Radiocommunications (Spectrum Access Charges—26 GHz Band) Direction 2020

The instrument introduces several defined terms that are essential to understanding its operation. The “26 GHz band” is defined as all frequencies greater than 25.1 GHz up to and including 27.5 GHz. This is a specific slice of millimetre-wave spectrum that was the subject of the re-allocation declaration, which enabled the issue of new spectrum licences in that band. A “relevant spectrum licence” is any spectrum licence the allocation of which is enabled by that re-allocation declaration. Practically, these are licences issued after the commencement of the direction for use of the 26 GHz band, likely for high-capacity fixed wireless or mobile services.

“Spectrum access charge” is not defined in this instrument but draws from the Radiocommunications Act: it is the fee payable for the grant of a spectrum licence. The “relevant spectrum access charge” is the specific charge payable for a relevant spectrum licence. “Upfront payment amount” is the amount payable if the licensee elects to pay the full charge before the licence is issued. This is the benchmark against which the instalment amounts are calculated.

The “charges determination” refers to a determination under subsection 294(1) of the Radiocommunications Act that fixes spectrum access charges or specifies the times when they are payable. The direction does not itself set the monetary amounts of those charges; those will be set by ACMA in the determination. The direction only governs the payment method.

The instalment structure is the core innovation. The direction requires that five instalments be offered, each equal to 20.32% of the upfront payment amount. The first instalment is due before the licence is issued. The second instalment is due either 12 months after the licence is issued (if the licence comes into force on the issue date) or at a point between 12 months from issue and 12 months from the date the licence comes into force (if the licence comes into force later). The third, fourth, and fifth instalments are due on the anniversaries of the second instalment due date. The instrument gives two examples: for a licence issued and commenced on 1 August 2021 with a $1 million upfront amount, the instalments are $203,200 each due on 31 July 2021 then 1 August 2022, 2023, 2024, 2025. For a licence issued on 1 August 2021 but commencing on 1 November 2021, the second instalment must be paid between 1 August 2022 and 1 November 2022, and the subsequent instalments follow the anniversary of the chosen due date for the second instalment.

The “bank guarantee” is defined as an irrevocable bank guarantee from an authorised deposit-taking institution under the Banking Act 1959, in a form ACMA considers appropriate. The direction requires ACMA to demand a bank guarantee as a precondition to allowing instalments. The bank guarantee must be provided before the issue date, must be from the licensee, and must secure 5% of the outstanding amount at any point. The example in section 6 shows that if the outstanding balance is $812,800 (the four remaining instalments after the first is paid), the guarantee must secure $40,640. As each instalment is paid, the required amount steps down.

The primary addressee of this direction is ACMA. ACMA is directed both to permit instalments and to require a bank guarantee. The direction binds ACMA’s exercise of its statutory powers when making a charges determination for the 26 GHz band. ACMA must include the instalment option in any determination it makes; if ACMA attempted to issue a determination requiring full upfront payment only, it would be acting contrary to the direction, and such a determination could be challenged as beyond power. ACMA also must, when negotiating agreements for payment of charges (as referenced in section 62(2) of the Radiocommunications Act), condition the instalment arrangement on a bank guarantee.

The secondary affected group is persons who obtain relevant spectrum licences in the 26 GHz band. These are likely commercial telecommunications operators, internet service providers, and possibly government entities, though the instrument does not exempt any entity from the requirement. For a potential licensee, the direction creates a choice: pay the full upfront payment amount before issue, or elect to pay in five instalments at 20.32% each, but with the added cost of procuring and maintaining a bank guarantee. The direction does not make the instalment option mandatory; it only requires ACMA to offer it. A licensee may still choose to pay upfront. The direction therefore expands financing options but at a cost: the total instalment payments sum to 101.6% of the upfront payment amount, so a net increase of 1.6% for the convenience of deferring payment. Additionally, the bank guarantee carries its own cost, which will depend on the licensee’s creditworthiness, the guarantee amount, and the bank’s fees. That cost is not set by the direction and will be borne entirely by the licensee.

