New Zealand sets low reserve in 4G spectrum auction

The New Zealand government has released details on its forthcoming radio spectrum auction, setting the reserve price for each 5MHz paired band at a low NZ$22 million (A$19 million).

NZ communications minister Amy Adams

In comparison, Australian communications minister Anthony Albanese decided in July this year to maintain the reserve price for the unsold 30MHz block of 4G spectrum at $1.36 per megahertz per population. The government picked up AU$1.96 billion after 30MHz of the 700MHz spectrum was unsold.

Communications minister Amy Adams set the start date for the auction to October 2013, with bidder registration starting on September 11. Management rights for the spectrum will start on January 1 the next year, and last for 18 years.

Nine lots of 5MHz pairs are up for grabs, meaning the government stands to reap at least NZ$198 million (A$171 million). The government has already spent NZ$157 million to clear the 700MHz band to ready it for auction, plus spending NZ$30 million on an ICT fund for Maori in lieu of specturm, leaving a margin of just NZ$11 million.

The maximum amount each bidder can acquire is three lots, or 15MHz of paired spectrum, initially. If any unsold spectrum remains after the first auction round, the limit may be increased to four lots.

Bidders are required to build at least five new cell sites each year, over a five-year period. The government wants new cellular network operators to participate, and has set differing conditions for these - they are given five years to deploy services that reach half of New Zealanders.

The three existing telcos, Vodafone, Telecom NZ and 2 Degrees, are all expected to bid in the 4G auction. Of these, Vodafone is already operating an LTE 4G network in the major population centres, and Telecom is trialling one. 

2 Degrees has not announced plans for a 4G network as of yet.

In the equivalent Australian auction, a large block of spectrum remained unsold and Vodafone pulled out as the price was considered very high.

The UK government had hoped providers would pay a premium for its spectrum auction held in February this year. However, hopes were dashed and the auction brought in just A$3.5 billion, A$2 billion less than expected.