Book Reviews | Gordon Campbell | News Flashes | Scoop Features | Scoop Video | Strange & Bizarre | Search

 


Did Telecom NZ pay too much for 4G spectrum?

Telecom NZ paid NZ$83 million dollars for the last slice of 700 MHz spectrum. The company beat Vodafone to secure the final 2 x 5 MHz block left on the table from the first round of bidding.

Overall Telecom NZ picked up four blocks or 2 x 20 MHz while Vodafone purchased three blocks and 2degrees acquired two blocks.

The size of a block in the 700 MHz band is significant because more 4G spectrum means faster data services.

That should give Telecom NZ a competitive boost against Vodafone which has a head start in rolling out 4G. At the moment Vodafone's 4G network covers a much wider area than Telecom's.

Not just 700 MHz


700 MHz spectrum should not be seen in isolation. As Paul Brislen points out on the Tuanz blog:
...when you look at the overall spectrum holdings you’ll find that 2Degrees has just on 100MHz of spectrum, Telecom has double that and Vodafone has nearly 300 MHz of spectrum available to it right across the managed spectrum range.

While the 700 MHz band is prime real estate, having an extra 2 x 5 MHz does little to address the overall balance.

 Did Telecom NZ pay too much?


NZ$83 million is a high price considering the other similar-sized blocks went for NZ$22 million a piece. No doubt the government will be pleased with the windfall.

Telecom NZ's willingness to pay a high price is as much a reflection of its need to deny the spectrum to Vodafone as the opportunity it brings.

What about the price? When analysts compare international prices paid for spectrum they measure the cost per Megahertz per head of population. Because this work is often done in Europe, comparisons are made in euros.

High by European standards


Last year Analysys Mason compared European spectrum prices and found on average carriers paid between €0.5 and €0.6 per MHz per person.

10 MHz of spectrum for a population of 4.4 million means Telecom NZ paid NZ$1.9 per person per MHz. That's roughly €1.2 or twice the average paid per person per MHz by european carriers.

On that basis, Telecom NZ paid too much.

When you aggregate Telecom NZ's entire investment in the 700 MHz band you get a total of €0.85 per MHz per person. Again that's above the European average.

For perspective, Vodafone's 2 x 15 MHz block works out at €0.5.

Clearly there's a premium for denying the 2 x 5 MHz block to a competitor, but on a simple calculation it appears Telecom NZ has paid a high price to have a little more spectrum. The pressure is now on the company to make it pay.

[digitl 2014]

digitl on Google+

© Scoop Media

 
 
 
 
 
Top Scoops Headlines

 

FIRST TARGET ACHIEVED: Help Scoop.co.nz To Fly In 2015

Scoop is NZ's oldest and largest independent online news service. We have described ourselves as fiercely independent for more than a decade and we would like to stay that way... By making Scoop’s connection to the public and contributors more explicit we hope to achieve the level of support and sustainability that will enable Scoop to fly as a community asset. More>>

ALSO:

Greek Riddles: Gordon Campbell On The Recent Smackdown Over Greece

There had been a fortnight of fevered buildup. Yet here we are in the aftermath of the February 28 showdown between the new Syriza government in Greece and the European Union “troika” and… no-one seems entirely sure what happened. Did the asteroid miss Earth? More>>

ALSO:

McBeth On The Cricket World Cup: It's How They Handle Fan Pressure

Brendon McCullum's team has achieved impressive results in the lengthy buildup to the contest and they deserve to be among the favoured teams, but... Their results need to be kept in perspective and fans should get a much better idea of the Black Caps chances when they face England in the capital on Friday. More>>

Keith Rankin: Contribution Through Innovation

The economic contribution of businesses and people is often quite unrelated to their taxable incomes. EHome, as a relatively new company, may have never earned any taxable income. Its successors almost certainly will earn income and pay tax. Yet it was eHome itself who made the biggest contribution by starting the venture in the first place. More>>

ALSO:

A Public Conversation: Reinventing News As A Public Right

Alastair Thompson: Oh how the mighty have fallen. Once journalism was possibly a noble profession, though that is certainly now, to quote our Prime Minister, a 'contestable' notion. It certainly seemed at least a little noble when I joined the ranks of reporters in 1989 . But ... More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
Top Scoops
Search Scoop  
 
 
Powered by Vodafone
NZ independent news