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Government to press ahead with remaining 4G auction

Tuesday 19th November 2013

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The New Zealand government is to press ahead with the auction of remaining unsold 4G spectrum in the 700 Megahertz range, despite hopes by late mobile market entrant 2degrees that it would be retained for later sale.

The remaining pair of 5MHz spectrum blocks was unsold in the first round of auctions held last month, which saw Telecom and Vodafone take three blocks each (2x15 MHz) and 2degrees took two blocks (2x10MHz).

Telecom and Vodafone have both applied to the Commerce Commission for clearance to purchase 2x20 MHz, which success in the second round would allow.

Bids for the final lot will be conditional on a bidder's clearance application being granted, said Communications Minister Amy Adams in a statement, with final settlement of the auction delayed until the Commission's process is complete, although bidding will commence on Nov 26.

Bidding will begin at the reserve price of $22 million and the price will increase in each round until only one bidder remains.

Under the auction terms, bidders who acquire three lots of radio spectrum must build at least five new cell sites each year, for five years, but that obligation rises to 10 new cell sites a year if a bidder wins four blocks.

"The auction conditions are designed to ensure that at least 90 per cent of New Zealanders have access to a 4G network and faster mobile broadband coverage within five years," said Adams.

2degrees argued at the time of the first auction round that there was no need for haste in making 700MHz spectrum available, as operators were currently deploying 4G technology in the higher frequency 1800MHz range.

The company's chief executive, Stewart Sherriff, also told BusinessDesk the 700MHz spectrum had achieved prices around twice as high as for 1800MHz spectrum.

"Paying a premium right now ... for spectrum we can't use for some time, is a challenge for all players but particularly 2degrees as a late entrant," Sherriff said at the time.

BusinessDesk.co.nz

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