Netsmart

13th September 2007

Radio Spectrum Policy and Planning
Ministry of Economic Development

By email

Re: Comments on Radio Frequency Auction: 2.3GHz and 2.5GHz bands discussion paper August 2007

Thank you for the opportunity to comment on the above paper. Using your numbering scheme we enclose our comments below:

Question 1a

We assume that the preferred use of these bands is wireless broadband, if so we believe that TDD is best suited for this market and is highly likely to dominate future wireless broadband technology. The principal reason for this is that the market for broadband is very price sensitive and TDD technology by its nature is less expensive to produce.

Question 1b

We strongly support the proposal for a larger managed spectrum park than previously offered. This will hopefully allow multiple operators to provide local and regional wireless broadband services. However, as discussed above we believe that TDD technology will be the technology of choice, especially in the managed park – we therefore hope that parts of the managed park will not be restricted to FDD use only, as this will risk reducing the size of the park for TDD use to an unworkable size for multiple operators. We question allowing Telecom to operate CMAR services within the managed park, which would appear to be the primary motivation to allocate a specific portion of the park for FDD. It is hard to believe that Telecom does not already hold management rights to alternative spectrum that could accommodate this type of service. Telecom also has the option to acquire rights through this auction.

Question 1c-f

No comment.

Question 2

Any option, except c(i).

Question 3

We do not support any proposal which would reduce the available spectrum for providing access to wireless broadband for all New Zealanders.

Question 4

Agreed.

Question 5

We do not support the expiry of acquisition limits before the use it or lose it date. We believe this would encourage speculators to purchase spectrum rights with the sole intention of selling when the limits are removed. Alternatively, the removal of limits after the use it or lose it date makes speculation very risky as the market for selling spectrum rights would be restricted to operators with less than the acquisition limit.

Question 6

Our preferred date is December 2012. This gives more than adequate time for an operator to deploy a network, whilst also ensuring that if they don't then others will be given that opportunity within a reasonable time-frame. We prefer Option B. We don't see why financial consequences are necessary if the risk of losing spectrum is real. We also encourage the Ministry to consider transfer of rights to the managed park in the event that it is not being used, this could also make provision for network operators that only deploy small networks leaving large areas of unused spectrum. At the very least this could be left open as an option to provide additional spectrum for the managed park if the park is oversubscribed.

Question 7

Agreed.

Question 8

The managed park proposal is of particular interest to NetSmart as we are a regional wireless broadband operator and we are very likely to seek access to any future managed park. We estimate that there are currently more than 10,000 fixed wireless broadband connections provided by local and regional operators who could benefit from a managed park.

Question 8a

We are concerned that any managed park will be oversubscribed and we therefore believe that the eligibility criteria should exclude all operators with suitable alternative spectrum rights – not just those with rights at 2.3Ghz and 2.5Ghz.

Question 8b

Yes, all except (d). We believe that a key objective of the managed park should be to promote innovation and therefore remain technology neutral. A requirement to use specific interference management technologies goes against this objective.

Question 8c

We believe Option 3 is a good option, we do not like options 1 or 2. Option 3 is preferred because it offers the following key requirements: reasonable quality of service guarantees; technology neutral; maximum flexibility and promotion of innovation.

Question 8d

We like Option 3 and see no need for alternatives.

Question 8e

Option 3 should require a reasonable amount of planning and engineering to prepare a submission, this will help to discourage speculation. Operators with existing, suitable, alternative spectrum rights should be excluded. Lastly, in areas where the spectrum is oversubscribed operators should only be granted licenses for equipment that is going to be deployed within a specific time-frame e.g. one year. This declaration should be enforced, possibly with the threat of penalties for failing to deliver on overly ambitious plans.

Question 8f

We would expect a reasonable fee levied by the Ministry to reflect the cost of providing the service.

Question 9

No comment.

Yours faithfully,
Paul Horak