ICT Minister speech notes: KANZ Broadband Summit 2011

Thursday April 28, 2011

The following speech notes were provided by officials to ICT Minister Steven Joyce for a speech he gave at the Korea-Australia-New Zealand (KANZ) Broadband Summit 2011 in Hobart, Australia on Thursday April 28, 2011. Please note that Joyce may or may not have used these notes in his actual speech and he cannot be quoted as having said any of these points unless there is an independent note or recording that he did so.

Introduction Senator Conroy, Chairman Choi, distinguished delegates: it is a great pleasure to be here today, attending my second KANZ meeting. I particularly want to express my thanks to Senator Conroy, and to the Tasmanian government for hosting this important event. New Zealand has been very pleased to participate over the past six years in this trilateral exchange between our three governments and industries. We are very keen to see these highly fruitful exchanges continue.

New Zealand has been very actively pursuing a range of policies intended to ensure that we are able to take full advantage of high speed broadband and new ICT-led developments.

Ultra-Fast Broadband and Rural Broadband Two programmes aimed at leading a step change in New Zealand’s broadband markets are currently being implemented to improve access to broadband for all New Zealanders. The New Zealand Government has budgeted a total of NZ$1.35 billion of Government investment over 10 years for the Ultra-fast Broadband Initiative, or UFB. We have also allocated $300 million of funding for the Rural Broadband Initiative over six years. The UFB is aimed at ensuring 75% of New Zealand households have access to ultra-fast broadband by 2019. Initially access speeds of up to 100Mb per second are planned. I am delighted that this programme is proceeding as intended. The UFB investment is being used to deploy fibre-to-the-premises network infrastructure. This investment will be made through Local Fibre Companies (LFCs), which are joint ventures between Crown Fibre Holdings and UFB partners. The LFCs will deploy the fibre network and sell access to products on that network in a particular region or regions. To help ensure active competition at a retail level, a key principle underlying the UFB Initiative is the requirement that all infrastructure is open access. This means that ultra-fast broadband must be made available to any service provider that seeks access to it on non-discriminatory terms. LFCs will be required to deal with the market in a fair and equitable manner, providing for equality of access and allowing consumers to switch easily between providers. In addition, LFCs will be barred from selling retail products so as to ensure no conflicts arise between their interests and the interests of access seekers who will provide retail services. In combination, these protections will enable a vibrant and competitive service provider market for the long term benefit of consumers. In late 2010, the government signed the first two agreements covering the Whangarei area and the central North Island of New Zealand. On 14 December 2010 the first UFB fibre was deployed at Manaia View School in Whangarei. In addition to these two concluded deals, Crown Fibre Holdings is in the process of prioritised negotiations with Telecom for remaining regions. A number of members of a consortium of regional companies called the Regional Fibre Group have also been shortlisted for many of the remaining regions. Members of this group include existing fibre distribution companies Enable Networks in Christchurch and Vector in Auckland. These negotiations are progressing well, and I expect deals to be concluded very soon. The Rural Broadband Initiative, or RBI, will ensure that the remaining 25% of New Zealanders also have enhanced access to broadband by 2016. On 7 February, after an intensive evaluation process, the government commenced negotiations with Telecom New Zealand and Vodafone for the RBI, and just last week on 20 April those negotiations were successfully concluded. Currently, 20 percent of customers in rural New Zealand can access peak speeds of at least 5 Mbps. This will rise to 86 percent of rural households and businesses. 95 percent of rural schools will be able to receive ultra-fast connection of 100 Mbps per second and all six hospitals in the rural sector will have a fibre connection available at the gate. The extension of the fibre backbone into rural areas (3,100 kms of open access fibre on top of the existing 26,000 kms) means more customers living on the RBI fibre routes will be able to get fibre-to-the-door.

In addition, 154 open access cellsites will be constructed allowing co-location for any mobile and fixed wireless access seekers. Mobile voice coverage will be increased as a result. DSL and Vodafone fixed wireless broadband coverage at a minumim speed of 5Mbps will both be available to 57% of rural homes - this will for the first time result in genuine infrastructure competition in rural areas. In implementing the UFB and the RBI, the Government is particularly focussed on the education and health sectors. Between these two programmes the government intends that 97% of our schools will be connected to ultra-fast broadband connections within six years. We are upgrading school internal networks so that they will be able to take full advantage of access to fibre broadband, and fibre drops into schools will be funded. We have also released a ‘request for information’ for a national education network for schools and I expect that we will be in a position to make a recommendation to proceed by mid-year. Legislative initiatives In parallel with the negotiations being conducted by Crown Fibre Holdings, we have now introduced legislation providing the regulatory framework for the UFB and RBI into the House of Representatives, with the intention of it being passed by July 2011. In the context of building a new network with uncertain uptake, and trying to get the lowest possible prices for consumers, the more that the Crown can safely do to remove risk, while also ensuring competition and open access, means the better the pricing will be. Therefore the legislation provides for regulatory forbearance with regard to the new fibre network for a period of eight years or so. I am confident that customers will not suffer as a result. In the initial years at least, the new network will be competing for customers with existing copper-based networks. If this competition is not sufficient to keep prices low, there are contractual measures in place. Crown Fibre Holdings has negotiated competitive prices that serve as caps on what prices LFCs can offer. The contracts negotiated to date include prices which are in fact comparable to copper, and are cost oriented.

