Telecom cleared to buy last 4G spectrum lot

The Telecom free WiFi hotspots installed into hot pink telephone boxes.

Telecom, the second-biggest mobile phone operator, has been cleared to buy the final lot of 700 megahertz radio spectrum, flagged for fourth-generation mobile use.

The Commerce Commission approved the sale, saying Telecom's acquisition was unlikely to substantially lessen competition because the unused block wasn't placed next to Two Degrees Mobile's other band-width holdings, meaning the third mobile operator wouldn't gain much of an edge if it held the extra lot. Commission chair Mark Berry said the government's proposed placement of the unsold block in a position not adjacent to 2degrees was key to clearing Telecom's acquisition.

See the Commerce Commission announcement here:

The band-width allocations were announced last Friday by Communications Minister Amy Adams.

"Given the blocks are non-adjacent, it reduced the prospect of the Crown and 2degrees reaching an agreement on a sale," Berry said. "Even if 2degrees was to acquire the 5MHz block, 2degrees' competitiveness in this space is not likely to be materially enhanced since the block is not adjacent."

The Ministry of Business, Innovation and Employment said the lot was placed between Telecom and Vodafone to let the government fulfil its commitments under the auction rules.

Telecom bought the fourth 2x5 MHz for $83 million in the second round of a government auction, having secured three lots of 2x15 MHz spectrum for $66 million in the first round. Vodafone missed out on the fourth lot, having bought three 2x15 MHz lots for $66 million in the first round. 2degrees bought two lots of 2x10 MHz spectrum for $44 million.

If Telecom wasn't cleared to acquire the spectrum, MBIE told the regulator the Crown would consider allocating the block for other uses ahead of a possible sale to 2degrees, though any decisions about the use wouldn't be made until after the September election.

The government raised $259 million from the auction of the spectrum, which became available as a result of the switchover to digital television from analogue, having put a minimum reserve price of $198 million for the spectrum, something privately-held 2degrees said was a premium to the $157 million spent clearing the radio waves in the switchover of analogue television to digital, and the $119 million valuation attributed to the spectrum by the Treasury.

While some 4G capability is already available on higher MHz spectrum, the 700MHz range is especially well-suited to pushing fast mobile broadband into rural areas because it requires fewer repeater stations to achieve coverage and into densely populated urban settings, such as commercial buildings.

As part of the auction's conditions, the mobile phone operators will have to upgrade existing rural cell sites to 4G capability within five years and continue to expand their coverage. That's to ensure at least 90 per cent of the country has access to a 4G network within five years