Is Starlink eating rural NZ?

WEBVTT - Is Starlink eating rural NZ? You're listening to the business of Tech. I'm Peter Griffin, and today we're heading to the front line of New Zealand's rural connectivity battle. I'm joined by Alex Stewart, the twenty one year old founder of wombat Net, a wireless internet provider serving the Greater Wellington region.

Alex has built wireless internet towers, hauled gear up hills, and connected farms and rural dwellers that the big talcos and fiber networks never quite reached, often literally changing people's ability to work, study, and run businesses from rural New Zealand. But he's now staring down a formidable competitor, Starlink elon Musk's low Earth orbit satellite network that's rapidly becoming the default option for rural broadband across New Zealand. On paper, Starlink looks like a miracle, fast, relatively affordable internet beamed from space, available almost anywhere you can see the sky.

I use it myself at my batch on the wire Rapid Coast, where I share access with my neighbors. The problem is what you don't see on the box, the resilience, sovereignty and competition risks that come when a growing chunk of rural New Zealand's connectivity, including some mobile towers, schools and businesses, depends on a single foreign owned satellite provider. Starlink has made big games in New Zealand, scooping up an estimated twenty percent of the rural broadband market, and now it's putting its prices up us as if the highest capacity tier of styling from next month, that's June, we'll see a seven percent price bump from one hundred and fifty nine dollars to one hundred and seventy.

The entry level plan goes from seventy nine to eighty five dollars, an eight percent increase, and if you want a casual plan you can just activate it month to month the feed doubles from ten dollars to twenty dollars. Starlink last year generated around one hundred million dollars in revenue for SpaceX in New Zealand with fifty eight thousand customers. It's a pretty big business that has scaled up very rapidly. Alex Facing being put out of business has gone deep on this dozens of Official Information Act requests to ministries, regulators and agencies to find out what the government and officials have actually done to assess those risks.

What he discovered is pretty sobering. Outside of defense and a few security sensitive corners of government, there's been remarkably little strategic thinking about what happens if Starlink stumbles, changes its business model, or simply decides New Zealand isn't a priority market anymore. It's not in New Zealand's specific problem. Australia was worried about Starlink's dominance in satellite broadband across the Tasman, so it went with its emerging rival Amazon Leo as part of its National Broadband Network Rural Connectivity service.

In the US, Starlink has urged the government to cancel billions of dollars in subsidies for rural broadband providers because, acclaimed in a submission, Starlink has solved the rural digital divide. Critics beg to differ, pointing to the latency issues inherent with satellite connectivity and favoring pushing gigabit five further out and then maybe using fixed wireless solutions to bridge the remaining gap. In this episode, you'll hear why many of our local wireless internet providers are on a knife edge as Starlink coovers up rural customers despite hundreds of millions of taxpayer dollars having already gone into rural broadband infrastructure.

Alex goes a little bit technical, but he explains a really important problem the spectrum constraints that make it impossible for small regional providers to compete on performance. Is there a smarter middle path here? Well, there could be one that recognizes Starlink's innovation and value for rural communities, but still leaves room for local providers to invest, innovate and offer genuine redundancy. On the ground, you'll hear a pretty candid assessment from Alex of the government's.

Current hands off stance. So stay with us after the break from a really interesting interview with Wellington entrepreneur wombat Nets Alex Stewart. Alex Stewart, Welcome to the business of tech. How are you doing.

I'm good, Thanks Peter. You're running wombat Net, a wireless internet provider serving the Greater Wellington area area. I go through all the time. I'm talking to you from the wire wrapper at the moment actually on a Starlink connection, so it might be a bit contentious, but with well we'll get to the height of that.

But great that you're you know, you're taking your young entrepreneur. You're got twenty one running a wireless internet provider. That's pretty cool. Yep, that's right.

Yeah, And what got you into this particular area because it's it's been a it's been a challenging industry for a while now, with the advent of satellite and that, and you know, fiber pushing out, the mobile operators doing stuff over four gen and eventually five G as well, you know, everyone claiming they can do broadband. Over their own networks. What made you thought I'm going to give this a go myself. Yeah, Well, the.

Stories probably a bit different. So I was fourteen or about probably I think thirteen when I first came up with the idea, and so I didn't come with a traditional angle of you know, oh, this is I know, the most profitable option or the old you know, something like that. There was no analysis or anything. Essentially, as the story go, my dad was out at Tidakena Beach.

