Red-faced ... Stephen Conroy. Picture: Digitally altered Source: The Daily Telegraph
Two of the three main telcos have pulled out or expressed serious concerns over the $3 billion-plus sale of digital spectrum - trumpeted by Mr Conroy as the "waterfront property" of the mobile phone industry.
Supporting the next generation of 4G mobile phones, the spectrum was also considered a key revenue raiser for the cash-strapped Gillard government under its now-abandoned budget surplus.
In September, Senator Conroy told a conference in New York telecommunications regulation was a federal matter and he was in charge.
"If I say to everyone in this room: 'If you want to bid next week in our spectrum auction, you'd better wear red underpants on your head', I've got some news for you. You'll be wearing them on your head. I have unfettered legal power," he said.
Spectrum bidders must register by tomorrow to remain in the hunt - but they can still pull out before the auction in April.
Communication analysts yesterday expressed concerns about a lack of competition amid industry fears a high sale price may pass costs on to consumers or restrict investment in 4G technology.
After Optus flagged concerns over the price, compared to overseas, Vodafone yesterday confirmed it would not bid on the 700 MHz low frequency and would not comment on the higher frequency 2.5GHz band auction.
Telstra, which has not voiced similar concerns, declined to comment yesterday.
Ord Minnett telco analyst Brad Dunn said setting the terms of the auction in stone with a floor price may have spooked the telcos, which would be worried about a return on their investment.
"If the government wanted some competitive tension I would have thought there would have been a meeting in the middle," he said.
Mr Conroy has already intervened once to set the $3 billion floor price for the spectrum - because Vodafone pulled out.
His office yesterday would not comment on the influence of his prior underpants comments or whether he would budge on the reserve price now the budget surplus was shelved. A spokeswoman for Mr Conroy said: "The government's focus in setting the reserve price has been on ensuring that taxpayers obtain a reasonable return for a valuable public asset."
Opposition communications spokesman Malcolm Turnbull said: "Just months after bragging about having 'unfettered legal power' to force telco executives to wear red underpants on their heads, Stephen Conroy instead risks having to wear egg on his face.
"Having imposed his new taxpayer-funded monopoly on fixed line communications, Senator Conroy is now doing his best to undermine competition in the mobile market."
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