'The money will be spent where it should be - on improving rural connectivity.' Photo / File
Is it too good a deal for the telcos? More details have been revealed of a scheme that’s seen Spark, One (formerly Vodafone NZ) and 2degrees receive spectrum at no cost in return for pledges to spend more on expanding mobile coverage in the regions.
Each of the mobile players will chip in $24 million (on top of their existing plans) to expand coverage, for a total $72m.
That’s well shy of the $259m the Crown raised at the last auction in 2016, as Spark (which spent $149m), Vodafone ($66m) and 2degrees ($44m) bid against each other for chunks of 4G spectrum. There had been speculation bidding could go higher for 5G spectrum, given the rise of mobile broadband.
The $72m deal announced today, “Seems a significant drop on the previous auctions,” Technology Users Association NZ head Craig Young told the Herald.
“The big change is that this money is not disappearing into the Consolidated Fund [the Government’s general accounts] but will be spent where it should be - on improving rural connectivity.”
Another factor is that while a 5G auction could have delivered the Government a big windfall, punters would ultimately pick up the tab as their phone bills increased.
“We would like it to have been more of course, and we’ll want to see real transparency around the spend, where it’s planned for to make sure that people that live and work in rural NZ get the best outcome from this money,” Young said.
The consumer advocate will have to wait a little longer for that. Today, Communications Minister Ginny Andersen released a list of towns earmarked for 5G expansion, but said it was only an “indicative list” (see foot of story).
The Government abandoned plans to auction 5G spectrum last October.
Instead, it allocated 5G airwaves directly to Spark, One and 2degrees - at no cost, but with the quid pro quo that they would commit to expanding their mobile networks in provincial and rural areas.
At the time, then Communications Minister David Clark was still hammering out the final details - or, indeed, nearly all details on where or when the expansion of 5G mobile networks would take place, or how much extra the telcos would spend to give less-commercially attractive areas better coverage.
Spark almost immediately volunteered in an NZX filing that it would put an additional $24 million into its funding to the Rural Connectivity Group between 2023 and 2025 (the Group being the joint venture formed by Spark, One and 2degrees for cell towers built under the public-private Rural Broadband Initiative).
This morning, Spark confirmed that $24m figure (which MBIE had previously acknowledged, but said was not necessarily the final tally). 2degrees and One also revealed their respective $24m commitments for the first time.
Wholesale spectrum access provider Dense Air pulled out of the process, according to a statement from the office of the Communications Minister.
Under the deal announced today, Spark, One and 2degrees will each receive 80MHz of spectrum in the 3.5GHz band. This is sufficient spectrum for all three MNOs to operate nationwide 5G networks.
Andersen’s office also confirmed an arrangement that removed a Treaty claim on airwaves as an obstacle to 5G spectrum negotiations (but did not resolve the claim).
A pan-iwi body called the Interim Māori Spectrum Commission will receive 100MHz of spectrum, plus $57m to operate and use the spectrum to develop businesses. The Interim Māori Spectrum Commission will manage this spectrum, on behalf of all Māori, Andersen’s office said. The Government has previously confirmed that the Māori Spectrum Commission will have the option to onsell its spectrum to Spark, One or 2degrees (an arrangement that has precedent; Hautaki traded a Crown 3G spectrum allocation for a minority share in the company that went on to become 2degrees, helping to ginger competition in the mobile market).
Earlier this month, Herald tech columnist Juha Saarinen criticised the Government’s focus on 5G “and nothing else” to fill gaps in regional coverage, which were highlighted during cyclone Gabrielle.
The focus on the three mobile players’ 5G networks was a “body blow” to wisps - or the 50 or so small wireless internet service providers that operate in provincial and rural New Zealand, Saarinen said.
Anderson said the agreement announced today “builds on other Government investment, including the $60m allocated through Budget 2022 for rural connectivity improvements, as well as the $47m of rural capacity upgrades that commenced in February 2022”.
Those funds include a new scheme that allows remote rural households to claim a grant of up to $2000 to subsidise a broadband install for a remote rural property under the new Remote Users Scheme. Applications close mid-year for the scheme, which is funded to the tune of $15m, or enough to cover around 7500 properties. All providers, including Starlink and Wisps, will be able to tender to provide Remote Users Scheme installs, the Government says.
Separately, Andersen said communications failures in the wake of Cyclone Gabrielle will be part of the wider review of the natural disaster.
Spark said earlier that it favoured Australia’s response to the 2019/2020 “Black Summer” bushfires, which saw the Government and telcos split the cost of measures to make cell towers more resilient. Spark CEO Jolie Hodson said a number of infrastructure factors that impacted communications in Northland and the East Coast, such as bridge collapses that took out fibre optic cable, or road closures that prevented cell tower generators from being refuelled, were out of the telcos’ hands.
One recently announced a partnership with Elon Musk’s satellite broadband service Starlink, which it said would provide 100 per cent text coverage by “late 2024″ via Starlink’s (yet-to-be-launched) satellite-to-mobile service, with satellite-to-mobile calling and data to follow - including 100 per cent coverage to 111 service, from around 50 per cent by geography today.
Can the telco navigate through its perfect storm?