If you've passed through State. Highway through on your way to Wanganu, you would have driven through Toda Kena it's a small beach settlement. It's where so that the people go to wind down and enjoy themselves and maybe they're looking for some TV entertainment. And so me being this young kid, I not sure exactly why, but I was approached by, you know, some of these It was a very small, tight knit community.

It was approached by some of the people there and they, you know, were saying to me, hey, you you know, you're you're younger, you'll probably know how to help. We've had real issues with getting internet out here. You know, We've talked to the telcos and they're not interested unless we've you know, we can raise two or three hundred thousand dollars to pay them to build one. And so I from then on just thought, well, there's something.

Clearly wrong here. Clearly there are people, you know, falling through the gaps. I was able to get support through a provincial growth funded rural innovation scheme that sort of helped get us off the ground. That was very helpful.

When we got some coverage through that, I then had an influx of i'd say probably about two thousand people. Emailing me saying like, oh, when are you going to be in Gore? When are you going to be in you know, why tetro you know. All that sort of stuff, And so I had some disappointing responses to give those people, But it became evident to me quite early on that you know, there was a big connectivity issue, and clearly that existed a long time before I was involved in it.

But I just sort of thought, well, you know, how hardh could it be. To fix the operative thing you pointed out there? You know, there are gaps, particularly around terrestrial coverage. You know, I talked at the start about you know, mobile networks.

Sure they're pushing out, and there's a big government funded scheme to get mobile sites further out and serving rural communities. Fibers is pushing out, but it's really that sort of last five to ten percent of the country that's really difficult to get to without resorting to satellite, and that's been an area that internet providers across the country have invested a lot of time and money billing relationships with rural communities. So you've got a customer base in the Wellington region.

How's business been for you? Yeah, So we're based in the Hut Valley and we cover the entire Wellington region outside of whited Upper. We sort of came along here. I had to move to will Into for some family reasons.

This was really where we started in the Hut Valley and it was right around COVID when people were working from home. There is slash was a copper network out here, and you know, it was never designed to sustain the level of load of you know, everyone at home. We're trying to be on a zoom call, and so we had huge growth at the beginning. You know, people who were on four g plans at the time, which were kept at one hundred and fifty gigs and they were spending five hundred bucks as a family on Internet every month and that was there only option and for us to come along, it was really quite incredible some of the things that the customers would say to me, like, you know, we genuinely were changing these people's lives and their ability to access the services that everyone to have access to to participate in society.

But once Staralink came along, it was sort of silently viewed by the public, officials and government as something that would solve that problem and would solve this problem that has existed for a long time. Around rural connectivity. I don't know to what extent they believed it would solve it, but there have been government programs in the past which have provided funding I think about seven hundred and seventy million in total, all of which came from the public through different means.

But what we have now is a situation where, yes, that infrastructure was built, it's not perfect and it didn't cover everyone, but much of that infrastructure is now becoming commercially economically unviable because of the amount of people and the rate at which people are switching to Staralink. And so it's important to note obviously, one bat Net we're a wireless Internet service provider a WISP, and we are a direct competitor to Starlink. But I would also note that we're a direct competitor.

I guess you could say to one New Zealand, but we partner with One New Zealand to utilize their unused capacity in rural areas, so that maybe we don't have our own coverage with our own towers that we've built, which we prefer to connect people to, but if someone comes to us, we then have an option to connect them, and we say this is the best option we have available for you, and that's what we can do. But unfortunately, it appears that SpaceX is taking a position which, at the very least the result of it results in companies like ourselves becoming non existent at some point in the near future.

So I'll talk a bit. About why, you know, the sort of value that we provide. I had a customer a few weeks ago. There was a storm and he had starlink, and his starlink modem got fried, and you know, maybe he could have done something to prevent that, but he gave me a ring because he messaged Starlink and they said, well, we'll have a new one to you in a week.

But he ran three businesses from home, and so he gave me a call and I was there within half an hour, screwing a dish to his tree and running a cap across his front lawn, all in the name of getting him back up and running without being prompted. He left this review that was quite lovely, you know, saying that. You know, even though I did eventually switch back to starlink, which is the option that works best for me, it was incredible to be able to have someone in the community who I could call an expert on this topic who can come out and you know, get you sorted.

