web analytics

Bill Bennett

Menu

Tag: government

MBIE responds to NZ mobile spectrum question

Len Starling, policy and planning manager at the Radio Spectrum Management division of the Ministry of Business, Innovation and Employment (MBIE), responds to How much spectrum do NZ mobile carriers have?

Firstly, you’re correct that the disparity between the spectrum holdings shown in Vector’s graph (which you published) and the numbers that MBIE previously provided is because Vector’s graph includes a lot of spectrum that is not used for cellular services.

Vodafone owns rights to spectrum in several bands that are not used for cellular services.

For clarity, the spectrum bands currently used for cellular in New Zealand are:

  • 850 MHz (Telecom only) – 3G
  • 900 MHz (2degrees & Vodafone only) – 2G and 3G
  • 1800 MHz (all operators) – 2G and 4G
  • 2100 MHz (all operators) – 3G

In the bands currently used for cellular, the operators hold:

  • Vodafone: 130.4 MHz
  • Telecom: 110 MHz
  • 2degrees: 99.6 MHz (some of which is owned by 2degrees’ shareholders, Trilogy Ltd and Hautaki Ltd) .

Soon, the 700 MHz band will also be used for cellular. All three operators will own rights in this band.

The 2.5/2.6 GHz band can be used for cellular (equipment is available internationally) but is not currently being used for cellular services in New Zealand. This band is particularly good for high population density areas such as Singapore and Hong Kong, not so good in low density places like New Zealand.  In New Zealand no-one has implemented yet.  These rights return to the Crown in 2016 (at the latest) if implementation doesn’t occur.

Secondly, while you are correct that the government would not prevent Vodafone (or any other network operator) from using any of its management rights for cellular services, in practice all New Zealand mobile networks are limited by international standards.

This is because cellular handsets are sourced from the international market. It is unlikely that major handset manufacturers would be interested in manufacturing bespoke handsets just for New Zealand given our small size. Therefore the holdings at 2.0, 2.2 and 3.4 GHz are not practical for cellular services.

Finally, there is not yet any international consensus on what frequencies 5G cellular services will use. While it seems likely that ‘5G’ will eventually be standardised at the international level, there is not yet any agreement on what exactly what 5G will be (apart from general statements like 5G will be faster and/or more efficient than 4G). Most of Vodafone’s unused holdings expire at various times over the next 5-8 years.  It should not be assumed that Vodafone will automatically be allowed to renew those holdings.  The government routinely reviews spectrum holdings five years before expiry and decides whether to make a renewal offer.  For example, the government recently reviewed Vodafone’s LMDS holdings and decided not to offer renewal so those rights will return to the Crown in 2018.

In summary, while there may be room for debate about exactly what should be counted, it is not correct to assume that current total UHF spectrum holdings provide a guide to future capacity of an operator to provide cellular services.

Amy Adams defends TICS, copper intervention

Amy Adams with IITP Chair Ray Delany
IT Minister Amy Adams with IITP Chair Ray Delany

Communications and IT minister Amy Adams delivered a wide-ranging speech opening the 2013 IITP Conference in Tauranga.

She used the occasion to clarify her position on two contentious issues: the Telecommunications Interception Capability and Security (TICS) legislation and government intervention in copper pricing.

Adams talked down criticism of TICS. She says we’ve moved from having one company control the only significant network to multiple networks and many companies.

Communications different

She says: “The way we communication now is different to the copper era and the industry operates differently. We haven’t changed our definition of what is a network operator or what is a service provider and what their obligations are.

“The new law is simply a matter of updating the rules for a digital world. What hasn’t changed is the importance of real time interception for law enforcement. The police are dependent on real time interception to tackle crime”.

Adams says contrary to what some critics say, the new law does not open backdoors. Nor does it give the GCSB fresh powers: “It doesn’t related to stored data or cloud computing. Interception requires a single warrant to cover a single person”.

Google, Microsoft

The TICS legislation has come under fire from industry players and from international companies like Google and Microsoft. They see the laws as imposing new constants and say it presents them with a serious legal conflict. Demands from New Zealand agencies to turn over information elsewhere in the world could see them break local privacy and confidentiality laws.

Adams says these companies misunderstood their position under existing law. The definition of a network provider hasn’t changed. And as for the legal conflict, Adams says the TICS legislation calls for a “duty to assist”. This comes with a reasonability test.

Not a tax, nor a transfer

Turning to copper pricing Adams points out the money is not a tax or a transfer. She say it is a matter between wholesale and retail service providers (i.e. Chorus and the ISPs). “I’ve not seen any indication the service providers would pass the savings on to their customers”.

