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STATES will lose $1.5 billion worth of rail infrastructure savings within five years of losing control of 1800MHz spectrum licences if they're auctioned to carriers, the federal government has been told.
Melbourne and Sydney's passenger rail networks could also lose $400,000 an hour in potential benefits from more frequent urban train services, according to the report that Deloitte Access Economics prepared for the Australasian Railway Association.
The report also identified a huge lost opportunity to derive social benefits from reduced congestion and pollution if the licences are re-farmed.
The ARA bought the licences from One.Tel liquidators for less than $20m in the late 90s and over the past 10 years it has invested $500m in a new unified national rail safety and signalling system that relies on them.
But the communication regulator is under pressure from carriers starved of mobile broadband spectrum to re-auction the licences. They give access to a band earmarked by international telecommunications standards bodies for next generation LTE services and could fetch more than $1bn at auction.
The report was part of a submission the ARA lodged with Communications Minister Stephen Conroy two weeks ago in a bid to guarantee state rail stakeholders access to the licences.
ARA chief Bryan Nye said rail authorities had "no fallback option" and would go backwards 10 years if they weren't guaranteed access to the licences.
In its submission, the ARA repeated its call for Senator Conroy to sell the licence to railways "at a reasonable cost".
The ARA met with staff of the Department of Broadband and the Digital Economy and Senator Conroy yesterday to discuss the submission. A spokesman for Senator Conroy said that the DBCDE was still working through the report.
The ARA claims the licences are key to replacing outdated manual safety and signalling processes with a national unified wireless system called GSM-R.
But it is understood the DBCDE wants the Australian Communications and Media Authority to re-auction the licences after they start expiring in 2013, and favours a model under which rail authorities would buy services from carriers.
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