Kiwi software logical step for cyber-auctions

By PAULA OLIVER

Many of New Zealand's wealthiest businessmen have had a daily date for the past month - one that could wind up costing them heaps.

From the comfort of their own chairs, at 9 am each day, they have logged in to their computers to bid in the Government's latest radio spectrum auction.

If successful, their bids could allow them to roll out a cellular phone network, possibly allowing customers to view rugby matches on their mobiles.

So far the auction has generated less excitement than a chess tournament, with bids totalling $37 million - way short of the windfall many predicted.

But though the strategy that most bidders are following is a mystery, the auction itself is a more open process than ever, thanks to a Kiwi-designed software program that is now being pushed overseas.

Bryce Dixson, managing director of NetLogic, says the auction is the first of its kind to be based on the internet.

The advantage is that it allows everyone to see what is going on, whether they are stuck in an airport lounge, in another country or parked comfortably in their offices.

"Other countries are using a server network, with a dedicated line, but that doesn't allow for the kind of openness we are seeing now," Mr Dixson says.

"The teams can work behind closed doors, but everyone can see their bid."

So what happens when a bidder decides to have a flutter?

When a company is registered as a bidder, passwords are issued.

For added security, major bidders can be issued with several different passwords known only to the auction manager, who sits at a terminal in the Ministry of Economic Development.

All transferred files are encrypted.

By logging on to a website and entering a password, players are able to send bids in during the two hour-long rounds each day.

Sitting at the other end of the line is the auction manager, who collates the bids and loads them on to the ministry's website at the end of a round.

The auction ends after two clear rounds of bidding for the 1600 lots up for auction.

Mr Dixson says that while the chance of collusion cannot be totally eliminated, the system is set up the most corruption-free way possible.

"You will always have an opportunity to top your opponent's bid," he says.

"While we can't stop collusion before the auction begins, any such deals are totally reliant on nobody else topping them, and they are given the chance to do that."

Should any technical hitches arise, Mr Dixson says they can almost all be covered by switching service providers, or taking other action.

The system has attracted criticism from members of the Auctioneers Association, because no registered auctioneer is involved.

But the law states that the Government is not required to have one if it wants to auction its own property, and the auction manager is therefore in control.

Ihug director and auction bidder Nick Wood, who has been critical of the tediously slow pace of the auction, says that the system is working "okay" overall.

"The only thing is that we can't see what's going on during the rounds.

"But the auction would be sped up by changes to the rules more than anything else."

The business development manager for the ministry's radio spectrum group, Chris Underwood, says the reason people cannot see what is going during rounds is that that would create a flurry of bids.

"Everyone would wait to see what others were doing and slip in bids at the last second.

"It could be done, but the way we are doing it is gaining fantastic feedback."