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Spark will take up right to renew spectrum

Friday 15th March 2019

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Spark New Zealand will take up its right to renew most of its mobile spectrum rights currently used for 3G and 4G services, although it would have preferred the whole lot. 

Communications Minister Kris Faafoi this week announced the renewal of most of the 2,100 megahertz and 1,800 MHz bands when they expire in 2021. However, Cabinet decided to pare back the offer in the 1,800 MHz band, where Spark and its rivals Vodafone New Zealand and Two Degrees Mobile each currently have 50 MHz.

Faafoi said the government needed to keep some of that spectrum in reserve to retain flexibility and it might be used for new technologies or by the emergency services network. 

Spark general manager of regulatory affairs, John Wesley-Smith, said the reduced renewal offer wasn't unexpected and the company doesn't anticipate any reduction in service. 

"We also accept that the creation of a spectrum band that could be used by emergency services could serve New Zealanders well," he said. 

The $720,000 per MHz renewal offer would represent a total outlay of $50.4 million excluding GST, which Spark intends to accept. However, it hasn't decided on whether to pay at the time of renewal or in annual installments over the following five years. 

Wesley-Smith stressed the spectrum available for renewal was separate to the rights being considered for the 5G auction. 

In its May 2018 submission on the renewal, Spark sought to keep its entire allocation, saying if the Crown kept a portion it would have a "material impact on our ability to cost-effectively meet demand and provide better services to customers". 

Spark has ardently lobbied for the government to auction spectrum rights for 5G, setting a target of having the new mobile network up and running by July next year. 

Faafoi last month flagged the first auction of 5G spectrum in the 3.5 gigahertz band will be early next year to be ready for use in November 2022. In a Cabinet paper accompanying the announcement, he noted that in some cases those rights could be granted sooner where the parts of the band weren't occupied. 

He recommended a cap be placed on the amount of 5G spectrum given to a single operator to prevent stronger players squeezing out smaller firms and blocking potential new entrants into the market. That will be a consideration for a later date. 

The cap is also seen as a potentially useful tool for setting aside spectrum to deal with Treaty of Waitangi issues, Faafoi said. 

The New Zealand Maori Council has urged for the process to be paused until it was apparent what role there would be for Maori and Maori organisations.

Maori were granted the right to buy 3G spectrum at a discounted price in 2000, which effectively paved the way for 2Degrees to enter the local mobile market.

The Hautaki Trust last year transferred its stake in the country's third-placed mobile carrier to the company's majority shareholder, Trilogy International, which bundled 2Degrees into a larger telecommunications group and listed that entity on the Toronto Stock Exchange.

Maori missed out on a special allocation in the 4G auction in 2013 and instead received a $30 million development fund to help Maori benefit from new technology.


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