HOWELL: When satellite chickens come home to terrestrial roosts

By Bronwyn Howell

For several reasons, 1990s New Zealand was a natural test bed for the deployment of nascent broadband technologies and different business models for their commercialization: It is geographically contained in a comparatively small land area, has a small but tech-savvy population of early adopters, and (at the time) had an extremely light-handed regulatory regime. I learned a lot from the interaction of a rich representation of international industry stakeholders in this remote corner of the world, and that experience has informed my subsequent research and analysis. And the physical legacy of their involvement remains — in New Zealand’s comparatively well-provisioned national and international connectivity.

Thirty years later, New Zealand is again at the forefront of experimentation with a new generation of broadband technology, as SpaceX’s Starlink has chosen the country for trials of its low-orbit satellite broadband network. New Zealand’s sparsely populated rural areas, which contribute disproportionately to its wealth (mostly due to some of the world’s most tech-savvy farmers) and its challenging geographical terrain (a long, narrow north-south profile, divided by steep mountains) make it an ideal proving ground for both the technological and commercial dimensions of the technology.

Somewhat surprisingly, given increased tightening of the regulatory ratchet since the 1990s, it appears that elements of the country’s wider telecommunications regulatory regime are also facilitating the trial.

For low-orbit satellite networks to function, it is essential for the satellites to connect with terrestrial base stations to transfer data to and from the internet via fiber trunk lines to local internet exchanges. These are equivalent to mobile telephone towers connected by fiber to local exchanges. Just as with mobile telephone towers, satellite base stations must be deployed at strategically important locations, and permission to build the stations — comprising an array of domes and dishes — must be obtained from local authorities. Unsurprisingly, the more base stations required, the greater the likely local resistance to their construction, as a consequence of both their physical presence and uncertainty associated with a new technology.

As part of the regulatory changes undertaken to facilitate the deployment of the government-subsidized fiber-to-the-home Ultra-Fast Broadband Network, New Zealand’s Resource Management regulations were changed in 2016 to streamline processes for deploying telecommunications infrastructure. Specifically, the regulations specified that infrastructure installed in compliance with the National Environmental Standards for Telecommunications Facilities would take precedence over locally administered resource planning requirements, thereby bypassing potentially fractious and costly disputes from individuals objecting to such deployments. The effect is similar to the Federal Communications Commission’s 2020 rulemaking intended to facilitate 5G infrastructure deployment, but the New Zealand rules are broad enough to cover any telecommunications network infrastructure — not just a specific nominated technology.

Thus, against a degree of local opposition, network operator Vocus has obtained a license to install, operate, and maintain a ground-based satellite station comprising of nine 2.7-meter-high (remarkably egg-like) domes on land leased from a local chicken farmer in Purewa, just south of Whangarei. Vocus, owner of significant nationwide trunk fiber capacity as well as two midsized internet service providers, is presumably undertaking the investment in concert with Starlink, which has registered an intention to proceed with deploying six New Zealand base stations, one of which is identified as being located at Purewa.

If that presumption is correct, it signals that a significant feature of Starlink’s international plan is to cooperate with local operators in each of the countries where its satellite services will be provided, rather than taking end-to-end ownership of all the infrastructure required for its services. While the services sold may carry the Starlink brand, Starlink itself may have a negligible terrestrial footprint.

This echoes the business case of many international internet firms, such as Netflix and Amazon Web Services (whose parent firm will likely rival Starlink when it deploys its Project Kuiper satellite service), that partner with local data center operators rather than investing in their own dedicated local capacity. The international contract provides the justification for the local firm to expand its own infrastructure base, and consequently it gets to participate in the financial and other benefits (or losses) from the new technology.

It thus behooves critics of large international firms to think carefully about the broader systemic effects of the companies when critiquing their apparent market power in home markets. Just as the internet is a complex worldwide web of interconnected networks and end users, so too are the networks of stakeholders in the activities of the firms deploying internet infrastructure and delivering products and services. The risks taken and benefits conferred by these firms internationally radiate out far further than just the firms and national boundaries concerned, and may prevail far into the future. Moreover, liberal (rather than more restrictive) regulations allow more options to be explored.

I for one am delighted to see New Zealand — and (even if accidentally) its more liberal resource regulation regime — participating at the forefront of broadband innovation once again.