'Explain' note as Telecom cans its bids

By PAULA OLIVER and NZPA

Telecom has been asked to explain bizarre bidding tactics in the Government's radio spectrum auction, which it had previously kept going singlehandedly by bidding over the top of itself.

The seven-month auction of second- and third-generation (2G, 3G) spectrum has been riddled with problems since it began, but the latest events have been enough to force the auction's guardians to act.

The Ministry of Economic Development's manager of telecommunications policy, David King, confirmed yesterday that a letter had been sent to Telecom asking it to explain its behaviour.

The ministry could refuse to accept bids, but the auction's rules did not prevent such behaviour from happening again, said Mr King.

Telecom's rivals said it was keen to see the auction continue so that it could snare more customers while potential competitors had to wait to acquire spectrum.

But Telecom seemed unaffected by the criticism yesterday. It continued its bizarre strategy by withdrawing all of its bids, totalling $50 million. This left it with no spectrum, and the auction's total value down to $108 million after starting the day at $155 million.

Rival bidders again expressed frustration at Telecom's move, and said they were keen to see the auction end so competition and technology were not held up any longer.

Telecom's rivals, Vodafone, Clear Communications and Telstra Saturn, still hold a combination of 2G and 3G spectrum each.

Walker Wireless and TVNZ-owned BCL hold frequencies suitable for high-speed internet and other services.

An unknown player holding a $15 million slice of 2G is Stuart Beadle, an Auckland businessman bidding under the name of Northelia.

Mr Beadle's business interests include a commercial cleaning franchise and several internet sites. He told the Business Herald he was negotiating deals to launch one of those sites, adultstore.co.nz, which would be a fantasy toystore for adults.

The store would sell expensive items, such as helicopters, houses and cars, and was modelled on a similar site in the United States, known as Sharper Image.

Mr Beadle said he had been deluged with interest in the site, but it was just one of his many business interests. It had nothing to do with his reason for bidding in the spectrum auction, which he would not reveal.

The auction will continue today.