Excitement absent for spectrum auction

By PAULA OLIVER

Auctions have been blessed with a glamorous image in recent years, but the Government's snail-pace radio spectrum auction is threatening to remove all the glitz.

The much-hyped online auction is the first of its kind worldwide. The frequencies on offer promise services such as maps on mobile phones to guide you to the nearest coffee shop or the Tri-nations match in Christchurch if you would rather stay in Auckland and view it on a thumbnail screen.

But the auction has failed to ignite. At the end of the second week yesterday, bidding totalled just $36 million. A similar auction in Britain last year netted several billion pounds, and our Government had openly hoped for a hefty several million dollars from the auction.

Most of the cash is tied up in bids for lucrative third-generation (3G) spectrum, which has the potential to revolutionise how people use their mobile phones - but at a large cost.

The big three of Vodafone, Telstra Saturn and Telecom are each perched on one of the three available chunks of 3G, at a bargain price barely above the reserve.

Nobody else wants to "reveal their strategy" just yet, but rumours have spread that Jump Capital, backed by Fay, Richwhite and the Todd family, will enter the 3G fray.

With no more bids since day one, the lethargic process prompted Telstra Saturn's Jack Matthews to plead for an early end to the auction this week.

But while 3G is not firing, the battle for slices of second-generation (2G) spectrum is a lot hotter. Smaller companies like Ihug, TVNZ-owned Broadcasting Communications, and well-known entrepreneur Nick Gordon's Gordon Marketing are outbidding one another by small amounts each day, but the highest lot price of $170,000 is still a fraction of the 3G level.

By successfully securing 2G spectrum, another competitor could emerge in the mobile phone market - one that might target the Auckland area only.

A ripple of premature excitement spread early last week when Jump Capital registered, but it, like media giant INL, has yet to bid.