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


Werewolf: ‘Disruption’ Is For Losers

Disruption – anarchic, dynamic, table-tipping, mould-breaking, consensus-shattering disruption – has become part of every corporate bout of auto-hype to the faddish point where the term has lost any useful meaning it might once have had. More>>


Werewolf: Coney Island (And The Trumps), Baby

Like much of that part of the coast, and given the storm surges of Hurricane Sandy, Coney Island should be occupied only by clumps of grass and seabirds. Instead there are 60,000 people in multi-storey apartment buildings living among the faded remnants of a once-spectacular fantasyland.. More>>


Gordon Campbell:
On Corbyn, Trump And Outsider Politics

Jeremy Corbyn elevated to the leadership of Britain’s Labour Party! Donald Trump and Bernie Sanders on the rise in the US… On both sides of the Atlantic, these are dark days for the political Establishment. More>>


Operation Chrysalis: A New Beginning For Scoop

On December 19th 2014 the Scoop Team set out on a project called "Operation Chrysalis". We decided to turn Scoop's 16 year old online news publishing business into a new kind of news business, one connected directly to its readers, owned by a not-for-profit and based on a new business model. More>>


Keith Rankin: The Economy - What's It For?

I re-watched the Q+A 'immigration debate' screenedon 23 August. In light of recent events, the discussion already seems very dated. The underlying assumptions were that the economy is a system in which production growth is pretty much the sole objective, and that migration policy must serve this end of output maximisation... More>>

Until Dawn: Pick Your Own Horrible Adventure

Suppermassive Games’ Until Dawn sees a group of dumb sexy teenagers take a trip to a spooky mansion atop a mountain. It is, obviously, a horror game. However, the game is so ridiculous it turns out to be more of a comedy. Until Dawn begins with ... More>>

Get More From Scoop

Top Scoops
Search Scoop  
Powered by Vodafone
NZ independent news