Third parties that may be indirectly affected include financial institutions that issue bank guarantees, as they face demand for guarantee products tied to these licences. Also, spectrum users in adjacent bands or other bands may be affected if the payment terms influence the competitive dynamics of the 26 GHz allocation. The direction does not directly affect consumers or the public, but to the extent that the instalment option lowers the upfront cash requirement for licence acquisition, it may increase the number of bidders or the amount they bid, potentially influencing the auction outcome and subsequent service rollout. The direction does not mention small or regional operators, nor does it differentiate between entities based on size or credit risk. All licensees are subject to the same terms.

There is no direct effect on other existing spectrum licence holders in other bands, as the direction is confined to 26 GHz licences issued after the re-allocation declaration. The direction does not alter ACMA’s general powers over other bands. It is a targeted intervention.

The instrument creates both duties and rights, albeit channelled through ACMA. The central duty is on ACMA: under s 5(2), ACMA must, in making a charges determination that fixes a relevant spectrum access charge, permit payment of that charge in instalments, subject to the terms in ss 5(3)-(6) and the precondition in s 6. This is a mandatory instruction. ACMA must include the instalment option; it cannot set a determination that requires full payment upfront with no instalment path. The duty is specific: the instalments must be exactly five, each equal to 20.32% of the upfront payment amount, with the timing as prescribed. ACMA has no discretion to alter the number of instalments, the percentage, or the schedule. The only area where ACMA retains discretion is in the condition to maintain the bank guarantee: under s 6(4), ACMA must consider whether to include that condition, but it may decide not to include it. If ACMA decides to include it, it must do so as a licence condition under s 71 of the Radiocommunications Act, which gives ACMA power to impose additional conditions it thinks fit.

A second duty on ACMA is under s 6(2): ACMA must require the provision of a bank guarantee as a precondition to reaching an agreement for instalment payments. This is not optional. The bank guarantee must meet the terms in s 6(3): provided before the licence is issued, from the person liable, for the period during which any part of the charge remains unpaid, and securing 5% of the outstanding amount. ACMA must also accept only bank guarantees from authorised deposit-taking institutions in a form ACMA considers appropriate (s 6(5)). ACMA has some gatekeeping authority over the form.

For licensees, the key right is the right to elect to pay the spectrum access charge in instalments rather than upfront. This right flows from ACMA’s duty; without the direction, ACMA could have set terms requiring full upfront payment. The right is not absolute: the licensee must provide a bank guarantee, as required by ACMA. If a licensee cannot obtain an acceptable bank guarantee, the instalment option is functionally unavailable, and the only option is to pay the full upfront amount. The right is also conditional on the licensee paying the first instalment before the licence is issued.

Licensees also have the right to choose the timing of the second instalment where the licence comes into force after the issue date: they can pick a day that is at least 12 months from issue but no later than 12 months from commencement. This flexibility may be useful for managing cash flow. The instrument does not give a licensee the right to prepay the remaining balance or to vary the instalment amounts; the amounts are fixed by the 20.32% formula. Licensees may have other rights under the Radiocommunications Act, such as the right to surrender the licence, but those are not affected by this direction.

The duty to maintain a bank guarantee is a continuing obligation if the condition is included. The direction leaves it to ACMA to decide whether to impose that condition, but the note to s 6(4) cites s 71, which gives ACMA broad discretion. If imposed, the licensee must ensure the bank guarantee is in force at all times while any part of the charge remains unpaid. Failure to maintain the guarantee could constitute a breach of a licence condition, with consequences under the Act.

This direction itself contains no penalty provisions. It is an administrative direction, not a penal instrument. Enforcement consequences arise from the underlying Radiocommunications Act and the specific licence conditions. The most direct enforcement mechanism is the power to refuse to issue the licence. As noted in the instrument’s note to s 6(2), under subsection 62(2) of the Radiocommunications Act, ACMA is not required to issue a spectrum licence unless the person to whom it is allocated pays the spectrum access charge or reaches an agreement with ACMA for payment. If a licensee fails to provide the bank guarantee or fails to pay the first instalment before the issue date, ACMA simply will not issue the licence. This is a de facto enforcement power: non-compliance with the instalment preconditions means no licence is granted.

