Telecom has announced its plans for a 4G network rollout. Starting in October, the country's biggest telco will start with the main centres and work its way out to smaller centres, deploying an 1800MHz network similar to Vodafone's.
I've been using the Vodafone 4G network around central Auckland for the past week or so and two things have become apparent - speed tests suggest quite a degree of variability at this stage, and the speed test app uses quite a bit of data. I've hit my 1.5GB limit for the first time ever and still have half a month to go to the end of my period.
The variability is a concern. I've only tested when my phone says it has an LTE connection but the range extends from 3.3Mbit/s down, 1.39Mbit/s up through to 88.69/47.22, which singed my fingers ever so slightly. I typically see a score in the 20Mbit/s range for download and about 15Mbit/s up.
This is only a category three device, of course. The Cat 4s are out later this year and both Vodafone and Telecom say they'll have them on offer - that raises the lid on theoretical maximums to 150Mbit/s which quite frankly is astonishing.
My usage has changed as a result. If I've got downtime somewhere I tend to flip through the news stories and now each one pops as if I were in the newsroom itself. No lag whatsoever. I've had to hit refresh a couple of times thinking the Stuff app had stuck again on old news, but no. It was brand new news. Even BBC video clips load with an unheralded ease.
Which of course means I can watch more, and do more, with my phone. Which means I use more data. Which means I will need more data and if Telecom can offer that, I would hope it will see the competitive nature of the telcos brought to the fore, which will be very nice indeed.
Both Telecom and Vodafone have said they will roll out 4G services on the RBI towers and this for me is the best part of the whole launch. Rural New Zealand is poorly served for broadband and mobility - having both delivered in a timely fashion will be great news. Better still, once you've got a tower in place with fibre backhaul the speeds per customer off each of these towers should be really quite good. Your rural LTE experience could well be better than the urban equivalent, with its higher density of users per tower.
Because the towers are paid for as part of the RBI programme the cost of rollout is greatly reduced and that means the telcos will be more likely to put kit on those towers.
But both telcos have said they'll need to wait for the auction of the 700MHz spectrum before they do so. My understanding of radio frequency issues borders on the ignorant (although not as ignorant as those cell tower protestors) but my understanding is that the footprint of each tower at 700MHz is far superior to that of 1800MHz and that the ability to operate over rural landscapes (trees, cliffs, water) is much better.
Vodafone tells me the amount of spectrum available will influence the speed capability. It has a lot of 1800MHz spectrum and will end up with a lesser amount of 700 so that too will impact on the speeds and throughput, but all told whatever the rural user gets it'll be a lot better than today.
So where are we at with the auction? The minister has said we'll have one (step one) and that they'll announce details later on this year (step two) but we're none the wiser as to how the auction will be run, what size blocks of spectrum will be allocated or what the reserve price will be.
In Australia the reserve price set by government was so high Vodafone Australia pulled out of the auction entirely.
There will be a degree of tension within the government regarding the auction. On the one hand, Treasury will (I'm sure) be pushing the government to maximise its return on investment. That is, make sure the auction brings in as much money as possible. Perhaps we'll see one block of 20MHz and two of 15MHz (or similar) in order to push bidders towards the bigger block. The more spectrum the more throughput so that will be attractive and that will drive up the bidding.
On the other hand, the economic value of the spectrum lies mostly in its use and the less the telcos spend on spectrum the more they'll have for network deployment. The cost of spectrum in the UK in 2000 saw BT almost bankrupted and in Europe several telcos did indeed go to the wall. The rollout of 3G was far less aggressive than we'd hoped and the user uptake took several years to get going.
Three equally sized blocks would lead to only a couple rounds of bidding while the three telcos sort out which one is going to buy each block and then they'll stop bidding. That means less income for the Crown but a faster deployment of network in rural areas.
TUANZ would like to see three equally sized blocks and a reasonably low reserve price to encourage the telcos to deploy. My concern is that 2Degrees be squeezed out of the 4G race with too high a price and that would be a disaster for the industry as a whole, particularly given how much change a truly competitive industry has delivered.