And so, I mean, you know, different people value that to different extents. Some people don't care about that at all. You know, We've found that there are actually many people who are resisting switching to starlink or moving off of Copper specifically because they want someone who can come out and explain to them what this means, you know, what this means for them, and do it for them. They don't want to be climbing up on their roof for you know, there are people like that.

And so if we lose this capacity, we then also lose redundancy in the sense that if anything was to ever happen with starlink. And I'll get into that a bit further later on, but at the moment, we mostly have alternatives which. We could turn to. There are my bon network, you know, coverage in most areas, but we still have while this Internet provided all regional broadband coverage across most of these areas.

Absolutely roost case scenario. They'll probably be a bit of a fuss, but we could all you could all switch to one bat net, you know, but there will be a point in time if the if the status quo is maintained, where we will no longer exist, and that has been evidenced by scenarios which i'll which again I'll get into shortly. But once you know our companies fail, you, as I say, you lose that optionality and redundancy and ability to have a fullback. So so what we're talking about here is real fears, and I think genuine fears that we face a bit of a monopoly situation emerging.

You know, I think to give credit to Stylink, it's a very innovative product. They've come in here with quite aggressive pricing and you may have a view on realistic you know that pricing is whether they're basically subsidizing the price here to win market share. They have been putting up their prices, so whether they're following that typical big tech model of go in cheap build you know a lot of raving fans and then put the prices up. But look, you know there is a genuine concern.

I think that as you say, a lot of government money, taxpayer dollars have gone into building rural connectivity. There are a number of businesses across the country that have committed to local communities providing wireless internet access to farmers and schools and communities, and how are we going to see a hollowing out off that? Now? Credit to you because of your concern over this, you went deep with official information at requests.

What really struck me about those responses you got? It's just the lack of information a lot of it redacted for commercial reasons, but just a lack of real deep thinking from a strategic national interest viewpoint in our government agencies about what it means if twenty five to thirty percent of the rural community is served by an American satellite company. Did that sort of surprise you? That just how little thought seems to have been given to this issue.

Startling is an incredible, incredibly revolutionary product. What it's been able to deliver from rural New Zealand is something that no other product has been able to And you know, as I think you may have covered, or certainly that the Herald has covered, Holter's recent deal with One New Zealand to have direct to cow connectivity, you know, and so there are so many opportunities around that, but there are risks that come with this, and so you know, we've had in past international satellite operators, different kinds of technology, but still satellite which have come into the market.

But we've never had a situation where the domestic market is being captured so quickly. And as you say, whether that is through subsidized pricing or not, that's not a conclusion that I think I can come to with the with the information that I have access to. But there is certainly the kind of the fear amongst some like I mean, they've just increased their pricing, you know, by some might say a small amount. But there's two sides of the coin.

Some people are saying, well, they haven't increased salent, has not increased their pricing in five years, so you know it's actually a good thing. You know, we only got one in five years. But then others are saying, well, this is a sign of what's to come post their IPO, and you know once there's that additional investor pressure. But going back to the official information it requests.

Yes, so we've been told as an industry, the original Internet providers, that the government is on top of this industry, that they are managing the risks both within our industry and externally, and that we have nothing to worry about. There has been some fracturing amongst some of the operators as relates to spectrum, which if you think of radio spectrum is what it's what highway is to transport operator. And the more lanes you have, the more trucks you can flit down the highway.

And so we look at the more spectrum we have means the more capacity we could provide to end users into rural New Zealand. So I was able to submit an official information at request to Minister Goldsmith late last year post a report that was released by the Commerce Commission, the FEZI Report. It was a review of the telecommunications market and where it's heading. Richard Feeze who wrote the report, he has quite a colorful history, but currently sits on the Competition of Markets Authority Board, which is the United Kingdom equivalent of the Commerce Commission, and so he provided this two hundred sum page report and in it he did say, you know, to one side, he did say that companies such as ourselves will become even more so non competitive in the current environment, but also mentioned that there is a particular risk that is evident right now of market kind of takeover monopoly by these overseas operators.

At the Rural Connectivity Symposium at Parliament, I think it was last week, the TALCO Commissioner, Tristan Gilbertson made a presentation where he didn't accept questions. But the last slide, and this was post the release of my investigation. The last slide was titled Emerging Risks with three items monopoly risk, displacement risk and sovereign risk. So that's the first time that the Commission, to my knowledge, has ever said that.

