KEY POINTS:
The Government has a hard call to make on how it will manage the upcoming auction of radio spectrum suitable for delivering WiMax wireless phone and broadband services.
Communications minister David Cunliffe has already delayed an auction of spectrum in the 2.3GHz band following loud pleas from the country's second-tier telecoms operators to exclude Telecom and Vodafone from the auction.
A Dominion Post story suggests Woosh Wireless, which needs a big chunk of spectrum to move its business to WiMax, would seek a judicial review if the radio spectrum auction goes ahead as planned.
Woosh's concerns about the auction mirror those of CallPlus founder Malcolm Dick, who in this Weekend Herald interview with me said the Government should block Telecom and Vodafone from participating the auctions so that his more deep pocketed rivals don't buy up all of the available 2.3GHz spectrum, leaving him unable to roll out a national service.
"In Australia it happened with the 3.5GHz local loop bypass spectrum. They banned Telstra and Optus from participating," said Dick.
"The other thing they actually do in parts of the world is a beauty contest. They actually give the spectrum to someone they like the look of."
This is proving to be quite a delicate matter for the Government. On one hand it is pushing ahead with separating and unbundling Telecom, but it also realises that an alternative technology like WiMax may improve the broadband situation here faster than having internet providers piggyback on Telecom's network.
If it bans Telecom and Vodafone from bidding, it gives CallPlus the green light on its plans for a national WiMax network and allows Woosh to stay in the game.
But keeping Vodafone and Telecom out of the game excludes two players that are potentially in the best position to roll out WiMax quickly.
The whole thing hinges on how good a mass-market technology WiMax will ultimately prove to be. That's anyone's guess. The mobile players claim they can get better download speeds through so-called LTE (long term evolution), which is the next generation of mobile technology. But they're all hedging their bets, buying WiMax spectrum and trialing services in case it takes hold.
Regardless of which way the Government goes on this issue, there will be howls of outrage in response from some players in the industry. What should the Government do? Ban Vodafone and Telecom or let the players with the biggest cheque books win?
The local tech blogosphere:
* Juha at Geekzone asks whether a win by National in next year's election would lead to a back down over regulating Telecom.
* Rod Drury on his Technium win and what New Zealand can learn from the Welsh tech start-up model.
* Aardvark questions why Xero needs to list.
COMMENTS
KenEThe arguments in this article echo the usual nonsense about how WiFi will save the world and provide loads of broadband for everyone. It won't.
WiFi is a very limited channel, even with the new spectrum, and is only suitable for creaming off the high density areas (of which NZ has precious few, Auckland is a low density urban area in this regard). It has very limited reach and is normally only used in built-up urban areas.
For low density urban, and very low density rural areas, WiFi will work to a fashion but will not be economic and will not provide the full broadband services expected from the marketing hype.
WiFi is what you use to cream of the most profitable areas - leaving all the low profit areas to the government backed networks. Don't get your hopes up - WiFi won't solve the broadband problem in NZ.
WoodyHow about allotting the available frequencies fairly amongst the bidders? Yes I realise this will then negate an auction for the highest price but what is the governments priority - to make as much money as possible from the sale or to facilitate rollout of this technology as quickly as possible for NZ's benefit ? If the smaller players are squeezed out it will be to our detriment.
AnnaVoda certainly have no intention of going down the wimax route. The 3G network is under utilised and their focus on building up usage is on HSDPA. WiMax isn't on the radar.
Ian from AucklandWhile I have no love lost for telecom it may not be the best solution to lock them out of new technologies. If we do then it may take longer to roll out Wi-Max, or we may all end up paying more for Wi-Max because someone else gets a sweet deal. Telecom (and Vodafone) have deep pockets and will probably be able to roll out Wi-max networks quicker than any other provider.
I suggest that the solution is to allow anyone to purchase Wi-Max spectrum, but to include two key factors:
1. No single organisation should be allowed to have more than 1/3rd of the spectrum in any single area.
This will ensure completion within Wi-max providers as well as with other technologies. It may end up with the govenment not getting as much as it could from the Wi-max spectrum sale (as no-one could get a Wi-Max monopoly), but that should keep the Wi-Max costs down too.
2. That the licence expire, or severe financial penalties apply, if the spectrum is not used. The best way to do this would be to include performance KPIs that require a minimum number of customers or a minimum bandwidth utilisation. These KPIs would increase over the lifespan of the spectrum license.
KLMatSallehIf the 2.4GHz spectrum represents such a good business opportunity then any player should be able to develop a business case to their respective financers & receive the necessary support to make competitive bids, irrespective of who is bidding.
I disagree with Government stepping in & not allowing particular bidders & therefore making the competitive landscape uneven.
