Covid 19 coronavirus: 5G auction cancelled, Govt dishes out cheap spectrum directly instead

The Government has cancelled the first 5G spectrum auction, following an earlier postponement caused by Covid-19 lockdowns.

Instead, spectrum will be directly allocated to Spark (60MHz), 2degrees (60MHz) and Dense Air (40MHz) at a low fixed-cost. (UK-based Dense Air, which leased spectrum to Spark for its fixed-wireless 5G launched in the South Island late last year entered the NZ market in 2018 when it paid $25.75 million for spectrum owned by CallPlus cofounder Malcolm Dick).

A spokeswoman for MBIE's Radio Spectrum Management division said the fixed-cost offer would not be made public until documents were sent to bidders.

But the Herald understands from two of the bidders that the pricing will be less than the $250,000 per 10MHz lot (over a total of 16 lots) - or chump change next to the 4G auction in 2014.

MBIE also confirmed that Vodafone NZ had not registered to bid. The telco already has 58MHz of 5G-friendly spectrum (the only sizeable chunk in telco hands), meaning an auction requirement to return existing spectrum would not have been attractive.

A 50MHz block will still go to iwi interests, as per the original auction plan. Iwi will be free to lease or onsell the spectrum to 2degrees (as helped with the 3G auction in 2000), Vodafone, Spark or Dense Air.

Even before the coronavirus outbreak, the initial 5G auction was shaping up to be a damp squib.

Communications Minister Kris Faafoi had the choice of maximising the return to the Crown (the approach taken in 2014 when a $22m reserve was smashed in the final round of 4G bidding and the Crown realised $259m as Spark spent a total $149m, Vodafone $66m and 2degrees $44m) or capping bids to promote market competition.

Faafoi took the latter path, with a stipulation that no party could bid for more than 40MHz in total.

The low pricetag direct allocations should help move 5G upgrades along after mandated halts during level 4 and level 3.

More broadly, the initial auction is something of a stop-gap measure, designed to give the Government breathing space to resolve a long-standing Treaty claim on airwaves

The direct allocations are for two-year, temporary licences for chunks of 3.5GHz spectrum.

Faafoi is angling for the auction of long-term licences, and the addition of millimetre bands that will allow faster 5G, at a round of full-blood auctions that will - ideally - take place before the end of 2022.

Vodafone was first to launch 5G mobile service in NZ, with a rollout in parts of Auckland, Wellington, Christchurch and Queenstown in December last year. The telco plans a fixed-wireless 5G service later this year (fixed wireless uses a mobile network to deliver broadband into a fixed space, such as a home or office, as a landline substitute).

Spark launched 5G fixed-wireless in a series of small South Island towns in November last year. It aims to launch 5G mobile service progressively from mid-year. This morning a spokeswoman said the direct allocation meant Spark could meet its mid-year target.

With Huawei side-lined by the GCSB, Spark has signed on Nokia Networks and Samsung to handle the RAN (radio access network or edge) element of its 5G network upgrade. Cisco and Ericsson remain Spark's primary partners for its network core.

2degrees - an all-Huawei shop - has yet to timetable its 5G upgrade.