Rule changes may add life to spectrum auction

By PAULA OLIVER

The Government's snail-paced radio spectrum auction may be about to get a hurry-up.

The six-week-old auction of second and third-generation spectrum has limped to its present value of $39 million, despite early hopes that it would raise hundreds of millions of dollars.

Katherine Moody, head of the Ministry of Economic Development's radio spectrum management team, yesterday hinted that the accelerator could soon be pressed.

"By now the bidders are all familiar with the system and the dynamics of the auction

"It wouldn't be too much longer before we would take some kind of action to see it move along."

Yesterday afternoon saw just one bid, which increased the value of a small licence by $29.

Ms Moody said two options to speed up bidding would be discussed at the steering committee's next meeting within the week.

The first, and probably most favoured, would be to increase the minimum bid from 5 per cent to 10 or 15 per cent on some of the lots. The minimum bid could be raised on all, or just some of the more active lots.

Another option would be to increase the number of bidding rounds each day, from the present two, although this would need to be managed to ensure that bidders had enough time to analyse what had happened in each round before the next began.

"We're pretty confident that things have gone as we might have expected for the first six weeks," said Ms Moody.

"But the pace has been on our meeting agenda at almost every meeting we have had so far."

Germany's 3G spectrum auction, which saw bidders locked away in a disused Army barracks, ended last week after just three weeks. It raised $97 million.

Hutchison Whampoa, parent of local bidders Hutchison Telecommunications (NZ), pulled out of the German auction when bids became extremely high.

But Ms Moody said the two auctions could not be compared because New Zealand's was far more complicated than just six licenses and seven bidders.

"We are clearing frequency that is presently being used, and there are different types of spectrum available. It's much more complex."

Ihug director Nick Wood said he was not concerned at the pace of the auction because people were probably trying to organise networks in the background.

"There's a lot more to building a network than just getting spectrum."

Top bidders are now Telecom, with $11.6 million, Vodafone, with $13.3 million, and Telstra on $10.5 million.