But within this report, which was released in October last year, Fezi said that the government needs to act as a matter of urgency to prevent a situation from forming where stalink is essentially entirely unregulable, where they gain enough capture of the market, where essentially with the punitive measures that the governments have available to them, there's very little that they could do to force them to do. Anything one way or another. And he warned you quote that the government should act as a matter of urgency.

And so I think it was just four days after that report was released the first wireless internet provider liquidated Evolution Networks in the Bay of Plenty. I don't know the exact numbers that they had, but that was just four days post Feez saying that we were becoming uncompetitive. But the thing that he failed to mention was that the government have had a complete lack of interest in progressing rural spectrum conversations. I'll explain.

You know what spectrum means for rural New Zealand. So Starlink their satellites that they have, So the measure of spectrum is mega hurts. So Starlink have two hundred and forty megahertz of bandwidth or spectrum per satellite per beam. Rural wireless providers.

In terms of spectrum that is dedicated to us, we have forty mega hurts, so we have forty for the whole industry. And Staralink has two hundred and forty per being per satellite and there's forty eight beams per satellite. That's not the government's doing that. Those are international coordinations which were outlined very long time ago.

But that is what you know. SpaceX has been able to take advantage of to provide this magic service, what some might call magic. The reason why while this Internet service providers are uncompetitive and the thing that the Minister and others seem to sort of forget is that we can't fight physics, and we know we. Have to follow the law.

We aren't allowed to turn a radio on a spectrum that technically it can turn on on that spectrum. If we're not allowed to, someone has to do the work to allow that to be switched on. And so in terms of technologies that are available right now to provide service to rural New Zealand that are non starlink, there are new technologies which were released some time ago which are not available in New Zealand simply because the government have not done the work. And in speaking with the government agencies responsible for this, they basically say, well, one we're under resource, but two, you know, we've also got to do all of the work on the spectrum for the mobile network operators and that's millions and millions of end users and we're talking about you know, maybe tens of thousands for you.

That's not as important. Obviously we have to prioritize. But they've been saying that for about half a decade. You often get comments saying, you know, oh, well, at least we have something different to the wireless operators that we're charging us an arm and a leg for slow internet, and some people just sort of think that they're just sticking their heads in the sand, you know, not providing any innovative alternatives.

But it's not because we don't want to. It's because we structurally are unable to both because we can't turn the equipment on, we're not allowed to, and we also struggle to access capital. You're in a bit of a bind really, And look, we've got more satellite providers on the way. Amazon's Leo service will launch in this part of the world.

They have secured ground sites access. It's just a matter of time. The Amazon Leo crowd have done a deal with the National Broadband Network in Australia to provide satellite connectivity across rural parts of Australia. So this competition is only going to intensify.

So you talked about one ISP that has failed recently, are a lot of others. You think on a knife edge that you know, this could sort of tip them over into insolvency. Absolutely. I mean with the current approach that is being taken by government, which I've been told is essentially that they want to wipe their hands of telecommunications because UFB has done its job.

The market will handle the rest. So yes, Amazon will be entering the market shortly where essentially Australia's equivalent to Coorus it's a bit different, but was able to negotiate a agreement with Amazon to allow wholesale access to retailers and so that service isn't live yet and there are some other nu answers to that deal, but that shows that the Australian government and it's subsidiaries can see that there is a sovereignty risk and that they need to be able to maintain some level of control of that section of the market.

That isn't a conversation that anyone within government seems to be interested in having, and so that is a conversation as industry we are having because as I alluded to before, we're not able to resell Starlink because you know, I've been able to confirm directly with them that the minimum monthly recurring revenue commitment is a million dollars a month and that's enterprise only, So we're not able to resell residential services and we have to be reselling a million dollars a month of it, which is not possible for us or any of any of us really none of us make that much money.

There are customers who we have had to either recommend Starlink to or switch them to Starlink because for whatever reason. But at that point the relationship it then ends. And we have had many. Customers who are saying, well, can't you just order the style and can put it on my account and we'll pay you for it, because we'd like to go through you, but we're not allowed to do that.

