15MHz 3G spectrum cap will continue until May 2010

Extension on the cap to promote competition in the future market for 3G mobile telephony services

The 15MHz spectrum cap that applies to 3G radio spectrum will continue for a further three-year period until May 2010, says Communications Minister David Cunliffe.

The decision came very quickly after a review of the need to maintain the 3G spectrum cap in respect of the 3G spectrum management rights, held by a number of telecommunications services providers.

On 26 January 2007, the Ministry of Economic Development invited comments from the industry about extending the cap for a further three years. The period for comments closed 2 February and the decision was made public today, 9 February.

The cap of 15MHz was initially set for a period of three years, as set out in management right deeds between the Crown and successful bidders. The Crown reserved the right to extend the caps for a further period should that prove to be necessary to continue to facilitate workable or effective competition as a condition of selling the management rights, says the MED.

"In making the decision to extend the cap until 2010, the government took into account the special features of the 3G services market," says Cunliffe.

"These included the limited amount of spectrum available for use in 3G cellular services, the price performance of cellular services compared to other OECD countries, the slow development of the 3G market, and the views of existing 3G spectrum rights holders.

"Given the potential importance of 3G technologies for the economic development of New Zealand, the…government wants to ensure that conditions that promote competitive entry into this market are maintained.

"While the market is developing, it is in the interests of consumers to ensure that potential future entrants will have access to appropriate spectrum," he says.

The government will conduct a further review before May 2010 to assess whether the market for 3G services has by then developed sufficiently to enable reliance on the Commerce Act, says MED.

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