Telecom and Vodafone grab NZ spectrum

The initial round in the New Zealand digital dividend frequency auction of radio frequency management rights in the 700MHz spectrum has concluded, with Telecom New Zealand and Vodafone snapping up a collective NZ$132 million (A$115 million) in spectrum.

NZ communications minister Amy Adams.

Compared to overseas spectrum auctions, the prices paid in New Zealand were comparatively low. The NZ government had set the reserve price for each 5MHz paired band at NZ$22 million (A$19 million).

Incumbent Telecom New Zealand acquired three lots of paired 15 MHz bands for NZ$66 million (A$57.6 million), with Vodafone winning the same amount in the auction.

Mobile operator 2degrees picked up two lots of paired 10 MHz spectrum for NZ$44 million (A$38.4 million). 

NZ Communications minister Amy Adams said the narrower frequency bands acquired by 2degrees were common overseas.

“While 2degrees has bid for slightly less spectrum than Telecom and Vodafone, internationally we have seen that 2x10 MHz is sufficient to run a viable 4G network and provide much faster data speeds to mobile customers.

“Examples of 4G mobile networks with 2x10 MHz of comparable spectrum can be found in Australia, the United Kingdom, South Korea, and many European countries,” Adams said in a statement.

A single five MHz pair of specturm of 700MHz frequencies failed to sell at the auction, the government said. A decision as to what to do with will be made in the coming weeks.

If after the initial round there is any unsold spectrum the government is permitted to relax the rules for the auction which limits the amount that can be acquired to two 15 MHz bands, and increase these two 20 Hz blocks.

Bidders can compete for the remaining block in a supplmentary auction round, or the government can retain it and allocate it at a later stage.

The oppositon wants the spectrum reserved for a fourth provider to add extra competition to the market.

The remaining spectrum should be used to help a fourth provider enter the market rather than being sold off to the highest bidder. Selling it this way would be a strategic mistake as the third mobile entrant, 2 Degrees, already struggles against Vodafone and Telecom," said Labour spokesperson Clare Curran.

If New Zealand is to have a genuinely competitive mobile market then what happens to the unsold spectrum will crucial for the prices Kiwis pay in the years ahead,” she said.

The 700MHz spectrum was freed up after the New Zealand's analogue television signal switch off. Officials estimate that using the spectrum for 4G mobile networks will bring the country benefits around NZ$2.4 billion (A$2.15 billion) over the next twenty years.