Telstra, Telecom slug it out over mobile video

By PAULA OLIVER

Bidding for third-generation (3G) spectrum in the Government's auction burst into life yesterday, when heavyweights Telstra Saturn and Telecom clashed over a slice of the spectrum that could allow mobile phone users to view videos on their handsets.

The allocation of 3G spectrum around the world has sent telcos into raptures, and fetched European Governments billions of dollars.

Until now, New Zealand's auction had failed to inspire anything near the kind of battles seen overseas, but the Government will be hoping that yesterday's heavyweight sparring is a sign of things to come.

Walker Wireless created a stir on Friday when it outbid Telstra Saturn for a slice of 3G, and Telstra in turn outbid Telecom yesterday.

Telecom was quick to reclaim its slice with a bid over Walker Wireless, all of which lifted the total bids to more than $60 million.

Rule changes by the Ministry of Economic Development two weeks ago have quickened the pace of the auction, but ihug director Nick Wood expects the bidding to continue. "We are a long way from the finish line yet, this isn't even the beginning," he said. "I doubt if we are going to see two clear rounds for a long, long time yet."

Telstra Saturn, Telecom and Vodafone now hold the three slices of 3G spectrum, returning to the positions they occupied two months ago.

Sources suggest concern is growing among some bidders that second-generation (2G) spectrum could be hoarded by larger players, because there is no cap on how much one company can own.

Mr Wood, who had a case against the lack of a cap thrown out of court before the auction, suggested it could be revived after the auction if anti-competitive behaviour was evident.

"When it nears the end the potential is there for a big player to simply stamp out all the bids, and it's a shame it's been set up in a way that could see that happen," he said. "It makes it harder to get an opportunity to set up in this country, and it's the reason we have a brain drain."

Much of the 2G spectrum is also held by the three big telcos.