1. Introduction

The Ministry of Economic Development (MED) commissioned Covec Limited to develop formulae for pricing television and radio spectrum licences. These formulae are based on estimates of broadcasting advertising revenue growth (denoted z) out to 2030. MED later engaged NZIER to review the estimates.

The process of setting prices comprised:

• Development by Covec of a method for setting prices based on forecast television and radio advertising revenue growth out to 2030.
• A peer review of Covec's report by PriceWaterhouseCoopers.
• A peer review of Covec's method by NZIER.
• Covec's response to NZIER's review.
• Development by NZIER of alternative estimates of advertising revenue growth, and exploration of some of the issues discussed in the peer review.
• Discussions between NZIER and Covec of the two sets of results. Re-estimation of the equations to account for data differences.
• Agreement between NZIER and Covec on an acceptable estimate of advertising revenue growth.

These steps are outlined in more detail below.