If the licence is already issued and the licensee defaults on a subsequent instalment, several consequences may trigger. First, if the bank guarantee condition was imposed, default may allow ACMA to call on the bank guarantee to recover the outstanding 5% security. However, the guarantee only covers 5% of the outstanding balance, not the full amount. That means the Commonwealth is at risk for the remaining 95% of the unpaid balance if the licensee defaults after payment of the first instalment. For a $1 million charge, after the first instalment of $203,200 is paid, the outstanding is $812,800; the bank guarantee only secures $40,640. If the licensee defaults before paying the second instalment, the Commonwealth could call the guarantee for $40,640 but would have to pursue the licensee for the remaining $772,160 through debt recovery or licence revocation.

Second, the Radiocommunications Act provides ACMA with powers to suspend or cancel spectrum licences for non-payment of charges. Section 109 of the Act allows ACMA to suspend or cancel a licence if a condition is contravened. If the licence includes a condition requiring the bank guarantee to be maintained, failure to maintain it is a condition breach. Section 108 of the Act also allows ACMA to suspend or cancel for non-payment of the spectrum access charge if the charge has not been paid and no agreement exists. However, the direction does not specify that failure to pay an instalment constitutes non-payment of the charge; it only says the charge is payable in instalments under the agreement. The Act’s provisions on non-payment would need to be read together with the determination and any agreement.

Third, there may be civil penalty provisions under Part 4.6 of the Radiocommunications Act for operating without a licence, but that would apply only if the licence is revoked or suspended and the person continues to transmit. The direction itself creates no criminal offences or pecuniary penalties. Any enforcement action would be initiated by ACMA under its general enforcement powers. The direction does not require ACMA to take any particular enforcement steps; it is silent on what happens if an instalment is missed.

The bank guarantee itself is a form of enforcement by private contract: the licensee arranges a contractual instrument that can be called upon by the Commonwealth. The guarantee is irrevocable, meaning the issuing bank cannot withdraw it. If the Commonwealth calls the guarantee, the bank pays and then has recourse against the licensee under the bank’s own terms. That private enforcement mechanism operates outside the Radiocommunications Act.

This direction operates as subordinate legislation under the Radiocommunications Act 1992 and the ACMA Act 2005. It must be read consistently with those Acts. The primary interaction is with section 294 of the Radiocommunications Act, which gives ACMA power to make determinations fixing spectrum access charges. The direction constrains that power by requiring the inclusion of an instalment option. If ACMA makes a determination that conflicts with this direction, that determination would be invalid to the extent of the inconsistency, because the direction is made under subsection 294(2) and must be followed.

The direction also interacts with section 62(2) of the Radiocommunications Act, which allows ACMA to enter agreements for payment of charges. The direction mandates that ACMA require a bank guarantee as a precondition to such an agreement. That imposes an additional condition on the section 62 agreement beyond what the Act alone requires. The note to s 6(2) makes this connection explicit.

Section 71 of the Radiocommunications Act is the basis for imposing the bank guarantee condition on the licence. The direction directs ACMA to consider including a condition under that power. The direction does not compel inclusion, only consideration. If ACMA decides to include the condition, the licence holder must comply with it. If ACMA decides not to, the direction does not prevent ACMA from later adding it.

The direction references the Banking Act 1959 in defining an authorised deposit-taking institution. This ensures the bank guarantee is issued by an entity regulated under Commonwealth banking law, providing the Commonwealth with a reliable counterparty. The direction does not incorporate any provisions of the Banking Act beyond the definition.

There is no direct interaction with competition, consumer, or tax laws in the instrument itself. However, the direction may indirectly affect the operation of the Radiocommunications (Spectrum Re-allocation , 26 GHz Band) Declaration 2019, which enabled the allocation. The direction assumes that declaration is in force. If the re-allocation declaration were revoked or amended, the direction would cease to have effect because there would be no relevant spectrum licences. The direction also does not override the general law of contract or banking; the bank guarantee remains subject to private law principles, which the instrument does not attempt to modify.

The direction does not interact with state or territory laws, as spectrum management is a Commonwealth matter under section 51(v) of the Constitution. It also does not affect other directions ACMA may receive under section 14 of the ACMA Act. The direction contains a saving clause in section 7: nothing in this direction limits ACMA’s exercise of powers or performance of functions in a manner consistent with its terms. This preserves ACMA’s freedom to do anything else within the bounds of the direction, but it does not permit ACMA to act inconsistently.

