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Wireless – A Government Perspective

Speech Notes

Wireless - A Government Perspective

In the government’s Growth and Innovation Framework, released earlier this year, we set the target of lifting New Zealand back into the top half of the OECD. To do so we will need to improve on our current economic growth rates.

The Growth and Innovation Framework identified information and communication technologies, along with biotech and the creative industries, as industries where there is major growth potential.

Within the ICT sector wireless and mobile technologies are an important sub-set.

It’s a technology that’s still in its infancy and one that represents a great opportunity for New Zealand.

The global market for mobile internet services is currently in the very early, innovator, stage of the market adoption cycle. This means that now is the right time to enter the marketplace.

The Government is very supportive of these types of events where people from the industry get together to network and share ideas. You may be aware that we are, through Industry NZ, a part funder of the "Unwired World" series.

NZ has a competitive advantage in wireless because of our rugged terrain and low population density. This means we are particularly suited to wireless and, necessity being the mother of invention, we have a number of leading companies in this area eg - Tait Electronics, Navman and Trimble Navigation.

Industry NZ and Investment NZ are actively promoting New Zealand as a test bed for wireless technology, although there are no specially targeted initiatives at present.

We are an attractive test bed for wireless/mobile technologies for a number of reasons

- A de-regulated environment

- Lots of available spectrum

- A tech-savvy population who are early adopters of wireless technology

- NZers have a good appreciation of IT, a do-it-yourself approach to creating software and therefore are potentially good mobile internet solutions developers

- NZ has a good communications infrastructure

- Our isolation means foreign companies can run pilots out of the international media spotlight

- We also have telcos deploying both of the major 2.5G technology standards (GPRS & CDMA). In most countries it’s one or the other. This means companies can test on both platforms.

The good conditions in New Zealand for testing in the wireless/mobile sector are the reason why GeoVector (a US wireless applications developer) is considering a major pilot project in NZ with NZ developers.

Branding NZ as a test bed could benefit the local ICT industry through international partnerships, the introduction of advanced technologies, collaboration with international expertise and access to global marketing channels.

The concept of smaller enterprises forming joint ventures or strategic partnerships with larger companies to evolve and pilot new initiatives is one way that NZ companies can add value to existing methodologies and design and also piggy-back on these larger companies to attain credibility in the international marketplace.

Industry NZ is currently carrying out a study looking at the Wireless / Mobile sector. The study is called the "Wireless/Mobile niche industry sector study" and has been contracted out to MediaLab South Pacific.

The aims of the study are to:

- Build a directory of NZ companies in this area

- Establish the key players and their relationships (incl offshore connections), investors, anchor companies and industry groups participating in the niche

- Understand the match of NZ co capability to attractive global market segments

- Elicit industry views on growth opportunities and barriers

One of the key purposes of the niche study is to elicit views from the industry on whether there are constraints to mobile (and fixed) wireless niche sector growth in New Zealand.

In particular the study will examine whether there are actions that Industry NZ (or, where necessary, a whole-of-government approach) could take to overcome such constraints that may be identified.

Some possible constraints include:

- Skills: e.g., shortage of radio frequency specialists

- Entry to offshore markets where there are complexities in arranging mobile service interconnections and billing arrangements

- Fragmentation: e.g. the inability to take full advantage from anchor companies that may have strong international relationships or the inability to leverage joint opportunities that may arise from the PROBE initiatives and platform advances by leading NZ companies that could be better utilised by other NZ players for first-mover advantage

MediaLab South Pacific has also begun to compile a map of the research work being undertaken by groups in this area, which will feed into the study.

It is likely we will learn more about the wireless/mobile opportunities from the niche study, and this could indicate an opportunity to develop a specific targeted programme.

Spectrum allocation

As I noted before the availability and relative low-cost of spectrum in NZ gives us an advantage in developing wireless/mobile applications and/or technologies.

The government is an allocator of radio spectrum. In late July/early August the government ran its latest auction of radio spectrum suitable for a range of voice, data and broadband internet services.

The spectrum sold included wireless local loop spectrum at 3.4 GHz. The spectrum is suitable for point to multipoint two-way communications up to approximately 15 Km, on a partial line-of-sight basis. Nine blocks of wireless local loop spectrum, each comprising nationwide management rights, were bought by four different companies.