Part of the debate hangs on establishing the cost of building a modern replacement for the copper network.

She says the modern alternative is a fibre network: “Normally we look at international benchmarks and overseas best practice. But when it comes to determining the cost of building a fibre network, we know what the prices are because we’re building one here”.

Adams says the controversial copper price regime would only last for five years from 2014 to 2019. Then new regulations will come in.

 

French expert says NZ Government drove too hard on UFB

Benoit Felten

Commenting on the controversy surrounding Chorus and the UFB in his Fibre Revolution blog French telecommunications analyst Benolt Felton describes the copper price debate as a ‘quagmire’.

He says:

…the government got an amazingly good deal out of Chorus and other LFCs, probably too good.

Felton says the $1 billion invested by the NZ government works out at around €500 (NZ$800) per household for 75 percent coverage.

His chart, shown below compares this with other government investments in fibre networks. He says : “Obviously, the more of the territory you want to cover, the more expensive it gets as urban density decreases.”

NZ government gets more fibre for less money

Felton was recently in New Zealand doing some work for Chorus, so he isn’t and entirely independent outsider.

He points out New Zealand’s government gets 75 percent coverage for the same cost per household that gives Malaysia 20 percent coverage. As he points out building costs are lower in Malaysia than New Zealand and that the NZ government’s money isn’t a subsidy, it’s an investment with an expectation of return.

Public-Intervention-Costs

 

Felton says Chorus isn’t using its copper revenues to pay dividends instead of investing in fibre. There are hard targets with stiff penalties for the deployment and Chorus is hitting the targets. Deployment costs have turned out to be higher than expected, but the deployment continues. He says:

Put simply, the current level of copper revenues ensures that fiber deployment is possible. Take it away or reduce it dramatically and either the UFB doesn’t happen or Chorus goes belly up or the government has to commit a lot more taxpayer money at no return.

Felton is critical of the government. He says it opened itself up to the attacks that are now happening. But he doesn’t let the Labour Party off either writing:

I do find it strange though that the party that initiated the UFB is now willing to throw it under the train to score some political points…

Switch off copper

So how does Felton think the government can get out of the quagmire? He suggests the government switches off the copper network in areas where the fibre is installed forcing customers to move to the new network.

He says Chorus can’t afford to finance the UFB roll-out without decent revenues from the copper network and that there’s no incentive for retail service providers to move customers from copper to fibre when there’s a wholesale price difference between the two networks. If that happens, Chorus goes bust, New Zealand gets no benefit from UFB.

Felton says switching off copper will force the service providers to stop investing in unbundling and force customers to move. It would also improve Chorus’ costs – the company would no longer need to manage two networks and keeping the copper network in shape is more expensive anyway. He says this won’t save Chorus’ cash flow, but that can be solved in other ways.

Copper networks face price discrimination

John Key says his government hasn’t ruled out using legislation to bypass Commerce Commission recommendations that could see a sizable fall in wholesale broadband prices.

That kind of move would protect Chorus which says it could lose up to $160 million a year from the regulatory change.

It would also become a form of price discrimination favouring the UFB fibre network being built by Chorus and three other fibre companies. In effect government intervention would make copper networks less attractive by making them more expensive than fibre.

While it is understandable the government would want to shore up its own fibre project, there are three reasons why this is a bad move:

1. It punishes poorer New Zealanders

It will take another seven years to build the fibre network. Business districts, schools and medical centres are a priority. Next on the list are the wealthier suburbs where the government thinks people are more likely to sign-up early for fibre. The poorer suburbs are at the back of the queue.

This means poorer New Zealanders will have no choice but to use copper networks for years to come. Making them pay more for it is doubly cruel.

This is politically dangerous for a National government. While it isn’t quite take-from-the-poor, give-to-the-rich, National’s opponents could easily make it look that way.

2. Not everyone gets fibre any way

If everything goes to plan – let’s assume for now it will – UFB will reach 75 percent of New Zealanders by 2019. There’s the rural RBI network for those in the back-blocks. People in small towns will be left with the fibre-to-the-node network where the last leg of distribution will be over copper. Making them pay more for their copper will add insult to injury.

Higher copper prices also mean ISPs will be less able to invest in technologies like VDSL to serve these customers.

3. Making copper networks dearer won’t change fibre demand anyway

Copper is the gateway drug leading to fibre. People who buy faster copper services, such as VDSL, are likely to be the first to buy fibre when it becomes available. Getting people hooked on fast broadband will do more to make sure fibre succeeds than discriminating against copper.

I’ve said all along, if the government has to discriminate against copper to sell fibre, that means there’s something wrong with the fibre project that needs fixing. Fix the problem, don’t cripple the competition.