Changes may put fizz into auction

By PAULA OLIVER

After eight weeks of painfully slow progress, the Government's radio spectrum auction is to get a kickstart from a rule change.

The auction of second (2G) and third-generation (3G) spectrum created a stir when it began in July, with widespread predictions that it could net the Government hundreds of millions of dollars.

Up for grabs are slices of spectrum that allow bidders to roll out a cellular network, or give customers the exciting opportunity to view videos on some mobile phones.

But the online auction has proved a fizzer. It has so far raised just $41 million, and bidders are becoming more and more frustrated by the snail-paced action.

Following feedback, the Ministry of Economic Development yesterday put a notice on its website detailing proposed changes to the rules, in an effort to speed up the auction.

The changes would see the number of bidding rounds each day increased from two to four, with each round open for just half an hour instead of a full hour.

Minimum bids for 2G management rights would be lifted from 5 per cent to 10 per cent of their value, and the smaller spectrum licences would be increased to 50 per cent.

Registered bidders are being asked to send their opinions of the changes to the ministry before 5 pm on Monday, with any change to take effect on Tuesday morning.

Vodafone New Zealand managing director John Rohan called for the changes to go even further, ending the auction after one clear round instead of the present rule of two.

"Having two clear rounds of bidding, and treating the withdrawal of a bid as activity, are still slowing the process down," he said. "Two possible changes to hasten the auction activity could be that there is only one round of bidding without activity, and that withdrawing a bid is not seen as an activity."

Vodafone is sitting on a slice of 3G spectrum, and has not faced a competitive bid since day one. Telecom is in the same position, and other bidders say that is the reason they support the changes.

"People are starting to get a little bored with it, and we think the changes are a great idea," Telecom spokeswoman Linda Sanders said. "We will be making a proposal saying 'let's speed it up'."

Ihug director Nick Wood, who has reverted to a strategy of bidding only after a clear round, said it was about time things moved on.

"It's hard to say what effect it [the change] will have, but it will put pressure on those who can't sit in front of their computer for four hours a day," he said. "We've been preparing for this for a year, so we're well geared up."

Meanwhile, Walker Wireless has registered for bidding in Australia's upcoming 3.4 GHz spectrum auction.

Chief executive Paul Ryan said the spectrum on offer was considerably different to New Zealand's present auction, but it gave Walker the chance to expand into Australia.