RBI2 submissions – key issues emerge

By 2017-04-19 Blog

Key points:

  • Smart play by Spark/Vodafone/2Degrees, but wholesale services to be provided by consortium should be strictly defined to avoid current RBI1 issues being repeated.
  • Chorus still likely to get a look in given fibre deployed to date for RBI1, but copper unsuited to rural market.
  • Lightwire presenting genuine wholesale wireless service access to market, should count in our favour.

 

Lightwire has made a submission in response to the Rural Broadband Initiative 2 tender issued by Crown Fibre. We are looking to extend the reach of our existing network into poorly served areas in the Waikato and Bay of Plenty regions.

Given my role within Lightwire, I have been keeping an eye on the submissions and news around the details as they emerge, so without further ado, here is my take on the state of play to date.
(If you aren’t up to date on the whole RBI2 process, Chris Keall wrote a good overview a couple of weeks ago which can be found here.)

Smart play by Spark/Vodafone/2Degrees
Spark, Vodafone and 2Degrees have made an unexpected but smart call to make a joint submission (does anyone know if they have also made separate submissions?). This virtually ensures that none of them miss out, and that the risk of deploying in areas with a low rate of financial return is shared. I expect Chorus, the only other party who can cover the bulk of the country, to fight hard against this joint submission based on two things:

  1. How much they will contribute financially. Spark/Vodafone/2Degrees have committed $75m in funding (shared equally), so it will be interesting to see what Chorus has offered. The more Chorus offers in proportion to Government money on offer, the stronger their case.
  2. Chorus will likely point out that for all three mobile providers to be working together leaves little room for competition. Spark/Vodafone/2degrees will state that they will provide access to retailers via their wholesale arms, but as we have seen with the awful wholesale model put forward by Vodafone after they jointly won RBI1, we should take any promises with many grains of salt.

It is worth pointing out that the three companies in the consortium contributed a combined total of $33m to the Telecommunications Development Levy in 2016, so they are in large part funding any Government contribution they receive.

Vodafone isn’t good at wholesale.
Vodafone currently allows retail providers to re-sell RBI services, which is not the same as allowing retail providers to access last mile wireless services at layer 2. An RSP must buy both the circuit and data pack, and given it is provided at layer 3, it is hard to gain visibility to the service or incorporate it into a WAN.

Lightwire has made a push in recent times to provide layer 2 access to its wireless network, selling services to major retail competitors. In contrast, Vodafone had never productised a suitable wholesale model for RBI services and that should count against it when the RBI2 submissions are being considered. Any mention of “open access” to services provided in the context of RBI2 should be framed in the same model as offered by Lightwire (or UFB carriers for that matter). Wholesale services should be handed off via SVID/CVID with no weird requirement for a data plan to be purchased as is the case via Vodafone for RBI1 services.

Where does Chorus fit in?
Chorus will have to deviate from current business model to do more than extend existing RBI fibre from current cabinets, and it is unlikely they are interested in pursuing that option. However, you would have to assume that given Chorus’s existing fibre network in rural areas that have been created under the RBI1 project, they would be best suited to continue on from that position and connect new/upgraded towers.

Any thought of connecting rural locations using copper should be discounted. You only have to run a few site checks to see that the distances involved make for poor speeds.

Where Lightwire fits in.
The Government went to quite some effort to stipulate specific clauses for smaller network operators to be included in the scope of this tender, and I am hopeful that those efforts were genuine.

The case for Lightwire, and other smaller network operators, are as follows:

  • We are local. When Cyclone Cook hit last week we had people on the ground before during and after the event. We understood the terrain, warned effectively in advance, and kept people updated. In the case of Lightwire, we are big enough to respond to events such as this when required, but not too big to care.
  • The cost to deploy services is lower and time to deploy faster. We are lean and agile, meaning a greater return on investment for tax payers.
  • In the event that Crown Fibre was to award Lightwire a portion of the available RBI2 funding, we would be exempt from having to provide open wholesale access to services built using public money, but we would do it regardless because that is the right, and commercially sensible, thing to do.

Brendan Ritchie

Brendan Ritchie

Author Brendan Ritchie

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