Government opts for short-term 5G spectrum auction

Two year spectrum licences to get carriers started

In March, New Zealand’s government will hold a 5G spectrum auction with 16 10MHz blocks in the 3.5GHz band.

It’s an unusual spectrum auction. Most past spectrum auctions in New Zealand have been for 20-year licences. This time, the licences are for two years.

The reason for this is that the industry is pressuring government to release the spectrum they need for 5G mobile services.

Treaty claims

At the same time, the government has yet to reach a Treaty of Waitangi settlement with iwi over spectrum. Selling short-term licences buys time to complete negotiations.

Each of the 16 10MHz blocks has a reserve price of $250,000. Bidders need to deposit $500,000 to take part in the auction.

If everything sells at the reserve price, the government will raise $4 million. Prices can go higher. The last time spectrum was auctioned prices went much higher.

No single bidder will be able to buy more than four blocks in the first 5G spectrum auction round. This is less than the 80MHz to 100MHz recommended for full 5G services by the GSMA, an international mobile operator trade association.

The rights are not tradable, are nationwide and buyers must use them for 5G mobile services.

Another 5G spectrum auction later

Licence terms start later this year and finish at the end of October 2022. The government will hold a further, long-term auction for the spectrum that year. The government says it expects to free up more spectrum later.

Bidders in the March auction will have to return existing 3.5 GHz management rights to the government.

This affects Vodafone more than any other carrier. It is possible Vodafone’s existing 3.5 MHz holding will fall. Returning existing spectrum will help flatten the playing field. There will be a refund for returned management rights.

Radio Spectrum Management, part of the Ministry of Business, Innovation and Employment, will use a simplified version’s of a combinatorial clock auction. In effect, this starts with the seller offering blocks at the reserve price. If the demand for blocks is greater than the supply, it increases the price.

Beyond the three mobile carriers

New Zealand has three existing mobile networks. There are 16 spectrum blocks on sale and each bidder can buy four in the first auction round. That means the government expects a fourth buyer to enter the auction.

This is a departure. The earlier auction for 700 MHz band spectrum was tailored to cater for the three mobile carriers; Spark, Vodafone and 2degrees.

The obvious candidate is Dense Air. The company owns 70 MHz of 2.5 GHz spectrum. At the moment Dense Air acts as a wholesaler to the mobile carriers. Spark’s tiny South Island fixed wireless broadband 5G project uses Dense Air spectrum.

Other parties may be interested in the spectrum. Few of New Zealand’s Wisps could afford the $500,000 deposit or the $250,000 per block asking price. Yet if they were to act collectively a bit might be possible.

If the government doesn’t sell all 16 lots in the first auction round, it may offer them to existing bidders.

Given that the amount of spectrum being auctioned is not enough for carriers to offer a full blown 5G service, it looks as if will be some time before New Zealand gets all the benefits of the technology. There’s enough bandwidth for fast data speeds, but, as things stand, maybe not enough for carriers to deliver the gigabit plus speeds 5G hype has promised.

Preparing for life after copper

The Commerce Commission is preparing a copper withdrawal code. It says it expects to issue a draft code soon. The code sets out consumer protections for after Chorus stops supplying copper services. The earliest this can happen will be from the middle of this year.

Chorus can only stop copper services in areas where fibre is available and where it can connect a home to fibre at no charge. At the same time Chorus is free to choose to keep copper services.

Vodafone back in mobile market pole position

Telcowatch reports Vodafone has regained head-to-head leadership of New Zealand's mobile market. The latest report says Vodafone had a market share of 36.8 percent in December. That puts it ahead of Spark on 34.9 percent.

Vodafone and Spark have been jockeying for top spot in recent years. Complicating matters is Spark's Skinny brand which has 5.6 percent market share. Skinny was the fastest growing carrier in 2019, although from a low base. 2degrees' performance was flat over the year. It ended on 22.7 percent.

Spark Foundation sells Givealittle

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King is Vodafone's people person

Jodie King, Air New Zealand's chief people officer, is to move to Vodafone. She replaces Antony Welton, who has moved to become Vodafone's customer operations director. King spent six years at Air New Zealand, before that she spent 16 years at KPMG in London.