ANALYSIS
New Communications Minister Ginny Andersen and Spark are approaching the Cyclone Gabrielle communications collapse - and what should be done next - from different angles.
In Andersen’s initial take, she said, “It’s important to remember that these are privately owned businesses and assets.”
Spark CEO Jolie Hodson, meanwhile, pointed to a public-private solution across the Tasman, spurred by the 2019/2020 “Black Summer” bushfires. She highlighted central and councils’ possible co-investment role - from more reliable cell towers to local authorities creating generator warehouses (more on which below).
In short, it seems there are going to be some robust discussions over who picks up the tab - or how much of it - for making our telecommunications networks more resilient.
After major flooding last year, a New South Wales Senate inquiry leaned on Australian telcos to implement more resilience measures, including more generators and satellite kits for backup, and moving cell towers from flood plains (how things will actually resolve is still a work in progress).
Could the same happen here, after many on the hard-hit East Coast - and scattered other parts of the country - spent a week without broadband and mobile service?
The Herald asked Andersen if `NZ would have an NSW-style inquiry - or whether she would be pushing to accelerate and expand three proposals for better communications in the region, all currently on a slow track or stalled.
“We are going to need to look at our telecommunications network to make sure it is as robust as possible”, Andersen replied.
“While it’s likely telecommunications will be included in a review of the response to Cyclone Gabrielle, I will be working closely with officials and the telecommunications industry as quickly as possible to ensure we do not experience the outages we have had this week. Plans may include expediting the proposed activity within the Lifting Connectivity in Aotearoa plan.”
The Minister added, “Government has a role to play in providing the funding to build better resilience into our core infrastructure. When it comes to our telco network, it’s important to remember that these are privately owned businesses and assets. In my view, the sector has a responsibility as part of their social licence to ensure that resilience exists in the network. Collaboration between the public and private sectors will be essential as we work towards a more resilient and reliable telecommunications network.”
Lots of angry customers, especially in Northland, Auckland’s west coast, the Coromandel and the East Coast, will agree that the telcos - all of whom make solid profits - should pull finger.
Spark, Vodafone NZ, 2degrees and Chorus are private companies and they’ve collectively spent billions of their own money upgrading their networks since 2010.
But the taxpayer is also heavily invested through two major public-private projects: The Ultrafast Broadband rollout and the Rural Broadband Initiative. Across the UFB and the RBI, including various top-ups, the Crown has chipped in $2.58 billion for fibre and mobile network upgrades (and as an aside - due to equity issued as part of the UFB funding mechanisms, the Government currently owns 63.4 per cent of NZX-listed Chorus - albeit in non-voting shares that it will gradually sell down).
So we’ve all got skin in this game. Ever since Labour decided to operationally separate Telecom, and provide $300m in Crown funding for public-private broadband - only to be out-Laboured by National as the party structurally separated Telecom and put $1.8b (later expanded to $2.58b) for the UIFB and RBI - the Crown has been heavily involved in this private sector.
The telcos say they’re already working on a response to Cyclone Gabrielle, which will take several weeks to come into focus (Andersen says she’ll also have a more detailed response in a few weeks).
But Spark has already said it sees the cyclone response as another public-private project.
In comments to the Herald, the telco noted that the 2022 Senate recommendations weren’t the first time that a disaster had prompted Government action in the telco sector.
Also in Australia, the Black Summer bushfires of 2019/20 led to a wide-ranging Government review into infrastructure and community resilience. A two-year A$37m Strengthening Telecommunications Against Natural Disaster (STAND) programme was established to fund resilience improvements in regional telecommunications networks, the telco noted.
“This included a A$23m Mobile Network Hardening Programme to fund increased battery storage at regional mobile sites of the three Australian mobile networks. The target was 12 hours of battery storage, and the funding provided up to 50 per cent of the cost of these projects. The programme has funded approximately 1000 site upgrades.” (See more from Spark below).
In the meantime, the telcos have pleaded that Cyclone Gabrielle was an extreme event.
For example, Paul Brislen - chief executive of the Telecommunications Forum, whose members include all the major telcos - said one of the worst-hit centres, Napier, had enough generators, but that each needed refuelling every eight hours - but in most cases that was impossible. Another issue was that both Chorus cables into Gisborne - which link cell towers to main telecommunications networks - had been damaged in multiple places as roads and bridges were washed away.
