Labor warns against high reserve for 3G spectrum

date: 27th February 2001, source by: f2.com.au

Labor today warned the Australian Federal Government not to demand too much money for thirdgeneration (3G) mobile phone licences, saying high prices would just be passed on to customers.

The government last year forecast a target of $2.6 billion from the spectrum sale, but bankers Merrill Lynch have predicted it could go for as little as $1 billion.

Opposition communications spokesman Stephen Smith said setting reserve prices for the auction too high would scare off bidders and put the whole process at risk.

“While there is an obvious interest in the Commonwealth achieving a reasonable market price for the spectrum, it needs to be remembered that the cost of this spectrum will be passed on by the successful carriers to their customers,” he told a 3G conference in Sydney yesterday.

“It is particularly important that the government not place Telstra in a position where it is forced to pay an artificially high price for any 3G spectrum it may acquire.

“If this occurs, then Telstra, its 2.2 million mum and dad investors and the Commonwealth itself would be big losers out of a Howard government attempt at saving face.”

A spokesman for Communications Minister Richard Alston said the government would not be setting the reserve price for the spectrum as the auction was being conducted by the Australian Communications Authority.

Seven applicants, including Australia's top five mobile phone carriers, have lodged more than $830 million in eligibility payments ahead of the auction, expected early next month.

Cable & Wireless Optus chief executive Chris Anderson warned the government last week not to use the auction simply to raise revenue.

“We are concerned ... that the federal government just wants to squeeze as much cash ... out of us,” he said.

Senator Alston said players had a vested interest in trying to drive the price down.

The five Australian operators bidding for the spectrum space are Cable & Wireless Optus, Telstra, Vodafone Pacific, Telecom of New Zealand and Hutchison Telecommunications.

Two unexpected bidders, CKW Wireless and 3G Investments, complete the list.

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