5. Process and terms of renewal

Publication of summary of submissions

48. A summary of submissions will be released publicly following the consultation. 
     

Timing of offer

49. Renewal offers are due by November 2006, five years before the first of the cellular rights for renewal expire. The offer price will be open for a limited period, probably no more than six months, from the offer date and its terms will likely be non-negotiable.
     

Terms of offer

50. Offers will be made to the person currently recorded in the Register of Radio Frequencies as the relevant rightholder of a management right at the date of expiry. A binding offer document will be provided to each management rightholder, which will specify the management right and terms being offered. The rightholder may accept in full, accept in respect of only some rights, or reject the offer.
     

Settlement

51. The Ministry's preferred approach in previous renewals is not to require early payment for rights or to accept annualised payments during the term of the new right, although the Crown would be happy to receive early payment (with no discount).
52. Pre-settlement requirements may apply, such as confirmation of use and any Commerce Act requirements.
53. The latest date for settlement, usually six months prior to expiry, would be specified in the original offer. This would allow time for the rights to be auctioned before expiry if the purchaser fails to settle. Since auctioning the rights would mandate a tight time frame, the timing of the settlement thus, will be of the essence.
54. Penalties will apply for failure to settle on time.
     

Assignment and transfer

55. In previous renewal processes, the Ministry has allowed purchasers to transfer contractual rights and obligations prior to settlement, subject to Commerce Act limitations.
     

Commerce Act

56. Acquisition of management rights is subject to the Commerce Act 1986. Purchasers need to assure themselves and the Ministry that acquisition, through the pricing approach that will eventually be adopted, or by auction, is consistent with the Commerce Act and that any necessary clearances or authorisations have been obtained. The procedure for providing Commerce Act assurance is likely to be based on the rules used in Radio Spectrum Auction 6.
57. The Auction 6 rules are available on the RSM website.
     

Questions on process and terms of renewal

3. Process and terms of renewal

Issue 3.1
Do you have any comments on the proposed timing of the renewal offers?

What would be a reasonable period for incumbent rightholders to consider whether to accept or reject the renewal offers? Why?

Issue 3.2
Do you have any comments on the terms of offer?

Issue 3.3
Do you have any comments on the terms of settlement?

Would you prefer an early one-off payment or annualised payments? Why?

What should be the latest date for settlement? Why?

What should be the penalty for failure to settle on time? Why?

Issue 3.4
Do you have any comments on allowing purchasers to assign and transfer contractual rights and obligations prior to settlement?

Issue 3.5
Do you have any other comments on the process and terms of renewal?