Between the lines: Battle of band for mobile movers

By RICHARD BRADDELL

Telecom, Vodafone, Telstra Saturn, Clear and Jump Capital are five firms with one thing in common - they want to secure a slice of the third-generation mobile spectrum that will be auctioned from July 10.

The reason: to gain a pole position in the convergence of broadband wireless with the internet.

But with only four blocks of spectrum on offer, and one reserved for Maori interests, someone will inevitably be disappointed.

The equation may not be simple.

Next Thursday, intending bidders will be required to put down a deposit with the Ministry of Economic Development equal to a quarter of what they expect the spectrum to go for.

Admittedly, the deposits are unlikely to relate to the final sale price because it can be raised as the auction progresses.

Nor is any risk attached since unsuccessful bidders will get their money back.

But the deposits will sort the sheep from the dogs.

And they will signal the start of some serious wheeling and dealing over the following week as bidders finalise their associated parties, who must be declared by the week after.

Just who ties up with whom is going to be more than interesting.

Telecom and Vodafone will be there in their own rights, not because they have an immediate need of the spectrum, but as insurance against the future.

But Jump's presence provides an interesting dimension.

Its related interests are said to have been sorely disappointed at missing out when BellSouth was sold to Vodafone, and so Jump must be taken seriously this time round.

While that may not be welcomed by cellular incumbents Telecom and Vodafone, the Clears and Telstra Saturns of this world may be less sorry because Jump is apparently more interested in becoming a common carrier that would sell access to other carriers on a non-discriminatory basis rather than dealing with end customers itself.

For Clear and Telstra Saturn, tapping into Jump's network would save hundreds of millions in network costs at a time when they are preoccupied with conventional builds.

Add to that the huge question of whether New Zealand can support three sets of infrastructure anyway and a projection that by the time a third network is operating Vodafone and Telecom would have a combined market penetration of the order of 60 per cent, and the argument for leaving the third generation to a common carrier becomes even more compelling.

But it will not be just Clear and Telstra Saturn who would benefit.

The Warehouse has already demonstrated how effective it can be in using Telecom's cellular network as the base for its own cellular business.

Apart from driving down wholesale prices, a new common carrier network should attract a range of providers such as electricity companies which have customer bases to exploit.