Auction summary - 28 to 31 GHz Broadband wireless access (1999)

The 28/31 GHz band or Local Multipoint Distribution Services (LMDS) auction closed on 18 February 1999 when no further bids were received during round 38. AAPT was the successful applicant on all lots, with bids totalling $66.2m. The highest bids were $35.7m for Sydney and $22.7m for Melbourne.  

During 1994, the 27.5–29.5 GHz band was identified along with other bands as potentially suitable for spectrum licensing by the Spectrum Management Agency (SMA) in consultation with the Radiocommunications Consultative Council (RCC) Working Group on Spectrum Licensing. (The RCC was a committee, comprising representatives of industry and user groups, established by the SMA to assist it in performing its functions.)

In a discussion paper “Implementing Spectrum Licensing” issued in February 1995, the SMA indicated its intention to recommend that the 27.5–29.5 GHz band be given a high priority for spectrum licensing. Appendix 2 to the paper explained that the band was so designated because it was unencumbered spectrum that was becoming the focus for development of new communications systems in the USA, such as terrestrial and satellite broadband switched systems and new media.

Following a further SMA discussion paper issued in April 1997 on possible licensing arrangements for this and adjacent bands, on 17 October 1997 the Australian Communications Authority (ACA) sought comment on a proposal to recommend to the Minister for Communications, the Information Economy and the Arts that he designate the 27.5–28.35 GHz band for allocation and the 31.0–31.3 GHz band for reallocation by issuing spectrum licences. Both these discussion papers pointed to interest in other countries in introducing new wireless broadband services in these bands, particularly local multipoint distribution services (LMDS). The FCC in the USA had indicated that it had plans to auction LMDS licences in the 27.5–28.35 GHz band and possibly the 31.0–31.3 GHz band (the FCC auctioned LMDS licences in both bands in February/March 1998). Further, in 1997 around 20 countries in Latin America, the Middle East and Asia were in the process of licensing LMDS networks.

LMDS technology could be used to deliver pay television, internet access, video teleconferencing and telephone (wireless local loop) services. It involves two-way communication between a central station and homes or businesses, typically within a 4–5 km radius. LMDS networks could be interconnected to other telecommunications networks, so increasing competition in the provision of local loop access.

On 14 January 1998, the Minister gave the ACA a notice designating the 28 GHz band (27.5–28.35 GHz) of the radiofrequency spectrum to be allocated by issuing spectrum licences. On the same day the Minister made a declaration that the 31 GHz band (31.0–31.3 GHz) was to be re-allocated by issuing spectrum licences. The 31 GHz band was declared for re-allocation because it contained incumbent users.

With a view to encouraging new entrants to Australian’s broadband telecommunications market, the Minister imposed a condition on the carrier licences held by Telstra and Optus that prevented them from bidding in the 28/31 GHz spectrum auction. This was achieved though a condition on their carrier licence because, while s60 of the Radiocommunications Act 1992 (the Act) allowed the ACA to set limits on the aggregate amount of spectrum an organisation or group could acquire, at that time, the limit could not be set at nil. The Act was amended in May 2000 to allow nil limits.

In late 1998, the ACA invited applications to take part in a simultaneous multiple round auction of spectrum licences in the 28 GHz and 31 GHz bands. The marketing plan for the auction provided for 29 lots, each offering 1150 MHz of spectrum from the two bands (850 MHz from the 28 GHz band and 300 MHz from the 31 GHz band) in one of 29 metropolitan or regional areas across Australia. Although LMDS was thought to be a likely application of the bands, the successful auction participants were free to use it for any purpose and deploy any devices compatible with the core conditions of the spectrum licences and the technical framework for the bands. Five applications were received by the closing date, 8 January 1999.

The five registered applicants for the auction were:

• AAPT LMDS Pty Ltd
• LibertyOne Pty Ltd
• Winstar Ltd
• Formus Ltd
• Associated Communications Australia Ltd.

AAPT and LibertyOne were listed on the Australian Stock Exchange. Winstar, Formus and Associated Communications were owned by companies based in the USA. Associated Communications withdrew from the auction before bidding commenced on 1 February 1999. AAPT and LibertyOne notified the ACA on the morning of the auction that they had formed a joint venture and that LibertyOne would not be bidding in the auction. This left three applicants to contest the 29 lots on offer.

After competitive bidding (predominantly for the lots in Sydney and Melbourne) the 28/31 GHz auction closed on 18 February 1999, when no further bids were received during round 38. AAPT LMDS Pty Ltd emerged as the successful bidder on all 29 lots. Of the total of the $66.2 million, the Sydney lot sold for $35.65 million and the Melbourne lot for $22.72 million.

AAPT won licences to provide services in Perth, South West Western Australia, Remote Australia, Darwin, Spencer Gulf, Adelaide, Riverland, Mount Gambier, Geelong, Bendigo, Melbourne, Eastern Victoria, Albury, South Coast NSW, Bathurst, Wollongong, Sydney, Newcastle, Northern NSW, Central West NSW, Inner West Queensland, Gold Coast, Brisbane, Sunshine Coast, Rockhampton, Townsville, Cairns, Launceston and Hobart.