NZ ready for Fibre Fund 2.0, says Macaulay

The Ministry of Economic Development "slammed" Fibre Fund plan in 2006

Internet NZ president and former Digital Strategy team head Peter Macaulay has dusted down his proposal for a Fibre Fund to stimulate public-private partnership investment in infrastructure.

Macaulay first advanced his plan in 2006 and the Ministry of Economic Development “slammed” it, he says. However, some of IT minister David Cunliffe’s recent speeches show he at least might now be well-disposed to a similar proposal.

Broadband funding “is a joint effort that cuts across all sectors — business, local and central government,” Cunliffe said at a local government broadband forum last month. “And it can only be achieved through both private and public partnerships.”

Macaulay was scheduled to present his plan to a meeting of local authorities, telcos and other interested parties, presided over by Stephen Tindall in his capacity as chair of the government’s Growth and Innovation Advisory Board, as Computerworld went to press.

The Fibre Fund plan envisages an investment fund which will attract contributions from large institutional investors such as pension funds and which can be drawn upon by anyone from a local council to “a wealthy farmer who might want to dig a trench and put in fibre to service users in his local area”.

The plan is essentially unchanged from the 2006 version.

“MED [the Ministry fo Economic Development] never evaluated [that] nor did they put it to Treasury,” Macaulay says. Now, he suggests, Cunliffe is putting forward ideas that sound similar to his own, which could have been adopted or at least seriously considered, two years ago.

MED was approached for comment but had not given a reply by presstime.

The Fibre Fund plan has already been criticised by at least one media commentator who says councils and telcos can already access cheap money and a fund of the kind envisaged would add nothing new.

Macaulay says this displays a misunderstanding of the plan. The fund will enable councils to enter public-private partnerships drawing on a common fund rather than drawing money from ratepayers or telco customers. The investors will want to stay in rather than looking for a quick repayment of a loan.

Government funding for broadband as part of the digital strategy has now dried up and there is pent-up demand in the market, Macaulay says. “Fifteen organisations would have applied for a second tranche [of digital strategy funding] if it had been available.”

The fund will be a good investment, he says, with the advantage of a go-ahead high-technology image and community benefit. The benefit for investors will be a stake in a permanent asset — the network — which will return increasing value, Macaulay says.

He disputes any suggestion that since technology typically reduces in cost with time the value of the asset will deflate.

“It will continue to be of equivalent value as demand and capacity increase,” he says. The main up-front cost will be not so much the fibre as the channels through which it runs. “Once you’ve got the ducting in place, you’ll be able to blow new fibre through it quickly to meet demand.”

Even the existing fibre will carry more traffic in time using additional wavelengths of light and perhaps technologies as yet unproven, he says.

“I’m sure we haven’t exhausted the capacity of fibre. Who would have dreamt that we’d be putting megabits per second down copper wire today?

“I’ve spoken to several organisations in the UK and their whole attitude has changed,” he says. “Building an open network is now regarded as a good investment.”

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