The third auction was held in July 2000 and was New Zealand's answer to the astonishing excesses of the European third-generation (3G) spectrum sales which netted billions of dollars. It was a tame affair cash-wise, which is no bad thing. The Euro telcos are currently scrabbling to make ends meet and avoid a WorldCom style fiery death by begging the very countries that sold the spectrum in the first place to give them tax breaks. It's entertaining to watch from afar but not very helpful when it comes to the future of the industry.
Our own auction didn't raise nearly that level of capital or interest and no sooner was it under way than the telcos began playing fast and loose with the rules in an attempt to keep it going for as long as possible. We gasped as companies bid for a lot and then dropped their bid, plunging the price back to the starting point. We watched in awe as companies waited till the very last moment before placing bids in order to annoy the auction manager. We giggled maniacally as they fought over neighbouring lots and justified their decisions to bid/not bid on a daily basis.
The next auction, due to start on July 23, should be a more streamlined affair with far less nonsense, which will be good, because the technology it will unleash is important to the country.
The auction will be split into four sub-auctions, any of which can end after a clear round with no bids or withdrawals. That should see companies unable to extend the fun and games for too long. Companies will also be unable to repeatedly bid and withdraw from a lot. The new rules limit bidders to three withdrawals and after that they're out of the race. Companies also won't be able to sit on the sidelines and watch; if they don't bid they're also heading for an early shower.
The division is based on potential technological use. The least interesting lot is the left over "lot 10" from the last auction. Lot 10 was an unpaired lot in the less desirable 2G space that didn't offer quite as much as its paired rivals. Bidders seemed to use it as nothing more than a stop gap bidding measure so they could keep the auction going for another round without bidding up the price of something they actually wanted. Consequently as the auction neared its conclusion everyone bailed out and so Lot 10 has been added to this auction.
More interesting is the other 2G lot on offer. Only 10MHz wide, the 890MHz to 900MHz band was abandoned by the cellphone companies after interference issues got in the way. Technology has marched on since the early 90s, however, and it's up for grabs again, to complement existing GSM or D-AMPS networks.
Moving up the food chain it's the last two sub-groups that are most interesting, I think. The 3.4 to 3.6GHz range is described as being "ideal" for wireless local loop (WLL) technology, with up to 11 paired blocks, each of 7MHz bandwidth, being available.
Buyers are limited to three lots in this band, but with that kind of capability it should open up wireless technology in areas that the copper network doesn't reach. BCL, Vodafone and Walker Wireless are all registered bidders, along with Compass Communications, which is reported to have bought Radionet. Interestingly, Radionet's former managing director, Leicester Chatfield, has re-surfaced as a "principal or beneficial owner" of UCC (2001), another registered bidder. It will be intriguing to see that particular battle played out.
TelstraClear is likely to be a keen bidder for the final sub-group, the 24.5 to 26.4GHz range, which is described as ideal for LMDS (local multipoint distribution service). TelstraClear has inherited Clear's LMDS capability, for better or worse. Clear had a peculiar approach to marketing its broadband offerings. They were all bundled under the name Tempest and it wasn't up to the customer to choose whether they wanted fibre, DSL or LMDS; they got what the telco deemed appropriate service. That makes it quite hard to tell just how successful LMDS has been for the number two telco. A trial with Social Welfare ended some time ago without the government agency taking up the technology. Whether TelstraClear will push LMDS as a viable alternative to the local loop in some areas remains to be seen.
Interestingly, Telecom has not signed up to take part.
More on the auction can be found here.