Telstra, Optus And TPG Buy Spectrum In Government Auctions [Updated]

The future of 4G in Australia took a big step forward this morning after the results of the government’s Digital Dividend were announced. Telstra, Optus and TPG Internet have collectively parted with almost $2 billion to secure spectrum in the 700MHz and 2.5GHz bands.

Update: Telstra and now Optus have put out statements talking about what they plans to do with new spectrum.

The digital spectrum auction, also known as the Digital Dividend by the Australian Communications and Media Authority (ACMA) is the sell-off of spectrum once used for analogue TV services in Australia running in the 700MHz band, as well as the sell-off of spectrum in the 2.5GHz band. These services are to be used by telcos for 4G services going forward.

Having a bunch of contiguous spectrum is pretty advantageous for pushing out faster 4G services. Just ask Vodafone: its upcoming 4G network is running on 20MHz of contiguous spectrum and the results definitely speak for themselves.

The Digital Dividend has been a secret, silent auction happening behind the scenes for the last few months, but finally the results have been announced.

Telstra parted with a whopping $1.3 billion for spectrum, securing two 20 MHz spectrum blocks in the 700MHz band and two 40 MHz blocks in the 2.5GHz band.

Optus was the second largest spender, parting with $649 million for two 10 MHz blocks in the 700MHz band and two 20MHZ spectrum blocks in the 2.5GHz band.

It had long been rumoured that TPG would also throw its hat in the ring for spectrum, pointing to potential investment in its own bespoke mobile service (currently TPG is an MVNO for Optus).

Those rumours were confirmed by the ACMA, who revealed that TPG Internet had spent $13.5 million for two 10MHz blocks of spectrum in the 2.5GHz band.

In total, the government netted $1.96 billion in the spectrum auctions, and only two 15MHz blocks of spectrum in the 700MHz band went unsold.

It’s unclear exactly what the telcos plan to do with their new spectrum, but it’s pretty clear that we’ll see new 4G services spring up using the services some time in the new year as the switch-over from analogue TV to digital TV occurs.

Telstra has come out and told the market what it plans to do with its spectrum:

The spectrum will be used to enhance our network to help support extraordinary demand growth for mobile services and data. With the 700 MHz and 2.5 GHz spectrum we will be able to deliver faster speeds, more capacity and expansive wide area coverage of 4G LTE technology on our Next G network.

The low-frequency nature of 700MHz means the mobile signal can travel relatively longer distances, which is ideal for improving the services we can offer to customers in rural and regional areas. It also means better inbuilding coverage in metro and suburban areas.

Together with ongoing investment in our wireless network, which will total $1.2 billion in 2012-13 Financial Year, and the application of next generation LTE-Advanced 4G technology that we announced earlier this year, the additional spectrum will help ensure we continue to deliver Australia’s leading mobile network for our customers.

No surprises there, but the more you know.

And Optus has a statement out now, too:

The spectrum Optus has acquired in the 700 MHz band will provide stronger 4G coverage across both metropolitan and regional Australia, allowing us to expand our 4G services to more customers than ever before.

The additional spectrum purchased in the 2.5 GHz band, when combined with our already substantial holdings in 2.3 GHz, will enable Optus to provide unparalleled network capacity for 4G data services to our metropolitan customers.

We’ll continue to update as we hear more.


Tower image via Shutterstock

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