Kudos to Rod Drury for chipping in various ideas for how New Zealand can speed its coronavirus recovery.
I love that he's pushing Commerce Minister Kris Faafoi on contactless payments, and his foreign billionaire bolt-hole idea has provoked some useful discussion.
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But one of his pandemic responses - "Let's treat 5G towers as public infrastructure" - has me baffled.
"With New Zealand and Australian superannuation funds looking for stable long-term investments and with low interest rates, let's apply the UFB model to 5G and kickstart the capital works. Let's have the best mobile data infrastructure in the world. This requires no government funding - just regulatory intervention to separate critical infrastructure from the retail service layer," Drury said.
I agree with the Xero founder that the Ultrafast Broadband (UFB) rollout is a textbook piece of government intervention.
Without the Crown stepping in with public-private partnership, the old Telecom would have sweated its copper lines for years - quite understandably from the point of view of its shareholders, but hampering NZ's economy as a whole.
As such, the UFB has been a classic piece of limited intervention for the greater good of business.
But I'm not so sure on Drury's concept of applying the UFB model to mobile.
With 5G mobile upgrades, we have Vodafone and Spark both champing at the bit. Vodafone wants to extend the lead it grabbed in August when it launched NZ's first mobile 5G service in parts of Auckland, Wellington, Christchurch and Queenstown, and Spark is sufficiently keen to catch up that it's sidelined long-time key partner Huawei in favour of Nokia and Samsung to skirt the GCSB's hold-up.
There are two temporary hold-ups: one the coronavirus putting a crimp on the 5G auction originally planned for last month, plus upgrades in the field, and the other a long-standing iwi claim. Both would remain even if a UFB model were adopted.
Spark and Vodafone's 5G rollout are going to take three to five years, as things stand.
On one level, Drury's kickstart idea appeals. I'd like 5G everywhere in less time than that. But even though Telecom's being cleaved into Spark and Chorus, and a $1.7 billion injection from the Crown only accelerated the fibre rollout so much. Once all wrapped up, the UFB will have been a 12-year project.
Fibre is mostly a natural monopoly. Whereas we have 3 mobile networks, suggesting mobile is not.— The masked Rohan MacMahon (@rohmac) April 29, 2020
So that’s a further reason “applying the UFB model” - in the sense of Government funding and retail/ wholesale separation - doesn’t seem right for 5G.
Granted, 2degrees seems in clear and present danger of being left behind on 5G, with its parent company already heavily in debt, and its most obvious source of capital for an upgrade - vendor-financing from Huawei - put on hold by the spooks in the capital. There's no doubt that 5G would be more competitive if 2degrees joins the party (a recent Commerce Commission report found a number of our mobile plans were more expensive than Australia, but overall we're now doing well, and cheaper than the OECD average). And the government is doing its bit to get them in the door, with its recent announcement of low-reserve pricing on 5G spectrum, plus caps on the amount that that Spark and Vodafone are allowed to bid on.
It's the fixed-wireless, stupid
But whereas competition in 4G was all about 2degrees shaking things up, the current broadband landscape is dominated by fixed-wireless services offered by Spark and Vodafone v Chorus fibre.
Fixed-wireless uses a mobile network to deliver broadband to one spot - a home or business - as an alternative to a landline, literally and financially cutting Chorus out of the loop.
Spark and Vodafone are offering fixed wireless plans cheap, with data caps, to steal business from Chorus. And Chorus is offering the world's fastest fibre plans, cheaply, to defend its turf. It's a great competitive dynamic that's giving us some of the fastest, most keenly priced broadband in the world. Yes, you can find a handful of places that have it better, but not many. We're right up there.
Witness the way our broadband held up so well during the first week of lockdown crush, and ye olde traditional voice-calling suffered congestion. There were a couple of minor outages, but overall, it's so good that people take it for granted.
Spark and Vodafone want to roll out more 5G, and as soon as possible, because it will make fixed-wireless service more compelling. This is just my theory. Vodafone NZ's new 50 per cent owner Infratil has told shareholders that 25 per cent of the telco's customers will be on fixed-wireless within two to three years.
Chorus has already floated a Drury-style idea of one company managing all cell-tower infrastructure in the same manner as it controls all fibre (it did not suggest itself, but its CEO knew full well that Chorus was the only player with the wherewithal to take on such a role).
But with Chorus in charge of most landline infrastructure, and 5G mobile network upgrades too, we would lose that landline v fixed-wireless tension that's driving competition, and roll outs of new services, today.