And so with Amazon, we do see it as part of the solution here. In a way, it doesn't solve one of the core issues here, which is the consolidation onto the satellite medium as a layer of our TAI communications network. But what it does do is it allows or if we were to able to negotiate some kind of agreement similarly for New Zealand industry at a local level, that would enable us to ensure that we can continue to provide the support that we do alongside our services which actually do help to improve digital equity and access to government services and those sorts of things.

We do a lot of stuff, a lot more than your Corus technician ever would and that we say that as an important part of it. But moving back a bit, you spoke about my IIAs yes, so I submitted post the Fezi report. First a request to Goldsmith asking what their plans were for the telecommunication development levy. If you are a customer of Spark or one of the larger operators, you probably have seen it on your bill if you have a broadband connection.

And initially that was intended to be primarily going towards programs funding rural broadband, which may be considered non commercially viable traditionally. But as of late in this government term, other than the funding which goes to the blind def relay service and the one one one service, funding has not been appropriated. It has not been allocated to anything. And so I asked the min Astray, I said, now that you have progressed this law change to bring starlink under this regime so that they are also paying into that.

You know, the idea behind it was this is supposed to fund what they are replacing, to ensure that there is a domestic alternative that could be a use for it. And obviously he refused to answer any of those questions. But following on from that, I didn't you know that didn't put me back. I thought, well, no, I need to find out what's going on here.

As I say that the ministries are all saying different things, there doesn't seem to be a cohesive argument. And I'm also fortunate enough to be on some AI and cyber security working groups within industry bodies and at the same time sort of started seeing that there was a discontent within the wider technology industry about the government's approach to AI and cybersecurity and their sort of unwillingness to do anything about it. You know, we only saw the updated cybersecurity strategy post that manage my health incident.

There should have been something there before that. So through my IAS, I suited twenty eight separate official information at requests and the main finding that was from the Commerce Commission and the Ministry for Business, Innovation and Employment, which is both the agency responsible for advice for minister which make decisions they provide the advice, but also much of the regulation around telecommunications industry. I asked them seventeen questions which were very simple.

What assessments have been done about the trajectory of this market, What assessments have been done about the fact that service has been withdrawn in other countries for non telecommunications related reasons. Has there been any discussions about those risks? And so I asked seventeen questions, only one came back. They answered eighteen e to the rest of them, which means nothing exists under that question to answer your question.

And the only question that those two requests did answer was that there was a regional provider which had submitted a complaint under the Commerce Act that the starlink promotional pricing may be predatory. But that sits idle because there is no analytical foundation for them to assess. They haven't assessed, you know, pricing or what future pricing might look like, or you know, anything like that. As I said before, we we've had international operators come in before.

But I think people most people don't really know how the Internet works, right. They think of it as a connection, you know, they don't know how many parts, how many moving parts through are behind it. You know, you have people saying, well, starletk's better than fiber, you know, and that sort of explains what people some people's understanding is of these things. But they don't understand that this isn't the same as fiber.

It's not the same as copper, it's not the same as four G. There are inherent risks both at the medium layer, such as solar weather events cascading debris events, both of which scientists have warned about as something that should be taken into consideration. But as I say, also the risks of the fact that these companies are foreign owned and controlled and we have no say in what they do. And so the long story short through my IaaS yes, all of these different agencies, the Privacy Commissioner, the Emergency Management Agency DPMC, none of them, even the foreign in Trade have not considered any implications from any angle about starlink in New Zealand, where there have been notes within government within MB internal slides and internal briefings and emails to say that they are aware of this risk, that they know that there is a monopoly risk, but then they've not done anything about it.

And so I, you know, I do note that I am a competitor, and so I do have a vested interest in the government. But I, as I said before, I think starlink stalk is an incredible service, and I don't think that as an industry we should be coming for their pricing or their availability because that's commercial for them. But you know, at this conference where Tristan Gilberts and the Commissioner spoke, the Minister also spoke about allowing while this providers such as ourselves to flourish.

But when he was asked in particular about what they are doing or planning on spectrum as we come into an election, has answer was, oh, well, it would be a bit sort of weird to push fiber further. And that wasn't the question that was asked. And we asked, you know, what is your what are you doing in this space, because we need more than just fiber. Fiber is not the answer to you know, the remaining percentages.

