Rural Broadband goes down to the wire

Computerworld considers the bids ahead of Friday’s deadline

The request for proposals for the $300 million Rural Broadband Initiative (RBI) closes tomorrow, with bids still being put together at the eleventh hour.

New Zealand Regional Fibre Group (NZRFG) CEO Vaughan Baker says that cooperation between all interested parties is being actively encouraged by the Ministry of Economic Development. “We’re proposing to partner with almost anyone and everyone as far as mobile and wireless is concerned, because the nature of it is that it is open access and it needs to be designed to support a variety of solutions.”

The parties Baker is in discussion with include Vodafone, FX Networks, Kordia, but not Chorus or Telecom; although Baker says he is open to talking with the incumbent rural provider.

NZRFG is the alliance of line companies and independent fibre companies formed to compete for the $1.5 billion Ultra Fast Broadband scheme. The UFB is administered by a separate government agency Crown Fibre Holdings and commercial negotiations are being conducted behind closed doors.

The RBI, on the other hand, will be a more public process, partly because it is a direct grant. (The government is not expecting a return as it is with UFB). The majority of the RBI funding is from an industry levy that replaces the controversial Telecommunications Services Obligation. The goal is to build a broadband network that delivers 5Mbit/s download speed to 97 percent of households and enterprises and 1Mbit/s to the last three percent.

The RBI plan is to roll out fibre to rural schools, which then act as connectivity hubs for their surrounding communities. Only national bids will be considered, so fixed line infrastructure players are lining up with wireless operators to pitch a total solution.

Kordia declares its hand

Kordia is the only provider to have publically stated who it intends to partner with in its RBI submission. CEO Geoff Hunt announced at the SOE’s first public meeting in late October that it would work with Woosh and FX Networks.

Kordia’s core broadcasting business is about to become obsolete when the government switches off analogue television transmission in November 2013, so it has been shifting focus from broadcasting to broadband delivery.

Kordia spokesperson Emma Morrison says its bid will use the WiMax spectrum owned by Woosh and Kordia and take advantage of its broadcast towers that it currently uses for analogue TV transmission. Kordia may also bid for the 112MHz radio spectrum that will come available when analogue television is switched off. This spectrum is necessary for telcos to roll out 4G mobile networks.

4G spectrum

Bidding for ‘4G spectrum’ would put the SOE up against Vodafone, Telecom and 2degrees. There isn’t enough spectrum to accommodate all mobile operators, so either some miss out or they work out a way to share the spectrum between them. Complicating the spectrum auction will be Treaty of Waitangi considerations.

It is against this backdrop the Ministry of Economic Development will be considering the bids for the RBI.

Vodafone’s proposal

In its presentation to the TUANZ Rural Broadband Symposium last month Vodafone proposed to build an additional 150 cell sites near the fibre-connected schools (or fibre POPs) using HSPA/LTE technology (that is, it would require ‘4G spectrum’).

At the symposium Vodafone CEO Russell Stanners told Computerworld the company would push for consents to build high towers that could accommodate other providers – the RFP is clear that both the fibre POPs and the cell towers that are built as part of the RBI plan must be open access.

Open access

The RFP states that the successful partners in the RBI must ensure priority users are connected – that is health clinics and educational facilities. Industry sources have suggested it would be hard to see what the business case for additional players in rural areas would be once the major customers had been signed up. In other words, open access, while designed in principle to encourage infrastructure competition, may not mean much in reality.

The emphasis on national bids narrows the field as only those with deep pockets could conceivably put forward a proposal. An industry source suggested to Computerworld that an alliance between Chorus and Vodafone for the RBI could even be on the cards.

Neither Telecom nor Vodafone would comment and told Computerworld that no public announcement will be made until after the deadline for proposals.

Other possible contenders are TelstraClear, which hadn't returned an answer to Computerworld when this article was first posted but have subsequently said they are not planning to submit a proposal, and 2degrees which also won’t be participating.