Spark, Vodafone, 2degrees scorn 'self-serving' 5G build proposal from Chorus

The suggestion that taxpayers should fund the 5G network was "ludicrous", said Spark CEO Simon Moutter.
Spark CEO Simon Moutter says "To jump straight to a conclusion that we need a monopoly network would be crazy." (Photo: Jerry Yelich-O'Connor)

New Zealand's two largest mobile telecommunications providers, Spark and Vodafone, have poured scorn on a proposal by fixed broadband network owner Chorus that the next generation of so-called 5G mobile technology should be built on a shared, regulated, government-backed basis.

2degrees has also weighed in against Chorus' proposal to build a new, faster mobile network on similar terms to the UFB for landline broadband.

That proposal was "self-serving and misleading", said a statement from Vodafone issued in the absence of local chief executive Russell Stanners (who is offshore), which came very close to accusing McKenzie of lying about 5G and trying to influence the new government.

Spark CEO Simon Moutter said in a statement that "a monopoly is and always should be the last resort option for a market, not the first as Chorus is proposing".

For 2degrees, head of corporate relations and wholesale Mat Bolland says, "In the past eight years, infrastructure competition between three mobile operators has delivered consumers’ price and product benefits that other industries would struggle to match. New Zealand is fortunate enough to have a mobile market where three players have pushed each other to invest in the latest technologies, resulting in innovation that would not have been possible via a common network.

Mr Bolland says cooperating on mobile infrastructure can make sense in remote rural areas, as Spark, Vodafone and 2degrees are already doing (the trio posted a joint bid for Rural Broadband Initiative 2 funding, beating out Chorus).

And he implies that any 5G cooperation in urban areas will also be between the trio of retailers, leaving Chorus out of the loop.

"The underlying fabric that each operator has created will be the foundation for 5G. If it makes sense to cooperate on elements of 5G then we’ll do so – while remaining fierce retail competitors," he says. 

The suggestion that 5G technology should be built using the same government-backed model used for the national rollout of ultra-fast broadband came in comments to BusinessDesk from Chorus chief executive Kate McKenzie and coincides with the publication of submissions to a Commerce Commission examination of how the mobile market is likely to develop.

"The conditions that led to the UFB model - a vertically integrated incumbent and a lack of high-speed broadband - simply do not exist in New Zealand's mobile market," the Vodafone statement said.

The suggestion that taxpayers should fund the 5G network was "ludicrous", said Moutter.

The country's three mobile network providers, which includes Canadian-listed Two Degrees Mobile, were creating competitive, fast, reliable networks "and some of the best value services in the world", said Vodafone. "All three mobile operators have rolled out 4G independently of government intervention, structural separation and financial incentives."

Chorus's McKenzie said the capital expenditure required to expand into 5G would be an "insane" and "unsustainable" expense leading to major duplication of installations that would be required every 200-to-300 metres as the next generation of mobile technology will be supporting the expected explosive growth in the so-called 'Internet of Things', which will see possibly billions of internet-connected sensors supplying data to systems that will manage anything from measuring traffic flows, to sewage system performance, to self-healing machines and precision agriculture.

Many of McKenzie's claims were "simply not true", Vodafone said. "5G is an evolution of 4G and will involve a straightforward technology upgrade for the vast majority of cell sites."

"We are confident the competitive market will deliver this upgrade without resorting to government intervention, as was the case when 3G evolved to 4G technology."

While there were times when industry-wide collaboration made sense, Chorus should focus on delivering "improved UFB services ... at competitive price points" rather than seeking "new revenue opportunities in markets that are already performing well".

"Doing this would put Chorus in good standing to be a partner in Vodafone's future 5G network plans.

"The new government should be very wary of any proposal put forward by Chorus that seeks to leverage its existing monopoly in UFB to create an unwarranted monopoly in the mobile market."

Moutter said "sensible infrastructure sharing where that can speed up deployment or address visual pollution issues" may be justified "but to jump straight to a conclusion that we need a monopoly network would be crazy".


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