Vodafone’s general manager of corporate affairs, Tom Chignell, labels the New Zealand Institute’s latest broadband report “a bit myopic” for being focused on fibre.
“Fibre is important, but it’s not the only way of delivering broadband,” he says.
Even as a means of increasing fibre penetration, “the model is flawed”, Chignell says. “It seems like a step backwards, effectively renationalising Telecom’s assets.”
The free market “may not have satisfied everyone”, but it has produced significant improvement in communications, and too much re-regulation might do more harm than good, he says.
He emphasises that he’s not dismissing the report (pdf) out of hand. “It’s a useful contribution to the debate, but sometimes we need more pragmatic solutions. We don’t all want a motorway coming to our front door. In New Zealand we learn to accept dirt roads sometimes; it’s a matter of what you want to pay for.”
The New Zealand Institute suggested, in its final report on broadband, that a single company be given monopoly ownership of “last-mile” connections between exchanges or street cabinets and user premises.
Existing telcos, utilities, local and central government, and other private investors, would have shares in the hypothetical company, christened FibreCo, and contribute resources, including fibre ducting and electronics to the company’s operation.
FibreCo would be price-regulated by government and required to give all providers equal network access.
Although this effectively creates a monopoly over the physical links, it does not lessen competition but merely relocates it, says NZ Institute head David Skilling. “This is service-based competition, not infrastructure-based competition.”
Multiple competing sets of infrastructure will not work in New Zealand with our small and comparatively sparse population, Skilling says.
FibreCo would take ownership not only of fibre but also of the copper-wire network currently mostly owned by Telecom, says the institute. The reason for this is to ensure an orderly migration of service providers and their customers from copper to fibre, to the point where the copper network can be discontinued.
NZI envisages an infrastructure monopoly will only be necessary in the last mile. In backhaul (between the exchange and the core network) the core itself and overseas links, competition in infrastructure is already stimulating an orderly enough market and low enough costs, Skilling says.