Government 'asking for a disaster' on broadband

Tenders can't be accurate with so little information on the table, says analyst Paul Budde

Australasian telecommunications specialist Paul Budde laid into New Zealand's $1.5 billion plan for ultra-fast broadband yesterday, saying he didn't see how anybody could respond to a tender to take part in the project.

Budde says he has grave doubts about the outcome of the initiative due to a lack of information about the shape of the network, applications and the regulatory environment.

Budde, speaking at a Wellington roundtable, says anybody looking to invest needs to know what the end result will be. If it that is just to provide internet services to the home, there is no business model for investors. They also need to understand Telecom's role, if any.

"Steven Joyce talks about the national interest, but he needs to fill in the gaps," says Budde.

He says potential investors need to know who will be participating and to understand the regulatory environment in which new local fibre companies will operate. At the time tenders were called for, none of this information was available.

"The tenders can't be accurate if half the ingredients are missing," he says.

Budde is also critical of the local fibre company structure. He says telecommunications is about scale, and the proposed 33 local fibre companies will not be large enough to deliver affordable services.

"It's totally ridiculous. It's not going to work. You are asking for a disaster," he says.

He says in Australia, Telstra is now becoming enlightened about the government's broadband objectives. Telecom could respond positively as well, but there's not enough detail on the table for the company to embrace the plan.

The business case for investors, he says, will be built around trans-sector applications in health, education and electricity, such as electricity smart grids, not entertainment services, which are becoming commoditised, and not home internet services on their own.

Budde was also concerned at what he sees as a disjointed approach to the UFB proposal, delivering a "suburban" network to 75 percent pf the population and coming back later for the other 25 percent. In contrast, Australia's plan is for fibre broadband or equivalent to the entire population.

He says New Zealand's rural areas are some of the richest in the world and he wouldn't be surprised if farmers take to the streets to protest.

Budde says a national plan is required, with a national design and standards.

"Now is the time for a national plan," Budde says. "If you separate rural and urban areas it becomes a hell of a job to finish."

The government has boosted its commitment to rural broadband since its original announcement with a levy on providers of $300 million to be used for rural network investment.

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