But increasingly we now have a situation where communities are fully reliant on Starlink as a means of communications with the outside world. The Rural Connectivity Group, which is jointly owned by the three tailcos and provides rural mobile coverage. They have around twenty remote sites which are back called or connected to the Internet via starlink. And so I mean, I'm sure I wonder if you know those communities were surveyed, if they asked, if they were asked, if you were Starlink which you're using for your internet goes out.

Do you think your mobile will stay on? And they'll probably say yes, They'll say, that's my backup you know, I can use my cell phone and it's got back up power, it's got a generator. Why would it go out. But we now, as I say, have situations where the homes run on stalink, the businesses run on starlink, the cell tower runs on starlink, the schools run on starlink, and in many communities the schools also double as the civil defense emergency hubs.

And there's been no assessment of what would happen if there were to be a natural disaster and a stalink outage on the same day, you know, and those are very very low probability, you know things, But that's not been considered at all. There's no contingency plan or thinking. Around what that means. And so rural New Zealand now think that they have a perfectly safe and considered solution which the government have approved, which they have essentially, you know, they speak of it as a market success.

People are making decisions about what connectivity they're going to rely on for their running of their businesses, for the running of their schools, and they are not properly informed to a point where they can make decisions about maybe we need to look at a backup, you know, because this isn't infallible in a way that we might traditionally think it is. That was a big learning from Gabrielle. If we want to have connectivity in rural areas, one potential backup would be to have styling there, both for the sites but also in rural community.

So if it all sort of goes down, you're in trouble. So I guess, is there some happy medium do you think, alex that can be struck where sure, this international very competitive player has innovated and a lot of people are enjoying those services, but we also want to thriving rural economy and internet providers servicing that economy. It's a middle path through And what's it going to take From the government's point of view do you think to facilitate that? You know, there are lots of different ways that this could be approached, but as I say, essentially the industry's kind of view on the government's current approach with the current ministers that it's not even worth engaging because there's not going to be any engagement in return.

And you know, I've had conversations with some people who have worked in previous national ministers' offices, ministers who were involved with the UFB program, and they've said to me, you know, I've seen what a national government looks like that is invested in the future of New Zealand and the long term resiliency and maximization of its infrastructure. And what we're seeing now as this person's now on the other end of the dial dealing with government, is the complete opposite of that.

And this isn't just rural this is the tile communications sector as a whole. So I mean you also have direct to sell now that's seen as the backup. Again, there are risks that exists where all satellites could go out and for us to be solely relying on this particular product as our infallible solution. That you know, because just because you can get it anywhere, it means that it's going to be there forever.

Early on in this investigation, I had discussions with other wireless operators, but more recently with wireless operators that are also dabbling in their own fiber networks, which some of us do, and I've actually heard across the board that these operators, they all want to invest, They all want to invest in rural New Zealand, they want to upgrade the technology on the towers, they want to build out fiber into new areas. But even the ones that have fiber, which is considered a long term asset, but they're unable to get capital.

And then us as a wireless operator, we're unable to get access to the technology that we need to compete on a performance basis. And so, as I say the service starlink, it's magic because or it appears to be magic because the domestic regime for telecommunications on the ground is so heavily focused towards the mobile network operators that this sector has been neglected for so long that the amount of spectrum that we have available now was perfectly enough a decade ago, more than enough, but now it's nowhere near enough, and there is spectrum that sits there unallocated, but you know, proposed for rural broadband, which could have you know, something could have been done about that this term, but instead we're continuing to lose customers and continuing to lose ground and operators are now removing towers and decommissioning infrastructure, which if it's ever rebuilt, will cost many times more than it would have to have just kept it operational.

I also spoke with Federated Farmers about this, you know what it meant for their members. And I think if rural New Zealand, which is eighty percent of our exports, our primary sector, the backbone of our economy, if they knew just how fragile the industry as a whole is that they rely on for their day to day you know, lives, connection to the outside world communications, but also the fact that the government has put rural broadband into the hands of a California based company that the government has no control of, and they openly discuss or openly talk about Starlink as thus solution loth All, but as thus solution to rural connectivity, and it may one day be, but it's it's very hard to properly consider that decision when the alternatives that you have are so structurally constrained that when you look at them on paper without the context and say, oh, well, you know, here's the speed that they deliver at what costs?

