Ultrafast broadband is supposed to benefit New Zealanders. Yes?
In his biggest 2008 pre-election pledge, John Key promised that for $1,5 billion, 75% of NZers would get ultrafast broadband in their workplaces, schools and homes. Steven Joyce was tasked with delivering it.
But is it going to happen? And will Kiwis be able to afford it?
Consider this:
- More than two years since the election there are no decisions made and no fibre in the ground.
- The govt was forced to admit last year it could not deliver broadband to homes, rather to streets. We don’t know how much it will cost consumers to connect, though industry analysts have estimated up to $2000 per household
- The discussions and negotiations on the $1.5 billion ( ultrafast broadband scheme have been conducted behind closed doors with the veil of commercial sensitivity used to prevent public scrutiny and discussion by the industry.
- Steven Joyce shifted the goalposts on the UFB tender mid year with little public discussion.
- The shortlisted bidders for the UFB excluded a major bidder (Vodafone/Axia) with little explanation.
- The role of Telecom has dogged the broadband debate from day one. The government has allowed a parallel situation to develop where Telecom is using its agreement to structurally separate as a negotiating tool (some would say a weapon).
- The government has said that the only way Telecom can participate in the UFB process is to structurally separate into legally separate companies.
- Late last week the government introduced the Telecommunications Amendment Bill to the House. It will enshrine in law a 10 year holiday from price regulation for whoever wins the urban broadband contract.
- The Commerce Commission will be prevented from playing a watchdog role on broadband fibre prices
- The government says it will introduce an amendment to the new Bill at the select committee to accommodate required changes to Telecom structurally separating (if it decides to do so)
- If Telecom decides to structurally separate, the government could give it a major tax break.
- The Commerce Commission has expressed concern that Telecom’s structural separation proposal will ultimately benefit investors rather than the end-users of its products
- A major bid in for rural broadband, covering 25% of NZ could result in a commercial monopoly by Vodafone and Telecom. Despite claiming it encourages competition, this could create a price fixing regime for rural NZ which would no doubt push into urban NZ.
- There are serious perceptions of conflict of interest on the board of Crown Fibre Holdings; the company established to roll out ultrafast broadband. The government and CFH are ignoring these claims and stonewalling concerns.
There are many other issues which I could list here.
All in all, does it sound to you as if the people of New Zealand and the affordability of broadband is the core consideration here? I don’t think so.
The average cost for the ordinary Kiwi of a fixed telephone line, broadband and mobile connection all amount to more than $150 month. That’s a lot. For many people, it’s much more. Not taking into account their Sky connection. NZers pay significantly more than the average consumer in the OECD.
Will ultrafast broadband be more expensive on top of these costs? If so, will people pay more? Should they? Can they afford more?
Is it important that they can afford it? Isn’t this why the government has committed so much public money towards this new network?
Isn’t this what the real debate should be about?
There also needs to be true entry level broadband options in terms of cost e.g. $15/month naked for a 10GB data cap, 512 kb/s download speed.
Hey buddy my country is not a corporate concern thanks, I’d appreciate if you didn’t label it as such.
By the way our broadband is “cost effective” for whom? Telecom and Vodafone? People I know from Hong Kong, Australia and US who come here think that our ADSL and mobile broadband is a joke in terms of value.
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Yeah I have to agree, privatising Telecom in the first place and then allowing foreign shareholders to make a mint year after year off tax payer funded assets was a muck up full stop.
Lesson learned.
You’d be there all day waiting for something to appear on screen CV. And you’d probably never approach 10GB downloading at that speed. That’s worse than dial-up was.
CV, really, ever farmer in South Korea has broadband? Every small village dweller? I find that hard to believe.
All that “competition” has done is increased the expenses. Two networks is, by definition, twice as expensive as one. Not that we have any competition – what we have is a monopoly (Telecom) with the illusion of competition (Lots of Telcos/ISPs). Getting broadband in rural areas is almost as hard as finding hens teeth and the 5th Labour government started subsidising that in 2k2 IIRC.
The lack of vision started in the 1980s when the 4th Labour government initiated deregulation and the sale of Telecom. If that hadn’t happened we would already have FttH to most of the country and our telecommunications would be far cheaper than what they are now. We should learn from these mistakes and re-regulate and renationalise.
When I last worked at Telecom and the usual speed was 256kbps I had a customer that had done 240GB in less than a month – he was complaining that he’d been dropped down to dial up speeds. BTW, dial up never got above 56kbps in NZ.
Rich, it’s December the 1st, Merry Christmas!
The south Korean government invested hugely in technology back in the 90s and early 00s, and their people are now elites in the hi tech world.
I couldn’t verify the farmer quote without checking further, but I certainly wouldn’t be suprised if true.
I think the discussion about what is required from our internet is missing the point a bit. The number one driver, as I see it, is that we cannot predict the future but it is increasingly likely that that future will involve the use of high speed internet in ways that we do not understand at the moment. This may include our conceptions of “normal” private use.
