Linkit

RE: Submission on the discussion paper “Radio Frequency Auction: 2.3 GHz and 2.5 GHz Bands”

Introduction

1. This submission is from Link Information Technologies Ltd (LINKIT) as is in response to your discussion paper “Radio Frequency Auction: 2.3 GHz and 2.5 GHz Bands”.
2. LINKIT distributes Broadband Wireless Access technologies to various broadband operators throughout NZ, Australia and Pacific Islands.
3. LINKIT is very supportive of the development of the Managed Spectrum Park concept. The principal of MSP outlined in the Ministry’s discussion paper will enable future radio technologies to deliver affordable broadband access services both nationally and regionally.
   

Question 1: Considerations Relating to Lot Design

(a) Expected technical developments and likely demand

1. We note the general trend in design of FDD equipment is towards working within 5MHz blocks. The general trend in design of TDD equipments is towards increments of four or more contiguous blocks of 3.5Mhz in order to offer a viable service delivery model to users. Hence our submission outlines the allocation of multiple 15Mhz to 35Mhz MSP blocks.
2. Demand will be dictated by the cost of coverage and the application of a competitive service delivery model appropriate to the users within a sector / region. Hence the Spectrum allocation for the Auction and indeed the Auction process itself would have a major impact upon the technology any one bidder may deploy.

(b) Size and location of the managed spectrum park or parks

3. LINKIT agrees that two MSPs should be provided for in the 2.5GHz band as it will enable more opportunity for use of technologies such as FDD.
   
4. However, the higher MSP block of 15Mhz proposed in the subsequent Lot Design options is too small. It should be at least 50MHz in total and split into two MSP 25Mhz blocks in order to cater for competition in higher population areas and to match the lower block in 2.5GHz, enabling any frequency bands within the lower MSP to have a counterpart in the higher one. This protects options for operators and ensures the MSP can be used to stimulate more operator deployment.
   

Example 1 : Two 25Mhz and one 35MHz block



Example 2 : 5 x 5 MHz national blocks and One 20Mhz MSP and one 25Mhz MSP

(c) Acquisition Limits

5. We support the Cabinet goal of ensuring opportunity for multiple providers to utilise spectrum and the setting of a limit of 35MHz per un-associated bidder to allow for provision for up to six nationwide service providers.
   

(d) Technical Issues

6. We support the Ministry’s preference that management rights holders take responsibility for managing interference issues and acquire sufficient spectrum to do so. However, we propose that the Ministry provide dispute mediation and resolution processes for the situations where management rights owners cannot resolve interference issues.
   

(e) Preferences regarding auction type

7. Our preference is for the SAA auction process, particularly as we support the more complex Option B in the Lot Design. We believe SSA will avoid excessively priced lots and blocking tactics.

Question 2: Proposed Lot Design

8. We prefer Option B because it gives the maximum flexibility for the future but with a caveat, that we would like the MSP block at the top if the 2.5GHz band to be at least one 20MHz and one 55MHz MSP blocks . The impact of increasing the size of this block would be minimal as there are plenty of other 5MHz blocks and pairs available. (See examples in 1 b above)
9. The 5GHz blocks provide a lot of flexibility for FDD technologies. For example adjacent or non-adjacent blocks of 5 can be used.
10. Option C is our next-best choice but again the MSP block at the top of the 2.5GHz needs to be 35MHz, which can be done at the expense of the non-MSP 35MHz block in the 2.5GHz band.
11. We do not consider Option A as suitable as it has insufficient opportunity for small bidders to participate.
12. The 2.3GHz block plan in Options A and C appears to be non-optimal for building a large network as it does not provide for sufficient separation. For example a provider might generally need blocks of 15MHz separated by 30MHz and so would have to purchase both available 35MHz blocks to achieve this.

Question 3: Māori Interests

13. The points for discussion here are technology and spectrum related and the proposals do not appear to prevent or disadvantage delivery of Maori language and culture as content or service across wireless broadband.
    

