Watchdog growling over spectrum sale

By PETER GRIFFIN

Telecoms watchdog Tuanz has called for the Government to look closely at Vodafone's recent purchase of mobile phone spectrum, and is asking why the incumbent operator needs more network capacity.

Vodafone paid around $2 million in July to pick up rights to a block of radio frequency in the 890MHz to 900MHz frequency range, adding to the 900MHz spectrum it had.

It also bought spectrum in the higher frequency 1800MHz band and 3G (third generation) spectrum that it plans to use in the future.

Tuanz chief executive Ernie Newman said the purchase might close the door on potential entrants to the mobile market.

"The question for us is whether the incremental value Vodafone may get from the spectrum to enhance the efficiency of their network is sufficient to justify closing out another market entrant at some future time," he said.

Newman has expressed his concerns to the Ministry of Economic Development, which is responsible for running the spectrum auction.

The ministry is examining all the successful bids to see if there are competition issues and a spokesman said the results of this work would be at least a week away.

Vodafone engineering general manager Jeni Mundy said the spectrum, which would allow Vodafone to more efficiently reuse frequency, was put up for auction and no other party wanted it.

"It beefs up our natural resource and allows us to deliver a better quality of service. You can never walk away from that," she said.

An industry source said Vodafone was faced with putting in more cell sites to improve coverage, or purchasing more frequencies.

"They would have to deploy a lot more sites and it would cost them a lot of money to get the equivalent coverage that the 900MHz spectrum would give them."

A Commerce Commission spokeswoman Jackie Maitland said Vodafone had outlined its plan to bid for spectrum, but did not make an application to have it approved - an action companies can undertake voluntarily.