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2GHz AUCTION: INFORMATION SHEET

2GHz AUCTION: INFORMATION SHEET

Maori Issues

A representative Maori trust will be given the exclusive right to purchase 15MHz of IMT 2000 (3G) spectrum (“special block”) to help promote Maori participation in the “knowledge economy”.

In order to acquire the 20 year management right in relation to this block, the trust will be required to pay a price equivalent to the average price of other 3G spectrum realised at the auction, less a discount of 5%.

This builds on Cabinet’s earlier decision that bidding in the special block be restricted to those could demonstrate a commitment to involve Maori in the development of the spectrum.

This decision recognises that Maori do not want to merely be the passive recipients of benefits that might accrue from the use of the spectrum.

The Government is taking this step because it wants to help close the gaps between Maori and non Maori by assisting Maori have an involvement in the development of the spectrum.

This initiative is not being taken for Treaty reasons. The Government does not accept that Maori are entitled to a share of the spectrum as a resource, as recommended by the Waitangi Tribunal.

Work is commencing immediately on the establishment of a trust.

Competition Issues

The Government was asked to look at whether acquisition restrictions should be extended to include 2G spectrum in the auction, but concluded that there was no compelling case for this.

Much of the 2G spectrum available in the auction is encumbered by existing fixed link operators who have various transitional rights in relation to these bands which will make establishing a new mobile network difficult.

A spectrum cap is unlikely to achieve the aim of a enabling a new operator to provide services because it will not guarantee that a new entrant will succeed in obtaining rights to the spectrum block most likely to be suitable for a new entrant (i.e. the block least encumbered by fixed services operators);

The other option, preferential access to the least encumbered block for a new 2G operator, would unreasonably preclude an existing operator from implementing 2G/3G USPCS technologies.


2GHz AUCTION: QUESTIONS AND ANSWERS


Maori Issues

Q. How much spectrum is being set aside for the trust?

A. One of the four 15 MHz blocks of IMT2000 or 3G spectrum in the auction. All blocks are broadly homogeneous, and expected to realise a similar value at auction.

Q. Does this decision establish a precedent for future spectrum disposals?

A. No. This is a one-off decision. The Government does not accept that Maori are entitled to a share of the spectrum under the Treaty, as was argued in the recent claim before the Waitangi Tribunal. The Government will continue to assess the utility of spectrum for promoting Maori language and culture, however.

Q. How will the proposed Maori trust acquire the “special block”?

A. By purchasing it from the Crown. The purchase price will be equivalent to the average price of other 3G spectrum realised at the auction, less a discount of 5%.

Q. Will the Maori organisations be subject to the same acquisition restrictions as non Maori entities?

A. Yes, to the extent that they wish to act commercially.

Q. What will be the purpose of the Maori trust?

A. The purpose of the trust will be to promote Maori development of 2GHz spectrum, with a view to increasing Maori participation in the knowledge economy. It is envisaged that the trust will be broadly representative of Maori and deliver benefits to Maori throughout New Zealand. In the long term, the trust may be able to support other Maori initiatives, e.g. by giving them financial security.

Q. How will the trust deliver benefits to Maori?

A. In order to develop the spectrum commercially, it will be necessary for the trust to develop a business arrangement with a strategic partner or partners. The details of such an arrangement is a matter for the trust to negotiate.

Q. How will the trust be established?

A. In order to get the trust up and running as soon as possible, Ministers have asked Bill Osborne to work with officials to establish the trust and appoint a commercial advisor to the trust. The Government, through Te Puni Kokiri, will be making $5m available to the trust to meet expenses through its establishment phase.

Q. What involvement will the Crown have in the running of the trust?

A. It is envisaged that initial appointments to the trust will be made by the Crown, after which Maori organisations with a stake in the purpose of the trust will have full governance responsibility. The trust will be accountable directly to all Maori throughout New Zealand.

Competition Issues

Q. Why has the Government decided not to introduce a competition rule on the acquisition of spectrum suitable for 2G mobile services in the 2 GHz auction?

A. The auction includes spectrum suitable for implementing 2G mobile technologies (from 1710 - 1785 and 1805 - 1880 MHz) which can support mobile telephony services similar to those currently provided by Vodafone
using the GSM standard. The Ministry of Economic Development recently consulted with industry on whether a competition rule should be implemented for this spectrum (similar to the cap of 15 MHz the Government has agreed to for third generation (3G) spectrum in the auction) in order to provide for a third cellular operator in New Zealand prior to the development of 3G services in New Zealand. Following this consultation the Government has decided not to implement a 2G competition rule because:

 much of the 2G spectrum available in the auction is encumbered by existing fixed link operators who have various transitional rights in relation to these bands which will make establishing a new mobile network difficult;

 a spectrum cap is unlikely to achieve the aim of a enabling a new operator to provide services because it will not guarantee that a new entrant will succeed in obtaining rights to the spectrum block most likely to be suitable for a new entrant (i.e. the block least encumbered by fixed services operators);

 the other option, preferential access to the least encumbered block for a new 2G operator, would unreasonably preclude an existing operator from implementing 2G/3G USPCS technologies.

ENDS

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