Question 4: Eligibility to Bid

14. In line with the use or lose policy advocated by Cabinet, and that we endorse, restrictions should be placed on bidders should they already have unused spectrum capable of providing similar services. Such bidders should be required to divest themselves of that unused spectrum prior to auction so that other bidders can access their technology options.
    

Question 5: Duration of Acquisition Limits

15. We would question the need for an expiry date at all, and particularly given that we are looking for the shorter use or lose time of three (3) years.
    

Question 6: Use or Lose Provisions

16. Of the options given, we would prefer a use or lose date of December 2014 with bi annual review requiring proof of further expansion. This should be more than sufficient time to establish that the business is successful.
17. Use or lose provisions and expiry of acquisition limits will need to be reviewed on an ongoing basis in terms of technology development.
18. As the test for use, Option B is our preference, on the basis that it is not punitive. There is the possibility that genuine emerging infrastructure businesses could be punished unreasonably under Option A or C. The concept of use or lose is to prevent spectrum hoarders, and should not punish other players.
    

Question 7: Settlement

19. We agree with the proposed settlement terms of 30 days following completion of the auction, on the basis that this will deter speculation.
    

Question 8: Managed Spectrum Parks: Proposed Allocation Procedures and Usage Rules

(a) Suggested eligibility criteria

20. We agree with the suggested eligibility criteria, with a caveat that the definition of regional area needs to be reviewed. A population-based model would be preferable, rather than geographic, and with equal distributions of population.
    

(b) Suggested core technical and usage requirement

21. Each region will need a spectrum user group. There will be both intra-region issues, and inter-region issues on boundaries. Therefore, there needs to be a neutral third party to ensure inter-group coordination. A Telco User group would not necessarily stimulate an early resolution process.
    
22. There also needs to be a disputes mediation and resolution process within the MED for when user groups cannot agree.
    

(c and d) Preferred method for implementing options

23. Our concern here is that the MSP allocation process is not defined enough hence it may not offer a degree of certainty required to invest in any deployment. Basically relegates the MSP to being a closed shop or and open GURL band. Neither situation will stimulate the level of investment required to build out a robust network technology.
    
24. We believe that the definition of a regional MSP needs to be better defined prior to the Auction process. If this is not well defined various regional parties will not get the opportunity to fully engage in the process. An example being the changing requirements of the 3.5Ghz auction lead to parties not registering for the first round only to find that the process did not allow re entry at a later stage.
    
25. Option 3 is the preferred option because it bridges the chasm between general licence and management rights in terms of the licensing regime itself. Further, it is technology agnostic, thereby providing a more fertile environment for investment and innovation.
    

(e) Incentives for gaming

26. LINKIT proposes that the Managed Spectrum Park regime include a two-year use or lose provision. The technologies that will be used are very quick to implement and to generate cash flow from, and a two-year use or lose provision will reduce the likelihood of gaming. Note our concerns if the MSP process in 23 above. If the MSP allocation process is undefined the gaming could start well before the auction itself.
    

(f) Fees or resource charges

27. We anticipate that cost recovery application and annual charges will be required under our preferred Option C.
28. The application fees should apply per TLA.
    
29. The annual fees should apply with respect to population within a TLA. We understand these relativities have already been analysed in respect to the 3.5GHz market.
30. We don’t think there should be a resource charge under our preferred Option C because under that option the applicants are doing the work.
    
31. It may be appropriate to have a disputes resolution charge for when issues can’t be resolved in the user group. This would create an incentive to reach agreement at the user group level.
    

Question 9: Managed Spectrum Parks: Proposed Allocation Procedures and Usage Rules

27. We support the transition plan.

Summary

This is a great opportunity to stimulate more broadband initiatives using the 2.3/2.5Ghz bands, however the actual technology may become available from 2009 onwards. Thus being able to catering for both FDD and TDD will be just as important as the allocation rules in a region. Either way technology requires investors, investors require a degree of certainty and a return on investment at some stage.

Thank you for the opportunity to submit on this discussion paper.

Yours sincerely

Ian Hastie
Wireless Systems Specialist
LINK Information Technologies Limited.