Ihug Abandons Failed Auction

27 November 2000

Ihug has today (Monday 27th) withdrawn from the Government's 2G and 3G spectrum auction.

The company has decided to abandon the auction following continued frustration over serious flaws in the auction rules and process.

Ihug Director Nick Wood says a 'window of opportunity' has been lost because of the inadequacies.

"The spectrum auction has staggered on for more than four and a half months," he says.

"Had it been established on the basis of fair competition from the start, we would not be left stranded with a stalled bidding process.

"Ihug was among those who made clear submissions on this issue. Those early warnings were ignored, to the detriment of all involved."

Mr Wood says the real advantages of rapidly launching a competing 2G network are fast disappearing.

"Telecom is now four months closer to the launch of their CDMA network and the whole world is edging closer to the commercial availability of 3G network services," he says.

"The Ministry's strategy of increasing the number of rounds per day, and high incremental bids, has done nothing to help bring the auction to a close.

"Moving the auction to one clear round will still not prevent placement of one bid on a fixed link every round for 1000 rounds without repeat bidding."

Ihug - New Zealand's second largest Internet service provider - today confirmed it is now pursuing new options. The company has not ruled out the possibility of new joint partnerships.

ENDS

*In July this year, Ihug mounted a legal challenge against the spectrum auction, claiming the Government had backtracked on earlier assurances that the auction would not be anti-competitive.

Ihug's main concern focused on the Government's failure to implement any second generation (2G) spectrum protections in the upcoming auction process.

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