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Are the Mobile Black Spots in Trouble?

Today’s announcement that Andrew Button has resigned suddenly as CEO of the Rural Connectivity Group is bad news on two fronts. First, because Andrew is a thoroughly nice guy who has been well respected by people he’s worked with. Second, because it highlights that things have not been going well for the Rural Connectivity Group (RCG), and therefore, the Government’s Mobile Black Spot initiative.

For clarity, the Rural Broadband Initiative divides broadly into two parts.

The first part is about broadband to rural and remote areas. Most of this work was contracted out in 2017 to 17 Wireless Internet Service Providers or WISPs. (Disclosure – I manage their national industry group ) The WISPs are getting on with the job rapidly with many of them well past halfway through the 2 year old contracts.

The second and more expensive part, the Mobile Black Spot Fund, is about filling in cell phone blackspots on Major highways. The RCG, a joint venture of the 3 cell phone companies, won that contract which was let on the same day in 2017. It involves around 500 sites. But its progress has been glacial by comparison – earlier this week the RCG claimed to have completed just 30 in that 2 year period. That’s light years short of 500.

There’s a degree of crossover between the broadband and cellular parts of the programme but that’s not material to this issue.

Key to the slow progress from my observation is the unconventional structure of the RCG. Its jointly owned by 2degrees, Spark and Vodafone, created as a cunning way to pick up the money the government put on the table to extend cellular coverage to areas that were not commercially viable.

Pity the child of three high profile, egocentric parents constantly squabbling with each other for attention. There’s not a lot of love around that family table – they are openly determined to eat each others’ dinner. Collaborating does not come easily.

Added to that, all three CEOs of those parent companies have resigned since they established the RCG. Do their replacements welcome having joint custody of an illegitimate, foundering 3-parent offspring?

Meanwhile the government, through its agency Crown Infrastructure Partners, has the political and commercial imperative of driving the project through in a timely way.

So what happens next?

Here’s a prediction. I’m betting the RCG is doomed. The three parent businesses will close it down. They will try to claim the government’s subsidy for themselves by dividing up the contracts three ways.

That will be a great pity and will set back mobile phone calling on many highways substantially. Not because the RCG conceptually is the wrong way to go, but because the culture of the three parents makes joint management downright impossible.

Whether or not that prediction is right, clearly there is a major challenge looming. In the interest of rural communities lets hope a satisfactory answer appears. Meanwhile for rural Kiwis, its still good news for their WISP-provided broadband but bad news for the under-served cellphone areas. Watch this space.

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