Summary

  • The Commerce Commission is testing how a proposed shared radio network could affect both competition for network inputs and competition in mobile services.
  • Separate brands, spectrum and retail pricing do not by themselves establish how joint investment decisions, supplier bargaining and quality accountability would work.

The boundary is the story

The proposed RANCo joint venture is often described as infrastructure sharing: combine radio access network assets, keep the mobile businesses separate, and use any efficiencies to improve coverage or capacity. That description leaves out the central economic question. When the physical network becomes a jointly governed input, who decides where capital goes, how quickly a site is upgraded, which supplier wins the next contract and who answers when service falls short?

The New Zealand Commerce Commission’s case register lists the application as open under section 66 of the Commerce Act. 2degrees and One NZ propose that a jointly owned venture take over and operate their radio access network assets. Their public application says the two companies would remain separate mobile operators, retaining their own spectrum management, core networks, retail and wholesale strategies, products and customer operations. It also describes rights for either operator to pursue additional network builds.

These are the applicants’ account of the proposed design; they are not yet findings about how the arrangement would perform.

The distinction matters because a mobile service is produced by more than a tower or radio. Spectrum shapes available capacity; the core network manages subscriber access and product rules; backhaul moves traffic; and the RAN connects devices to the network. The parties argue that spectrum, core networks, prices and products will remain their competitive differentiators, while radio assets are largely homogeneous. If that account is right, pooling assets could reduce duplicated spending without eliminating the main rivalry. But a separate retail price list does not answer who controls investment at the shared layer.

A two-sided investment test

The Commission’s 1 October Statement of Preliminary Issues is not a verdict. It sets out questions about unilateral, coordinated and vertical or conglomerate effects. On the buying side, it asks whether one joint RAN buyer could press suppliers on price or terms enough to weaken returns, investment, innovation or supplier participation. A stronger buyer can create efficiencies; it can also narrow the routes through which equipment makers and service providers reach customers.

On the service side, the Commission asks whether the proposed structure could support higher prices or lower quality, service levels or innovation. It also asks whether market conditions could make coordination easier, or whether the venture could foreclose rivals. Those are separate theories, and none is established by the statement.

The applicants’ case is that combined scale could make some radio investments economic sooner. A NERA report submitted with their application reviews prior studies and advances that argument, but it was prepared at the request of the parties’ counsel. The Commission has not adopted its conclusion. Publicly redacted figures also limit outside scrutiny of the companies’ projected economics.

The evidence that could resolve the gap is operational: site-by-site investment plans, technology and capacity differences, procurement tenders, supplier alternatives, fault and service-level responsibility, and whether unilateral build rights are commercially usable when one operator wants a different upgrade. The Commission has specifically invited input from equipment suppliers, installation and maintenance providers, mobile operators and MVNOs on these kinds of questions.

Interested parties have until close of business on 15 October to submit views. The Commission currently schedules a decision by 23 November, subject to extension if it needs more evidence. Until then, the relevant distinction is between what the parties say the structure permits and what the review establishes about its incentives and constraints.

Sources