NZ spectrum auction details announced

The New Zealand government has announced the timing, reserve price and implementation conditions for the upcoming auction of the digital dividend radio spectrum.

The allocation of the 700 MHz band of spectrum will enable the building of 4G mobile networks using the spectrum freed up by the switchover to digital television. The government has spent NZ$157 million clearing the 700 MHz band to facilitate 4G.

The auction will begin on 29 October 2013. The start date will be confirmed after completion of the bidder registration process. The reserve price for each of the nine lots of 5 MHz pairs is NZ$22 million.

The auction conditions include requirements for mobile network operators to upgrade their existing rural cell sites to 4G capability within five years and for successful bidders to continue expanding cellular coverage. This is to ensure that at least 90% of New Zealanders have access to a 4G network and faster mobile broadband coverage within five years.

Management rights for nine lots of 2 x 5 MHz in the 700 MHz range will be auctioned. The management rights will begin on 1 January 2014 and last for 18 years.

Bidders will initially be limited to acquiring a maximum of three lots each. If any lots remain unsold after the initial auction round closes, the limit may be increased to four.

Successful bidders who acquire three or more lots will be required to build a number of new cell sites in areas that do not currently have any mobile coverage.

Bidders who acquire three lots must build at least five new cell sites each year, for five years. For bidders who win four lots, the requirement increases to 10 new cell sites each year for five years.

The government also wishes to ensure new or non-cellular operators are able to participate. These bidders will have five years to deploy services to at least 50% of New Zealanders.

To ensure that rural communities also benefit from the new technology, existing cellular operators buying the 700 MHz spectrum will be required to upgrade at least 75% of their existing rural 2G and 3G cell sites to 4G capability using the 700 MHz spectrum within five years, up to a maximum of 300 cell sites.

Bidders choosing to pay in instalments will be required to pay a commercial interest rate and provide appropriate security.

The Ministry of Business Innovation and Employment will be running the auction. It will provide further details for prospective bidders shortly. Bidders will be required to register and provide a deposit before the auction. The bidder registration is likely to open on 11 September 2013.