Last of New Zealand's 700 MHz spectrum auctioned

Telecom has secured the final 700 MHz radio spectrum auction in New Zealand with a bid of NZ$83 million (+GST). Under the auction rules, Telecom’s bid for the final block is conditional on it obtaining clearance from the Commerce Commission to acquire the spectrum.

Radio spectrum management rights are deemed to be business assets and are therefore subject to the competition provisions of the Commerce Act 1986.

In the first round of the auction in October last year, three bidders were each entitled to bid for three spectrum blocks. However, 2degrees only bid for two blocks, leaving one block unsold.

Following the final round of the auction, the results of the 700 MHz auction are (subject to Commerce Commission clearance):

• Telecom: 2x20 MHz (four blocks)
• Vodafone: 2x15 MHz (three blocks)
• 2degrees: 2x10 MHz (two blocks)

Under the auction terms, bidders who acquire three blocks of radio spectrum must build at least five new cell sites each year, for five years.

As a condition of winning the final spectrum block and having four blocks of 700 MHz radio spectrum, Telecom will be required to build 10 new cell sites each year for five years, in areas that it does not currently cover.

All successful bidders will also be required to upgrade 75% of their existing rural cell sites to 4G, up to a maximum of 300 sites.

The auction conditions are designed to ensure that at least 90% of New Zealanders have access to a 4G network and faster mobile broadband coverage within five years.

4G mobile broadband services are capable of speeds up to 10 times faster than existing mobile data networks and are expected to help meet growing consumer demand for mobile data.

Indications are that by using the spectrum for 4G mobile networks, economic benefits for New Zealand of up to NZ$2.4 billion can be expected over the next 20 years.