Iwi allocation could delay 4G roll-out

Controversy over Maori water rights has significantly complicated the task of allocating hundreds of millions of dollars-worth of radio spectrum freed up by the closure of analogue television, sources say.

Mobile phone companies need the rights to the so-called "digital dividend" spectrum before they can plan their investments in large-scale 4G networks.

But after months of delay and with less than six months to go before a self-imposed Government deadline for a probable auction, a proposal on how to dispose of the spectrum rights has yet to be put before the Cabinet, communications minister Amy Adams confirmed yesterday.

Adams reiterated a statement she made in June that she would "soon be taking a paper to Cabinet".

Vodafone corporate affairs manager Tom Chignell said its roll-out of 4G technology could be delayed if the rights weren't allocated by April.

Maori interests including Nga Kaiwhakapumau i Te Reo have made a Waitangi Tribunal claim for the digital dividend spectrum, which sits in the 700MHz band, but Adams has stuck to the line taken by previous National and Labour-led governments that it is not "taonga" (treasure).

Nga Kaiwhakapumau i Te Reo treasurer Piripi Walker said it and its fellow claimants and other Maori interests had decided to convene a national hui for interested parties in four weeks' time to discuss "all of the matters which have been canvassed in the claim".

The Waitangi Tribunal ruled in 1999 that Maori had ownership rights over 3G spectrum, but the judgment was not accepted by the then Labour government, which nevertheless granted Te Huarahi Tika Trust $5m and the right to buy a block of the 3G spectrum at a 5 per cent discount to its market price. The spectrum became a founding asset for third mobile operator 2degrees.

The Government has been expected to seek a similar "pragmatic" resolution to the 4G spectrum claim. But the debate over water rights triggered by its asset-sales programme has raised the stakes for both Maori and the National Party, sources say, making it harder for either to be seen to be giving way on points of principle.

Maori Party co-leader Pita Sharples wrote to Computerworld last month saying that unless there was a "principled Treaty-based agreement" between the Crown and Maori claimants, disputes would arise every time a spectrum auction was proposed.

"[The Government] has a number of large constitutional issues to grapple with," one source said. He believed any accommodation that did not formally recognise Maori rights to the 4G spectrum would probably need to offer Maori far more than Labour's 3G peace offering to compensate.

The clock is ticking as the Government seeks a solution. Adams has promised the digital dividend spectrum will be allocated by the end of March. That would let telcos plan ahead for their investments in 4G and hit the ground running when the last analogue television transmissions are switched off in November next year.

[Since publication, Amy Adams’ office has been in touch to note that the Minister said that the allocation of spectrum “remains on schedule” to be allocated to commercial players in the first quarter of 2013. but had not promised that, as reported above (That was a delay from the end of 2012 previously).]

Vodafone's Chignell said if the likely auction slipped beyond April, there was "a heightened risk" the company would not be able to roll out 4G as soon as the spectrum became available at the end of the year.

Chief financial officer James Marsh said last week that while Vodafone could quickly organise funding to buy any spectrum rights, it would not be not ideal for there to be only a short gap between the allocation rules being set and any auction. "We would much prefer to get clarity on the situation as soon as we can."

London-based Dotecon, which monitors spectrum sales globally, said in April that $400m was the mid-point valuation for the digital dividend spectrum, based on the going "per-capita" rate paid by telcos for similar spectrum overseas. However, analysts have said the Government has had a history of selling off spectrum relatively cheaply, with few conditions.

A "straw man" proposal put forward by the Economic Development Ministry in December would allow Vodafone, Telecom and 2degrees to each secure 10MHz of the 45MHz of paired spectrum on offer, while letting one of the three carriers grab 20MHz and another 15MHz. 10MHz is generally considered the minimum block required to build an efficient 4G network.

The ministry's proposal did not discuss the Maori claim, but might not be incompatible with granting Maori a 5MHz paired block, especially if it could be assumed that would be pooled with any spectrum purchased at auction by 2degrees.

Te Haurahi Tika trustee Antony Royal said the Labour government's decision to provide some 3G spectrum to Maori on favourable terms had had benefits for the whole country, in helping create 2degrees. "We think that should carry through to the 700MHz spectrum," he said.