New rules fail to spur spectrum auction

By PAULA OLIVER

Bidders in the Government's lengthy radio spectrum auction could have been forgiven for thinking they were victims of a practical joke yesterday, when the seven-month-old auction resumed with new rules tailored to finally bring it to a close.

The auction of second and third-generation (2G, 3G) spectrum has been plagued with problems since it began in July. Legal challenges almost stopped it before it even began, but once underway, loose rules surrounding the withdrawal of bids sent its value soaring and plummeting within one day.

On offer are frequencies that could be used for anything from high-speed internet to lucrative 3G mobile services. Sending video onto handsets is just one of the developments being touted overseas for 3G spectrum.

New Zealand's auction was suspended in early December to await the Government's new telecommunications regime, and yesterday Communications Minister Paul Swain launched it into the home straight.

New rules will punish bidders who withdraw their bids - a practice that has been used to push down the price of the available lots.

But even the new rules could not stop the auction dropping in value again yesterday. After sitting at $144 million when it was suspended in December, the auction fell to $129 million yesterday.

The drop came largely from TVNZ subsidiary BCL's withdrawing $11 million of bids for 1098 frequency, which can be used to transmit high-speed data.

No bids were received for 3G spectrum, which now sits at a total value of $50 million. It is held by telco giants Telecom, Telstra Saturn, Vodafone and Clear Communications.

Surprise bidder Northelia, backed by cleaning franchise businessman Stuart Beadle, registered $7.2 million worth of bids for 2G frequency. Mr Beadle is about to launch the internet site name www.adultstore.co.nz.