Why can't we have a Crown Castle?

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Posted Tue 26 August 2008 @ 4:58 a.m. by Ernie Newman

Crown Castle, the independent Aussie company that owns a large chunk of that country's cell towers, has just bought another 140 of these from the Vodafone Group, according to The Line. These more remote sites add about 10% to Crown's stock of sites.

Why did Vodafone Australia go into the deal?

“Because it is commercially prudent for Vodafone to outsource the ownership and management of these facilities,” said CTO Andy Reeves. “Vodafone will continue to utilise each transmission site under a leasing arrangement with Crown Castle, and use the proceeds of the sale to reinvest in its national mobile broadband network upgrade.”

Makes sense! A lucid explanation that begs the question "why not New Zealand?" Wouldn't you think a similar model - having the bulk of sites independently owned and managed - would free up capital here too? More importantly, wouldn't it get over the long standing issue of radio co-location that after seven years attention by the TCF and Commerce Commission has yet to be resolved?

The answer seems to lie in different incentives arising from the lack of competition in New Zealand's mobile market. In competitive markets like Australia operators gladly deal with an independent tower owner and embrace co-location as a means to recover some overheads. But in New Zealand with a weak duopoly, the incentive is to use the lack of co-location as a means to frustrate entry. Just ask Tex!

Only last week TUANZ sent yet another in a long line of submissions on co-location to the Commerce Commission. But the regulatory route is long and arduous - look at this page to gauge the massive amount of work done and time taken in the Commission thus far!.

In the market for services, competition is clearly the way to go. But for expensive and environmentally-sensitive infrastructure like cell towers, there's a lot of sense in the industry playing Happy Families.

I just wish somebody from Crown Castle would book a flight in this direction and present a business case, Sadly I suspect it's not about to happen.

Categories: Innovation | Regulatory | TUANZ policy | Vendors | Wireless carriers

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1 comment

• Tom Chignell says:

  Ernie
  Let me help you understand why Crown has not done in New Zealand what it has done in Australia. Its convenient to pin it down to some sort of "anti-competitive" ploy by the existing operators but that is not the case. Deals such as the Australian one make sense to infrastructure companies such as Crown because the facilities are significantly under-utilised. Crown come along and specialise in marketing space on sites and are therefore able to pay a price to the original owner which makes sense and is attractive. No doubt they also obtain synergies in site maintenance and operation too. You could argue that operators could have done this themselves - but you have to remember that selling spare space on cell sites is not our core business.
  So, you might ask, what is different in NZ? Take a look around when you next visit Sydney. The average size/height of towers in Australia is significantly greater than NZ. In fact, its not just an Australian phenomenon. Vodafone's cell sites in NZ are on average more than 10m shorter than the rest of the Vodafone group.
  So, the occupancy rates (or capacity) of NZ sites is significantly less than international norms. We do have some big lattice sites with plenty of capacity, but most sites are much smaller.
  And why is this? Well, operators here in NZ are not generally allowed to build big sites or are prevented from doing so through the RMA and other consent processes.
  Allow taller sites and there will be more room for co-location, the price for co-location will come down, the average build costs for operators will be lower (more operators per site and few sites because they are taller) and in our competitive market these savings will be shared with customers.
  So, if there is a review of the RMA next year, we should all get behind making it easier to build bigger sites.
  Cheers
  Tom Chignell
  GM Corporate Affairs, Vodafone New Zealand

  Added: 26 August 2008, 2:32 p.m. Flag as Spam  |  Flag as Offensive

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