'Use it or lose it' move angers Telecom

By PAULA OLIVER

A recommendation that owners of a radio spectrum be required either to use it or to sell it has outraged Telecom and Telstra Saturn.

The final report of the Ministerial Inquiry into Telecommunications suggests that healthy competition is vital in the wireless industry to ensure new entrants have a chance to compete.

The Government's present auction of second and third-generation spectra has a cap on how much third-generation spectrum a bidder can buy, but the report suggests that it does not go far enough.

It said it was still possible for a successful bidder to sit on a spectrum, effectively stopping a keen competitor from getting into the market.

If the reasons for a holder not using the spectrum were enterprise-related rather than technical, and the holder would not say when it expected to begin using it, the newly created commissioner should be able to force a sale to another party that was ready to start a network.

Telecom strongly opposes the recommendation.

Spokeswoman Linda Sanders said it could be a long time before technology allowed the third-generation spectrum to be used, and that must be clearly understood before any move was made.

"The time can be quite significant, and we think the rules and guidelines in place already are fine," she said.

"We've been through these issues with the auction process, and really don't think it's a place for the inquiry to be looking at."

Telstra Saturn also opposes the recommendation, saying that the present cap on third-generation is enough.

Chief executive Jack Matthews said through a spokesman that the auction itself was an open market mechanism that allowed anyone to pay a price for spectrum.

A spokeswoman from the office of Communications Minister Paul Swain said no decision had yet been made to apply the recommendation to the present auction.

The report needed to go through several processes, including the cabinet. But the auction's catalogue allowed rule changes and outlined to bidders that a "use it or lose it" clause was being looked at.

The structure of the present auction has been criticised since it reached the starting blocks. Ihug director Nick Wood took a case to court asking for a cap limiting how much second-generation one company could own.

Although his case was thrown out, Mr Wood is still open-minded about trying again, depending on the result of the auction.

Walker Wireless chief executive Paul Ryan welcomed the inquiry's recommendation.

"In our submissions we asked for 'use it or lose it,' which they do overseas, so we're happy."

Vodafone spokesman Mark Champion said the company had always used the spectrum it purchased, and the "use it or lose it" move carried the possibility of devaluing spectrum.