New Zealand mobile telcos will be expected to pay a collective minimum of NZ$198 million for 45MHz of the 700MHz spectrum band that will go up for auction beginning on October 29.
The NZ government doesn't look to be getting a major return on the spectrum sale, with Communications Minister Amy Adams saying today that the government has spent NZ$157 million in clearing the spectrum through the switch-over to digital TV.
The spectrum will be auctioned off in nine lots of 2x 5MHz spectrum blocks, each with a reserve price of NZ$22 million.
"In setting the reserve price, we have balanced generating a fair return on the sale of the spectrum rights with the significant investment required by mobile network operators to build the 4G network infrastructure," Adams said.
"The reserve price also takes into account the value to New Zealand of having 4G connectivity widely deployed."
Access to the spectrum will commence one year before 700MHz is available in Australia, in January 2014, and will be set over a period of 18 years.
Despite the early launch date, Telecom NZ has already indicated that the 700MHz 4G spectrum, which is stacked differently to the 700MHz spectrum band in the US, will not be able to be used until there is greater device availability, which the company estimated will come into market in mid- to late 2014.
The bidders will initially only be allowed to bid for a maximum of three lots of 2x 5MHz spectrum, but if any spectrum is left over, this may be increased to four.
Any telco that wins three lots must build at least five new base stations every year for five years in areas that don't have mobile coverage, under the auction rules. If a bidder wins four lots, they will need to build 10 new sites per year over five years.
It is expected that Vodafone NZ, Telecom NZ, and 2degrees will all participate in the auction process, but if any new players enter the market, the auction process will require them to build a new network out to 50 percent of New Zealanders in five years.
Existing providers will need to ensure that 75 percent of their rural 2G and 3G sites are upgraded to 4G within five years.
The telcos will get five years to pay for the spectrum, with interest.
Registration for the auction is set to open on September 11.
Australia's auction of spectrum in the 700MHz and 2.5GHz bands came under criticism for the government setting the reserve price higher than had been expected. The government ultimately picked up AU$1.96 billion from the auction, with 30MHz worth of the 700MHz spectrum left unsold.