There were two rounds of consultation on lot configuration, which describes the way the spectrum to be allocated will be divided into lots for auction. It is defined by a geographic area and frequency bandwidth.
On 18 November 2011, we presented the following three possible lot configurations and invited feedback from stakeholders on the options they preferred:
˃ Scenario 1-national geographic market area, 5 MHz minimum frequency lots for the 700 MHz band, and 10 MHz minimum frequency lots for the 2.5 GHz band.
˃ Scenario 2-metro/regional/remote market areas, 5 MHz minimum frequency lots for the 700 MHz band, and 10 MHz minimum frequency lots for the 2.5 GHz band.
˃ Scenario 3-aggregated metro/regional market area and remote market area, 5 MHz minimum frequency lots for the 700 MHz band, and 10 MHz minimum frequency lots for the 2.5 GHz band.
Stakeholder feedback on this round of consultation follows.
700 MHz lot configuration
There was strong support from all submitters for a national lot structure for the 700 MHz band spectrum, comprising 5 MHz paired frequency lots (2×5 MHz) and a national market area covering all of Australia (Scenario 1).
Submitters preferred a national market area because the propagation characteristics of spectrum in the 700 MHz band allow for service coverage over large geographic areas. They also favoured a national area because it accommodates the layout of a national mobile network. Submitters were concerned that disaggregated market areas would create the risk of gaps in roaming coverage for customers on national networks.
For technological and market-related reasons, all respondents supported a lot bandwidth size of 2×5 MHz lots. Frequency blocks of less than 2×5 MHz were inappropriate for the operation of either 3G or 4G technologies.
Submitters also recognised that the amount of spectrum available in the 700 MHz band (2×45 MHz) restricted the lot size options that were available or desirable. Multiples of 2×10 MHz lots would not fit equally into the amount of spectrum available, while larger lot sizes would limit the flexibility of auction participants to bid on the most suitable quantity of spectrum for their business needs. Lots of 2×15 MHz would also preclude bidders from acquiring spectrum up to the maximum permitted by the competition limits set by the minister-2×20 MHz in the 700 MHz band.
2.5 GHz lot configuration
Stakeholder views differed on the preferred lot configuration for the 2.5 GHz band. One favoured national market areas, expressing the view that the Australian market was not conducive to deploying regional mobile networks and that a disaggregated lot structure would unnecessarily complicate the auction. Disaggregated lots could lead to 'cherry picking' of desirable areas, and may not generate new competition in remote areas.
However, other stakeholders supported a disaggregated geographic lot structure. They said that the 2.5 GHz band was more likely to be used to provide capacity and support for the delivery of mobile telecommunications services, rather than to provide the foundation of a national mobile communications network.
One submitter preferred a geographic disaggregation of market areas with eight metropolitan areas, two regional areas and one remote market area-the Scenario 2 configuration.
Opinions also differed on the preferred minimum frequency bandwidth of lots in the 2.5 GHz band. While one stakeholder indicated a preference for 2×10 MHz lots, there was also support for lots with a minimum size of 2×5 MHz.