New Zealand to begin 4G auction in October

New Zealand authorities have published details of a keenly awaited 4G auction and said that bidding for the airwaves would begin on October 29, despite continued opposition from Maori tribes that claim ownership of the frequencies.

In a statement on her website, Amy Adams, the communications and IT minister, said that nine lots of paired 5MHz spectrum in the 700MHz band would go under the hammer after the completion of a bidder registration process.

New Zealand authorities have published details of a keenly awaited 4G auction and said that bidding for the airwaves would begin on October 29, despite continued opposition from Maori tribes that claim ownership of the frequencies.

In a statement on her website, Amy Adams, the communications and IT minister, said that nine lots of paired 5MHz spectrum in the 700MHz band would go under the hammer after the completion of a bidder registration process.

Authorities have set a reserve price of NZD22 million ($17.31 million) for each of the nine lots available – meaning the auction will fetch a minimum of NZD198 million for government coffers.

The reserve pricing equates to a price per MHz per head of population of about NZD0.50.

However, according to Adams, authorities have already spent about NZD157 million on clearing the spectrum so it can be used to provide 4G services.

“In setting the reserve price, we have balanced generating a fair return on the sale of the spectrum rights with the significant investment required by mobile network operators to build the 4G network infrastructure,” said Adams. “The reserve price also takes into account the value to New Zealand of having 4G connectivity widely deployed.”

Moreover, to ensure that operators have the means to invest in network rollout, the government is to offer a deferred payment option to successful bidders, allowing fees to be paid over a five-year period subject to commercial interest rates.

Adams said the auction would ensure that at least 90% of New Zealanders would benefit from 4G services over the next five years.

Using 700MHz spectrum, winners will have to upgrade 75% of their rural 2G and 3G cell site (up to a maximum of 300 cell sites) to 4G capability within five years of receiving licenses, which will be valid for 18 years from 1 January 2014, unless they are new entrants to the telecoms sector, in which case they will have to cover 50% of the population over the same timeframe.

“Indications are that by using the spectrum for 4G mobile networks, we can expect economic benefits for New Zealanders of up to $3.4 billion over the next 20 years,” said Adams.

According to Adams’ statement, no bidder will be allowed to obtain more than three spectrum lots – equaling 2x15MHz – although the limit may be raised to four lots if some remain unsold after the initial auction round closes.

However, any bidders that do acquire four lots will be required to build networks in areas currently without cellular coverage.

Authorities are proceeding with auction plans even though Maori tribes say they have no right to the frequencies being offered.

According to the tribes, Britain guaranteed them rights to certain natural resources in the Treaty of Waitangi, signed in 1840.