum issues that are so critical to the growth of the sector.

Thank you.