The government has allocated part of the 5G radio spectrum to major telecommunications companies instead of holding a revenue-generating auction.

The big three mobile network operators Spark, Vodafone and 2degrees, will get a 20-year term on condition that rural and small town broadband connectivity is improved.

The Interim Maori Spectrum Commission and infrastructure wholesaler Dense Air will also get allocations.

Chief executive of the Telecommunications Users Association, Craig Young, said he hoped the money saved by the telcos would be spent on increasing the pace of the 5G roll-out to small towns and rural areas.

"We've been arguing for quite a while now that spectrum auctions are really just revenue grabs because the money doesn't go to help users it just disappears into the government's coffers," Young said.

"We're pretty happy with the fact the government has taken a different approach with this."

If telcos were getting the spectrum for a token amount, Young wanted the government to tie them down on specific commitments on what benefits it will bring the consumer.

"This will hopefully bring the roll-out of improved services like 5G significantly quicker because one, the telcos now know what they've got in terms of spectrum.

"Secondly, they know what they've got to spend.

"That's the critical piece that I'm waiting to see what the government does."

Minister of Digital Economy and Communications David Clark said many more New Zealanders would gain access to the speed, capacity and reliability of 5G services as a result of the agreement.

"As part of the new agreement, our three major mobile network operators - Spark, 2degrees and Vodafone - will be required to increase the pace of the 5G roll-out to small towns across New Zealand. There is also an expectation they will continue efforts to improve rural connectivity," Clark said.

The details of this long-term allocation will continue to be worked through over the coming months as the Crown negotiates final contracts with the parties involved.

PHOTO: RNZ / Nate McKinnon