Cellular Rights Renewal Gives Greater Certainty - Minister of Communications Media Statement

Government decisions on the renewal of cellular spectrum rights provide for better use of under-used mobile spectrum, says Communications Minister David Cunliffe.

"The government will re-auction some under-used cellular rights in the 800 and 900 MHz spectrum bands when they expire in 2011 and 2012," Mr Cunliffe says.

Mr Cunliffe says 7.5 MHz of the cellular spectrum in each of the 800 MHz and 900 MHz bands will not be offered for renewal to Telecom and Vodafone. Instead they will be freed up to the open market and reallocated by way of an auction which will be open to all interested parties, including Telecom and Vodafone.

"This decision has been made after a case-by-case review of spectrum holdings in the 800 and 900 spectrum bands. Analyses carried out during this review indicated that Telecom and Vodafone were not fully or efficiently utilising their existing spectrum holdings.

"Potential market entrants have shown significant interest in gaining access to the 800 and 900 MHz bands, as these bands are considered to be more economic for providing coverage to lower population density areas.

"Reallocating some of the spectrum rights by auction or secondary market trade will provide an opportunity to test the market interest in these bands and improve the potential for new entrants."

Mr Cunliffe said it was possible Telecom and Vodafone would want to on-sell their cellular rights through secondary market transactions, so an incentive has been provided for existing holders to arrange an early secondary market transaction, rather than face a later auction.

"The Labour-led government's approach is designed to encourage investment in cellular services using the cellular spectrum in the 800 and 900 MHz bands.

"Freeing up 7.5 MHz in each band is the best way to improve this as it provides sufficient certainty for incumbents while also making the mobile market more attractive and accessible for new entrants," Mr Cunliffe said.

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