Similarly, Brislen said Spark, Vodafone and 2degrees purchased another 40 generators for the East Coast as the cyclone hit - but again, impassable roads and ongoing slips made fuelling them a no-go. In the days that followed, the mobile telcos also flew in mini cellsites and satellite uplinks (NEMA also flew 20 Starlink kits to the East Coast, while local iwi Ngāti Porou charted a plane and chopper to deliver 31 Starlink kits to connect remote communities).
“An unprecedented event like this forces is all to rethink both how the networks are built, but also how we can respond when crisis does occur,” Brislen said.
“As we are challenged by climate change our level of expectation around what normal looks like has to change and we’ll be having that conversation with government and our customers in the coming weeks and months.”
Vodafone NZ spokesman Matthew Flood said, “It is important to note 80 per cent of our outages were due to power. While we do keep a stock of diesel generators ready for such emergencies, many of which we had pre-deployed anticipating the cyclone, we are often limited by access where roads are inaccessible to deploy and refuel these and they have to be topped up with diesel every four to eight hours.”
Flood added, “While batteries are a good option for very short-term resilience, current battery technology means that running longer than this without mains power is not feasible – you’d need more space for the batteries than for the cell tower itself.”
Flood said it was still very early days in assessing the situation “And we won’t rule anything in or out in terms of what additional steps might be taken to improve network resilience.”
He emphasised that robust telecommunications relied on other infrastructure being up-to-snuff.
“Any discussion on this needs to involve other infrastructure providers that any telecommunication network anywhere in the world relies on – including the electricity grids that power networks and the roads that fibre cables run on,” Flood said.
“We’re up for any response that balances increased resilience with the need to ensure that investments are affordable, and costs remain affordable for consumers and businesses.”
“We are going to experience more extreme weather events like Cyclone Gabrielle in the future, and in the face of these events no public utility will be 100 per cent infallible – whether that is roading infrastructure, telecommunications, energy, or water. The true test of resilience is not necessarily whether you are impacted, as all infrastructure will be, but how quickly you can recover. The telecommunications sector had over 620 cell sites down on Wednesday last week, and by Sunday it was below 50. But there is absolutely more we can and must do, and we are up for that challenge,” Spark’s Hodson says.
“With an increasingly volatile climate our country needs to have a hard look at the level of resilience we will need our infrastructure to have. This is not an issue one company or sector can solve on its own, but one we need to plan for across sectors and as a country. There is no doubt telecommunications infrastructure must be part of that discussion, recognising the critical role it plays not only in our everyday lives, but in times of emergency.
“New Zealand is not alone in looking at this issue. After the Australian Black Summer bushfires a telecommunications resilience programme was put into place that was jointly funded by Government and industry.
“This provides a useful model for New Zealand in considering investment that is beyond the scope of any one company – for example larger battery storage in areas of strategic national importance or geographic vulnerability or things like decentralised generator warehousing by local authorities for use by utilities providers in emergency situations. We have a strong track record of shared private and public investment in rural connectivity that we can build on.”
Hodson added: “The industry will be looking at what more we can do, for example things like roaming across all three mobile networks in times of disaster, or further fibre redundancy in our networks. For now, Spark is steadfast in our focus on getting every single tower and every single customer back online, and supporting those who have been hit the hardest, but we are ready and willing to be part of the bigger conversation of how we plan for these kinds of events as a country.”
There are three ideas already on the table for making provincial and rural telecommunications more far-reaching and resilient.
First, the $15m Remote Users Scheme will make up to $2000 per household available to install a broadband solution, which could be Starlink.
Second, there’s the matter of finalising where Spark, Vodafone and 2degrees will expand mobile service in provincial and rural New Zealand - and how much they’ll spend - as a quid pro quo for being allocated 5G spectrum without any auction. So far Spark, which spent $189m on 4G spectrum bids in 2014, has earmarked $24m.
And third, there is a recommendation by a major MBIE record, Lifting Connectivity in Aotearoa, to extend the public-private UFB fibre rollout to city fringe and rural areas.
Andersen - who took over the Communications portfolio barely a fortnight before the Gabrielle hit - says it will be a few weeks before she weighs in with a detailed response.
Spark shares closed on Monday at $5.23. The telco, which reports its half-year result tomorrow, is up 14.3 per cent over the past year.
Chorus declined 20c or 2.39 per cent to $8.17 after reporting a 79 per cent fall in net profit to $9m on revenue of $487m, up 1 per cent, for the six months ending December (the NZX50 was down 2.05 per cent).
Can the telco navigate through its perfect storm?