Big market seen for spectrum auction sales

By RICHARD BRADDELL

NetLogic, the company behind the internet software driving New Zealand's mobile radio spectrum auction that begins today, will sell its system to other countries as they, too, decide to sell spectrum rights online.

The software was developed for the Ministry of Economic Development and first used when the ministry sold LMDS radio spectrum two years ago.

NetLogic bought the software back, and now sees a burgeoning market overseas as other countries adopt New Zealand's example and put their spectrum auctions online.

The company, a template for the knowledge economy, has no intention of joining the disenchanted and moving offshore, even if it sees the bulk of its business coming from overseas in future.

Instead, managing director Bryce Dixson, a Canadian who has been in New Zealand six years, sees this country as the perfect place to develop knowledge economy applications.

The first reason is its taxation - or lack of it because New Zealand does not have a capital gains tax. That is the perfect position for a knowledge company whose value lies in the intellectual property it develops, not in its earnings.

But every bit as important is New Zealand's size. Specialising in systems integration, NetLogic can develop a family of applications, put them out into the market and know that they will work before taking them offshore.

Compare that with a Silicon Valley company which, by the time it has one part of the equation functioning, may well have become so successful in the large US market that it has been gobbled up by a competitor.

Mr Dixson's view is that by the time NetLogic is ready to take its systems offshore, it will be able to capture far greater returns.

In fact, NetLogic is the incubator for a number of internet start-ups.

Its offshoot, Online Reservations, will soon take on the Australian entertainment market, e-see International is an electronic brand management system that enables brands to be managed over the internet, and Bankonit is an internet-based electronic payments gateway to the New Zealand banking system.

Another company, Ibid International, is, of course, the company that handles online auctions.

NetLogic is growing rapidly. In the three years since it was created in a management buyout of Apple computer distributor CDL, it has grown to 35 staff and is taking on another two each week. Mr Dixson sees a float as unlikely, but it will float the start-ups when they are ready. And that's where the money will be made.