So the cost of putting equipment into roadside cabinets may have cooled competitor investment in the copper network. Orcon and Vodafone claim the Commerce Commission’s determination on how much they will pay to access those cabinets means they will struggle to make a business case for Local Loop Unbundling. Meanwhile, the prospect of a fibre network that reaches at least 75% of the population is up to 10 years away.But what if there was an alternative network that could be rolled out in six months’ time? One that offered speeds in excess of the existing 3G mobile networks and one where the customer didn’t have to shell out any money to replace their existing equipment?According to CallPlus CEO Martin Wylie, there is a technology that promises all that – and more. It’s called WiMax, and the company is currently doing the numbers to see if it’s worth taking a punt on rolling out a brand new network across the country next year.There’s already been one false start – the company trialled a WiMax deployment using the 16d standard in Whangarei in 2006. They spent millions of dollars, but only connected 100 customers to the technology before they decided quit. The fledging network was effectively shut down when global manufacturers of chipsets switched to backing the 16e standard of WiMax and 16d became outdated technology.It meant CallPlus had to turn down an offer of $US400 million from Japanese financier Marubini, but the business case just didn’t stack up.When I ask Wylie what the return on investment was, he laughs. “I think it’s an investment in the intellectual capital to ultimately make the right decision about the deployment in this technology. Potentially this is hundreds of millions if you were to roll it out nationally. There’s a big penalty for getting it wrong.”But a company such as CallPlus can’t quite afford to stand still either. With 150,000 customers – 50,000 of them on broadband – the tier two telco currently provides only a marginal point of difference. It wholesales Vodafone’s unbundled lines where it can, and Telecom’s unbundled bitstream service in most other areas. Next month it will launch a mobile offering by wholesaling Vodafone’s mobile network. It is under no illusions that the power lies in the hands of those who own the infrastructure.“It is still a major cost that you are paying essentially to your major competitor. That’s always going to be a very difficult place to be and you are fundamentally dependent on regulatory policy, and the government attitude to allowing access to those services,” Wylie says.Last year CallPlus successfully bid for part of the radio spectrum which allows for a WiMax deployment. Now they are trialling base stations from three vendors in three different locations to determine if they can make the business case to go ahead. One base station is in Whangarei; the others are on sitting on top of CallPlus buildings in central Auckland.So how many customers can you put on a base station? Wylie is cautious when answering.“These are trade secrets. This is the stuff that we are endeavouring to pin down by these trials because it depends on how high, how powerful is your base station, how much spectrum do you have, what topography is it being deployed in, how fast do you want it to run, how much dedicated bandwidth do you want per customer.”But get the business case right and CallPlus could be ready to roll in January next year, when the spectrum becomes available. Wylie says there’s no reason to believe Marubini wouldn’t be open to investing in a new network using the 16e standard.Also, they wouldn’t need all the cash up front because rolling out a WiMax network can be done one street at a time. Wylie says all it takes is one base station – get it installed with the appropriate backhaul and then you start knocking on doors asking those within range whether they want to make the switch to WiMax. As it’s the 16e standard this means that once other streets, and whole suburbs, become connected, customers can access their broadband account anywhere within the coverage area.“It’s not our ambition to be the fourth mobile network coming into New Zealand,” says Wylie, careful to underplay the benefits of the mobility aspect to the 16e standard. “It would just happen to be a benefit.”“If we were building a network in Whangarei, it means you could take that equipment anywhere around Whangarei and it would operate. But if you left the coverage zone of Whangarei, it may not.”Customers could either access WiMax through an Intel chip in their PC or they might need to purchase a ‘plug-in dongle’ to attach to their phone – either way it’s a small cost compared to the equipment that had to be installed with the previous WiMax standard 16d. Wylie says handsets will also evolve to support WiMax, which will enable customers to switch seamlessly between wireless technologies such as WiMax, wi-fi and GSM.He admits it’s leading edge technology and bleeding edge economics – there’s no one in the world that’s deployed WiMax as a fully fledged bypass network to date. But there are plenty of trials happening, especially in rural areas and in third world countries.The latter is why Marubini was so keen to invest.“WiMax has huge application in developing markets where there isn’t already infrastructure. What we’re doing is looking to bypass an existing network infrastructure, which always makes the economics that much harder,” Wylie says.“But if you’re in the third world, where there is no infrastructure, then it’s always going to be cheaper to use something like this where you’re not laying copper or stringing cable over large distances. If you’re putting up a couple of base stations at a local village, the economics there are much more compelling and the opportunities are almost immeasurable.”CallPlus isn’t alone in looking at WiMax. Kordia, Compass and Woosh were also successful in gaining the appropriate spectrum last year. Are they working together?Wylie says there’s nothing formal, but there is knowledge sharing between the companies. There’s a willingness to work cooperatively so that a national network can be created between them. For example, if CallPlus deploys a WiMax network in Rotorua, Woosh in Palmerston North, Compass in Taupo and Kordia in Taupo, they could have agreements with each other which would allow their customers to use WiMax in all four centres.“We have to mindful of the Commerce Act, of not being seen or actually colluding in any way, but I think there is some scope for managing the deployment so that we went to areas that the little guys weren’t already going to.”The promise of WiMax is what dragged Wylie back into the telecommunications sector – he had previously been the company secretary for Telecom, before running law firm Simpson Grierson and then insurance business Aetna. And it’s probably the only thing that will keep him at CallPlus when his self-imposed tenure expires next year. Despite owning about 7% of the company, he believes that five years is long enough in any role and after that it’s time to “reinvent yourself.” But he hesitates.“If you were going to roll out a national WiMax network it would be a shame to walk away immediately before that, but I still think after five years you’ve probably done your dash.”
