New rules to speed spectrum auction

By PAULA OLIVER

The Government's long-running radio spectrum auction will resume next month - six months after it began - with new rules that promise to bring it to an end.

But the new rules will not include a "use it or sell it" clause, although that was recommended by the Hugh Fletcher-led telecommunications inquiry.

The clause would have stipulated that winners of the second- and third-generation spectrum begin using it within a certain time, or be forced to sell.

The intention was that the clause would stop big players hoarding spectrum.

But Communications Minister Paul Swain said the clause, adopted in some overseas auctions, was unnecessary locally because the Government's work to strengthen the Commerce Act would ensure robust competition laws.

Concerns over the potential to hoard the second- and third-generation (2G, 3G) spectrum on offer led ihug director Nick Wood to take a case to court this year, fighting for a change in rules. The case was dismissed.

The auction, which was suspended almost two weeks ago pending the Government's response to the telecommunications inquiry, will resume on January 8.

Its value sits at $144 million, after peaking at $180 million.

Loose rules surrounding the withdrawal of bids sent its value tumbling last month as telcos withdrew high bids to reduce the amount they needed to pay to secure a lot.

The Ministry of Economic Development has now moved to tighten those rules, and will disqualify any bidder who withdraws bids in more than five rounds.

The auction will also be split into two sections, one containing 2G, 3G and management rights to the 1098 area of the spectrum, and the other the small licences under the management rights.

If one round passes clear of bidding in either section, that section will end.

Walker Wireless chief executive Paul Ryan said it was good to see the ministry moving to speed the auction towards completion. It was ready to close, he said.

Many bidders have been frustrated by the lengthy process, and one said that the suspension two weeks ago was stupid.

The ministry's manager of telecommunication and postal policy, David King, said that the "use it or sell it" clause was not necessarily dead and buried. It could be applied to a future auction if appropriate.