KEY POINTS:
Broadcasters MediaWorks and the Radio Network (TRN) look set to challenge bans on their bidding for the latest - and possibly last - crop of com-mercial FM radio frequencies.
Thirty-one frequencies are up for grabs at an auction next month.
The Government says it is opening the door to independent commercial broadcasters by not allowing MediaWorks and the Radio Networkto bid.
But the move clips the wings of the duopoly that dominates the sector.
The auction of the frequencies covers the big media markets - Wellington Christchurch and Dunedin.
It covers Auckland FM106.2 as well as frequencies on Waiheke Island and in Northland, Rotorua and Hawkes Bay.
The auction looks set to make sure that the big players will facecompetition.
Established players would be bepermanently banned from buying out newcomers, Ministry of Economic Development officials said.
A spokesman said the spectrum of FM frequencies was now reaching its optimum level.
The restriction on MediaWorks and TRN owning the FM rights limits their value at auction, but also ensures that the two radio giants do not have carte blanche.
Government ministers David Cunliffe and Trevor Mallard have moved to impose what is being called "diversity through ownership".
Government officials say rules have been "tightened" to limit the potential for big companies maintaining controls through owners outsourcing - providing content.
The two industry giants - represented through the Radio Broadcasters Association (RBA) - have lobbied against the new rules.
"There will be a lot more said over the next two weeks," said RBA spokesman Norm Collinson.
The RBA argues that diversity should be met through the wide range of content in the current regime and not through ownership.
The RBA made similar comments recently over Government moves into digital radio that would open the door to more competition.
The Government is lukewarm on a different digital format - HD Radio - that would entrench MediaWorks and TRN dominance of the sector.
In this largely unregulated market New Zealand has developed, a large number of radio stations are being run by the two firms.
Former broadcasting minister Steve Maharey boosted the duopoly system.
In a secret deal, the Government allowed MediaWorks to control a publicly owned FM frequency set aside for a youth radio network.
But Cunliffe and Mallard have both acted to address competition concerns.
A spokesman for Cunliffe's office said a commercial licensee might not transfer, modify, lease or share thefrequency, or otherwise surrendercontrol of transmissions, without permission in writing from the chiefexecutive of the Ministry of Economic Development.
Cunliffe's spokesman said an application for such permission must demonstrate that any new owner or lessor meets the same criteria as the initial applicant.
