This decision follows a review of the need to maintain the 3G specturm cap in respect of the 3G spectrum management rights that a number of telecommunications services providers hold.

The cap of 15MHz was initially set for a period of three years, as set out in management right deeds between the Crown and successful bidders. The Crown reserved the right to extend the caps for a further period should that prove to be necessary to continue to facilitate workable or effective competition as a condition of selling the management rights. The cap was consequently extended in 2004 for a further three years.

"In making the decision to extend the cap until 2010, the government took into account the special features of the 3G services market," Mr Cunliffe said.

"These included the limited amount of spectrum available for use in 3G cellular services, the price performance of cellular services compared to other OECD countries, the slow development of the 3G market, and the views of existing 3G spectrum rights holders.

"Given the potential importance of 3G technologies for the economic development of New Zealand, the Labour-led government wants to ensure that conditions that promote competitive entry into this market are maintained.

"While the market is developing, it is in the interests of consumers to ensure that potential future entrants will have access to appropriate specturm."

The government will conduct a further review prior to May 2010 to assess whether the market for 3G services has by then developed sufficiently to enable reliance on the Commerce act.