By Lucy Craymer 
 

WELLINGTON, New Zealand--New Zealand is going ahead with plans to auction off radio spectrum ear-marked for fourth generation mobile networks despite indigenous Maori tribes continuing to assert their ownership of the radio waves.

Amy Adams, government minister responsible for technology, said Wednesday that an auction was scheduled to start on Oct. 29. A reserve price of 22 million New Zealand dollars (US$17 million) will be set for each of the nine lots of spectrum up for auction.

"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," Ms. Adams said.

The auction has been marred in controversy.

According to Maori, the government doesn't have the authority to auction off spectrum because Britain guaranteed the rights of unspecified national resources to New Zealand's first people in a landmark 173-year-old treaty, the Treaty of Waitangi. Maori say that makes the spectrum their rightful property, even though the pact predates the invention of the radio by several decades.

The case is currently before the Waitangi Tribunal, a commission that deals with grievances raised by the indigenous Maori population, and although no decision has been made or any time frame given for the case to be heard, the government has opted to proceed with the auction. Ms. Adams has previously said she didn't believe Maori had rights to the spectrum under the treaty.

The auction has been keenly anticipated by the market, with only limited 4G services currently available. Major players Vodafone New Zealand, a subsidiary of U.K.-based Vodafone Group. (VOD.LN), and Telecom New Zealand Ltd. (TEL.NZ)--both of which do offer 4G services already--have confirmed they will participate in the auction. The auction is expected to provide sufficient spectrum so that at least 90% of New Zealanders will have access to the network and faster broadband within five years.

Successful bidders will have five years in which to pay for their spectrum under a plan to encourage new and non-cellular operators to participate in the auction. However, bidders who acquire three or more lots must build at least five new cell sites a year over a five-year period, a government release says.

Due to New Zealand's hilly terrain and small, scattered population there are areas in the country that don't have access to a cellular phone service or anything but dial-up internet. The government has committed to improving this, launching a rural broadband initiative during its previous term.

Write to Lucy Craymer at lucy.craymer@wsj.com

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