Devil's in the detail when comparing RBI bids

Computerworld looks at the Telecom/Vodafone and OpenGate proposals

The announcement on Monday that the government has opted to negotiate with Telecom and Vodafone to roll out the Rural Broadband Initiative has triggered a strong response from its rivals Opengate (Kordia, Woosh and FX Networks), with a claim the two telcos are using outmoded technology.

Central to Opengate’s argument is that the Telecom/Vodafone bid will provide only 3G connectivity, while it says it can roll out a 4G network. In terms of end-user experience that is said to amount to download speeds of 5Mpbs (Telecom/Vodafone) versus 10Mbps (OpenGate).

However, in a statement on its website addressing the key points for choosing Telecom/Vodafone, the Ministry of Economic Development states the Telecom/Vodafone bid guarantees of the coverage objectives are superior to all other proposals.

Computerworld asked the MED to justify that statement. The ministry replied in an email:

“Coverage figures have been calculated by each company using radio propagation planning tools. To ensure ‘apples with apples’ comparisons between the bids, the Ministry of Economic Development specified the database of address points to be used in those calculations.

“The ministry did not repeat the radio frequency coverage planning undertaken by bidders, as they have very experienced engineers with the expertise to do that planning. Designs had been peer reviewed internationally. Vodafone's coverage calculations were peer reviewed by Vilicom.

“Uplink speed and service levels in the fade margin also become a consideration of coverage, particularly when comparing one proposal with 86% coverage and another with 83% coverage. MED's view is that end users should be able to make a VoIP call plus use best efforts [for the] internet at the same time.

“If contracts are agreed as part of the RBI, Telecom and Vodafone will have to guarantee their RBI coverage figures.”

The devil is in the detail

In its statement, MED says a key point is that 97.8% of households will receive a minimum of 5Mbps and that many will get faster download speeds.

The RFP document requests that tenderers deliver a BUBA or EUBA specification product. It is expected that the respondents will provide a range of wholesale services that are equal to or better than Telecom Wholesale’s BUBA and EUBA services.3

The minimum specification for (basic) UBA is an average of 32kbps – much less than the 56Kbps ICT Minister Steven Joyce says many rural households experience now.

The RFP stated there should be "99.9% probability of providing to any provisioned end user a minimum uplink and downlink average throughput of 32kbps during any 15-minute period on demand" In other words, 5Mbps is not continuously guaranteed. At an OpenGate presentation in Wellington late last year, some interesting numbers were raised. Most cell towers in a city run at 14.4Mbps and a few at 28.8Mbps. It was suggested that once there were six users on a tower, running concurrently at a full 5Mbps, the 28.8Mbps would be chewed up. Given that the rural initiative proposed by Telecom/Vodafone involves around 500 towers, that would allow for just 3000 users running concurrently at 5Mbps. According to Vodafone’s response to the RFP, there are 585,000 individuals and 200,000 households in the rural sector. The form of 4G which OpenGate was proposing is the first version of cellular based on IP. 3G puts IP over the voice infrastructure. With 3G, when a user logs on, a little bit of the spectrum is reserved to that user, though most of the packet is empty. 4G doesn’t reserve anything for the user. That said, Communications Minister Stephen Joyce has categorically stated that 4G is an unproven technology. Moreover, he says that OpenGate’s bid was not accepted and that there would be a need to retender if negotiations with Telecom/Vodafone fell over. Joyce also suggests figures of $100 a month for 5Mbps (Telecom/Vodafone) and $60 a month for 10Mbps (OpenGate) are way out of wack. “We aren’t announcing the pricing at this time as the detail is still subject to negotiation,” he says. “Vodafone and Telecom provided competitive prices at levels that were encouraging. Price is obviously a factor in choosing the successful bidder.” There is no mention of datacaps. Pricing without that information is useless. OpenGate’s technology in Australia Last week in Australia, Vividwireless announced it could be offering customers services via TD-LTE (4G) with 18 months, after a two-month trial. “Vividwireless found TD-LTE to be more mature than it had expected and is now mulling blending the technology straight into its planned deployment in Sydney, Melbourne and other eastern capitals,” the company says. Vividwireless owns 98MHz in the 2.3GHz band and more than 90MHz in the 3.4GHz band. It notes that the ecosystem is less well developed for 4G in suitable devices. A report this month by research company IHSiSuppli forecasts 303 million LTE (long term evolution) subscribers worldwide by 2014. The researcher says LTE will become the dominant 4G technology by 2012, with more than double the number of users of the alternative WIMAX. OpenGate said at its December presentation that India and China were committed to 4G. In Europe, Germany has already auctioned spectrum for 4G. Third bidder Meanwhile the other unsuccessful bidder, Torotoro Waea, has adopted a more low-key approach to voicing its dissatisfaction with the outcome. Spokesman Antony Royal told Computerworld on the day of the announcement that the RBI decision is disappointing.

“History tells us that Telecom and Vodafone are not really interested in New Zealand," he claims. "I’m not convinced that they will deliver, though we would welcome discussions with them.”

But he says the announcement is unlikely to impact the proposed Taitokerau network – the first stage of which is a $9 million fibre link between Whangarei and Auckland — other than that Telecom may become a customer.

The project is being managed by a strategic equity partner and telecommunications operator, Datalight Ltd – the company that leads the OPTO Consortium and is also acting as general partner for Torotoro Waea.

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