The instrument is made as a single, original direction. The commencment table states it applies to the whole instrument on the day after registration. The table carries the note that the table relates only to the instrument as originally made and will not be amended for later amendments. There is no indication in the source text that this direction has ever been amended. The instrument includes no provision for sunsetting, variation, or revocation. It remains in force until superseded by a later direction or until the underlying re-allocation declaration is dealt with. The Federal Register of Legislation would be the definitive source for any later amendment, but the supplied text shows only the 2020 instrument. No amendment history is recorded in the text.

Because the direction is specific to the 26 GHz band and the 2019 re-allocation declaration, it is likely that the direction was issued at the same time or shortly after the declaration to set the payment terms for the allocation process. Since 2020, no amendments are listed in the source. It is possible that subsequent legislative changes to the Radiocommunications Act, such as amendments to the spectrum access charge provisions, could have rendered parts of this direction inoperative, but the direction itself has not been formally amended. The user’s source does not include any amending instruments. The analyst must treat the direction as it currently appears: unamended.

If a practitioner is verifying the current status, they should check the Federal Register of Legislation for any amending instruments, as the supplied text may not reflect post-2020 changes. The source does not list any amending acts or regulations.

The source text for this instrument contains no references to litigation. There is no case law cited in the instrument, and no judicial consideration mentioned. Because the direction is a ministerial direction that does not create rights or obligations directly enforceable by licensees (it directs ACMA), it is unlikely to be the subject of frequent litigation. Disputes are more likely to arise under the charges determination itself or under the Radiocommunications Act generally. However, the direction could be challenged on administrative law grounds if a person affected argued that ACMA acted inconsistently with the direction or that the direction is ultra vires. No such challenges are reported in the source.

The direction was likely issued during the allocation process for the 26 GHz band, which involved an auction in late 2020 or 2021. If there were disputes over the auction rules or fees, they might have been resolved within ACMA’s administrative processes rather than in courts. The instrument’s provisions on the bank guarantee and instalment terms are specific and unlikely to generate interpretive litigation. The most interpretive ambiguity is the 5% bank guarantee amount: the direction says the guarantee must secure an amount equal to 5% of the amount “still owing to the Commonwealth at any point in time.” The word “owing” could be ambiguous if an instalment is overdue but not yet paid; it is arguable whether “still owing” includes overdue amounts. The direction is silent on this. A court would need to construe “still owing” in the context of the timing of demands.

The discretion in s 6(4) for ACMA to consider whether to include the licence condition could be subject to judicial review if ACMA failed to consider the matter or acted on an improper basis. But no reported cases are known.

Overall, the direction is a narrow administrative instrument with low litigation risk. The high-value nature of spectrum licences might create incentives for legal challenge if a licensee feels disadvantaged by the payment terms, but the direction leaves little room for dispute because it is prescriptive.

Several features of this direction may trip up the unwary. First, the 20.32% instalment factor results in total payments of 101.6% of the upfront payment amount. A reader skimming might assume the instalments are proportional and sum to exactly the upfront amount. They do not. The direction does not call this a fee or interest, but it is effectively a 1.6% premium for paying over time. The Minister could have set the instalments at 20% each to be neutral; the 20.32% figure is unexplained. Any cost-benefit analysis must account for this premium. The bank guarantee cost is additional.

Second, the bank guarantee secures only 5% of the outstanding balance at any time. For a $1 million charge, the guarantee is $40,640 when the second instalment is due. If the licensee defaults, the Commonwealth can call only that amount and must pursue the remaining 95% through other means. That is a thin security for the Commonwealth. A licensee might assume the guarantee fully protects the Commonwealth and thus expect more lenient terms, but the direction does not provide that. The Commonwealth bears significant credit risk. On the other hand, the 5% figure might be seen as a low compliance burden, but it is not trivial: the licensee must arrange and pay for an irrevocable guarantee from a bank, and the annual cost could exceed the premium.

Third, the timing of the second instalment is flexible only if the licence comes into force after the issue date. If the licence comes into force on the issue date, the second instalment must be paid by exactly the 12-month anniversary of issue. That gives no flexibility. The instrument gives an example for a 3-month gap but not for a situation where the gap is a few days. Practitioners must check the licence commencement date carefully.

