Vocus calls for cost-plus wholesaling of mobile networks

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DarkShadow

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#222559 17-Aug-2017 14:25

Spark, Vodafone and 2degrees should be required to wholesale their mobile networks on a "cost-plus" basis to rivals, says Slingshot and Orcon owner Vocus, the country's third-largest broadband provider.

Vocus New Zealand chief executive Mark Callander said such a move would bring mobile networks more into line with the regulations governing Chorus' copper fixed-line network.

https://www.stuff.co.nz/business/industries/95790873/slingshot-owner-says-new-mobile-rules-needed-to-ensure-fair-competition

[ EDIT MOD RC:Made sure it was a quote]

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#1848078 17-Aug-2017 14:28

Not comparing Apples with Apples that's for sure with a single copper network and 3 mobile networks in New Zealand and a few MVNO's

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sbiddle

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#1848080 17-Aug-2017 14:29

So rather than 3 networks competing for business we'd now have a monopoly. Yeah nah.

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#1848088 17-Aug-2017 14:46

The more I think about it the more flaws I can see

This is just plain dumb!

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hio77

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#1848090 17-Aug-2017 14:48

While this could be handy in remote areas, I'm not a fan of the idea of mix and matching networks.

I'd hate to see the overhead of, say, for arguments sake a Spark tower Looses connection with the backend and a Vodafone customer is "roaming" at cost plus, support for this would be a nightmare...

"oh lets see what tower, oh thats sparks you have to call them" or worse yet "let us log a ticket *sends email*"...

i personally carry a kit in my bag, with sims for all providers.. This is particularly used in low signal areas when one provider has a minor edge over another (say they have Wider U850 range compared to U900). Actually can be useful to be able to forcefully switch providers with a quick sim swap.

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mattwnz

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#1848109 17-Aug-2017 16:19

sbiddle:

So rather than 3 networks competing for business we'd now have a monopoly. Yeah nah.

Potentially it would have bee cheaper for the consumer, rather than running 3 networks. It could have been run in a similar what to how fibre is done. But NZ decided to go down this route instead.

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#1848110 17-Aug-2017 16:22

mattwnz:

Potentially it would have bee cheaper for the consumer, rather than running 3 networks. It could have been run in a similar what to how fibre is done. But NZ decided to go down this route instead.

Cheaper sure, but when you consider the 3 networks are all put together differently, you can come across cases where network A is far better designed than network B within that area.

Be it noise related, Antenna design or whatever.

3 networks gives the consumer the power to select the base network they want.

to bring fibre into this, I lived in one of the places both Chorus and Unison were sold I'd jump straight for Unison as They often have a better record than Chorus.

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mattwnz

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#1848112 17-Aug-2017 16:37

hio77:

mattwnz:

Potentially it would have bee cheaper for the consumer, rather than running 3 networks. It could have been run in a similar what to how fibre is done. But NZ decided to go down this route instead.

Cheaper sure, but when you consider the 3 networks are all put together differently, you can come across cases where network A is far better designed than network B within that area.

Be it noise related, Antenna design or whatever.

3 networks gives the consumer the power to select the base network they want.

to bring fibre into this, I lived in one of the places both Chorus and Unison were sold I'd jump straight for Unison as They often have a better record than Chorus.

If they had one network though, it could have been far more comprehensive, and better designed than all combined, as there would be far more money to put into it.There are still many areas that have crappy reception in low population areas, because it is far better ROI to put money into areas with high populations. Not sure if 2D still share some of VFs towers, but if so that would mean that there are only 2 networks that have nationwide coverage.

DarkShadow

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#1848286 18-Aug-2017 00:54

sbiddle:

So rather than 3 networks competing for business we'd now have a monopoly. Yeah nah.

I don't think they're proposing merging the 3 networks into one. Rather, they're demanding access to the 3 networks at regulated prices.

hio77:

to bring fibre into this, I lived in one of the places both Chorus and Unison were sold I'd jump straight for Unison as They often have a better record than Chorus.

Sure, we all have our own Chorus horror stories.

But the question is, why should the government spending our tax dollars on subsidizing Chorus to build fibre to your place, when you already have a perfectly good fibre available that doesn't need subsidy?

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#1848287 18-Aug-2017 01:16

DarkShadow:

But the question is, why should the government spending our tax dollars on subsidizing Chorus to build fibre to your place, when you already have a perfectly good fibre available that doesn't need subsidy?

