Digital dividend FAQs

What is the digital dividend?

The digital dividend is the radio spectrum freed up by the move to digital television. As digital television is more efficient in spectrum use than analogue television, it is possible to free up a considerable amount of spectrum to be allocated to new uses.

Cabinet made high level decisions about how this spectrum would be used in 2009. Those decisions means that spectrum in the range 694-806 MHz (the ‘700 MHz band’) can be allocated for new uses.

Why is the digital dividend important?

This frequency range is in a ‘sweet spot’ of the radio spectrum and it can carry large amounts of information over large distances. A transition to digital television is occurring internationally, with the released spectrum typically being allocated to fourth generation mobile broadband.

Faster mobile broadband will enable New Zealand to keep pace with overseas development and will facilitate improvements in productivity and ease of doing business in New Zealand, as well as providing new applications for customers.

A report prepared for the Ministry estimated that allocating the digital dividend to mobile broadband will result in economic benefits of $1.1 - $2.4 billion over 20 years, compared with using higher frequency bands.

The coverage properties of the 700 MHz spectrum means that services can be rolled out with fewer cell sites, meaning lower costs for consumers.

What is “fourth generation mobile broadband”?

Fourth generation (4G) is the next step-change in cellular technology capability. It can offer significantly faster and better mobile broadband services than current 3G technology.

Why are allocation policies being considered now?

The spectrum is expected to be fully available for use in late 2013 once the switchover to digital television is complete. It is important to complete technical planning, and finalise allocation policies and methodologies, well in advance to ensure certainty for industry and end users for business planning.

What about the VHF spectrum that is also used for analogue TV?

The switch to digital television will also free up some spectrum in the VHF band. There are several options for use of this spectrum, including digital radio or public safety uses. The high level decisions in 2009 put this spectrum to one side for now, as it is not under as heavy demand as the 700 MHz band. Specific options for this spectrum will be considered at a later date.

Are the proposals in the paper the final position of the Government?

No. The proposals in the paper are for consultation, and will be modified or confirmed following the consultation process.

Will the spectrum be auctioned and how much revenue is it likely to raise for the Crown?

In the past, spectrum in high commercial demand has typically been allocated by auction and this is one of the proposals made by the Ministry of Economic Development in the paper. The government will ultimately determine how the spectrum will be allocated to operators. This will happen once government has the benefit of submissions from this consultation process. It’s important to note that the primary aim of an auction is to ensure an efficient allocation of the scarce resource. Auctions provide transparent mechanisms to allocate resources to the highest value use. Due to the nature of an auction, it’s difficult to predict how much revenue may be raised.

When will final decisions be made?

Final recommendations are anticipated to be made to Cabinet by April 2012.