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Government sets 700 MHz reserve price, Telecom approves

Government sets 700 MHz reserve price, Telecom approves

Telecom predicts deployment into 4G/LTE networks to commence mid to late 2014

With the Government’s auction for the 700 MHz radio spectrum scheduled to commence October 29, telecommunications provider, Telecom, said it welcomes the allocation and intends to be a bidder.

Minister for Communications and IT, Amy Adams, announced the reserve price for each of the nine lots of 5 MHz paired has been set at $22 million, with the finalised auction date to be confirmed once bidder registration is complete. This includes the option for staged payments to enable network operators to immediately invest in building networks.

“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,” Adams said.

“The reserve price also takes into account the value to NZ of having 4G connectivity widely deployed.”

Bidders will initially be limited to acquiring a maximum of three lots each; the limit may be increased to four if some lots remain unsold following the initial auction.

Successful bidders with three lots will have to build at least five new cell sites each year for five years. For those with four, this is increased to ten sites per year for the same period.

Additionally, the auction conditions require mobile network operators to upgrade their existing rural cell sites to 4G capability within five years, and for successful bidders to continue cellular coverage expansion.

Telecom said it welcomes the Government’s acknowledgement of the investment required by mobile network operators to build the 4G/LTE infrastructure required to utilise this spectrum, and the conditions in place to enable this.

In a statement, the Telco said, “the 700 MHz band is an important resource if NZ is to make the most out of 4G LTE technology, which will deliver significant benefits to New Zealanders in the shape of faster mobile broadband speeds and significant long-term economic benefit to the country.”

It also claims its commitment to rural NZ would also be strengthened via the 700 MHz spectrum as it would enable better economics of coverage in less populated areas. The Government stated existing cellular operators buying the 700 MHz spectrum must upgrade at least 75 per cent of their existing rural 2G and 3G sites to 4G within five years, up to a maximum of 300 cell sites.

With management rights for the spectrum to begin on January 1 (and to last 18 years), deployment of the spectrum into Telecom’s 4G/LTE network is dependent on 700 MHz handset availability from global manufacturers.

Based on current indications, Telecom believes these will start becoming available in mid to late 2014 at earliest.

The Government has spent $157 million clearing the 700 MHz band to allow the spectrum to be used for 4G mobile networks.

Nermin Bajric is IDG's coordinator for the Reseller News NZ website. His primary point of contact is email via: nermin_bajric@idg.co.nz


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