Thursday, July 03, 2008

Calculating the Ditigal Dividend

The Department of Broadband, Communications and the Digital Economy has issued a Request for Tender for a consultant to estimate the value of spectrum being freed up by the conversion of Australian TV to digital. However, you would be hard pressed to work that out from the language of the tender, which refers to the commercial value of the potential ‘digital dividend spectrum’.

The analysis being asked for is very limited, in that it only looks at the financial return the government would receive. The consultant is not asked to look at the contribution the spectrum could make to the Australian economy or its value to the community in terms of culture, education or improved health. Radio spectrum is one of those public goods, where it can be very difficult for a commercial entity to capture all of the financial benefits of its use. As a result the government will likely no allocate the spectrum to its best use if it uses financial return as the sole criterion for selecting the use for the spectrum. The value of services to the community which might be created should also be considered.

The Department requires a Consultant to undertake a desktop analysis to estimate the commercial value of the potential ‘digital dividend spectrum’ for a specified range of scenarios.

The analysis should use relevant international and Australian comparisons of value and circumstances, particularly the relevant policy environments relating to the major services that are likely to use the spectrum. Commercial value means the amount of money buyers may pay to purchase the spectrum when it becomes available.

The successful tenderer is to also undertake a desktop analysis of the financial return to the Australian Government of maintaining existing spectrum arrangements for the broadcasting services bands assuming a continuation of the present policy settings that govern the key uses of this spectrum. The analysis should use relevant data on current and projected broadcasting industry revenue to identify trends over time and any potential financial impact on Government revenue...

From: Digital Dividend Technical Consultancy - Stage 2, Section 59.1 "The Services", Statement of Requirement, Department of Broadband, Communications and the Digital Economy, Request for Tender DCON/08/64, 2-Jul-2008

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