Vodafone declares its spectrum agenda

Valuable 700MHz band could be divided according to market share says head of corporate affairs

Vodafone head of corporate affairs Tom Chignell has opened up the discussion on how to divvy up the valuable 700MHz spectrum that becomes available next year.

Chignell, speaking to a media briefing earlier this week, outlined his company's position on how the telco wants the Ministry of Economic Development to divide the spectrum, after the termination of analogue television transmissions in November 2013. The spectrum is highly valued by telcos wanting to upgrade of their mobile networks to Long Term Evolution (LTE) technology that will enable 4G services.

Chignell says the MED is expected to release a discussion document on the spectrum allocation in the next fortnight. He says the auction is expected to take place next year, though the policy settings will be finalised after the election this year.

According to Chignell, the 700MHz band has 45MHz (paired) and a critical policy setting will be the spectrum cap (that is, how much the telcos can bid for). He wants the cap set at a maximum block of 20MHz.

This could potentially mean only Vodafone and one other operator (assuming they were both successful in acquiring the maximum amount) would have enough spectrum to roll out a national LTE network.

When asked by Computerworld what happened to the idea of sharing the spectrum floated by the (now defunct) Telecommunications Industry Group of which Vodafone was a member, Chignell says “We are dead against it. Owning your own network is, we believe, the best way of differentiating your service.”

He says a 700MHz auction could net the government between $150 million and $200 million and that spectrum should go to the most successful telcos in the market.

“Although there are three operators, they don’t all have equal market share,” he says. “We’re saying in an efficient market those who’ve got, or who anticipate getting more customers, will pay a higher price for the spectrum and it should be allocated on that basis, which is typically how it is done in New Zealand.”

The last major spectrum auction took place in 2001, for what is known as 3G spectrum. Chignell says there was 60MHz available, with a 15MHz cap and that distribution has ended up (after TelstraClear was forced to sell some spectrum and Vodafone bought it) being equally split between four companies – Vodafone, Telecom, 2degrees and TelstraClear.

Chignell notes that then, as now, there was a Maori claim on the spectrum and that Trevor Mallard, the acting communications minister at the time, dealt with this by offering a quarter of the spectrum to Te Huarahi Tika Trust. This spectrum is now being used by 2degrees. Chignell does not want to see a similar deal happen with the 700MHz band.

“2degrees is a commercial operator owned by US and Middle East capital, it’s no different from anybody else with a small Maori stakeholder, so why should they be given spectrum?” he says.

When asked by Computerworld how he thinks the Maori claim should be settled, Chignell declined to comment, pointing out it was a decision for politicians, not telcos.

Vodafone head of networks Tony Baird says with 20MHz, Vodafone could potentially treble the speed, capacity and reach of its service, particularly in rural areas. He says the amount of mobile data on the network continues to increase, for example in June 2010 it was 60 terabytes and a year later, in June 2011 it was 135 terabytes.

Baird says that a 15MHz block would enable the company to create a national LTE network, but anything less than 10MHz would be difficult. However, he says that LTE can also be enabled by using blocks in other spectrum bands, such as the 1800MHz and 2.6 GHz, and that the next stage in LTE (LTE Advanced) enables operators to “take lots of different spectrum and join them together and that would mean a bit of 2.6 GHz, 1800MHz and 700MHz.”