Critical to the success of the $250 million rural broadband rollout will be strong competition at the retail level, says Telecommunications Users Association (TUANZ) CEO Craig Young.
The rollout – which includes the construction of 450 towers – will be carried out by the Rural Connectivity Group (RCG), a joint venture between Spark, Vodafone and 2degrees. Young says TUANZ has advocated since 2015 for infrastructure sharing by the mobile providers as a way to maximise the investment for rural New Zealand, so the RCG approach “is in line with that”.
“We also see this as a perfect opportunity for the new joint venture to creatively work with other parties, including regional players, to solve connectivity issues for rural New Zealand rather than be constrained by the three owners,” he says.
“Critical to us, is the continued strong competition between the retailers and their own individual interests should not interfere with the RCG programme.”
Vodafone, Spark and 2degrees have each sent statements to the Foresyte Report (see below for statements in full), pledging a competitive environment when the infrastructure is built.
In addition, the carriers will be aware of a recent Commerce Commission warning against “anti-competitive provisions” in infrastructure sharing contracts as part of its review of the national roaming agreements between Vodafone and 2degrees.
“RCG is a joint venture collaboration between the three telcos to solve the issue of delivering expensive infrastructure to rural areas where it would have otherwise been uneconomical to do it individually. This is not the type of challenge one company could solve ever on their own.
Now formed, RCG is a separate subsidiary with its own management that will make its decisions independently, based on how best to deliver the services in their contract with Crown Infrastructure Partners (CIP).
The RCG will ensure the new infrastructure is open-access, to foster greater retail competition amongst ourselves and other market players, and to help rural consumers get the benefit of the improved products, services and innovations that competition will deliver. Its delivery is firmly aligned with the government’s 2025 connectivity aspirations. The three telcos will all still continue to compete fiercely as we do today.”
“The RCG will bring coverage to some of the remotest and least populated parts of the country. It is not economically feasible for one RSP to build their own infrastructure in these geographies, which is why the RCG has been established. Once the infrastructure is built, there will be fierce competition for the retail customers from Vodafone Spark and 2degrees, and it will also open up wholesale opportunities for smaller RSPs.”
“RCG is now a standalone entity with its own Board and focus on RBI2 infrastructure delivery.
2degrees involvement in the RCG has always been about competition that increases choice for customers while avoiding expensive network duplication. The reality is that the only economic way to develop infrastructure for some of NZ’s most rural and remote locations is to collaborate. However, at a retail level we will do what 2degrees does best – compete, and fiercely. This will mean our customers can use their mobiles in more blackspot locations but it will also mean that we can offer competitive retail services to more rural and remote New Zealanders. We’re also an active wholesaler and are keen to work with other retail operators who want to provide services.”
1 Around $8 million in funding has also been allocated to independent Wireless Internet Providers (WISPs) as part of the RBI2.