15MHz for Maori; 10MHz each for the three telcos

In part two of Q and A with Te Huarahi Tika Trust trustee Antony Royal, he discusses spectrum allocation and Chinese investment

In the second part of Computerworld's Q and A interview with Antony Royal, Te Huarahi Tika Trust trustee discusses the Trust's bid for a slice of the spectrum that will become available when analogue television is switched off, and he discusses Chinese investment in iwi-led telco projects.

The submission from Te Huarahi Tika Trust on the 700MHz spectrum allocation, rather than an auction it suggests that the Trust gets 15MHz (paired), and 10MHz each goes to the three telcos. How would it work?

It does appear from the research that the 700MHz spectrum is best used by mobile providers. There are three mobile providers out there in New Zealand. Yes we could potentially see a fourth mobile provider come to New Zealand but I would imagine it would be even more difficult than bringing the third mobile provider.

There are still many hurdles for a new entrant coming into the market, so the chances of a fourth entrant are I think fairly low. So what we’re left with is three mobile providers from a pragmatic sense you need to figure out how to divvy up amongst the three.

The rationale behind the submission the Te Huarahi Tika Trust put forward is firstly the amount of spectrum allocated — while not as much as what Maori in general would prefer and maybe more than the Crown would prefer — is a pragmatic solution.

We would like the opportunity to build relationships with the telcos, not just with 2degrees but with Telecom and Vodafone.

So the idea is that they’d all have 10MHz, but to get the additional 5MHz, they’d have to work with you?

Yes. It would help us build a relationship with those telcos.

Have you spoken to anybody in Telecom and/or Vodafone?

Not specifically about the proposal.

The allocation would be given to the Trust – you wouldn’t pay for it?

We don’t believe we should have to pay for resources we believe we have an interest in.

But you would expect the telcos to have to bid?

Although we don’t necessarily believe either that the auction process, which is an auction process designed to maximise the amount of revenue from a scarce resource, we don’t necessarily believe that’s the best way to allocate it either.

Sure, the government might end up with some short term revenue but in the end it’s the consumer who pays for it.

There is a parallel process around this spectrum allocation. There’s the one that’s being led by the Ministry of Economic Development, which this submission is responding to, and there’s another process at the ministerial level between Pita Sharples and Steven Joyce.

Let’s not confuse the proposal on the 700MHz with the discussion the Crown has to have with Maori as a whole. We would have hoped that that discussion would have come to a satisfactory conclusion by now but then it’s taken decades to get to this point so we’re not surprised, we can wait a little longer, and wait we will.

A change of government – would that alter anything?

I think what’s really important here is the principles which need to go right past whose in government at the time. This is a discussion between Maori and the Crown and, yes, representatives of the Crown may change but the principles need to remain the same.

That discussion is a separate discussion and that discussion is with the claimants, it talks about the entire spectrum, not just 700MHz. Our proposal is to say look, let’s sort this out here. In the meantime we wanted to look at 700MHz spectrum, that portion of it and here’s our view.

From a technology perspective is where are we going with the 700MHz spectrum? What we have to do is find the best use of it and at the moment it does appear that internationally it is still not quite settled, we’re still not quite there. So we don’t want to make a mistake, because if you do it at the wrong time and you don’t get it right, it’s a long time before you can fix it.

Are you saying the government is rushing the process and that maybe its better to wait?

I think before allocating spectrum we should be quite clear about where we’re going and make sure that internationally we’re aligned with where everybody else is going. There’s no use allocating spectrum if suddenly nobody is making any devices. There are a bunch of other spectrums that are being used for 4G and LTE which are being used right now – Australia’s rolling out 4G and the US is rolling out 4G, but not on the 700MHz.

The US plan is a bit of a mess.

There are very, very powerful lobby groups over there that protect their own. In New Zealand we’re quite lucky in that regard in that we can make decisions based on logic and on what’s best for New Zealand — not what’s best for a particular lobby group.

What we’re seeing now is an alignment with iwi and Chinese investors in telecommunications – Huawei in 2degrees is one, and Axin (which is connected to China Telecom) in Taitokerau fibre network in Northland is another. What’s the relationship there?

It’s very interesting the Chinese and Maori relationship. Culturally they’re very similar. Have very similar values, and if you get to understand them then they become much easier to deal with. The Chinese have got a long history here in New Zealand.

The 2degrees relationship with Huawei was laughed at early on but I think that Huawei’s becoming an international leader in the field of telecommunications.

There’s been a big push for Chinese investment in telecommunications in New Zealand, Trade Minister Tim Groser is encouraging it, there’s a Free Trade Agreement with China and Maori seem to be at the forefront of it.

I think it’s the way we deal with Chinese at a cultural level. They invest for the long term; they’re interested in doing things that have multi-generational benefits.

So did Axin approach iwi to invest in Taitokerau?

Axin has been looking at investment in New Zealand for a while; it has actually been doing work here for some time. They were looking for some funding and Axin became aware of it and my understanding is they got together and discussed it.

I think they’re interested in investing in New Zealand because, firstly the FTA, first country in the world to have a FTA with China. They’ve come to trust New Zealand as one of those countries they’re prepared to experiment with.

We’re fairly small, relatively safe to deal with, and have a stable political and financial environment. And my guess is that if they can figure out how to do it here in New Zealand then there are opportunities for them to replicate that in other countries – that’s my view.

Will we see more networks like Taitokerau being built?

I think we will see more investment in projects for New Zealand. It’s thoroughly interesting what’s happening in the telecommunications sector. Everything was kind of gone on hold while UFB and RBI were being sorted out. Now we know what the shape of those are, we also see that they’re not going to solve all our problems.

There is still a lot to do, still a lot of opportunity.

I think people have got over the ‘oh my god this is all going to be doom and gloom’ and are saying we know what shape it is, let’s figure out where to go to next.

You were disappointed not to participate in RBI.

Of course we were disappointed, we naturally believed we would have had a better outcome but we are where we are. We now have Nga Pu Waea.

That’s come out of RBI — it started with the RBI, and now it’s also with the UFB.

What we’re doing is building the relationships with the telcos. We’re not there to beat them up with a stick. We’re there to find those opportunities, find those missing gaps and see how we can fill those missing gaps.

What we’re really looking for is opportunities for skills development, training, jobs, particularly for Maori, but also for everybody.

Part one of Q and A with Antony Royal here.

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