Wellington goes all-in for BIF funding

Changes to scheme receive nods from applicants and users

The councils in the Wellington region plan to put forward a joint proposal for funding under the government’s Broadband Investment Fund (BIF), says Wellington City Council strategy manager Paul Desborough.

BIF was formally launched on August 26 following a revision of the criteria for funding in response to public submissions.

Wellington City did not put forward a proposal for funding under the 2006 Broadband Challenge scheme, because the scheme had limitations and the city was already equipped with an urban fibre network in the form of Citylink, Desborough says.

The city council last year appeared very interested in the “vision” of a broadband network, but decided in April this year to back away from that plan in favour of laying ducts to accommodate fibre deployed by other parties.

“This time the fund is bigger and more comprehensive”, offering the chance to spread through the region rather than “just the CBD”, Desborough says. BIF’s clear open-access philosophy gives it “a much wider reach”, he says, with the potential of providing services to a wide range of “Mush-type entities” — educational, local government and health sector organisations.

Desborough emphasises that he can only speak on behalf of the city council.

From the city’s point of view, any deployment under BIF is likely to be of both fibre and ducts, he says, thus qualifying for 50% central government funding.

Although the city council has a wealth of information to draw on from the earlier “vision” document and the considerations that followed it, there is still a lot of work to do co-ordinating the region’s councils and possible providers, so Wellington has opted to start by submitting an EoI, despite the availability under BIF of a “fast-track” procedure that enables applicants to dispense with this step.

The councils are looking at a date of September 30 to file an initial expression of interest (EoI).

The fast-track process could see some BIF applications approved by the end of this calendar year, says ICT minister David Cunliffe.

On the other hand, some applicants, wanting more time to consider their plans, are likely to still prefer the longer route, Cunliffe says. That will enable those less sure of their ground to get a preliminary assessment before committing funding to development of a business case that will prove unsatisfactory.

Even the longer route “has been shortened somewhat by compressing the assessment time”, Cunliffe says, confirming that decisions will be available no later than May 2009 for the two-stage process.

The minister expects that a number of applicants, particularly those who missed out on funding under the Broadband Challenge scheme, or decided not to apply, will be immediately ready to go with a detailed business plan.

While asking for maximum time for the applicant to prepare a case, writers of submissions on the draft plan requested that government compress its side of the decision-making timescale, says Cunliffe. However, by putting on more resources these apparently conflicting objectives have both have been achieved to some extent.

The core business-plan assessment should typically take about three weeks, he says, though other approval procedures will surround that.

“There will be a special high-level committee which will advise Cabinet. Cabinet will make the final decisions but on the basis of technically rigorous recommendations.”

The leverage of the joint public-private deals has been modified, giving more government funding for projects at lower layers of the communications hierarchy, allowing maximum freedom for service providers to take advantage of the built infrastructure.

What Cunliffe calls a “layer zero” proposal, providing both ducting and dark fibre, will be able to apply for 50% of the cost from the public purse. If either ducting or dark fibre, but not both, is provided, (a “layer one” scheme) the maximum BIF funding will be 33% of the project cost. At layer two, where a specific networking technology, for example, Ethernet, is prescribed, only 10% of the project can be funded from BIF.

There is “a clear incentive” in that structure to provide maximum openness, Cunliffe says.

Some submitters, such as TUANZ and InternetNZ, suggested that the definition of “open access” in the draft criteria had been left open to some interpretation. The definition has now been tightened to the point where it should satisfy all objectors, Cunliffe says.

As for a definition of “broadband”, this has been tied down to 5 Mbit/s in the inward direction and 1 Mbit/s outward for the rural part of the BIF scheme. Twenty Mbit/s inward is defined as the standard for the urban part of the scheme but no outward figure has been set, says MED spokesman Reg Hammond.

Cunliffe disputes that there is a major difference between the hundreds of millions promised by BIF and the “billions” brandished by the National party.

“The difference is in the relative share of taxpayer versus private investment,” he says. “We’re talking about a 10-year programme; we’ve committed $500 million for the first five years and have said we don’t expect the second five to be any less. The National party is saying $1.5 billion over eight years.”

National’s plan is “vague” he says.

User group TUANZ is satisfied that the main points in its Broadband Investment Fund submission have been met by the revised criteria.

“We like the idea of having two routes, one for the fast movers and another for those who want to take a bit more time,” says chief executive Ernie Newman.

The definition of open access has also been tightened up to TUANZ’s satisfaction. “Those were our two main points, so overall we’re pretty happy [with the revisions]”, Newman says.

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