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

 

Gordon Campbell: On Donald Trump, And Dr Dre

For the past few months, you, me, and Rupert Murdoch have been waiting for the wheels to fall off the Trump campaign, and for some drab incarnation of business-as-usual (Jeb Bush, Scott Walker) to emerge as the real Republican standard bearer in next year’s presidential election... More>>

ALSO:

Hiroshima: 70 Years On, The Nuclear Threat Looms As Large As Ever

Rumours had been circulating in Hiroshima that the city was being saved for something special. It was. The burst of ionising radiation, blast, heat and subsequent firestorm that engulfed the city on August 6 killed 140,000 people by the end of 1945. More>>

ALSO:

#FutureOfNews: Challenge & Solution - A ''New Scoop''

The development of Scoop's new "Ethical Paywall" approach to licensing commercial use of its news content and addressing the current State of the NZ News Media and the challenges being faced news media everywhere. More>>

ALSO:

Lyndon Hood: God Defend The National Anthem

Recently Labour leader Andrew Little said – deliberately, I think – that he didn't like New Zealand's national anthem and many New Zealanders preferred to sing along to the Australian one. More>>

Keith Rankin: Centenary Of The Battle For Chunuk Bair

I don't agree with the view that our national identity was forged at Gallipoli, despite the rah-rah about this in the week leading up to Anzac Day... What concerns me now, however, is our lack of respect for our own history. Why have we switched off? More>>

ALSO:

Werewolf: Pitch Perfect

Among his other blessings, Pope Francis has been a gift to the world of marketing studies. There can be few other examples where a leader has transformed the perception of an enterprise so thoroughly, but without making any discernible change to its core principles. More>>

ALSO:

US Politics: The Democrats Try To Engage With America (Again)

Venues are being rebooked to accommodate the thousands of people coming to listen to Vermont Senator, avowed socialist, and presidential aspirant Bernie Sanders talk about the redistribution of wealth. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
Top Scoops
Search Scoop  
 
 
Powered by Vodafone
NZ independent news