Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

New 4G spectrum looks pricey, warns 2degrees

New 4G spectrum looks pricey, warns 2degrees

By Pattrick Smellie

Sept. 5 (BusinessDesk) – Mobile phone operator 2degrees is questioning the government’s minimum reserve price of $198 million for new fourth generation (4G) mobile spectrum, saying it’s well above prices being paid for existing spectrum.

Communications Minister Amy Adams announced the auction of spectrum in the 700 Megahertz range from Oct. 29, after spending $157 million clearing the spectrum of analogue television broadcasting to allow mobile phone operators to meet fast-growing demand for ultra-fast mobile broadband services.

“The spectrum’s been priced at a premium to the $157 million cost of clearing the band, well ahead of Treasury’s $119 million valuation and about double the price we paid recently for 15MHz of 1800MHz spectrum,” said newly confirmed 2degrees chief executive Stewart Sherriff in an emailed statement to BusinessDesk.

“That’s beachfront spectrum, which we can use now,” said Sherriff of 1800MHz spectrum, which competitors Vodafone and Telecom are also already using to offer 4G services. The 700MHz band is expected to be particularly useful for spreading 4G to rural areas because it requires fewer cell-sites to provide coverage.

The 700MHz auction is offering nine “pairs” of 15MHz spectrum at a reserve price of $22 million, about double the price 2degrees paid for 1800MHz spectrum it bought last year..

“The spectrum cost $15 million and had eight years left on the licence,” said Sherriff. “Converted to an 18-year term, that amounts to around $33 million for 15MHz paired versus the $66 million in today’s reserve.”

Adams said that “in setting the reserve price, we have balanced generating a fair return on the sale of the spectrum rights with the significant investment required by mobile network operators to build the 4G network infrastructure” and “the value to New Zealand of having 4G connectivity widely deployed.”

While 2 degrees welcomed the government’s willingness to take staggered payments for new spectrum over five years, Sherriff said “paying a premium right now – even with terms – for spectrum we can’t use for some time, is a challenge for all players but particularly 2degrees as a late entrant.”

“We’re investing heavily to deliver competition to a market dominated by two players controlling 90 percent of the industry’s revenue. We’re still building our network and will deploy 4G next year using the 1800MHZ,” he said.

“Affordable 700MHZ spectrum was crucial for future mobile competition. We hope the government keeps sustainable competition in mind throughout this process,” Sherriff said.

Meanwhile, Telecom welcomed the auction but warned that, at this stage, there were no handsets available from international manufacturers to operate on the 700MHz band.

“Current indications are that suitable devices will start becoming available in mid to late calendar 2014 at the earliest,” the company said.

(BusinessDesk)

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 


Commerce Commission: Appeals Record $2.25m Fine In Vodafone FibreX Case

The Commerce Commission has filed an appeal in the High Court against a record $2.25 million fine imposed on Vodafone NZ Limited (Vodafone) for its offending under the Fair Trading Act during its FibreX advertising campaign. While the sentence imposed in the Auckland District Court on April 14 was the largest-ever fine under the Fair Trading Act, the Commission will argue that it is manifestly inadequate... More>>



All District Health Boards: Historic Pay Equity Settlement

An historic agreement has been ratified that addresses a long-standing undervaluation of a workforce that is critical to the smooth running of our hospitals and the delivery of healthcare... More>>


MPI: Dry Autumn In Waikato And South Auckland Leads To Drought Classification Drought conditions affecting the primary sector in the Waikato and South Auckland were today classified as a medium-scale adverse event, enabling a package of support for farmers and growers... More>>


Barfoot & Thompson: Rents Up By Around 3% In Most Areas

The average weekly rent paid for homes in most areas of Auckland has risen by around 3 percent year-on-year. The figures for end March from more than 16,000 properties... More>>


DoC: Smeagol The ‘Gravel Maggot’ Leaves Its Rare Mark On The Remote West Coast
An extremely rare species of sea slug or ‘gravel maggot’ has been detected for the first time on a remote beach in South Westland... More>>



Immigration: Annual Net Migration Loss Of 7,300

The provisional net loss of 7,300 people in the year ended March 2022 was the lowest net migration for a March year since 2012, Stats NZ said today... More>>