INL link to Sky cited in 3G frenzy

By PAULA OLIVER

INL's move towards interactive television through its link with Sky Network could be behind its fierce bidding for third-generation (3G) spectrum, say analysts.

INL, publisher of numerous New Zealand newspapers and magazines, yesterday continued to make strong bids in the Government's spectrum auction, targeting only 3G.

The supposedly lucrative 3G spectrum now looks as if it may fulfil its early promise to be a cash cow, with four bidders clearly making a serious attempt to win one of the three blocks available.

Telecommunications analyst Paul Budde said that INL's 49 per cent stake in Sky Network brought the obvious possibility of the two businesses working together to provide new services, and illustrated the growing convergence between the two industries.

"Sky has said for a while that it is keen to get into telecommunications, and 3G is definitely suited to that," Mr Budde said. "With INL's established customer base and focus, if they play it right they could come out on top of the more established telcos like Telecom."

3G spectrum is being sold alongside second-generation (2G) spectrum in the auction, but there are grey areas surrounding the capabilities of the two.

It is widely accepted that 3G spectrum has the capacity to revolutionise the way people communicate, and could lead to handsets showing video and internet.

But some of the 2G spectrum can also be adapted, with considerable investment, to provide similar services. High-speed data and internet access are also possible with the frequencies on offer.

Rumours persist among some players that television could be possible through some of the available spectrum, but no bidders will discuss the prospect.

Mr Budde said companies such as Telecom and Vodafone would feel as if they had to bid for 3G and 2G, if only to increase the capacity of their existing networks and make sure they are ready to introduce new features.

It is not new for media companies to show interest in spectrum. A Kerry Packer-backed company took part in a recent Australian auction.

"Often media conglomerates bid through a subsidiary, and that certainly happened in Germany," Mr Budde said.

"If INL and Sky did work together and offer an extension of the coverage they already offer, NZ would have to be careful they did not begin to dominate."

Wilson & Horton, owner of the Herald, said it was unlikely to enter the auction.

"We see what they are buying as just spectrum, which requires significant investment after that to make it useful," said chief executive John Sanders.

"It needs significant capital outlay and looks risky."

Action in the 3G lots began to hot up more than a week ago, when Walker Wireless began a bidding war with Telstra Saturn. Vodafone sat untouched on its chunk of 3G until INL bid over it, and in turn Vodafone replied.

Yesterday's action ended with INL leaving Vodafone's chunk alone, and targeting Telstra Saturn's turf. In the process, it raised the value of each of the three blocks to about $13 million.