Auction 12, Cellular management rights in the 700 MHz band for LTE (4G) cellular networks
Auction 12 was for 9 lots comprising 2 x 5 MHz spectrum in the bands 703-748 MHz and 758-803 MHz. It was held over several months in 2013, and was completed in 2014.
The 700 MHz spectrum was freed up as part of the transition from analogue to digital terrestrial television broadcasting. Over a series of consultations between 2009 and 2013, it was determined the best use of this spectrum was for LTE (4G) cellular mobile networks — with the band configured according to the Asia-Pacific Telecommunity (APT) band plan.
The first consultations in 2009 — run jointly by Radio Spectrum Management (RSM) and the Ministry for Culture and Heritage — resulted in the decision to reallocate the 700 MHz band to new uses.
In 2011, we consulted on the best way to allocate the 700 MHz band, including band planning and any public policy set-asides.
Consultation on the detailed auction design was run by RSM, also in 2011.
At the same time, we released a technical report into coexistence between 4G-LTE in the 700 MHz band and existing fixed links in the KK band above 806 MHz.
The APT band plan for the 700 MHz band enabled 2 x 45 MHz to be auctioned for 4G network. The spectrum was configured in nine lots of 2 x 5 MHz spectrum
The auction was structured as a simplified combinatorial clock auction (CCA) with 3 phases:
- Phases 1 and 2 identified how much spectrum each bidder would purchased.
- Phase 3 identified where in the band their spectrum would be placed.
The CCA was a new auction design for New Zealand, following similar auction designs used overseas.
700 MHz: Auction Catalogue [PDF, 1.7 MB] (includes detailed auction rules)
An acquisition limit or “spectrum cap” was applied to each bidder, which restricted the amount of spectrum any one bidder could obtain through the auction. In addition, implementation requirements were imposed on all lots to ensure that the spectrum was put to use in a timely manner for the benefit of consumers.
Successful bidders were also able to pay for their spectrum over 5 years. While common internationally, this auction was the first time such payment terms had been used for cellular management rights in New Zealand.
The 3 phases of the auction were:
Phase 1: Clock Allocation Phase
Bids were invited for the 9 lots of 2 x 5 MHz of generic spectrum at the reserve price of $22 million (plus GST). Bidding continued until demand was equal to or less than supply. For this phase, an acquisition limit of 3 lots was imposed.
Phase 2: Supplementary Allocation Phase
If there were unsold lots after Phase 1, the government had the discretion to raise the acquisition limit to 4 lots and offer the unsold lot(s) again, starting at $22 million (plus GST). Bidding continued until demand equalled supply. Bids were conditional on clearance by the Commerce Commission, if a bidder chose to apply for such clearance prior to the phase commencing.
Phase 3: Combinatorial Assignment Phase
In Phase 3, bids were placed in a single round for bidders preferred placement (frequencies) in the band. The outcome was decided by the combination of bids that achieved the highest revenue.
Placement combinations were advised by the government. Lots purchased by each bidder were placed in contiguous frequencies. The government retained the right to not offer some placement combinations which it exercised in this round.
Auction 12 results
Three bidders registered to bid in the auction — 2degrees, Telecom (now known as Spark), and Vodafone.
- In Phase 1, Telecom and Vodafone each bid for 3 lots, and 2degrees bid for 2 lots, at a reserve price of $22 million (plus GST) per lot. This left one lot unsold.
- In Phase 2, in the 62nd bidding round, Telecom won the bidding at a price of $83 million (plus GST). Telecom applied for clearance from the Commerce Commission for their acquisition, which was subsequently granted on 30 May 2014.
- Phase 3 resulted in Telecom being assigned the bottom position in the band, Vodafone the middle, and 2degrees the top.
|Bidder||Phase 1 results (price)||Phase 2 results (price)||Phase 3 results (price)||Total lots won (total price)|
- September 2010 announcement(external link) – Digital switchover.
- August 2011 announcement(external link) – Discussion document released.
- February 2013 announcement(external link) – Auction confirmed.
- May 2013 announcement(external link) – Consultation.
- September 2013 announcement(external link) – Auction timing and details.
- September 2013 announcement(external link) – Waitangi Tribunal findings (WAI 2224).
- October 2013 announcement(external link) – Phase 1 results.
- November 2013 announcement(external link) – Phase 2 announced.
- January 2014 announcement(external link) - Phase 2 results.
- May 2014 announcement(external link) – Assignment round options.
- June 2014 announcement(external link) - Auction completed.