3. Process and terms of renewal

Issue 3.1:

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

38. TelstraClear considers that a renewal offer by November 2006, ie five years before the rights expire, will ensure that there is sufficient time for the incumbents to consider whether they wish to renew their rights to the spectrum and, if necessary, re-auction it. However, TelstraClear would not support this date if it prevented reallocation of some of the rights to new entrants. A renewal offer by 2007 would still ensure that there is ample time for the incumbents to consider renewal of the right and, if necessary, for it to be re-auctioned.

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

39. TelstraClear considers that three months is sufficient for the offer period. This should give the right holders sufficient time to fully consider the implications of accepting or rejecting the offer.

Issue 3.2:

Do you have any comments on the terms of offer?

40. No.

Issue 3.3:

Do you have any comments on the terms of settlement?

41. No.

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

42. TelstraClear submits that there should be an early one-off payment for renewal of the rights to help incentivise the right holders to renew only the quantity of spectrum that they actually need.

What should be the latest date for settlement? Why?

43. TelstraClear submits that 12 months prior to expiry is an appropriate final date for settlement, as this would allow sufficient time to auction the right before the expiry date.

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

44. TelstraClear considers that the penalty should be an interest rate that is set at a level that is sufficient to ensure that the party renewing the right has an incentive to pay on time. The penalty rates for late payment of tax may provide appropriate guidance.
45. There should also be a final cut-off date where if a party has failed to settle by that date the option to renew the right expires. If that occurs the rights should be reallocated by auction.

Issue 3.4:

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

46. There should be no limitations on assignment and transfer of rights prior to settlement other than those set by the Commerce Act. This will ensure that the right is obtained by the user that values it most.

Issue 3.5

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

47. No.