In March, New Zealand's government will auction 16 10MHz blocks of spectrum 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 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.
More spectrum 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 3.5GHz management rights to the government.
This affects Vodafone more than any other carrier. It is possible Vodafone's existing 3.5MHz 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 Wisps1 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.
Wisps are small, local wireless internet service providers. They cover rural and remote gaps in markets not served or
poorly served by bigger telcos.
What New Zealand's 2020 5G spectrum auction reveals was first posted at billbennett.co.nz.