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Comment on IHUG and Spectrum Auction

26 June 2000 Media Statement
Comment on IHUG and Spectrum Auction

The Crown says it will defend any proceedings brought by IHUG over the 2 GHz spectrum auction.

IHUG is launching a legal challenge against next month's auction of the radio frequencies.

The Government today confirmed its earlier decision not to introduce a competition rule for second generation (2G) mobile spectrum in the auction.

Acting Minister of Communications Trevor Mallard said there had been thorough consultation with industry on competition issues surrounding the 2 GHz auction.

“At the end of February the Government decided to place a cap on acquisition of spectrum in the auction suitable for third generation (3G) mobile services," he said.

“Following that IHUG asked the Government to consider a similar measure for 2G spectrum.

“After considering industry submissions on the issue, the Government decided in mid-May not to introduce a 2G competition rule.

“We did look at two possible rules: a spectrum cap; and a preferential block (reserved for a new entrant). The Government decided not to adopt either.

“A cap would not guarantee that a new entrant would obtain the clearest spectrum at the auction.

“A preferential block was considered not suitable as the clearest block of spectrum that might help a new entrant to establish a service overlapped with spectrum that could be used for 2G/3G USPCS services.

“IHUG has since made further submissions arguing in favour of a spectrum cap. These submissions have also been given full and fair consideration.

“While it could be desirable for a new entrant to provide mobile services prior to the introduction of 3G services, it is uncertain whether an effective competitor can be established in that period.

“This is because of the high level of encumbrance in these bands by fixed service operators.

“The Government considers that further delay in holding the auction may hold-up the introduction of 3G services, and risk damaging New Zealand’s credibility with international investors.

“Given the extensive consultation undertaken with IHUG I am confident there are no grounds on which to base a judicial review of the Government’s decisions," Trevor Mallard said.


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