Hands off the spectrum cap says CallPlus

MED consulting on the whether to lift spectrum cap in 2.3/2.5GHz bands to enable Woosh sale to Craig Wireless

If the cap is lifted on the amount of radio spectrum a company can own in the 2.3/2.5GHz spectrum bands to ensure the sale of Woosh, it will set a dangerous precedent, says CallPlus.

The Ministry of Economic Development is carrying out a closed consultation with spectrum holders on the 2.3/2.5GHz spectrum band that was auctioned in 2007. It is seeking comment on a request to lift the spectrum cap of 40MHz in order to facilitate the sale of Woosh to Canadian company Craig Wireless.

Craig Wireless has offered to buy Woosh for $5 million and Woosh chairman Rod Inglis will contribute $500,000, but the sale is conditional on the company getting hold of Woosh’s spectrum rights.

Only right holders in the spectrum bands are being consulted, which includes CallPlus. Its CEO Mark Callander says lifting the cap to allow the sale could have serious implications for other spectrum bands.

“If the rules were changed now to enable this acquisition it may potentially encourage more speculation which will limit competition further and artificially increase the cost of building wireless networks in New Zealand,” he says.

“The MED is currently in the process of receiving submissions on Digital Dividend spectrum (700MHz) and several players in the industry have raised concerns over how the MED is simply trying to change the rules in relation to the 2.3/2.5GHz spectrum without due process and consultation. This may set a dangerous precedent that could impact the rules in all spectrum bands.”

Callander says Craig Wireless “is well known for being a spectrum speculator” and it is unlikely to use the spectrum in a network deployment.

Woosh disputes speculation claim

Woosh chairman Rod Inglis strongly denies Craig Wireless is a “spectrum speculator” and says it has built networks in Greece, the US and Canada. He says that if the sale goes through Craig Wireless will use the spectrum to deploy a network using the 2.3/2.5 spectrum band. He wouldn’t comment on what kind of deployment (ie, LTE or Wimax), if it will partner with Kordia (as it had intended to for the Rural Broadband Initative) or what will happen to Woosh if the sale doesn’t goes ahead.

Inglis points out that the spectrum caps are due to be lifted at the end of next year, and that it wouldn’t set a precedent to remove them early because the 2.3/2.5 band is the only one that currently has spectrum caps. He wouldn’t comment specifically on caps for the 700MHz spectrum currently being debated.

“Our position is that provided competitive services are being provider, that are good for the benefit of the consumer then the spectrum should be used in the most efficient way possible,” he says.

“The caps go at the end of next year anyway; it’s only a temporary measure. As far as I can see caps are there to enable everyone to get some spectrum and to make sure there’s no abuse of market power.”

MED’s response

MED manager for radio spectrum policy and planning Len Starling also denies that lifting the cap in the 2.3/2.5GHz spectrum will set a precedent for other bands. “Acquisition limits are put in place to safeguard competition or other government objectives and, when used, are designed specficially for a particular frequency band. If the acquistion limit begins to inhibit investment ... the government can vary terms of the deeds by agreement with deed holders,” he says.

Starling says this occurred in the 2.1GHz band in 2010. He says MED is not planning to publicly release submissions on the proposal to lift the cap in the 2.3/2.5GHz band because several contain commercially sensitive information. He says in addition to consulting rights holders, the MED has spoken to the Commerce Commission, and that a decision on whether the cap will be lifted will be made soon, but he could not give a timeframe.

He says the acquistion limit expires in December 2012 and that despite seven companies buying rights in the 2.3/2.5GHz bands when it was auctioned in 2007, only one company has implemented services in the band.

Caps favour small players

Callander says “the only industry players likely to be in favour of removing the spectrum caps is the large incumbent mobile operators”.In the submissions to the MED discussion paper on the 700MHz submission, some telcos have referenced the proposal to lift the cap in the 2.3/2.5GHz band.

Vodafone applauds the move saying “a balance must be struck between competition checks and the ability to innovate.”

2degrees rejects the idea of lifting caps early, saying early removal of “raises concerns regarding the integrity of acquisition limits”

Computerworld approached Craig Wireless for comment but had not received an answer at press time.

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