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About spectrum auctions
This page describes the history of radio spectrum auctions in New Zealand, following the passing of the Radiocommunications Act in 1989.
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Radiocommunications Act 1989
The Radiocommunications Act 1989 heralded a new era for the management of the radio spectrum in New Zealand. The Act enabled the creation of property rights for spectrum, and also the use of market-driven allocation mechanisms for the distribution of the newly created rights.
The Act doesn't specify any particular allocation mechanism for radio spectrum. Initially spectrum was sold using a tender system. The first auction was held in 1996, making New Zealand the first country to sell rights to use spectrum in this way. An internet-based computer system was developed for the second auction, held in 1998.
Internationally, spectrum auctions are now widespread. They are recognised as an efficient way to allocate spectrum to its highest value use.
Radio Spectrum Management (RSM) initially used simultaneous ascending auctions. This type of auction involves making all lots available for bidding at the same time. The auction takes place over a number of rounds of a specific duration (say 30 minutes), until no further bidding takes place on the lots being offered.
This type of auction allows bidders who wish to purchase specific combinations of lots to take a part in the auction. Advantages are that bidders:
- obtain full market information, and
- are able to determine their level of success on any combination of lots at any time during the auction.
More recently, auctions have been used for AM/FM broadcasting licences, wireless broadband management rights in the 2300 and 2500/2600 MHz ranges, and cellular management rights.
700 MHz auction — the digital dividend band
In 2013-14, the rights to the 700 MHz band were auctioned for 4G-LTE cellular use. This ‘digital dividend’ band became available after New Zealand switched to digital television broadcasting, thus freeing up the former analogue broadcasting spectrum.
The 700 MHz auction was structured as a simplified combinatorial clock auction, with 9 lots available. This was a new auction method for New Zealand.
- The auction began with a clock allocation phase in which bidders were limited to bidding for 3 lots each.
- One bidder only bid for 2 lots, which meant that a supplementary allocation phase was held to auction the final lot.
- In both phases, bidders bid for generic blocks of spectrum.
- Finally, a combinatorial assignment phase was held in which bidders, knowing how much spectrum they had won in the allocation phases, bid again for particular placements (frequencies) in the 700 MHz band.
Spectrum auction design in New Zealand
The Spectrum Auction Design in New Zealand report was published in 2005 to provide the industry with further information on auction design. It describes:
- how New Zealand has competitively allocated radio spectrum
- factors pertinent to auction design
- alternative options for competitive allocation.