Spectrum cost modelling in Australia

Plum supported ACMA with the estimation of spectrum value for the 700 MHz and 2.5 GHz bands in Australia based on potential savings in network cost enabled by additional spectrum. The work included the development of a comprehensive cost model of 3G and 4G network deployment and the simulation of an auction to estimate final prices.

Plum provided:

  • A range of spectrum values that can be considered by the ACMA alongside other aspects of valuation (e.g. revenue forecasts and international benchmarks) to derive an auction reserve price
  • A cost model that can be validated by the ACMA and used for calculation of spectrum values under alternative scenarios.

The end goal of the process was to establish a reserve price for the auction that was high enough to promote auction efficiency, yet below a reasonable lower bound on potential operators’ valuations to encourage participation. Operators’ valuations were based on the practical circumstances that they face given their historical network deployments.