Fourth, the instrument does not state what happens if the bank guarantee is required but the licensee fails to provide it. It only says ACMA must require it as a precondition. If the licensee cannot obtain an acceptable guarantee, the instalment option is effectively unavailable. The instrument does not oblige ACMA to accept alternatives like letters of credit, cash deposits, or parent company guarantees. The definition is limited to an irrevocable bank guarantee from an ADI. Any other form of security is excluded.

Fifth, the direction in s 6(4) says ACMA “must consider whether it thinks fit” to include a licence condition requiring the bank guarantee to be maintained. This is a weak direction: ACMA could consider and then decide not to include the condition, leaving the bank guarantee requirement only as a precondition to the instalment agreement, not as an ongoing licence condition. If ACMA chooses not to include the condition, the licensee is not obligated to maintain the guarantee after the licence is issued. Once the licence is issued, the guarantee is provided but could lapse. The Commonwealth would then have no recourse if the licensee later cancels the guarantee. The direction does not require ACMA to include the condition, so it is possible that in some licences the condition is absent, creating a gap in security. Licensees should check the licence conditions carefully.

Sixth, the instrument does not address the possibility of early or late payment. If a licensee wishes to pay the remaining balance early, the direction does not prohibit it, but it does not create a right to do so. Conversely, if a licensee pays late, the direction is silent on penalties or interest. Those would be governed by the charges determination or general law.

Compliance with this direction is required of ACMA, not of private entities directly. However, for a person who wants to obtain a 26 GHz band spectrum licence and pay the access charge in instalments, the following practical steps apply, drawn from the instrument.

First, the person must calculate the upfront payment amount. This amount will be determined by ACMA’s charges determination, which will set the fee for the licence. The person should obtain or calculate the upfront payment amount applicable to their specific licence (e.g., based on the licence area, bandwidth, duration). The instalment amount is then 20.32% of that upfront amount. The person should budget for the total instalment payments being 101.6% of the upfront amount.

Second, before the licence is issued, the person must decide whether to elect to pay in instalments. The election is not defined in the instrument but presumably would be made in writing to ACMA as part of the application process. The direction does not set a deadline for the election, but the first instalment must be paid before the licence is issued. The person must ensure they have funds available for the first instalment at that time.

Third, the person must procure a bank guarantee from an authorised deposit-taking institution (an Australian bank or credit union holding an ADI licence under the Banking Act 1959). The guarantee must be irrevocable, in a form ACMA considers appropriate. The amount must equal 5% of the outstanding balance at any point in time. Initially, after paying the first instalment, the outstanding balance is the remaining four instalments. The person should request a guarantee that covers the maximum required amount (when the first instalment is paid and the remaining four instalments total 81.28% of the upfront amount, 5% of that is 4.064% of the upfront amount). The guarantee must be provided before the licence issue date. The person should allow time for the bank to issue the guarantee and for ACMA to accept it.

Fourth, after the licence is issued, the person must pay the second instalment by the due date. That due date is either 12 months from the issue date (if the licence commences on the issue date) or a day chosen by the person (or ACMA) between 12 months from issue and 12 months from commencement. The person should confirm the due date with ACMA. The instrument does not specify who chooses the day in the gap period; it may be set by the payment agreement. The person should negotiate this early and ensure the date is documented.

Fifth, the third, fourth, and fifth instalments must be paid by the anniversaries of the second instalment due date. The annual amounts are fixed at 20.32% of the upfront amount. The person should set up payment systems or reminders for these dates.

Sixth, the person must ensure the bank guarantee remains in force if ACMA includes the licence condition requiring it. The direction only imposes that condition if ACMA thinks fit, so the person should check the licence conditions after issuance. If the condition is included, the person must maintain the guarantee until the last instalment is paid, and must ensure the guarantee amount reduces as instalments are paid. The guarantee issuer should allow for partial reductions.

Seventh, the person should retain all records: the election notice, the bank guarantee document, proof of payment of each instalment, and any correspondence with ACMA about due dates. These may be necessary if there is a dispute about payment.

Finally, the person should review the charges determination carefully. The direction only governs the instalment option; the determination will contain other terms such as the actual charge amount, the licence period, and any other conditions. The direction does not override those. If the person cannot meet the bank guarantee requirement, the only compliance path is to pay the full upfront payment amount before the licence is issued. That is the fail-safe option under the direction.