The Government also sold five blocks of LMDS spectrum at 24 GHz to three

successful bidders. Again, this spectrum can be used for point to multipoint two-way communications, but with much higher capacity than wireless local loop, at a shorter distance (up to 3 km,) and on a line of sight basis.

The Government has also reserved two further blocks of wireless local loop spectrum, out of which it will grant licenses to those looking to provide services at a local level. The two blocks of spectrum that have been retained are for regional use.

It’s been proposed in a draft paper that these blocks be allocated on a first-come first-served basis. Spectrum buyers will pay for the spectrum. The cost will be worked out by a formula which charges for the spectrum based on the amount of people that can be reached i.e. someone buying spectrum to serve a rural valley with 5,000 inhabitants would pay half as much as someone buying spectrum for a town with 10,000 population. It is not expected that the cost of the spectrum will be such as to inhibit regional users from taking it up. If you don’t use this spectrum within two years you will lose it. This is to ensure that no one can acquire a license and then just sit on it forever.

The auction also included a small block of cellular spectrum around 900 MHz, which was bought by Vodafone.

This latest auction, following on from the 2 GHz auction in 2000-2001, which brought spectrum 2G, 3G and IMT 2000 mobile spectrum to market, means that New Zealand companies now have real opportunities to develop wireless technologies for New Zealand consumers and international markets.

Broadband Project (PROBE)

You will no doubt be aware of the of the government’s broadband project, known as PROBE, announced in this year’s budget.

The government committed tens of millions to the project, which will involve 14 regional tenders to deliver two-way high speed (at least 512 Kbps for secondary schools) internet rolled to most schools and communities by the end of 2003 the remainder by 2004.

As well as being of benefit to schools, the broadband roll-out will also be of benefit to the wider regional communities and businesses. Further to the initial budget of the project there will also be discussions with regional community groups and regional business groups to come up with ways in which the infrastructure could be extended to reach the most isolated areas.

The Request for Information for the broadband project was released in July. There were a large number of responses, which are currently being collated. About 10 responses were substantial ones, covering the entire country or multiple regions. The Request for Proposal will be released in late October.

Wireless technologies will have a big part to play in PROBE, especially in remote areas with rugged topography. It is envisaged that in a number of areas solutions will take the form of a combination of technologies ie - wire, wireless and satellite.

Industry NZ’s wireless/mobile study will also have synergies with aspects of project PROBE - developments in the wireless sector may assist PROBE roll outs and PROBE investment may stimulate the export capability of NZ companies.

ICT Taskforce

Another government initiative that will have impacts on the wireless sector is the ICT Taskforce.

The taskforce was formed earlier this year to identify ways in which the ICT sector can boost its already substantial contribution to the economy. It is one of three taskforces - the others are biotech and creative industries - announced by the Prime Minister Helen Clark in February, as part of the Government’s Innovation Framework.

The 11-member taskforce is made up of entrepreneurs running leading edge ICT companies in NZ. These are the people who can apply their commercial experience and understanding of innovation and business growth and their focus on future trends and international opportunities to give the government considered and robust advice.

The ICT Taskforce has a range of goals including: setting a vision and developing a strategy for the ICT sector; developing a better understanding of New Zealand’s current ICT capability; identifying possible barriers to growth and the means to address these; identifying international ICT opportunities and trends; developing better focus and branding for the NZ ICT sector; developing a more strategic approach to export growth opportunities and identifying how the sector can contribute to the growth of other industries. The role of government will also be identified.

Jim Donovan, managing director of management and investment company Isambard Ltd and the former CEO and co-owner of Deltec (sold to Andrew Corporation in July 2001) is on the taskforce due to his background in wireless.

A series of concentrated meetings has been held over the last few months and the taskforce is due to report back to government soon. The taskforce’s initial findings will be made available via a web site and input from the wider industry will be sought. An ICT forum may be held later in the year to bring the industry together to formalise the taskforce’s strategy.

The taskforce is in the final stages of completing a draft of its. It has identified a number of key issues related to

- -management transformation that take place as a company progresses through various stages in a growth continuum

- the future supply of skills and talent (ICT is very dependent on tertiary trained graduates, currently 24,000 of the 40,000 ICT workforce are tertairy trained)

- lack of awareness amongst school students and their parents/caregivers of ICT as a rewarding career and the global successes of New Zealand based companies

- -various regulatory and policy issues where New Zealand is an outlier in terms of the global business environment

The taskforce has proposed a number of recommendations. These will be firmed up following the consultation phase and turned into an action plan.

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