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Second spectrum auction favours Vodafone, says new 2degrees director

By Vodafone is favoured by the government's decision to press on with the second 4G mobile spectrum auction in two months to dispose of the two "pairs" of 700 Megahertz spectrum in last month's bidding round, says newly appointed 2 degrees director John Stanton.

Any suggestion there was a need for additional 700Mhz spectrum in the short term was "ludicrous" and "specious", Stanton told BusinessDesk in an interview from the US.

The effect of Communications Minister Amy Adams's decision this week to proceed with the auction will almost certainly advantage the deepest pocketed player in the New Zealand market, multi-national carrier Vodafone, says Stanton, the largest individual shareholder in Trilogy International Partners, the American 60 percent shareholder in 2degrees.

"If the government intentionally or unintentionally gives a competitive advantage to a hugely well financed company like Vodafone, that disadvantages us and Telecom," he said.

In much of the world, and especially the US, new mobile spectrum was becoming scarce as mobile digital technology takes off, but that pressure has yet to emerge in New Zealand.

"Because it was a duopoly for longer than most, (New Zealand's mobile market) developed more slowly."

Moreover, the world is waiting for a supply of compatible handsets to emerge for 700Mhz mobile services in coming months, further reducing the urgency for the sale of New Zealand spectrum in that radio frequency band.

"We are prepared to compete forever on a level playing field," said Stanton, who says the Trilogy directors' success over nearly three decades in wireless and mobile technology, first in the US and then globally, lies behind 2degrees' success in carving a third player niche in the relatively small New Zealand market.

"The little guy sees the government as a source of protection from the big guy. We are looking for them (Vodafone) not to get an unfair advantage by having more spectrum at a particular band," said Stanton.

Telecom backs 2degrees' view, as does Labour associate ICT spokesperson Clare Curran, who has written to the Commerce Commission to complain about the second round of spectrum auction.

Both Telecom and Vodafone have sought clearance from the competition regulator for the right to acquire more spectrum, and the outcome of the auction will depend on the Commerce Commission's view of the potential for unfair commercial advantage to any party of owning substantially more 700Hhz spectrum than competitors.

Since it was only seeking to recover the national costs of converting from analogue to digital TV broadcasts, "the government does need to do it for the revenue," said Stanton. "The competitors don't need it for the capacity, or the coverage, so you can hold it in abeyance."

2degrees has less capital available for buying assets it may use in the future and is only just finishing the capital-intensive roll-out of its own 3G technology network, and would prefer a breather before being pushed to invest in 4G, having already spent $450 million since start-up in 2009.

Stanton is stepping onto the 2degrees board as a final consequence of the death of former Trilogy executive and 2degrees chief executive Eric Hertz in a plane crash in the sea off the west coast of the North Island in March this year.

Trilogy's former chief technology officer and 2degrees chairman, Stewart Sherriff, has stepped into Hertz's shoes this year and current Trilogy director, Brad Horwitz, has taken the chair.

Stanton has co-founded three, top 10 wireless operators in the US in the last 25 years. He helped found McCaw Cellular Communications (sold to AT&T in 1994), was the founder of Western Wireless Corporation (sold to Alltel in 2005), which created Voicestream (sold to Deutsche Telekom, now T-Mobile in 2001), and co-founded, along with Horwitz, Western Wireless International, which operated mobile networks in 12 countries around the world. He chairs the board of another US mobile play, Clearwire Corp.

Asked about emerging talk of 5G technology, Stanton was dismissive: "As soon as someone can tell me what 5G is, then they will start talking about 6G just to make you think you don't know something."

(BusinessDesk)

Comments and questions
1

It's now up to the Commerce Commission to determine whether or not Vodafone or Telecom can buy that much spectrum, as it will give the winning company a major advantage in the marketplace.