Australia's big three telcos are set to be handed a billion-dollar discount on the license fees they pay to use critical public assets with no strings attached.
Australia's peak communications consumer body, ACCAN, argues that the government should put in place obligations for telcos alongside the privilege of unrestricted access to licences that enable them to generate significant profits from a finite public asset.
ACCAN CEO Carol Bennett said, "This is an opportunity to ensure that this money improves coverage, particularly in rural, regional and remote areas, where reliability is at best patchy, rather than pad profits, pay and dividends for the big three telcos."
Sector regulator, the Australian Communications and Media Authority's (ACMA) proposal to renew expiring spectrum licences without an auction, at a revised valuation of $7.3 billion, represents a significant discount compared to the $8.2 billion paid in the previous period. Without firm conditions, this amounts to a corporate handout, with consumers seeing no guaranteed benefits in return.
In a policy position released today, ACCAN calls on the Minister for Communications to put in place coverage obligations on the carrier licenses of mobile network operators as a condition of renewing long-term spectrum licences at discounted rates.
ACCAN CEO Carol Bennett said spectrum is a scarce public resource and discounted licence renewals must deliver tangible outcomes for consumers.
"If telcos are to receive a cut price on a public asset, Australians should also be guaranteed a return through better coverage, especially in communities that are currently underserved," Ms Bennett said.
ACCAN is calling for amended carrier licence conditions, with coverage obligations equivalent in value to the real discount received through the licence renewal process, supported by public reporting and accountability.
International experience, including in France and Japan, shows that modern management of spectrum can improves coverage, strengthens competition and delivers better outcomes for consumers - as documented by the OECD in its report released in January.
"The Minister has the power to set obligations on telcos to act in the public interest and to invest in infrastructure to expand coverage and improve services."
"With spectrum licences up for renewal, the government has a clear choice," Ms Bennett said.
"Rather than padding profits, dividends and executive pay, the government should move to ensure licence fee reductions are passed along to consumers via coverage improvements."
"Coverage obligations are used by governments and regulators around the world because they secure public benefit for the use of a public asset. It's time for Australia to take a leaf out of the book of other nations and put the interests of consumers ahead of the interests of major telcos," Ms Bennett concluded.
Richard Holden, Professor of Economics at UNSW Business School, has said failing to attach conditions to discounted licences would entrench poor outcomes.
"Now that ACMA has decided to renew licences rather than use the OECD's "gold standard" auction approach, it is essential that strong licence conditions are applied to ensure maximum consumer benefit - particularly clear, enforceable obligations to improve coverage, service quality and pricing, particularly in underserved communities," Professor Holden said.
About us:
The Australian Communications Consumer Action Network (ACCAN) is Australia's peak communication consumer organisation. The operation of ACCAN is made possible by funding provided by the Commonwealth of Australia under section 593 of the Telecommunications Act 1997. This funding is recovered from charges on telecommunications carriers.
