The Digital Dividend is here, (but isn’t evenly distributed)

The government has announced its plan for auctioning off the 700MHz digital dividend spectrum that will become available once analog TV is discontinued next year.

700MHz spectrum is highly sought after as a way of delivering 4G speeds, especially in rural areas. The lower frequency means the signal travels further, copes with buildings better and generally is seen as the best frequency range for LTE mobile services.

The government has decided to hold a straight forward auction rather than any kind of beauty contest as happens elsewhere in the world. It’s also decided that the sale will be organised in spectrum blocks “according to the Asia Pacific Telecommunity band plan” but there’s no word on how many blocks there will be, how big they’ll be or indeed how the auction will run. That’s yet to be decided, apparently.

In our submission to the MED (now MBIE) on the whole issue, TUANZ pushed for some kind of discount or other form of preferential treatment for rural deployment. Telcos traditionally roll out new networks in the CBDs of their largest target cities, and slowly deploy deeper into rural areas. We’d like to see that circumvented and suggested offering a lower price for telcos that offer to do just that. The government has decided not to follow that model.

Vodafone has indicated that it will deploy LTE on rural towers once the 700MHz spectrum is made available, which is a good thing for rural users.

There is one major issue outstanding, however, and that is Maori access to spectrum.

In 2000, as the 2100MHz auction approached, Maori pointed out to the government of the day that no ownership of the airwaves had been established and that Maori could challenge the government through the Waitangi Tribunal.

Then-minister Paul Swain side-stepped the issue by putting aside one block of the four blocks being sold and giving Maori interests first right of refusal on taking up those management rights at a 5% discount. He also sweetened the pot by putting up $5m to help set up the Maori Spectrum Trust (now the Hautaki Trust) and to help it find a commercial partner.

Today, that Trust is a shareholder in Two Degrees and without that discounted spectrum we probably wouldn’t have a third player in the market today.

In an ideal world, the government would probably have reached a similar deal today. Perhaps a chunk of spectrum could have been given to the Trust in order to shore up its shareholding in the company that runs Two Degrees, thus ensuring strong competition from our newest telco alongside encouraging Maori investment in the high tech sector.

Instead, the government “is investigating” setting up a $30m ICT development fund to assist Maori to “leverage the potential benefits from new technologies and promote and support the language and culture in a digital world”. That’s a laudable goal but I can’t help but feel the government has missed an opportunity to do a lot more on a pragmatic level.

It also opens the door to a challenge to the spectrum sale through the courts and potentially the Tribunal itself. That could delay the auction and potentially mean we spend a lot of money on lawyers and economists instead of where it should be spent – on rolling out faster mobile broadband, something the government says is worth $2.4 billion over the next 20 years.

2 replies
  1. RobJS
    RobJS says:

    I have to agree with you Paul. We have a UFB initiative and a Rural Broadband Initiative. I live rurally by definition, but actually next to a State Highway. A UFB cable passes my gate, but I get no service because it’s on its way north to a big city. I’m not covered by the RBI either and just about get normal broadband, being 7km from the nearest exchange cabinet. LTE – if priced right – could save laying huge amounts of infrastructure and could rapidly give good service to rural New Zealand. Now, where does most of our GDP come from? Telecoms? The Internet? Or sheep and cows? And where do they live – rurally. The cities already have the infrastructure and the big service providers can easily upgrade their masts to adopt LTE. The costs of doing so are low, so yet again they will make a lot of money by serving urban customers, and rural customers who underpin the nation’s economy will get nothing. The government really needs to tune this auction to ensure that communications development in NZ is strategic, and not purely profit driven. You make a good point with Maori and 2Degrees, now is the time to build on that and improve our national coverage. Amy Adams I hope you are listening.

  2. John Allen
    John Allen says:

    Mixing mobile and fixed broadband services on 3G networks does not give a good quality of service to rural people and businesses. There is little reason to expect that situation to be different in a 4G world.

    No Paul, this is a tragedy in the making for those rural people and businesses that will come to rely on wireless networks for their broadband services. The burgeoning demand for mobile broadband will come to swamp the capacity of the service. It is counter-productive that people watching video on mobile devices will reduce the quality of service available to people using a fixed rural broadband service over the same network.

    But well done to Amy Adams for resisting the Maori spectrum claim. The shame is that Maori will get more dollars ($30M!!!) and rural will likely get no improvement on a CIR of 45Kbps, 100ms+ latency.


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