Someone may say that they “only” need the internet for emails, maybe some light skyping and checking a few forums with your measly 1MBPS speeds that would have been astronomically fast in recent memory. Most households having access to this speed and these services would have been unforeseen not too long ago. Dialup would struggle with these basic services that are now completely normal with any type of broadband. The point is, we don’t know what the new normal will be in 5-10 years but we should plan for it by upgrading the infrastructure to the best of our ability to prepare for that unknown future.
Going back, it would be like building roads specifically for cars before trucks had been invented; all we need it for now is these light cars, but it is reasonably foreseeable that these cars are going to get larger and larger as people discover new ways of using them. A good planner may have made the roads stronger than required to prepare for this unknown, but foreseeable, future.
Fair comment Jason, but how come telecom didnt factor this future into its own planning and set aside money for capital expenditure over the past decade?
Possibly because the govt, particularly a National/ACT government will “subsidise” them.
Why would a private monopoly do that when the government will front up with the cash once it becomes obvious that the private monopoly and any “competition” won’t do it?
The only way we were going to get our telecommunications to develop as new technology came out was if it was all done through a state monopoly. That’s why it was a state monopoly in the first place. This multi-billion dollars of taxpayer subsidy of private profits is the direct result of following a failed economic theory which is based upon unrealistic assumptions.
DracoTB’stard
I actually answered my own question, so why would you just use the question as a quote, and then give the answer I gave, odd dude. Just wondering
Perhaps I exaggerated just a little. Not 100%, but 95% ain’t bad. (2009 data)
http://arstechnica.com/tech-policy/news/2009/06/us-20th-in-broadband-penetration-trails-s-korea-estonia.ars
Thanks CV. I am surprised because I know some Koreans with families in very small communities back home who dont have telephones let alone broadband. I guess they are among the 5%, someone’s gotta be
No probs tracey. Bearing in mind that its a wee bit easier for South Korea to wire up broadband to its residential population – it has a relatively small land area settled with 30x (!) the population of NZ per square kilometre.
The mind boggles.
Just emphasising… honest
The Telecom exchange in my area has just been VDSL2 enabled – in theory I could get about 50Mbps over the existing copper (being less than 1km from the exchange).
Colonial Viper:
“There also needs to be true entry level broadband options in terms of cost e.g. $15/month naked for a 10GB data cap, 512 kb/s download speed.”
This could actually be easily done – via wireless. The costs to do it via copper or fibre wouldn’t work (would need subsidising), but a wireless access point serving <1Mbps each to 50-100 users would be doable.
@ Jason
“The number one driver, as I see it, is that we cannot predict the future but it is increasingly likely that that future will involve the use of high speed internet in ways that we do not understand at the moment.”
All the more reason not to do fibre to the home, or to put the cost onto those willing to take a risk. There are a range of competing technologies that may or may not give higher speeds. One poster here said he is able to get 50mbs out of the existing infrastructure upgrades. That also shows that we can quickly roll out such technologies.
As for your roading analogy, it’s a false one. There are plenty of roads out there that can’t take 44T trucks – those tend to be at the ends of networks, eg suburban roads. You also fail to recognise that we didn;t build the highways for future trucks up front. We waited. Four lane highways to everyone’s doorsteps just in case is not sensible planning for roads or telecoms.
The whole thing seems to have been handled very poorly… I read a CEO from one of the UFB bidders said that fibre will have to provide $150 of revenure per month to be economically viable…
In many ways UFB is a solution looking for a problem…
MY current crappy 3 megabit linespeed is enough to get a $300 a month bill if I actually try to use it.
The problem is my ISP is not able to deliver the data as fast as I want it on a crappy slow circuit.
How is replacing tired old copper with fiber going to help, when even at a dollar a gig, it is too expensive to actually USE the internet.
I dont want to just sit there watching TVNZ on demand or whatever other content providers do deals to zero rate their traffic, I want to be able to watch multi megabit ustream’s, have a couple of 1080p youtubes going in different rooms for different people, and perhaps some half decent looking skype calls.
The only benifit I can see from this is that upstream speeds will improve, but that could be done right away if tightass telecom would allow annex-m adsl2+ to be deployed, but they will not.
I think the problem at the moment, and is likely to be a problem for a long time yet, is the fact that the emphasis is not on the customer.
We want fast internet. We want reasonable price points. We want a service that doesn’t have ourselves wondering why we don’t just pay the $15/month for dial up if for the majority of the month we’re on dial up speed anyway.
And things aren’t improving. $1.5b of taxpayers money (that is, the customer) to go into essentially upgrading the profit potential of private entities who have had no interest in improving things for their customers.
And just to make sure those companies can skim as much as humanly possible from us, we’ve got a 10 year price regulation break and potentially tax breaks for those companies.
If this money is to be spent, I don’t think National can be trusted to do it. I’ve said it before – we simply can’t afford National to come in for another term.
Never mind the past. Is Labour up to the challenge of delivering that infrastructure in a way that actually helps the public?
Agreed and made worse by the fact that GST put the prices up recently
Thanks LabRat.