Recommendations

Part A: Implementation process

Part B: Rights expiring in 2010

UHF-TV and DMS spectrum licences

MDS Management rights

Further work

61. It is recommended that the Committee:

1. note that in May 2003 Cabinet agreed policy on expiry of commercial spectrum rights whereby, subject to case-by-case assessment, replacement rights will be offered to existing rightholders five years before expiry, at a price calculated using a price-setting formula, and if the offer is not accepted, the rights will be reallocated by auction;

2. note that in May 2004 Cabinet [POL Min (04) 12/4] authorised the public release of the discussion paper "Implementation of a Price-Setting Formula for Reallocation of Commercial Spectrum Rights" and invited the Associate Minister of Communications to report to the Cabinet Policy Committee by 31 March 2005:

Part A: Implementation process

3. agree that the case-by-case assessment of specific spectrum rights will be initiated approximately six years prior to expiry of the rights and released for public consultation by the Minister of Communications, who will then report to Cabinet at least five years prior to expiry;

4. agree that the case-by-case assessment may consider, without limitation:

4.1 whether commercial renewal is appropriate for individual rights;

4.2 future use of the band, appropriate renewal period, level of spectrum related investment, whether unused rights should be renewed, and appropriate parameters for renewed rights;

4.3 whether direct application of the price-setting formula estimates the market value of the rights, or whether base prices should be adjusted, additional information recognised, or a valuation or auction used;

5. agree that any renewal offers agreed by Cabinet will be open for acceptance for three months, and that if a rightholder does not accept the offer and indicates its intention to bid for the rights, a contestable auction allocation will be held within one year of the offer date;

6. agree that the terms of any offer and auction rules will:

6.1 require full settlement of purchases at least six months prior to commencement of the new right, including any pre-settlement requirements, such as proof of use and Commerce Act requirements;

6.2 provide that if the purchaser fails to settle on time, the rights may be reconfigured and allocated at a later date, as seen fit, with financial penalties on the defaulting purchaser;

6.3 include a minimum charge for each right, agreed by the Minister of Communications;

7. agree that if a rightholder does not respond within three months, or it rejects the offer but does not indicate its intention to bid for the rights, the rights may be reconfigured and allocated at a later date, as seen fit;

Part B: Rights expiring in 2010

UHF-TV and DMS spectrum licences

8. note that a case by case assessment including consultation with rightholders has been completed for spectrum licences under management rights 1 and 2, consisting of seven UHF-TV licence sets sold in 1990 for near nationwide coverage (UHF-TV nationwide sets), individual UHF-TV licences sold from 1990 and licences for "distributed music services" (DMS) sold in 1991;

9. agree to offer replacement spectrum licences to holders of UHF-TV licences due to expire on 11 March 2010 in management rights 1 and 2:

10. agree:

11. agree that DMS spectrum licences not be offered for renewal;

MDS management rights

12. note that a case by case assessment including consultation with rightholders has been completed in respect of rights between 2.3 and 2.396 GHz and that these rights have not had significant utilisation since creation in 1990;

13. agree that replacement management rights over frequencies between 2.3 GHz and 2.396 GHz not be offered to current rightholders, and that this spectrum should be reallocated in due course following technical re-planning;

Further work

14. note that renewal decisions are due before April 2006 with respect to commercial AM and FM spectrum licences, which expire in April 2011, and that the Associate Minister of Communications has been invited to report on renewal of these rights by 31 March 2005 [POL Min (04) 12/4];

15. authorise the Minister of Communications from time to time to make such decisions and approve such offers, terms and conditions, agreements and other documentation as may be desirable to implement these decisions;

16. agree that the Minister of Communications may, either generally or particularly, delegate to the Chief Executive of the Ministry of Economic Development any of the Minister's functions, powers, or duties under paragraph 15 above, and that the Chief Executive may sub-delegate any function, power, or duty delegated to him or her by the Minister;

17. invite the Associate Minister of Communications to announce the decisions as outlined above and release to this paper and associated minute.