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New Zealand’s 700 MHz spectrum auction is due to start today. The auction is for nine parcels of 5 MHz paired spectrum. Each parcel has a reserve price of $22 million. That’s a total of $198 million. Few expect the auction to raise much more than that figure.

In the first round of bidding each bidder is limited to buying three parcels of the spectrum. With only Telecom NZ, Vodafone and 2degrees registered to bid, there are unlikely to be many surprises.

The only unknown is whether 2degrees is able to buy its full allocation of 15 Mhz paired for $66 million. Should it fail to do so, Telecom NZ and Vodafone will each be invited to bid for an additional 5 MHz block.

The 700 Mhz spectrum became available after New Zealand switched from analogue to digital television broadcasting. 700 MHz is especially well-suited to 4G mobile data networks, particularly in less densely populated rural areas because signals can travel further.  Or to put it another way, carriers can cover the same amount of ground with less physical infrastructure.

There are some interesting auction rules requiring successful bidders to increase their network coverage. For more details, see the Radio Spectrum Management website.