Double attack on spectrum sale

By RICHARD BRADDELL

The estimated $2.5 billion sale by the Government of key mobile spectrum is under threat less than two weeks out from auction.

In a double assault launched yesterday, Maori interests are seeking an injunction claiming the auction ignores their legitimate interests, while New Zealand's second-largest internet company, Ihug, wants a judicial review because it fears the big players will corner the market.

This action comes after several delays and as players are lining up to compete in the so-called 2GHz spectrum auction on July 10, which is being offered in two categories and includes third generation services.

The 3G services enable high-speed transmission of data over mobile networks. At least one player - a consortium including Jump Capital and Ericsson - is looking at bidding for the new spectrum to compete against Telecom and Vodafone.

The Maori claimants, who earlier obtained a Waitangi Tribunal ruling entitling Maori to a share of the spectrum, are led by Mrs Rangiho Everton, with Professor Whatarangi Winiata and technical adviser Graeme Everton.

"I would suspect we would be in court soon because of the pressing nature of the auction," Mr Everton said.

The action is separate, although supported by the Maori Council - which is also maintaining its right to return to the Privy Council under the terms of a previous ruling that the Government must consult Maori on radio and television spectrum.

However, one of the four 3G sales is already earmarked for Maori. It is to be sold at a 5 per cent discount to the average cost of the other three blocks.

Though the Government did not respond to the prospect of another Maori action, acting Communications Minister Trevor Mallard said it would not agree to Ihug's demand for a competition rule for second generation (2G) spectrum similar to that for third generation (3G) auction - which caps the maximum amount one bidder can buy.

"We did look at two possible rules: a spectrum cap and a preferential block reserved for a new entrant," Mr Mallard said. "The Government decided not to adopt either."

Ihug contends the 2G spectrum will be of even greater value than 3G, due to an International Telecommunications Union agreement last month clearing the way for it to be put to 3G use as well.

Ihug director Nick Wood said the absence of caps on the 2G spectrum could leave it open for Vodafone and Telecom to corner the lot.

According to Mr Wood, the value of 2G spectrum lies in the ease of network implementation, because today's technology makes it possible to have a network operational within a year.

There is now a smooth path to what has become known as 2.5G - which embraces WAP services now being introduced - and also to 3G when it becomes prime-time in about three years.

2G refers to narrowband digital networks such as that operated by Vodafone. 3G is also digital but will be able to deliver more services at greater speed.

Because of the ITU agreement, Telecom and Vodafone would now be able to run 3G over their existing spectrum, so would no longer need the 3G spectrum, Mr Wood said.

But there was nothing to prevent them foreclosing the entire 2G offering if they wished.

Uplink and downlink portions in the 2G spectrum are not paired, meaning only one side would have to be bought to block out competitors.Mr Wood said that in March, when the Ministry of Economic Development had sought views, Telecom, Vodafone and Transpower had opposed putting caps on 2G.