Managing spectrum in the 400 MHz band: Further steps | ACMA

Managing spectrum in the 400 MHz band: Further steps

Consultation closes: 22 December 2016

IFC: 31/2016

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The ACMA received two submissions to this consultation and these can be accessed from the right hand side index box. The ACMA is reviewing submissions.

 

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Consultation paper:
Managing spectrum in the 400 MHz band—Further steps

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Overview

The ACMA is progressively implementing opportunity cost-based licence tax rates in the high density areas (HDAs) of the 400 MHz band; staged over five increases each of 15 per cent. Two increases have been implemented in August 2012 and April 2016, and the ACMA is now considering whether to introduce the third increment.

As part of its consideration, the ACMA is utilising a framework specifically developed to monitor demand for spectrum in the HDAs of the 400 MHz band. The framework takes into account the feedback provided by stakeholders, as part of earlier considerations related to the second price increment. A critical aspect of this current consideration is an update to the monitoring framework to inform two aspects:

  1. Have earlier increases in licence tax rates had an undesirable impact on demand such that further increase would not be consistent with maximising the public interest associated with spectrum use? This in turn has two considerations:
      • whether there has been a sharp contraction in demand
      • whether the trend in licence numbers is inconsistent with timely utilisation of the extra supply occasioned by narrow-banding.
  2. Whether continued growth risks demand and congestion rising to the problematic levels experienced prior to the introduction of the reforms, even allowing for the supply enhancing effect of narrow-banding?

In summary, the updated analysis shows a persistent increase in demand for spectrum in the HDAs of the 400 MHz band. Spectrum demand grew by around 14 per cent over the last year and has increased by around 34 per cent since its low-point in January 2014. More detail on trends in demand is provided in the consultation paper at Section 3.1.

The ACMA has developed indicative projections of demand to consider whether congestion is likely to re-emerge. These indicative projections suggest congestion at levels similar to that previously experienced (adjusted for the effect of narrow-banding) is likely to emerge across 2017–18. More detail on the risk of congestion is provided in the chart below and in the consultation paper at Section 3.3.

Augmented supply versus actual and potential spectrum demand

31-2016 jpg

Source: ACMA analysis 

Based on this monitoring analysis, the ACMA’s preliminary view is that the continuing strong increase in demand strongly indicates that:

  • licence tax rates are not so high as to cause an undesirable sharp contraction in demand
  • continued growth would risk demand and congestion rising to the problematic levels experienced prior to the introduction of the reforms.

Based on this material risk of re-emerging congestion, the ACMA considers that a further increase in licence tax rates is prudent to ensure licensees encounter the long-term opportunity cost (OC) of their spectrum use, and therefore, use spectrum efficiently. More detail on the ACMA’s pre-consultation disposition is provided in the consultation paper at Section 3.5. 

Issues for comment

The ACMA invites feedback on the issues detailed in the consultation paper or on other matters related to the introduction of OC principles in the HDAs of the 400 MHz band. The ACMA is especially interested in feedback on the following questions:

Question 1

Is there more useful data available for analysing both the level of and trends in demand for spectrum in the 400 MHz band?

Question 2

Do you have other evidence about recent and possible future demand in the HDAs of the 400 MHz band?

Question 3

Is there a better approach and/or more useful data for analysing congestion risk in the HDAs of the 400 MHz band?

Question 4

Does the ACMA’s preliminary view on congestion risk in the HDAs of the 400 MHz band align with industry views, or do you have other information on congestion?

Question 5

The ACMA seeks feedback on the proposed amendments to the tax determinations outlined in the consultation paper.