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SECTIONS / WIRELESS & NETWORKING

Red Knickers Minister Comes Up $1B Short After Spectrum Auction

By David Richards | Tuesday | 07/05/2013

He is arrogant, has been called a "hopeless negotiator" and loves bragging about red knickers. Now Labor's Communications Minister Stephen Conroy is facing a new dilemma after he failed to raise $3 Billion dollars from his recent 'Digital Divide' 4G spectrum sale.

Earlier today Telstra and Optus were the only bidders for the spectrum, with the Federal Labor Government falling $1 Billion short of their $3 Billion budget target. 

Telstra forked out $1.3 billion, or two thirds of the total amount, to secure spectrum in the 700 MHz band, which carries signals long distances, and in the 2.5 gigahertz band.

Optus, secured 20 MHz of the 700 Mhz band and 40 MHz of spectrum in the 2.5GHz for a total sum of $649 million.

"This additional spectrum represents a major investment in the future of telecommunications in Australia and means we can continue to deliver a superior mobile experience for our customers," Telstra chief executive David Thodey said in a statement released on Tuesday morning.

Telstra has to pay the full amount by the third quarter of 2014. The licence is valid for 15 years.

The withdrawal of Vodafone from the spectrum auction and Telstra and Optus' decisions to buy less than maximum allocated spectrum saw 30 MHz of the 700 MHz spectrum unsold.

Opposition spokesperson Malcolm Turnbull claims the Government's latest failure to reach a revenue goal comes despite the extraordinary intervention by Communications Minister Stephen Conroy in December, when he set an unprecedented reserve price for the 700 MHz spectrum. 

"Yet again, Labor has failed against a key fiscal target it set for itself," said Turnbull.

"And yet again, the end result will be more public debt." He added.

In June 2012 the Government announced the auction would have to be pushed out to April 2013 to allow more time for preparations.

Then in December Senator Conroy set a reserve price for the 700 MHz spectrum that was extremely costly by global standards - sacrificing the long-term economic benefits of a more competitive and robust mobile telecommunications market in favour of near-term revenue to prop up Labor's pursuit of a Budget surplus, only for the Prime Minister and Treasurer to summarily dump that objective barely a week later.

"When Senator Conroy realised there was a chance nobody might turn up to his auction, he fiddled with the process yet again, switching the maximum block size bid from 2x20Mhz to 2x25Mhz in an attempt to extract more cash from the Telco's said Turnbull.

Last year, in New York, Communications Minister Conroy addressed the Columbia Institute for Tele-Information conference, he told the US audience, "The regulation of telecommunications powers in Australia is exclusively federal. That means I am in charge of spectrum auctions, and if I say to everyone in this room 'if you want to bid in our spectrum auction you'd better wear red underpants on your head', I've got some news for you. You'll be wearing them on your head. I have unfettered legal power."

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