6. Final results and recommendations

Following the re-estimation and after further discussion and deliberation, Covec and NZIER agreed to define the recommended z factors as averages of the values stemming from their respective approaches.

The values for z that are jointly recommended are simple averages of the values derived by Covec's and NZIER's independent econometric approaches:

1. The first approach (a linear regression) was used by Covec in their initial report. When NZIER re-estimated this using Statistics NewZealand data, it provided values of 2.08% for television licenses and 2.12% for radio licenses.
2. The second approach (the error correction method) was proposed by NZIER in their review of Covec's estimates. The re-estimated NZIER error correction model provided values of 3.12% for television licenses and 2.73% for radio licenses.

Further detail on the equations and data is provided in the appendix.

Based on averages of these estimates, we therefore recommend the following z values be used for calculating spectrum license renewal fees:

Television: z = 2.60%

Radio: z = 2.43%