Thursday, August 18, 2022

Focus on impact of cell tower sales

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The impact on rural connectivity of Vodafone and Spark’s planned cell tower sales will depend heavily upon the long and short-term goals of the investment companies that purchase them, and the depth of commitment to the sector.

TUANZ chief executive Craig Young says the planned sale of Spark and Vodafone cell towers could hold some upside for rural users, depending who buys them.

The impact on rural connectivity of Vodafone and Spark’s planned cell tower sales will depend heavily upon the long and short-term goals of the investment companies that purchase them, and the depth of commitment to the sector.

Telecommunications Users Association of NZ (TUANZ) chief executive Craig Young says New Zealand has been the global exception in having its cell phone towers owned by the telcos that operate them.

“In Australia Telstra have just sold 49% of their tower company,” he says. “This will free up quite a lot of capital for both Vodafone and Spark, but how it plays out will depend upon who buys the towers. 

“If it’s short term, they will just be wanting to get dollars out of it. It will also depend upon whether the towers get sold to two competing companies or just to one investment company, but the regulator may have something to say on that.”

He said the cell tower network being set up under the Rural Connectivity Group (RCG) agreement would not come into the deal. These towers were initiated under a 2017 agreement between government and the three telcos where towers would share equipment owned by all companies to provide 4G broadband connectivity.

“It is possible that the RCG group may even buy some of the towers in some regions to expand further.”

The figures being bandied about for the cell tower sales are about $1 billion for Vodafone’s and slightly less for Spark’s. 

The RCG programme has the goal of erecting 500 towers across NZ by 2023 to expand 4G cellular coverage from 49% to 62% in a globally unique multi-ownership model.

By the start of this year just over 300 live sites had been rolled out after what Young described as a slow start.

“The downside to this service is that the more people you get on these sites, the lower the speed, but the theory with RCG sites is they are in sparse, low population areas and will not hit capacity issues.”

Further rural rollout has been aided by the $47 million injection to the Crown infrastructure projects fund through the covid response recovery fund. 

Young said it was encouraging to see smaller localised wireless service providers had been given a seat around the table for that funding, and they too were now capable of rolling fibre into localised areas.

He saw this as a key means of dealing to the “stale donut” where the fringes of internet coverage in rural areas initially served under the RBI 1 initiative struggled to keep up with demand over lockdown. In total 11 organisations received funds through the response initiative.

Satellite links are likely to play a key part in hooking up the “last 3%” of rural users unable to access any other connections. NZ is served by low orbit satellites flying south to north, and there was likely to be more launched in coming months.

For remote rural users, Young said their main concern was that copper would be withdrawn, given 60% still have a landline.

“But under a Chorus deed with government, copper cannot be withdrawn if an equivalent service cannot be provided instead. Anyone who had copper in 2001 cannot have it withdrawn.”

This fear had been fuelled by misleading pitches made by some telcos to rural users, telling them their copper line was due to be removed.

If a copper line was removed and a rural customer was moved to voice over internet, the power supply required for that means Spark has committed to providing an uninterruptible power supply unit to provide eight hours of power.

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