Spectrum sale limited to 15MHz

By BRIAN FALLOW

WELLINGTON - The Government is to auction prime real estate in the radio frequency spectrum on July 10, and make sure that no one gets more than a fourth of it.

"This spectrum auction is particularly exciting, given that part of it can support third-generation cellular technology which will eventually provide high-speed mobile data and voice applications," said acting Communications Minister Trevor Mallard.

The auction had been scheduled for January 31 but the Government deferred it, citing competition concerns.

The Government has also increased the amount of spectrum on offer from 45MHz to 60MHz, but it is capping the amount any one operator can get to 15MHz, the minimum needed for a full national third-generation cellular mobile network.

One of the blocks will be restricted to bidders with Maori participation.

Details of the auction's rules will be announced in six or seven weeks. As with a previous spectrum auction it will be held on the internet, so that bidders can see rival bids though not who is making them.

The process is open-ended, staying live until it is clear bids are not going to go any higher. Mr Mallard said the Government had decided competition was more important than maximising the proceeds of the auction.

The Government might have made more by allowing a single bidder to acquire all the spectrum on offer. But the opportunity cost of that monopoly premium - which was impossible to quantify anyway - was considered worth accepting for the sake of a pro-competitive outcome.

The Government is not contemplating attaching any use-it-or-lose-it condition to the blocks on offer.

"People will be paying a lot of money up front for these rights," Mr Mallard said.

The 15MHz cap will apply initially for three years.