2. The recommended pricing approach

Issue 2.1

Is the proposed incremental ODV approach, benchmarked against New Zealand and overseas spectrum values, a reasonable and appropriate approach in calculating a market value for the renewal of management rights in the 800 MHz and 900MHz MHz bands? Why or why not?

Does this approach meet all policy objectives) fair market value, fair return to the Crown, transparent and simple to administer)? Why or why not?

The proposed ODV is appalling because there is no competition in the use of 900MHz. New Zealand is the only country with no same technology competition. The primary concern of the Ministry of Economic Development should be to develop New Zealand, the country. Not to fertilize a monopoly. The primary concern of the Ministry of Economic Development should be to stimulate competition in the same technology band. The crown needs competition not further entrenchment of the incumbent, which the current ODV formula is designed to do.
 

Issue 2.2

Are there factors or inputs that should or should not be considered in the proposed methodology? Why or why not?

Econet only provides an answer to this question on the understanding that it maintains the whole process under which these questions are asked is flawed and inadequate to achieve Government objectives. Yes. There needs to be a consideration of the asymmetric policy requirements needed to create competition.
 

Issue 2.3

Do you have any comments on the benchmarking to be applied to the ODV – calculated value?

It is a flawed process and Econet does not agree with the ODV valuation process, as it is a subsidy to the incumbents.

No respect has been given to the gaming by the incumbents in the process
 

Issue 2.4

Do you have any other comments on the recommended approach? Do you have any other comments on the consultant's report and peer reviewers' feedback?

Econet only provides an answer to this question on the understanding that it maintains the whole process under which these questions are asked is flawed and inadequate to achieve Government objectives.

The Price Waterhouse Cooper report has failed the country. It is full of errors and statistical anomalies. We would like to point out a few.

• It fails to highlight the lack of competition in the 900MHz spectrum
• It fails to illustrate the comparison between New Zealand and other countries who have same technology competition
• The report fails to articulate the relatively cheap price of spectrum in New
  Zealand and the virtual nil SAC costs of Vodafone which should lead to a
  tremendously wonderful consumer outcome
• It fails to discuss the development of 900MHz 3G networks
• The report is a travesty because it does not discuss the capex cost differential of building a 900MHz spectrum verses 1800 spectrum in New Zealand
• We are disgusted that public money has been spent on this report and there have been discussion with Vodafone and Telecom regarding this report but not Econet, TelstraClear, Woosh or Callplus
• Page 28 of the report, point 6.20, has also failed to identify Ireland as a similar country to benchmark New Zealand against.
• It fails to discuss the concept of gaming (regulatory gaming) by the incumbents to drive up the renewal costs of 900MHz spectrum for new entrants It is Econet’s view that the Ministry of Economic Development would be better informed by contracting their peers in Ofcom, ACCC, the EU Commission, ComReg (Ireland) or the Kinshasa based Congolese regulator.

Issue 2.5

If you do not agree with the proposed approach, what alternative approach would best meet all policy objectives?

Econet only provides an answer to this question on the understanding that it maintains the whole process under which these questions are asked is flawed and inadequate to achieve Government objectives.

Such is the mess in New Zealand. Such is the entrenchment of Vodafone and Telecom regulatory government relations’ team. We believe the whole function should be outsourced to a European Regulator for a five-year period.