Telecom & Vodafone snooker 2degrees over rural celltowers

At the TelCon11 conference in Auckland today, Telecom’s Vodafone’s Steve Rieger and Telecom’s Michael Gaunt took to the stage to pitch their world view on the government’s $300 million rural broadband initiative.

Communications minister Steven Joyce told the same audience that, assuming a few remaining wrinkles are ironed out, the government should sign a contract with the pair within a fortnight.

The duo said their open access wholesale network would provide dark fibre to all-comers – a point of contention up to now.

Mr Guant also said that Telecom would put XT transmitters on the 154 celltowers that will be built for the project (up until now, that hasn’t been clear).

The pair said the government’s budget only extends to the celltowers themselves.

Telecom and Vodafone will use their own money to put their own transmitters on the towers - set to be up to a monster 25m.

Special headframes will mean that 2degrees can add its own transmitters at the same height. Any wi-fi or wi-max operators who come onboard in future will have to be a rung down, but will pay less.

62% of schools, accounting for 79% of pupils, will be connected to fast fibre within the roll-out’s first year.

25% of rural homes will get faster-than-5Mbit/s wireless broadband over the first year; 41% and from there it will jump in steady increments to 80% coverage by year six.

Landline broadband will be rolled out to 32% of homes in the first year, then will stick at that level for three years at Telecom and Vodafone concentrate on wireless before returnig to "fill gaps".

Mr Gaunt said Telecom and Vodafone had no ability, or ambition, to make a profit on the government subsidised rollout (though some critics have argued they could put the squeeze on the bits inbetween).

But, but, but …
It all looks good on paper.

But 2degrees’ chief commercial officer Bill McCabe was unconvinced.

Mr McCabe said each company putting its own electronics on a tower was costly and inefficient, and not the model followed in most countries.

2degrees prefers a shared RAN (radio area network) where there is one set of electronics on each tower – shared by all phone companies using the tower – then traffic is split once it reaches the main network.

Telecom and Vodafone counter that the RAN model inhibits upgrades. If three carriers share the transmitter on a tower, they all have to agree before it can be upgraded.

2degrees sees regulated national roaming (that is, where it could use Vodafone's 3G network, as it does now for national roaming, albeit at 2.5G) as another alternative.

Co-lo ... where it gets worse (for 2degrees)
A bigger issue: while Mr Joyce praised Telecom and Vodafone for offering co-location (which he did not see supported by the rival Kordia/FX Networks/Woosh bid) at TelCon11, and elsewhere he has restricted his comments to the 154 new towers.

Yet the Telecom-Vodafone bid sees rural New Zealand covered by 540 towers. The balance already exist, and most are too low for co-location.

Vodafone’s Reiger admitted that of the 387 existing towers; only about 60% will be co-locatable.

Where the towers are too short for colocation, “then we have to add, rebuild or extend – that’s just how it is," Mr Reiger said.

He added: “The MED* is not funding those towers.”

No wonder the 2degrees table looked glum.

*Whereas Crown Fibre Holdings is wrangling the urban ultrafast broadband project, the Ministry of Economic Development is overseeing the rural broadband initiative.