A British company paid millions for the desirable radio frequency spectrum rights. Photo/Getty Images.
A British company paid millions for the desirable radio frequency spectrum rights. Photo/Getty Images.
A British company has paid tens of millions to acquire desirable radio frequency spectrum management rights in New Zealand in the 2.5 gigaHertz band, netting CallPlus founder Malcolm Dick a handsome profit.
Dense Air paid a total of US$17.5 million (NZ$25.75 million) Len Starling, the Ministry of Business, Innovation andEmployment's manager of radio spectrum management policy and planning told the NZ Herald [UPDATE: Spark has leased spectrum from Dense Air for its 5G fixed wireless launch in the South Island.]
Four rights were acquired for a total of 70 megaHerz of 2.5 gigaHertz radio-frequency spectrum, by a New Zealand subsidiary of Dense Air which can now use them until December 31, 2028.
The management rights were held by Cayman Wireless, a subsidiary of Canada's Craig Wireless and by Malcolm Dick's Blue Reach Wireless.
Blue Reach paid $500,000 for 30 MHz of 2.5 GHz spectrum in 2007, and Craig Wireless $500,000 and $555,000 respectively for two lots of 20 MHz in the same range, $1.91 million in total in today's money after adjusting for inflation.
Management rights holders in New Zealand must use the radio frequencies they've been allocated and not sit on them, a practice known as spectrum squatting.
Starling said MBIE has done on-site audits and found that the spectrum that was sold was in use at the time of audit, albeit not to a great extent.
"More generally we note that lack of affordable equipment and lack of customer demand have impacted on use of this band, and none of the four (now three) owners of these management rights have, so far, put it to extensive use," he added.
Dense Air said it will not use the spectrum to compete with existing mobile or fixed-wireless service providers throughout the country.
Instead, the UK company will operate at the wholesale level and hopes to supplement existing operators' networks.
"We are very excited about the opportunity to bring a completely new type of wholesale service to New Zealand's network operators," Dense Air chief executive Paul Senior said.
"Dense Air's service offering will complement existing 4G investments and planned 5G deployments. By adding neutral host 4G and 5G small cells, running in licensed spectrum to networks at cell edge, either outdoors or indoors we can dramatically improve the service experience to end users," Senior added.
The company claims it has plans to invest in 4G and 5g networks in New Zealand. Photo/Getty Images.
Dense Air calls itself a "Carrier of Carriers" operator and said it intends to offer commercial services starting next year in New Zealand.
Radio frequency spectrum is a finite resource with more bandwidth required to support high-speed 4G and upcoming 5G mobile and fixed data services.
Technological advances have meant that it's possible to join up carriers, or signal bands in non-adjacent frequency ranges for greater capacity.
As a result, spectrum auctions for management rights have netted governments large amounts of money. In 2014, the "digital dividend" auction brought in over $270 million plus GST for the New Zealand government.
Craig Wireless sold 70 MHz of 2.3 GHz spectrum to Spark in 2016, which was used by now-defunct provider Woosh. Spark has management rights for 274 MHz of spectrum, ranging from 700 MHz to 3.5GHz, in bands of 7, 15 and 20MHz.
Vodafone has 315 MHz in bands ranging from 700 MHz to 3.5 GHz, and more in higher frequency ranges such 25-26 GHz.
2Degrees Mobile and its American owners Trilogy International Partners meanwhile have 100 MHz worth of management rights between 700 MHz to 2.1 GHz.
Many of the management rights above are set to expire in the next few years, including the 1800 MHz and 2.1 GHz bands that are actively used for 3G and 4G service by telcos.
The government asked for submissions on the renewal process for 1800 MHz and 2.1 GHz spectrum in May this year, and sought input on how providers should pay for management rights and whether or not they should be extended to longer terms for greater industry certainty.
