TUANZ submission on the five year spectrum outlook

Back to Media Releases

TUANZ thanks the Ministry for the opportunity to comment on
the Radio Spectrum Five Year Outlook.

As you know, TUANZ (the Telecommunication Users Association
of New Zealand) represents around 300 New Zealand business customers of
telecommunications and as such our focus in all matters such as this is on
customer benefits.

New Zealand is unique in many respects – we have a
relatively small population but live in a country as large as the UK or Japan.
We have limited competition in many aspects of our basic infrastructure and in
terms of use of scarce resources – such as radio spectrum – we face challenges
in making sure we encourage investment without simultaneously reducing
competition in the market place.

TUANZ has seen early versions of both InternetNZ and
Jonathan Brewer’s submissions and broadly speaking we support both. Brewer’s
report into the use of “white space” guard bands is very exciting and TUANZ
would encourage the Ministry to look into whether or not New Zealand can take
advantage of this kind of flexibility in terms of guard band usage. The idea
that would could help create a market for an ultra-fast wifi equivalent in the
spaces between licensed spectrum is an enticing one and we would encourage the
Ministry to pursue it further.

We would also like to draw the Ministry’s attention to a
point made by Brewer in his submission:

Measurements taken
by University of Auckland researchers Chiang, Rowe, & Sowerby (2007) showed
that in Auckland, arguably New Zealand’s busiest radio spectrum environment, real
spectrum use in 806-2750MHz was only 6.2%. These measurements included all of
the cellular and most popular broadband bands. Almost 94% of the New Zealand’s
most valuable radio spectrum was quiet it its largest market.

Taken in isolation,
the UoA study might seem fantastic or flawed. Viewed in the context of studies
around the world including the US and Singapore, some funded by the United
States Defence Advanced Research Projects Agency, these measurements are
unsurprising. It has been conclusively proven that traditional management
techniques do not result in the efficient use of the radio spectrum
.

TUANZ is of the opinion that it is critical to New Zealand’s
economic development that we make the most of our few natural resources and
that spectrum use of only 6.2% of the available bandwidth in our largest city
is appalling and should be addressed as soon as possible. Opening up our
spectrum reserves will increase the use of both portable and mobile broadband
services and this will in turn drive down costs to users and increase usability
of such services. Bandwidth isn’t a scarce resource, yet we are regularly told
that it is.

To this end, the Crown’s approach of auctioning off
management rights must be revisited – something we address later in this submission.

TUANZ would like to address a number of broader issues over
and above those raised by InternetNZ and Brewer.

Enforcement

In May 2009, Vodafone took Telecom to the High Court
alleging interference from Telecom’s pre-launch XT network. While the action
was settled out of court, the Ministry should have played its part in policing
the radio spectrum management rights. That it didn’t meant the industry as a
whole was negatively impacted by the adverse publicity generated by the court
case.

If the Ministry is to issue management rights it needs to
ensure that rights holders are treating each other fairly and that those rights
are being upheld. TUANZ would expect to see the Ministry work to ensure any
future such interference be minimised both from a technical and from a
publicity point of view.

Choosing winners

While the Ministry claims it doesn’t “choose winners” when
it comes to deciding what technology path the industry will follow, its choice
of spectrum band sizes and whether or not they are paired does, by default,
force a direction on the industry.

TUANZ would suggest that either the Ministry explore
allowing similar technologies to work side-by-side and the difficulties therein
(TDD vs FDD for example) or that it drop the pretence that it hasn’t already
decided which path will be triumphant before embarking on any particular sale
of rights.

Technology Roadmap

Having said that, TUANZ would welcome the creation of an
open and contestable technology roadmap for the country. It’s important that we
have a clear vision of the direction the Ministry is taking, both from an
investment point of view but also for consumers of telecommunication services.
Various international agencies, such as the ITU and IEEE, have extended
roadmaps for technology that we should be aligned with – TUANZ would support
any such move from the Ministry towards this level of transparency.

Fast Follower

As has been noted elsewhere, New Zealand is not a large
country and as such we cannot set the agenda with regard to either spectrum allocation
or technology deployments. As such, TUANZ recommends we continue in the “fast
follower” mode, rather than moving to an “early adopter” or market leader model
when it comes to such things.

Expert advice

TUANZ understands the ministry has, from time to time,
seconded telco staff into its ranks in order to attend conferences or even to
represent New Zealand interests on the international scene.

TUANZ questions whether these telco experts should be used
in this fashion as they clearly have loyalties and allegiances with their
employers first and foremost. TUANZ would like to see the Ministry able to
employ its own experts, able to represent New Zealand’s needs on the
international stage and to help develop spectrum policy without fear of bias
towards particular interests.

Dividend: Now or
Later

TUANZ firmly believes that the real value from spectrum
rights comes not in the form of a cash injection at the time of either sale or
renewal of management rights, but in the efficient deployment of that spectrum
resource to better encourage broadband uptake and deployment.

As such, TUANZ would like to see the Ministry move away from
the pure auction model towards either a “beauty pageant” or similar approach.
There are a number of alternatives in use around the world and we would like to
see more emphasis placed on the longer term outcome from these rights, rather
than short term gain for Crown coffers.

Maori spectrum rights

For better or worse, in 2001 the Crown reached an agreement
with iwi over the sale of 2100MHz spectrum rights that included apportioning
off a block of spectrum and the creation of the Maori Spectrum Trust.

That Trust helped create the company now trading as 2Degrees
Mobile and it has brought real competitive pressures to the New Zealand cellular
market, for the first time since Vodafone overtook Telecom in terms of customer
numbers.

TUANZ would not like to see that good work wasted –
regardless of broader views on Maori rights over other forms of natural
treasures, the approach taken by the Crown in 2001 has delivered for the users
of telecommunications in New Zealand and we would encourage the Ministry to
continue to develop that relationship further.