4. The auction alternative

Issue 4.1

What would be the most appropriate design of auctioning cellular spectrum, following a rejection by incumbent rightholders of renewal price offers from the Government?

48. TelstraClear supports the open simultaneous multiple round auction design. This design ensures that bidders have good access to information, avoids the winner’s curse, is generally successful in ensuring that lots are allocated to the party that values it most and enables a fair return to the Crown. As identified in the Ministry’s discussion paper Spectrum Auction Design in New Zealand, dated November 2005, it should be possible to devise rules to address the gaming problems that have been identified.

Issue 4.2

Do you have any comments on the use of an open, simultaneous multiple round auction design previously adopted by the Ministry for large commercial rights and licences (e.g. Auction 6 rules)?

49. See answer to previous question.

Issue 4.3

Do you have any other comments on auction as an alternative to the renewal process?

50. No.