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Te Weraiti (Bay of Plenty) TOPO50: BD36 558.87 097.54 WGS84: 175.9072617E 37.8237783S
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1. Executive summary

  1. In 2003, Cabinet agreed to a policy for the allocation of commercial spectrum rights at expiry. Subject to a case-by-case review, replacement rights will be offered to existing rightholders five years before expiry to provide certainty for investment and to ensure a seamless transition from one term to another. If a rightholder does not accept the renewal offer, the rights will be auctioned. The policy requires the offer price to approximate the market value of the rights and produce a fair return to the Crown. The offer price will be determined using a methodology that is transparent and simple to administer.
  2. The management rights in the 800 MHz and 900 MHz spectrum bands, the main bands currently used for cellular services in New Zealand, will start to expire from November 2011. If the Government decides to renew the rights, offers to incumbent rightholders are due by November 2006.
  3. This paper sets out the case-by-case review for the renewal of management rights for cellular services in the 800 MHz and 900 MHz bands. Issues being considered under the review include the future use of these bands, the level of spectrum-related investment, whether the spectrum has been used, whether the rights should be renewed, the appropriate renewal period, and the appropriate pricing approach.
  4. This paper also describes an incremental optimised deprival valuation (incremental ODV) approach, recommended by consultants, for the renewal of cellular rights. It is proposed as a more appropriate pricing approach, compared with the Covec formula that was used in the renewal of commercial AM/FM and UHF-TV licences, and with other approaches that were considered.
  5. Incremental ODV determines the renewal price by calculating the incremental costs that a generic New Zealand cellular operator would incur to deliver the same quantity and quality of services if deprived of spectrum at the margin. The ODV-calculated value will be checked that it lies within reasonable range from New Zealand and overseas benchmark spectrum values.
  6. This paper seeks the views of incumbent rightholders and other stakeholders on pricing and related issues under the case-by-case review for the renewal of cellular rights in the 800 MHz and 900 MHz bands.
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Last updated 3 April 2008