Why 4G auction is at risk from ill-conceived Waitangi claim

Any day now the Waitangi Tribunal will decide whether to grant an urgent hearing on the recently reactivated Māori claim for a slice of 700 MHz fourth generation digital spectrum.  

If they do grant urgency that puts the Government’s intended spectrum auction at serious risk.

The claim itself is poorly conceived and represents, at least in part, an attempt to game the judicial process to extract concessions which won’t actually deliver lasting benefits to Māori.

In February the Government announced its intention to auction the 700 MHz spectrum in the third quarter of this year.  Subsequently, Ministers signalled the auction would likely take place in September or October.

The Government also confirmed no specific allocation of 4G spectrum would be set aside for Māori stakeholders.  Instead, the Government signalled using the proceeds of the auction to establish a $30 million fund to promote and support Māori language and culture in a digital world and to assist Māori to leverage potential benefits from 4G technology.

Ministers argued, in keeping with the view of successive governments that spectrum is not a taonga, it does not follow Māori require further spectrum to be set aside in order to protect the Māori language and culture.

Unlike earlier claims where spectrum was required to deliver substantive Māori radio and TV content, 4G spectrum is not broadcasting spectrum.  It is digital spectrum used for person-to-person mobile calling and the accessing, viewing and downloading of digital content. 

Ownership of digital spectrum is not required to enable Māori to make mobile calls or to either access or download Māori language or cultural content.  Instead, the Government’s $30 million fund is aimed at developing Māori innovation and digital content to be made available over 4G mobile networks.

Rather than respond to the Government’s February announcement at that time, the claimants waited until July – potentially just two months before the planned auction – to re-activate their claim with the Waitangi Tribunal and seek 33 per cent of the spectrum at no cost. 

This in itself suggests an attempt to game the process, to gain leverage and extract concessions from the Government under a threat of the auction proceeding under the cloud of ongoing litigation and a potentially lower return to taxpayers from the auction itself.

In this context it is worth noting that the Waitangi Tribunal can only make recommendations in this area – it cannot bind the Crown. 

And while the Waitangi Tribunal has asserted spectrum is a taonga, the courts have not.  In the 1994 Broadcasting Assets case the Privy Council held spectrum was important as a means of broadcasting and thereby protecting the Māori language and culture. 

The court did not find spectrum to be a taonga in its own right.

At best, if the matter ends up before the courts, all the courts are likely to do is enquire into whether the Crown has actively turned its mind to protection of the Māori language and taken reasonable steps to do so.  The fact the Government has set aside $30 million from the proceeds of the auction to, at least in part, protect the language is a clear demonstration that it has.

The prospect of successful litigation leading to an allocation of 4G spectrum to the claimants is therefore low, further lending credence to the view the claimants are using the potential threat of seeking injunctive relief to frustrate the auction itself rather than any genuine expectation of succeeding in a substantive court hearing.

In this context, asserting an ownership stake in 33 per cent of 700 MHz spectrum lacks credibility.  Even if the claimants obtained some of the spectrum they lack any realistic ability to raise the estimated $300 - $500 million capital needed to set up a sustainable 4G mobile network.

Almost certainly the claimants would simply on-sell the spectrum to 2Degrees, in which one of the claimants’ supporters, Hautaki Trust, has a 10 per cent stake.  In an auction with only three likely bidders – Telecom, Vodafone and 2Degrees – this would distort the auction dynamic and competition within the resulting 4G mobile market.

So what benefit can the claimants deliver to their constituents should they succeed in their case? 

In recent years Hautaki Trust’s interest in 2Degrees is thought to have resulted in either very modest or no return on investment.  A recent annual report cites the ongoing lack of return as a concern.

In their attempt to leverage the Waitangi Tribunal and court process, the claimants are willing to put at risk an undertaking by the Government to provide a $30 million development and innovation fund from the proceeds of the auction that would deliver much greater economic and cultural benefits to Māori. 

Instead of bringing such an ill-conceived claim they should take up the opportunity offered by the Government.

John Harbord worked for five years in the Beehive, including two years as senior advisor to the Prime Minister and three years as advisor to the Attorney-General.  He is a consultant at commercial and public law specialists Franks and Ogilvie.