LPON licences too high says Media Consultant

A Perth-based media consultant says sale prices for low-power FM radio licences in Australia should never exceed $30,000 a piece.

“It is absurd for owners of LPONs to try and sell their radio licences for high five or even six figure prices, now that the top prices paid at the NSW auctions held on September 25, has set a benchmark at around $20,000!,” said Philip Smith, a media consultant who participated in the auction process.

$21,500 was the highest winning bid, which was placed for an 87.8 MHz LPON at Corrimal near Wollongong.  

The next highest winning prices were paid for another 87.8 MHz licence at Farmborough Heights near Wollongong ($19,500) and another frequency in Newcastle ($19,000).

Mr Smith said the licence he was hired to bid for was won by him at a price of $4,200 for an 88MHz application at Bulli, located on the escarpment above Thirroul, near Wollongong NSW.

This latest ACMA-led auction smashed the previous record price for a new LPON [Low-Power Open Narrowcast] licence – $12,050 – which was set in November 2008 for an 87.6 FM licence in Camberwell in Melbourne.

“It didn’t surprise me when the bidding went to around $20,000 in three of the lots in NSW,” says Mr Smith, “although I thought it was a lot of money to pay for a piece of paper from ACMA, that gives the licencee the right to transmit on a certain frequency from a set location at just one-watt of power.”

ACMA recently opened application windows for new LPONs in zones that were defined by ACMA as protection radii for analogue Channel 3 TV stations.

Now that these TV stations have all switched to digital, ACMA invited applications for new LPONs located inside these former exclusion zones.

ACMA assessed the submissions and drew up lots based on the frequencies available in a specific geographical area.

If two or more applications for an available frequency in an area are deemed to clash with each other, then the competing applicants have to bid for the right to have their licence allocated from a lot.  This is called a Price-Based Allocation (PBA) process.  

The first exclusion zones that ACMA opened up to new LPON applications were in Western Australia.

The PBA process for these WA zones was begun in May 2014, and was completed by late August.

“What was surprising about the results from the WA auction was that the highest price reached was not for the LPONs located in the urban areas on the south side of Perth, but was for the 88 FM licence proposed for Bunbury, a regional city in an ACMA-designated low density zone,” said Mr Smith.

“Bunbury is a large and growing regional city, and so a solid price was to be expected, but $9550 is top dollar for an LPON in a town of this size,” he said, noting that the final bid price for the outer metro area auction in Rockingham was just $5050.

“Once again, it shows the market what is the value of an LPON, and it isn’t fair to expect buyers to pay more than $10,000 for a licence in an urban area of a regional city in Australia.”

“When you consider that the LPON system is only promised to continue until 2020, it just doesn’t make sense to pay a fortune for permission to broadcast for just five years on a sub-band FM frequency at one-watt.”

Philip Smith works as a Technical Officer for Altronic Distributors Ltd in Perth.  He has a M.A. in Mass Communications from Griffith University (QLD).  Over the past decade he has acquired many dozens of LPONs in every state of Australia, most of which he has then sold to churches and community groups.  He owns a small urban radio network of 87.6 MHz LPONs on Perth’s southern suburbs, including one he operates from his home.  He has made many submissions to ACMA on reforming the LPON system.  He also started a Facebook group called ANNRO – Alliance of Narrowcast and Narrowband Radio Operators.

For more information, Philip Smith can be contacted on 0409 212377 or email [email protected].

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