Government makes offers for renewal of cellular spectrum rights [Published 27 November 2007]

The Government is offering renewal rights in the 800 MHz and 900 MHz radio spectrum bands which will encourage more competition and investment in mobile broadband services.

"It also provides for part of this spectrum to be made available for investment by new market entrants," said Communications and Information Technology Minister David Cunliffe. "The renewal offers provide the existing owners with greater certainty for their future investment plans."

In April 2007, Cabinet agreed that a 7.5 MHz pair of the spectrum that expires in 2011 or 2012 in each band should not be offered for renewal but should be offered by auction.

Cabinet also agreed that if Telecom or Vodafone sell at least a 5 MHz pair of 800 MHz or 900 MHz spectrum on the secondary market to a new market entrant in these bands within six months of the renewal offer being made, then they would be offered the remainder of the 7.5 MHz otherwise intended for auction.

"There is significant interest in these bands, as they are considered to be more economic for providing coverage in lower population density areas," said Mr Cunliffe.

The renewal offers were sent to the current right holders, Telecom and Vodafone on 9 November 2007.

"The offer price is $3.8 million (excluding GST) per MHz pair for a term of 20 years which, as directed by Cabinet, approximates the market value of the rights and produces a fair financial return to the Crown," said Mr Cunliffe.

"The offers also include usage criteria requiring the spectrum to be used within five years to encourage investment and ensure that the spectrum is not hoarded."

If any renewal offer is rejected by the existing right holder, then the relevant rights will be resold by auction.