Question - where did Unison get the money to fund their fibre rollout? Answer - most likely from charging higher lines fees to electricity customers in their area. As I doubt that Unison receives enough money from fibre access charges to fully fund a fibre build. At least with internet access, alot of areas have 4G and fixed Wifi available, and there is always satellite. So not that many areas where Chorus offer the only technically possible means of getting an internet connection.

But how many areas are served by multiple power lines companies? Im guessing zero. If your lines company is overcharging, your only option is to spend mega $$$ on building an offgrid power system.

And when Crown Fibre Holdings originally invited companies to tender for the UFB build. Presumably Unison either didn't submit a bid, Or Chorus submitted a cheaper bid for that area. Also there are increased costs for ISPs as well. As they now need multiple handovers in the same area.

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#1848289 18-Aug-2017 06:48

Vocus really should worry about consolidating.

A 1.3 Billion AUD writedown, and a NZD 199 Million write down reported yesterday.

Also, don't Vodafone already wholesale their mobile network? I don't know if its the cost model they were after... but I think Vodafone NZ do this.

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#1848293 18-Aug-2017 07:09

This really is one of the craziest things I've heard for a long time. Why should a commercial operator who's gone to the effort of building a network that's not a monopoly be forced to sell wholesale their product at a cost plus price?

I wonder what arguments Vocus would come up with if they were told they had to sell access to their nationwide fibre for a cost plus pricing model? I don't see any difference between that and what they're asking for. They want to reap the benefits of not investing in infrastructure themselves - isn't that what commercial wholesale agreements such as those in place at present are for rather than forcing yet more regulation into our society?

At the end of the day this is nothing about mobile access - it's about FWA and the fact Vocus feel they'll be unable to compete in a market where going forward there will be many people in NZ served by FWA with Spark, 2D and VF having a cost advantage not having to pay Chorus or the LFC's for a UFB or NGA service. There is absolutely nothing preventing Vocus from deploying their own LTE based FWA network to compete except for the financial outlay which seems to be what their fundamental issue is.

What's next? Forcng McDonalds to have maximum retail pricing as their prices are unfair?

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SaltyNZ

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#1848308 18-Aug-2017 08:03

sbiddle:

What's next? Forcng McDonalds to have maximum retail pricing as their prices are unfair?

Hmmm... Their burgers are both smaller and more expensive than when I was a kid. Maybe that's not a dumb idea.

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CaptainSandwich

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#1848312 18-Aug-2017 08:15

Wholesaling the mobile networks means each carrier (VF, Spark and 2d) would each be required to provide wholesale access to their own network at a regulated price, no one is talking about combining physical infrastructure into one big network. The carriers have each made a massive investment and in most populated areas have doubled or tripled up in coverage, so a combined network would not be worth as much as three separate ones. Also, network is a key point of difference between spark and vodafone, each wants to have the 'best 4G network', biggest network, most reliable etc...

Each of the mobile network operators currently wholesales their network to the few, tiny MVNOs (mobile virtual network operators) we have in NZ. e.g. Bluesky with Spark Wholesale, Slingshot mobile also with Spark Wholesale, The Warehouse Mobile with 2degrees. Before Vodafone bought it, TelstraClear was the largest MVNO in NZ. Technically Skinny and Skinny direct are MVNOs wholesaling off the Spark network, but they are generally just viewed as Spark brands rather than fully separate MVNOs.

I imagine its not easy as a small start up MVNO to negotiate wholesale deals with a network operator, especially when you lack scale. The mobile network operator may not really be interested in more competition applying downward price pressure. So difficulty getting a wholesale deal becomes a barrier to entry in the market.

MVNOs are quite prolific in other countries but not in NZ. MVNOs equate to less than 1% of the total mobile market in NZ and have never flourished (this figure excludes Skinny & Skinny direct). So the question will be whether there is enough mobile competition currently to ensure that all players are incentivised to act competitively to ensure the best outcome for the consumer or whether the regulator needs to step in to reduce barriers of entry for new MVNO players to develop competition in the market.

smalltrader

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#1848314 18-Aug-2017 08:17

Has anyone actually asked the question 'Why don't Vocus put money where their mouth is and build a mobile network themselves". It is a free market and there are no regulations against building a new mobile network.

Everyone one else invest their hard earned money to make money. Why is this different for someone?

CaptainSandwich

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#1848337 18-Aug-2017 09:10

Probably because with three other mobile networks out there already the business case will be harder to stand up