Spectrum sale glory fades

By RICHARD BRADDELL

WELLINGTON - Thoughts that the Government might scoop up to $650 million in the cellular spectrum auction have faded after only 12 bidders registered for the sell-off.

The Ministry of Economic Development indicated that it would accept late registrations in the auction.

So far it has attracted no international bidders and includes five state-owned enterprises, of which Airways Corporation and three power companies may be there simply to protect existing interests.

In contrast to the British auction, where similar spectrum sold for $72 billion, New Zealand's third generation auction has been delayed more than once under protest from carriers and due to Waitangi claims, and now faces court action from Ihug and Maori claimants that could delay it yet again.

Though the hype has centred on the multi-media potential of the third generation component of the auction, barely mentioned offerings of second generation spectrum may prove to be the battleground since it can be exploited much sooner.

An International Telecommunications Union decision a month ago means it can now also be used for third generation when that becomes available.

Though one industry source said spectrum prices could yet surprise on the high side, an analyst said $200 million might be more realistic, and that might have budgetary implications for the Government.

Telecom, Vodafone and Telstra Saturn are regarded as the only bidders with the obvious muscle and incentive to be credible builders of a national network, although the registration of Independent Newspapers has to be taken seriously.

INL is regarded as wanting to secure distribution of internet content, after this week entering the internet age with the launch of its Stuff website.

But there is some debate over whether it is interested in spectrum as insurance against needs that may emerge in the future, or whether its plans are more immediate.

The bidders also include Counterpoint Securities - a subsidiary of listed company Savoy Equities, Mighty River Power, Genesis Power, Transpower, Ihug, Broadcast Communications and Walker Wireless.

Clear Communications, which had been regarded as a likely bidder, said earlier this week it would not go into the auction because it did not want to spread its energies and resources over two major network rollouts at once.

Yesterday, the first two commercial customers on its fixed radio LMDS went live in Penrose and New Plymouth.

Another likely contender, Jump Capital, also reserved its position, but could still register for the auction.

Jump said owning spectrum was only a starting point for a cellular business, and it was focusing on the other parts that were needed to create a network.

Jump is thought to be talking to industry players in an effort to forge some sort of coalition capable of shouldering the $1 billion risk associated with building a national network.

There has also been industry speculation that Jump's common carrier model got nowhere because potential users such as Clear, and potentially any of the registered bidders aside from the incumbents, were unwilling to commit until the outcome of the auction was known.

Savoy's chief executive, Kerry Haycock, said his company's interest dated from the days of an abandoned relationship it had worked on with Ericsson when the spectrum was lined up for sale two years ago.

Though he said the present registration was aimed at keeping its "irons in the fire," he said Savoy was still definitely interested.

"But it's a moving feast at the moment and a lot of people are going in and out of this process."