Past consultation and documents

Pricing-setting formula for spectrum rights

The Ministry commissioned Covec Limited to develop a simple price-setting formula for spectrum rights that reflected the change in the market value of spectrum rights using publicly available data.

The formula developed by Covec calculated an offer price for a spectrum right by scaling up the original acquisition price through the application of a growth factor (z). The growth factor reflects the change in value of the spectrum between the original auction and the reallocation.

This appproach was peer reviewed by PricewaterhouseCoopers. With various amendments, the Covec methodology has been applied to the renewal of UHF TV licences and is being applied to the renewal of AM and FM radio broadcast rights.

At the time Covec and PriceWaterhouseCoopers (who peer reviewed the formula) expressed reservations on the suitability of using a price-setting formula for the cellular market because:

• the cellular industry was not mature compared to the "more stable" UHF and sound broadcasting industries;
• reliable data on total industry revenues were only available for a limited period (1999-2003); and
• new and emerging technologies may use different spectrum frequency ranges than those covered by existing cellular rights.

Case-by-case review of cellular rights

The Ministry of Economic Development undertook a case-by-case review on the reallocation of management rights for cellular services for the 800/900 MHz bands, which are the main spectrum bands currently used for cellular services in New Zealand.

As part of the process, the Ministry of Economic Development engaged PricewaterhouseCoopers (PWC) and the New Zealand Institute of Economic Research (NZIER) jointly to produce a report that:

• reviewed earlier work and views of cellular operators;
• assessed whether the price-setting formula was a suitable means of calculating the market value of spectrum for cellular rights, either in its original or amended form;
• proposed alternative approaches that might better meet policy objectives if the formula is not deemed appropriate;
• identified a preferred approach, stating adequate reasons and an appropriate length of renewal; and
• proposed a methodology for the implementation of the preferred approach.
  

In July 2006, the Ministry published the report from PWC/NZIER Report, which was peer reviewed by CRA International.

Consultation on discussion paper

The Ministry of Economic Development released a Renewal of Mangement Rights Discussion Paper for stakeholder feedback in July 2006.

This discussion paper formed part of the case-by-case review for the renewal of cellular rights. It sought to confirm the views of stakeholders, which had been expressed in previous consultations on the renewal process and may have remained consistent or may have changed over time.

Submissions on the discussion paper were released on 19 September 2006.

On 2 October 2006, the Ministry invited all interested parties to make cross submissions by 13 October 2006.

Copies of the cross submissions were released on 2 November 2006.

Optimal spectrum quantity study

The Ministry of Economic Development commissioned Network Strategies Limited to conduct a study into the optimal quantity of 800 MHz and 900 MHz spectrum for operators in New Zealand over the period 2011-2031. The report was peer reviewed by PricewaterhouseCoopers. Both reports were released in November 2006.

Documents