And our costs are going up because our customer numbers are going down. So now you know, it's just going to with us being constrained in this way. It's only inevitable until more of us fail. And that's why I say when the when the Minister says, you know, we want to see regional providers flourish, it's like, well you can, you can say that, but you have to have done something for that to happen.

And so I mean, there are many levers that can be pulled both in spectrum. One thing that I raised in a submission to Select Committee on one of these telecommunications bills was that the TDL could be used to fund underwriting of these loans that operators want, because my understanding is that the bank seat is too risky. That you know, it's just the stuff's changing too much. But that's also the excuse that Goldsmith gave.

He said, he essentially said in his speech that the industry is moving too fast for us to do anything about it. And so I don't know at what point, at what stage you say, oh, well maybe we need to do something about it now, or whether you just wait for it for one section of it to fail, But that seems to be the current sort of outlook. And I'll just quickly note that you know, over over in Australia, our closest neighbor, we Starlink, made a submission to a Senate committee in regards to one of them.

And I won't pretend to be an expert on the on their legislation, but it was in relation to legislation which they had passed to make. It was called universal Mobile Obligations or. Something like that, and in the in the Senate hearing SpaceX, I don't have the quote in front of me, but essentially said that if they don't get their way in terms of the government directly allocating spectrum to them rather than to the talcos as we do in New Zealand, that service. May one day be withdrawn.

And so they're already making essentially like you know, kind of hidden threats. You know that they have this leverage that they can use. And people in New Zealand are saying, well, you know, right now Stalink is cooperating with the Commerce Commission and the various agencies. But this is them being being nice, you know, at a stage where they need to be because they you know, they need to have standing at the stage where the government can do something about it.

But as you say, as you said before about you know, big tech. It's like with Uber. I mean, you know, there were cities where, you know, the local cabs were decimated because of the Uber pricing, which was. Subsidized or not.

But then once those local cab companies were gone, then the price is triebok. And that's exactly what I think is going to happen here. And the saving grace. You know, people in my age wouldn't really like me saying that, but Amazon is our saving grace here because you know, because they're going to come in and create some you know, Starlent can't just price massively, and you know, we say, oh, we don't have any option, but we also don't know what their plans are.

We don't know whether they will work with us or not. And so yeah, I mean I just see that. The core thing is it's not for me to assess what the problems are here. It's for the government to assess that.

And I'm simply raising the fact that they haven't assessed that. And I've spoken to many within the industry, including representatives of the m and os, who are saying this is very very concerning, Like, you know, we're concerned about what you have brought to light, and you know, we're interested to see what the government's going to do about it, because you know, this potentially could be a very politically fraught conversation, I would say, and it could have the potential to not look very good if things didn't go the right way.

As I said earlier, you're in a bit of a bind. Is there a way that you can basically innovate your way out of this? And I'm thinking about you know, sure that deal at Halter and Starlink innovative, you know, communicating directly with cal Colas, you know, getting all the analytics off the cows, all that sort of thing. But surely, you know, this whole Internet of Things revolution, it's more efficient for you to blast out across you know, a two hundred hectare farm from using fixed wireless heading sensors all across that farm.

There's got to be a really compelling, compelling proposition to deliver that from ground based stations rather than relying on satellite to do all of that. It's going to be I think a permanent layer of you know, New Zealand's Talorcommunications from now on, and it should be integrated into different things. But again it's just the risk, you know, once everything is consolidated onto that. But certainly, as you pointed out, you know there are again, this is physics.

You know, our business operates on physics, whether that's light or radio signal. Physics dictates that the closer you are, the faster the radio signal can reach the destination. Ground based networks do have an inherent advantage as relates to latency, and so there are certain time sensitive tasks which ground based networks are more suited to. That's not something that most people experience on mobile because they're not optimized for latency, but our networks are.

We often see below ten milliseconds on our wireless networks. In terms of innovating overseas, there are regimes that have been innovated on over time where essentially, if you want to, you can go and buy your own five G tower and put that up and that can punch through trees, It can punch, it can the signal can bend around hills, and you know, for certain industries such as mining or ports, you know we're traditional Wi Fi or whatever doesn't work for whatever reason, those have enormous benefits.

But as I say, we are constrained to using consumer grade equipment, consumer grade spectrum, and forced to compete with the most well capitalized broadband. Provider in the world. It will certainly the most well capitalized satellite operator. There is technology available that would allow us to, as I say, deliver many hundreds of megabits, but also gigabits over wireless, which is readily available today, but we're not able to deploy them because we can't access the capitol.

