Minister denies link between Formus visit, radio spectrum sale

A month before the government announced it would auction a large chunk of high-bandwidth radio spectrum worth millions of dollars, Telecommunications Minister Maurice Williamson visited the Denver-based company which eventually bought the lion's share - Formus Communications. Now, Williamson's office denies that the government auctioned off the high-bandwidth spectrum at Formus' request.

A month before the government announced it would auction a large chunk of high-bandwidth radio spectrum worth millions of dollars, Telecommunications Minister Maurice Williamson visited the Denver-based company which eventually bought the lion’s share — Formus Communications. However, Williamson’s office denies that the government auctioned off the high-bandwidth spectrum at Formus’ request.

When the government first announced the auction last November, local telcos were up in arms saying the inclusion of the 26-28GHz spectrum had caught them unawares, leaving them with no time to prepare bidding strategies or business plans. Many wondered what had prompted the government’s swift decision.

BellSouth went as far as preparing to file an injunction against the auction, but it was then postponed by the Ministry of Commerce, which cited technical problems.

Computerworld has confirmed that while the minister was in the US last October receiving an award from the Institute of Government Innovation, he accepted an invitation from Formus to see a presentation on the company’s plans in the area of LMDS (local multipoint distribution service). His office says although he discussed the New Zealand market and the forthcoming auction, he was not asked to include the 26-28GHz bandwidth.

Formus Communications documentation dated last year states: “Formus has shown an interest in New Zealand because of the low barriers to entry into the relevant markets. It sees in New Zealand an opportunity to gain early experience in operating the new technology. Formus is therefore seeking an early inclusion of frequencies suitable for LMDS in a radio frequency auction and welcomes the New Zealand government’s recent agreement to include management rights for frequencies around 27GHz in the auction to be held in November 1997.”

Before the proposed auction, Chris Underwood of the Ministry of Commerce, which oversees radio spectrum, told Computerworld that the government was auctioning the 26-28GHz range due to market demand.

The auction went ahead in February this year, with one lot of 28GHz radio spectrum being bought by Clear Communications, and five lots being snapped up by US company Formus Communications for $2.4 million.

Since gaining the spectrum Formus has formed a New Zealand subsidiary, Hinet.

Computerworld understands the company will set up a high-bandwidth infrastructure upon which other companies can layer services such as high speed Internet access, digital subscription television, fax, voice or data transmission. It may also offer services itself.

Currently the company is involved in bidding for radio spectrum which is being auctioned in the US by the Federal Communications Commission.

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