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Broadband Services in Rural and Provincial Areas

7 November 2007

Broadband Services in Rural and Provincial Areas

The government is now seeking applications for radio spectrum licences for broadband wireless access services in rural and provincial areas, Communications and Information Technology Minister David Cunliffe announced today.

“The government has a further 77 lots of radio spectrum licences in the 3.5 GHz band to assign for commercial broadband wireless services,” said Communications and Information Technology Minister David Cunliffe.

“These licences have been created to facilitate the roll-out of more high-speed internet services to New Zealanders, and in particular to rural and provincial areas. In doing so they should promote greater competition for broadband services in these areas.”

The government has created two lots of licences in the 3.5 GHz spectrum band for each of the 74 territorial local authority areas, i.e., a total of 148 lots. Each lot comprises a pair of 7.5 MHz licences.

“A first round assignment of 71 lots was completed in 2006. Applications are now open for the second assignment round for the remaining 77 lots,” said Mr Cunliffe.

“Interested parties have four weeks, or until 4.00pm on Wednesday 5 December 2007 in which to make an application. “

“This allocation of spectrum is designed for those parties who may not have had the incentives or resources to acquire nationwide rights previously. I encourage all parties who have an interest in providing wireless broadband services in their local area to look at applying for these licences,” said Mr Cunliffe.

Full details of the second assignment round, including the allocation rules, prices and an application form, are available on the Ministry of Economic Development’s radio spectrum website at www.rsm.govt.nz

Questions and answers regarding the Second Assignment Round of 3.5 GHz spectrum licences.

1. What is ‘broadband wireless access’?
Broadband wireless access (BWA) is the use of wireless communications to deliver broadband services to individual customers.

2. What is an area spectrum licence?
This is a form of radio-communications licence, defined by the geographic boundary of a Territorial Local Authority area). The licence holder will be entitled to operate a BWA service within those boundaries until October 2022.

3. Is a licence the same as a lot?
No. Each lot contains two licences, to accommodate two-way broadband traffic.

4. How many lots can applicants apply for?
In total, applicants (including any associations – as defined in section 1 of the Allocation Rules) may own one or both of the lots in no more than ten Territorial Local Authority areas (a maximum of 20). This includes any lots they may already have acquired during the first assignment round.

5. Are there any restrictions on applicants?
Yes. If an applicant has a controlling interest in sufficient alternative spectrum rights or radio licences (excluding general user rights and licences) for the provision of broadband services, or in a substitute broadband delivery system (as defined in section 14 of the Allocation Rules), it cannot participate in this allocation. Successful applicants from the first round who failed to settle are also excluded.

6. In the first round, lots had to be contiguous. Does this still apply?
No. There is less opportunity for ‘cherry picking’ in round two and many of the remaining lots are isolated so it is not possible for them to be sold as contiguous lots.

7. What happens if there is only one applicant for a lot?
The lot will be assigned to that applicant at its reserve price.

8. What happens if there is more than one applicant for a lot?
The applicants will be offered the opportunity to negotiate assignment of the lot to a single applicant. For example, it may be possible for applicants to agree to cooperate and operate a shared service. Should there be no such solution by February 2008, then the lot in question will be offered at tender.

9. What is a statutory declaration?
This is a declaration, on oath, by the applicant that they meet all of the required conditions. To supply false or misleading information is punishable by law. A template is provided as part of the application pack.


10. What is a Certificate of Deposit?
This is a document provided under the seal of a trading bank, chartered accountant or solicitor attesting to the deposit in an independent trust account of sufficient funds to cover the reserve prices of the lots applied for. These funds may not be withdrawn until the applicant has been notified of the final result of its application.

11. What is a ‘single-round closed tender’?
Licences for which there is more than one applicant will be offered at tender in February 2008. Each applicant affected will be sent a bidding sheet on which to mark up to five different selections of lots and specify a bid for each selection. Bidding software will be employed to calculate an optimum outcome (highest bids with maximum coverage). In the event that two or more outcomes of equal value are calculated, a legally supervised draw will determine the result.

12. What happens if a licence holder fails to establish a BWA service within two years?
They will lose the licence without compensation, although a short extension may be granted, subject to Ministry of Economic Development approval.

13. Can a licence be sold, leased or the ownership otherwise be transferred?
Only after two years and only if the licence owner has successfully established a BWA service.

ENDS


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