So what are you going to do, Alexi? You've got this small business, you're young, you're an entrepreneur. Are you going to throw the towel in or are you going to continue to fight this fight? Oh?

No, Well, I'm certainly committed to running this company. You know, I'm committed to seeing it through to whatever end that is. But you know, I would like to see an environment while this Internet providers are competitive again, in an environment where we're provided the resources that government is withholding from us to be able to do that and provide an alternative local service for rural New Zealand. But we are progressing conversations internally as an industry about what this all means for us and about ensuring that we can present a cohesive argument for why we are important, why we are valuable.

I mean, Sarlenks, I believe their twenty twenty four revenue was one hundred million. Dollars from New Zealand. So that's money that if we were to receive that money, we would be spending at the local supermarket, at the local motorbike shop, you know, at the local grocure whatever, on local jobs. But at the moment, that money is all going overseas.

But that doesn't answer a question about what I'm going to do. As I say, we are progressing discussions. We're especially interested in discussing potential arrangements that could be made with the new low Earth orbit operators and how we could fold that into our offer to continue to both expand our offering but also ensure that we retain enough revenue to support our terrestrial networks and hopefully, you know, we all really most of us want to deploy our own fiber. Like I live just around the corner from me, there's a three kilometer row with about three hundred homes on it, perfect for fiber, you know, perfect economic, you know, but just because of the inability to get funding and you know, previous to talking about Prior to me talking to other fiber operators about it, you know, I thought, well, it's pretty it's pretty incredible that my community's infrastructure is dependent on whether or not the twenty one year old has a house, you know, you know, but now realizing that it's actually much bigger than that, and even the fiber operators are unable to you know, I was saying to one of them the other day, maybe they should approach the China Bank.

Maybe that would prompt you know, some some different thinking. I'm not sure, but we're not asking for the government for money. We're asking for them to do the work that is their mandate to do, or is within their mandate, and we. Can't do that work.

But increasingly we feel as though we need to, and so we are having some very productive discussions as industry about what we're going to do in terms of presenting an alternative picture of what rural connectivity could look like realistically, not just throwing buzzwords and different stuff. Ab out there. Because we are the people who are on the ground, who dig the holes in the ground and are up on the hells fixing the towers, and so we are the ones who know what the exact end results are going to be and what it means for rural New Zealand.

Well, good luck, Alex. Good on. You've forgiveness a crack and raising this issue. You're obviously really switched on young entrepreneurs, So good luck.

Whether it's this or. Hopefully, as you say, you've got fire, you've got other things where you can hopefully build on the economics and get the customer numbers up so that the margin sort of equation improves. But whether it's this or something else, I think you're going to go far, so all the best, and we'll keep a close eye on this issue. This is not going away as a problem.

I think as Starlink probably builds more market share, it's just going to become much more obvious how exposed we are. Yeah, thank you so much, Peter. I mean, and it's core recognize that you know, I am a competitor to starlink, and people will take what I say with the grain of salt. I would hope that the very least the mark that this particular piece of work would leave on the public is that they should be thinking about what their options are and just like the water in an earthquake might switch off, you might have your generator, but the starlink for whatever reason, there are a number of reasons.

That could cause it to stop working, and that might be your only option in the community that you are. I think people should be asking their local MPs and that sort of thing, you know about, how are you ensuring the resilience of our local community, How are you ensuring that we retain optionality and have someone local who can help us. But yeah, it's certainly part of a much larger discussion, and I'm not the only one who's going to be fronting it. But I just did feel as though, you know, I couldn't sit around being told that the work was done, then finding out that the work wasn't being done and for me to just sort of sit and say nothing about it.

Yeah, and we'll put a link to the stories you've written outlining the responses from those oias. Will put those all in the show notes. Alex, thanks so much for coming on the Business of Tech and talking us through all of this. Thank you so much, Peter.

That's it for this episode of the Business of Tech. Thanks to Wombat Net founder Alex Stewart for coming on a lot of good work. He's done there shining a light on this issue, and I will link to all of those articles that he's done based on THEIA responses. Thanks for listening to the Business of Tech.

I'm Peter Griffin and I'll catch you in the next episode, dropping as normal next Thursday.