Between the lines: Territory staked for 3G madness

By PETER GRIFFIN

Proponents of the over-hyped world of "3G" envisage us videoconferencing, trading shares and downloading MP3s via our mobile phones within a couple of years.

It's not all that unrealistic - it's already happening in Tokyo, thanks to mobile operator NTT DoCoMo and to the Japanese fixation with new and expensive gadgets.

When the high-speed wireless madness reaches New Zealand, competition for the next generation customer will be fierce.

Vodafone, Telecom and TelstraClear have all secured third-generation radio spectrum to make sure they are in the game from day one.

But a shuffling of spectrum management rights this week has knocked on the head the chance of another operator entering the fray.

TelstraClear has just off-loaded a chunk of its radio spectrum to Vodafone, effectively sewing up the market for 3G spectrum - and to the whizz-bang services that run over it.

TelstraClear shed the management rights to a 5MHz section of 3G (third generation) spectrum for an undisclosed sum (but probably a lot less than it bought it for, or it would be crowing about the sale).

The company was forced to sell the spectrum to comply with Government rules stipulating that any one telco can own a maximum of 15MHz of 3G spectrum.

In last year's spectrum auction, Clear bought 10MHz of 3G spectrum for $10.05 million and TelstraSaturn bought 10MHz for $8.33 million - giving the merged business 20MHz of spectrum. That is too much under the rules.

The sale leaves the market with three companies, Telecom, Vodafone and TelstraClear - each with 15 MHz helpings of 3G spectrum - and fledgling player Econet Wireless, which has access to a further 15MHz block through its partnership with the Hautaki Trust.

But had the sale gone differently, there may have been potential for a fifth competitor.

TelstraClear indicated it was willing to sell a 10 MHz chunk of spectrum, leaving it with enough to run a next generation network but allowing another company to establish one as well.

Some will say four is enough in a small and crowded market such as New Zealand, but a 10MHz slice could have given Walker Wireless, TVNZ's transmission arm BCL or anyone else a platform to deliver 3G services. And we all think competition is good - don't we?

Maybe the Government should have jumped in, picked up that 10MHz block and put it back on the shelf ready for the day when a new competitor starts eyeing the New Zealand market.

But it's "market reality" shout the analysts, who say the chance of the market supporting another company is slim.

Maybe so, but no one knows where 3G will take us, and an auction process flawed from the outset has given a few players the entire show.

Game over for now. Let's just hope our resident telcos decide to use the invisible resources on which they are sitting some time soon.