Auckland, New Zealand: OpenGate (Kordia and Woosh Wireless) and FX Networks, who together put in a consortium response to the Rural Broadband Initiative request for proposal (RFP), are dismayed by the Government’s decision to stick with the status quo provided by the incumbent duopoly.

Kordia CEO Geoff Hunt says that this decision effectively condemns rural communities to suffering from same old duopoly services that continue to under-deliver and hold rural New Zealand hostage.

“The government had an opportunity through the RBI to provide a technology step-change in services for rural New Zealand that would have laid a future-proof and highly competitive foundation for the next 15 years,” he added.

“We should remember that this was supposed to be the rural broadband initiative and not the rural mobile initiative.”

Hunt says that Telecom’s copper has been rejected for urban New Zealand, and performs even more poorly in rural environments. “The 3G element of the Telecom Vodafone solution is being superseded all around the world by 4th generation wireless (4G) technologies like TD-LTE. OpenGate’s proposed technology solution for the RBI was 4G wireless. Australia, India, China and the U.S. are all planning to roll out this technology now, and between them will have over one billion customers. We thought this would have been a compelling sign for New Zealand if the Government wanted to keep in-step with its key trading partners. Alas, no,” says Hunt.

Instead of 4G and genuine competition today, the Government has opted for limited 3G broadband across much of rural New Zealand, and to greatly diminish competition by handing over the fixed broadband market to the incumbent mobile duopoly.

The OpenGate and FX proposal would have delivered 83% of rural New Zealand with speeds in excess of 10 Mbps; 68% with speeds up to 20 Mbps and 88% with speeds of 1 Mbps or more. Within two years, more than 80% of all households and schools in rural New Zealand would have had access to seriously fast broadband.

Hunt says that the TD-LTE technology that OpenGate and FX proposed would have future-proofed the connectivity of rural communities. “The 3G component being offered by Vodafone is old technology, and is effectively an extension of their mobile voice network with data over it, which will be contended and prone to latency – delivering an unnecessarily poor customer service experience.

“Telecom is also in contract negotiations to deliver Ultra-Fast Broadband, which requires them to deliver up to 100 Mbps in urban areas. Rural access to up to 5 Mbps will hardly close the digital divide,” says Hunt.

Hunt says that OpenGate’s proposed open access network exceeded requirements, but fears that the definition given to open access by Vodafone may be somewhat narrower. “Vodafone has already said they are not seeking funding to build the radio access network (RAN), which means they have no plans to deliver a wholesale end-to-end service. Statements regarding magnanimous co-location offers are simply more of the status quo. They have to do that today,” says Hunt.

“Truly open access in the radio access network would have stimulated new product development, innovation and competition. With this decision, rural customers will see rebadged Vodafone products only – and Vodafone will dictate the price. If there is no competition at the wholesale level, there will be no pressure for prices to reduce over time.

“Look at what happened to competition in the international bandwidth space when we announced our trans-Tasman cable project. Incumbent prices first dropped by 50 per cent, and then down to less than a third of the original price. Without competition, it is hard to see this duopoly doing anything other than rolling out the minimum requirement of 5 Mbps over six years. Urban users in the same timeframe will have access to 100 Mbps.

Vodafone and Telecom do not currently own the spectrum required to roll out 4G and will not be able to access it until 2014 – assuming they are successful in the auction process.

“Any upgrade path promised by Vodafone and Telecom is hypothetical, as it can only follow the 700 MHz spectrum auctions that are planned some time before 2014. Vodafone will have to compete with other parties to buy spectrum, so unless the government has accepted their bid conditionally on the outcome of the spectrum auction, or plans to alter the auction process accordingly, delivery of any promised upgrade is not a certainty by any means,” says telecommunications consultant, Ernie Newman.

Hunt adds that all too recent history shows that once the incumbents deploy, there will be no incentive without commerce commission action and government intervention to upgrade.

“This is not the right decision for rural New Zealand,” concludes Hunt. “The opportunity to quickly close the digital divide with urban New Zealand has been lost. Effective and future-proofed wireless communication requires critical investment in the latest technology and the upgrade path that it will offer. Sadly the government has chosen to invest in what they know - copper and 3G, both of them well down the path to obsolescence.”

ENDS

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