Govt warned not to 'hype' spectrum auction

Britain's $70 billion phone auction frenzy is unlikely to be repeated here, say analysts and phone companies.

Britain's $70 billion phone auction frenzy is unlikely to be repeated here, say analysts and phone companies.

Last month's auction was for the third generation of mobile services in the UK, which will allow full Internet access, email and video services through handsets with large screens.

New Zealand's auction, to be held in July, is only expected to raise $100 million, instead of several billion dollars it could earn if it was as hotly contested.

Kiwi phone companies and Tuanz chairman Ernie Newman are anxious to avoid talking up a bidding war, fearing higher licence charges will mean higher charges for phone users.

Critics have branded the UK government's windfall - 10 times what it had budgeted for and five times what analysts had expected - as a hidden "telephone tax" on the UK population.

All four existing UK mobile operators - Vodaphone Airtouch, BT, Orange and One2One - secured a licence, together with newcomer TIW of Canada. TIW paid $13.2 billion, Vodaphone paid $18 billion and the others paid over $12 billion for their licences - an amount totalling more than $3000 for each UK household.

However, Australian telecommunications analyst Paul Budde believes the Kiwi auction will only raise around $100 million, saying circumstances here are radically different. This approximates at around $100 per Kiwi household.

Budde says the British experience was "mind boggling. The reason people are bidding so high is they expect the majority of voice services will be transferred from the fixed system to the mobile system."

The UK auction had 13 initial bidders, but Budde says New Zealand could expect only three to five bidders, with a similar number of licences available.

Budde bases his $100 million forecast on it being a third of the expected $300 to $400 million cost of setting up the system.

Newman says: "If the government hypes up or talks up the auction, they are in effect taxing cellphone users because . the cost of the premium will fall back on the users."

Phone companies also played down the UK auction and declined to comment on whether they would take part. Telecom spokesman Gerry Eller says the UK prices were "excessive and would not be sustainable in New Zealand". Deanne Weir of Telstra-Saturn agrees, and Vodaphone spokesman Mark Champion says: "Let's watch [the auction] unfold rather than be speculative."

A spokesperson for acting Communication's Minister Trevor Mallard, says the government has not made a budgeted or estimated figure for the sale, "because no one knows what it's going to be worth".

However, she confirmed speculation that the spectrum could raise $50 to $200 million.

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