Vodafone’s rural cell tower costs questioned

If rural cell towers in Indonesia cost $31,300, why are towers in NZ priced between $300,000 and $500,000?

Why do Vodafone’s rural cell towers cost so much?

That was the question asked by telecommunications consultant and blogger Jonathan Brewer at a session on rural broadband at the InternetNZ NetHui last week.

Brewer says he attended the CommunicAsia telecommunications conference in Singapore last month and discovered that in other countries rural cell towers are being built for as little as US$10,000.

In New Zealand he has been told by Vodafone – who together with Chorus won the $300 million Rural Broadband Inititative – that a cellphone tower costs $480,000 to build.

Brewer later emailed Computerworld more details about the towers built overseas. “US$10,000 ($12,500) in India for a 2G site to cover a village. Includes solar power and satellite backhaul.

“US $25,000 ($31,300) used in Indonesia for a 2.75G (GPRS/EDGE) to cover a village. Again includes solar and sat backhaul.”

“Why can’t New Zealand come up with a $50,000 site? What are we doing wrong?” he asks.

Vodafone wholesale manager Steve Rieger, who attended the NetHui session and who oversaw the telco’s RBI bid, told Computerworld that a rural cell tower costs between $300,000 and $500,000 to build. To date Vodafone have built 14 new towers and upgraded 80 existing towers as part of the RBI.

He says the price is dependent on a range of issues, including geography, ability to build an access track (for maintenance vehicles), electricity and the resource consent process.

In addition, the RBI towers are required to hold the equipment of six retail service providers. “It’s government funded so you can’t limit them. So we build them heavier, bigger and with a much stronger footprint.”

The Vodafone towers are 25 metres tall on average. Rieger says there are 295,000 houses which are considered rural or remote and of that 86 percent will be covered by RBI. “There are 40,000 households that haven’t got an immediate solution,” he says. “They’ve got satellite as an option but they don’t generally (buy it) because they say it’s too expensive.”

During the NetHui session a number of delegates queried the low download speeds available to rural users. Under the RBI, the telcos are expected to deliver a maximum of 5Mbps, but Rieger told the audience that this was “a technology spot in time and we’re on a journey of ever increasing speed and performance.”

He says that if Vodafone is successful in securing 700MHz spectrum (the telco has said previously it wants a 20MHz chunk of the 45MHz that is available), at peak times rural broadband users could expect speeds of up to 20Mbps.

Computerworld asked Rieger if Vodafone would commit to rolling out LTE technology (which is enabled by the 700MHz spectrum) in rural areas first if it got 700MHz spectrum.

“I’m going to give you an opinion on this, not the company philosophy because if you quote me as that I’d be doing the company a disservice. My opinion is we will do just that, because I think its the right thing to do,” Rieger told the NetHui audience.

ICT Minister Amy Adams told Computerworld in February that during the 700MHz auction process government will be looking for bidders who can provide plans that contribute to better productivity gains for New Zealand.

“It’s not about who can bid the most. I’m not interested in a high bid that’s not going to deliver much for New Zealanders,” she told Computerworld.

A spokesperson for her office says that a paper on the terms of the 700MHz spectrum auction – which is also the subject of a Waitangi Tribunal claim – is due before cabinet shortly.