New Zealand hands over mid-band spectrum in return for rural rollouts

Spark, 2degrees and One New Zealand have all received a chunk of 5G frequencies as part of a scheme to improve mobile coverage.

The government’s Radio Spectrum Management department late last week allocated each telco 80 MHz of 3.5-GHz spectrum, enough to deliver nationwide service. In return, the operators will each pay the government NZ$24 million (£12 million) between 2023 and 2025.

This money will be given to the Rural Connectivity Group, a joint venture between the aforementioned MNOs that is building – in partnership with towerco Crown Infrastructure Partners – a shared mobile network in parts of the country where it isn’t commercially viable to do so.

“This deal is a huge step forward for rural New Zealand when it comes to connectivity. By working together with our telecommunications operators more Kiwis will have access to faster wireless mobile services,” said digital economy and communications minister Ginny Andersen, in a statement.

This funding is on top of the NZ$60 million already earmarked for rural connectivity in New Zealand’s 2022 budget, as well as the $47 million allocated for rural broadband as part of the government’s Covid relief funds.

This quid pro quo arrangement seems to be a pretty sweet deal for Spark and its rivals.

They get long-term access to valuable mid-band spectrum – enabling them to bolster both network capacity and coverage – without having to endure an auction, which typically results in higher prices.

Indeed, the price per MHz per head of population (price per MHz/Pop) works out at less than 6 cents. By comparison, the US C-band auction, which covered the 3.7 GHz band, weighed in at 94 US cents , making it the costliest in the world. Taiwan’s 3.5-GHz auction fetched 71 cents per MHz/Pop.

In return for the frequencies, New Zealand’s telcos have to contribute to a rural network that they jointly own anyway, and which will benefit them directly by rolling out infrastructure in areas where ordinarily it wouldn’t be financially prudent.

In addition, the low price per MHz/Pop is good news for customers, who won’t have to pay quite so much in order for their service provider to recoup the cost of spectrum.

“The government has taken a progressive, measured and pragmatic approach, allocating spectrum in return for investment into rural connectivity and a clear infrastructure build programme that will benefit New Zealanders,” said a statement from Mark Callander, CEO of 2degrees, which this week also began looking into satellite direct-to-device (D2D) communications in partnership with Lynk.

“We are really pleased to finalise this agreement with government, which provides us with the certainty we need to continue investing in 5G and delivering these connectivity benefits to Aotearoa New Zealand,” said Spark CEO Jolie Hodson, in a separate statement.

Finally, the Interim Māori Spectrum Commission has been separately awarded 100 MHz of 3.5-GHz spectrum, which it will manage for the benefit of the country’s Māori population.

“This is a significant win for rural and regional New Zealand” said Andersen. “I am certain that Kiwis, especially those living in regional and rural areas, will soon reap the benefits coming out of this allocation.”

Get the latest news straight to your inbox. Register for the Telecoms.com newsletter here.