It was a captivating campaign promise: $1.5 billion committed by the National Party to a fibre-to-the-premises network (FTTP) for 75% of New Zealanders. Never mind that the details were so thinly sketched as to be almost skeletal. The aspirational vision it offered put it (almost) beyond challenge.
After all, who can argue against a proposition that a top-class fibre broadband network is exactly what New Zealand needs to earn its place in the world? To question it sounds plain unpatriotic, anti-Kiwi, almost technophile. We may not know all the purposes a national fibre network will be put to. We cannot yet quantify the benefits. But if we build it, so the argument goes, the services and value will inevitably come — at some point.
Yet, as National’s campaign rhetoric shifts to elected reality, hard questions are critical. What exactly is a National Government seeking from its national fibre network plan? What are the outcomes we want? Is a nationalised FTTP network really the best option — or do we need to consider a mix of technologies and a staged approach? How will National’s plan integrate with current infrastructure and investment?
At the core of these questions are National’s broadband objectives: whether the benefits sought are economic or social in nature.
To say “both” is overly simplistic. There is consensus that we need a robust national broadband strategy. However, the scale of investment demands quantifiable outcomes where possible, and a clear view of qualitative social outcomes where not. Right now these objectives are muddy at best: we risk marginalising current and future investment, overbuilding and undermining the industry with no clear view of what we want to achieve.
If the priority is economic growth and productivity, it changes the roadmap. New Zealand already has considerable metropolitan and urban fibre, with more planned through private investment (see the NZ broadband map: www.broadbandmap.govt.nz) On this basis, a new nationalised fibre network risks overlaying or bypassing, at least in part, existing competitive infrastructure. Is that the government’s objective? Or should the focus be on working with the industry to develop a coherent architecture based on existing and planned investment to ensure fibre is not just available, but also affordable and competitive?
Direct government assistance to deliver rural broadband, which is otherwise uneconomic, will help meet primary production, tourism and agri-business broadband demand. This is likely to require a mix of fibre, copper and wireless technologies. The opportunity for government is to complement infrastructure with a multi-faceted education and R&D programme. Delivering affordable services that boost productivity, lower costs and improve time to market would make rural broadband a lot more compelling.
Of course, in the fibre debate, we hear of teleworkers and small business with intense video or symmetrical graphics requirements. These needs should be met: but this could be incentivised on a targeted basis, instead of through a fibre-for-all approach, at least in the mid-term.
In short, if the goal is economic gain, then surely the approach needs to be calibrated to encourage contestable and competitive fibre availability where commercially viable, and new contestable investment where it is not, keeping an open mind on what technology will best meet market need. Then integrate it with a strong focus on helping grow the services that will truly deliver productivity benefits.
The equation changes if the government’s desired outcomes are social. Economic benefits can be quasi-commercial and quantifiable; social benefits are more ephemeral. They will almost certainly deliver, at some future point, economic gains. But what becomes harder to determine is whether it is the difference between 100Mbit/s or 50Mbits or 20Mbit/s that really drives the benefits — or the services and convergence capability that are emerging apace.
The argument for truly symmetrical, 100Mbit/s broadband to the home becomes more compelling if we look at services like e-learning, interactive video-based healthcare or delivery of multiple streams of high-definition TV on demand as a true media platform. Growth in social networking and sharing of user generated content will continue to drive complexity and demand.
But we are a very long way from requiring that level of service capability. Today New Zealand’s internet usage is basic email, browsing and online banking. Yes, video usage is exploding: but the majority is user generated and the capacity bottlenecks are shifting from the access network to international transit.
Experience shows usage will expand to meet capacity and deliver returns over time. But what will the social benefits facilitated by this be? Arguably, if the government is pursuing a social agenda, then that can be delivered by targeted health, education, government and new media service delivery as a priority, with FTTP rolled out as part of a second services wave.
Before I am labeled a fibre luddite, let me be clear: New Zealand needs a long term fibre strategy. Government has a critical role to play in extending it beyond what is commercially viable for the private sector. We need to invest to meet long term social and economic objectives — an incremental mish-mash will not best meet our needs.
But neither will a “one-size fits all” approach. In the current economic climate we need to ensure every investment dollar counts and delivers. In 2007, New Zealand’s telecommunications industry (excluding IT services) was worth $6 billion and showing only marginal single-digit growth. This year, revenues have declined quarter on quarter.
Yet, a rough, back-of-envelope tally put current infrastructure investments at over $4 billion over the next three years, of which Telecom is spending just over half.
We are still early in the investment curve and have yet to experience the benefits; let’s strategically build onto rather than overbuild that investment.
The role of government is to set a broadband vision; its responsibility is to execute effectively and efficiently. That requires more than just building pipes: it requires a sophisticated architecture developed in clear stages that not only helps deliver the pipes but also helps pump the true lifeblood of new services and content.
Nelson is research telecommunications manager for IDC New Zealand.