In addition, the Bill requires that the providers on the new fibre network give deeds of undertaking to ensure the UFB and RBI networks are provided on an open access basis. Those undertakings will be monitored and enforced by the Commerce Commission.

The Bill also contains measures to assist with efficient deployment and encourage uptake. These measures will cover areas such as the telecommunications services obligation (TSO) regulatory framework as an enabling measure in conjunction with the RBI, deployment of infrastructure in multiunit buildings, and access to the road corridors for wireless operators. Digital Switch-Over Last September I announced with my colleague the Minister of Broadcasting that the switchover to digital television in New Zealand would be completed by November 2013. We have kicked off a campaign known as “Going Digital” which will help increase awareness and educate people on what is happening and what they need to do. To allow as many people as possible to have the best possible access to these benefits, we recently announced that the digital terrestrial TV network of UHF would be extended from the existing 75% to 86.5% of the country. This will allow as many people as possible in provincial areas to access free-to-air high definition digital TV, all in time for the Rugby World Cup, which takes place over six weeks in September and October this year. For me, though, the most exciting benefit from the switchover is the opportunity to allocate the 700 MHz radio spectrum band to new services. This spectrum would be particularly useful for fourth generation mobile services. Over the coming year, we will continue preparing for the allocation of this band, to ensure that the spectrum is allocated in an efficient manner providing the best outcome for New Zealand as a whole. Cyber Security Improving New Zealand’s cyber security response goes hand-in-hand with the ever increasing and more sophisticated nature of the cyber threats that we all face. Businesses around the world are facing an increasing cyber threat to their intellectual property. Individuals and businesses have a responsibility to protect themselves online and Government needs to ensure that its own systems and the country’s critical infrastructure are well protected and responsive to any intrusion. In the very near future, the government intends to publish a National Cyber Security Strategy similar to those developed by our international partners. Mobile Roaming As the Senator mentioned, a year ago he and I released a discussion document that suggested there might be a case for a full market investigation into trans-Tasman roaming services.

Now a full market investigation is no small thing. It diverts resources both from the Government and from the operators. There is an opportunity cost.

That is why the Senator and I invited comments on our discussion document; it is why we studied traffic and revenue information provided by the operators; and it is why we allowed the market some time to show what it could do, before we made our decision. As the Senator has noted, that decision is now made.

Why did we make the decision to proceed? Well, on the basis of what we have seen, we remain concerned that there may be a lack of competition in the provision of trans-Tasman roaming services.

What will happen now? Officials from the Ministry of Economic Development, and from the Department of Broadband, Communications and the Digital Economy, will help me, and the Senator, determine for certain whether competition has failed in the relevant market. If we find that it has, regulation will be considered.

This is an important process. Roaming markets have been analysed abroad, but typically in regions with supra-national authorities, such as the European Union and the states of the Gulf Cooperation Council. Today we are announcing something different – the launch of a joint investigation by two independent countries. Governments abroad will be watching.

I look forward to working with Senator Conroy on this important process over the coming months. But most of all, I look forward to healthy competition in roaming services between our two countries.

ICT in Government In October 2010 the government approved the Directions and Priorities for Government ICT which set the policy direction for the government's use of ICT and we have appointed the Chief Executive of the Department of Internal Affairs as the Government Chief Information Officer to oversee its implementation. In addition, we have established an ICT Council with an independent chair to ensure that a number of priority common capability initiatives are progressed and there is more rigorous assessment of planned large scale ICT investments. Common capabilities are already being progressed in the areas of identity management (igovt) , networks (one.govt), ICT infrastructure, and all of government procurement (PCs and voice services). Progress is well underway on the Infrastructure as a Service initiative. This initiative will deliver a shared cross-government approach to core and common computing needs, including a pay-as-you-go approach for central computer servers, processing and data storage, at the appropriate security level to protect the information. It currently has nine agencies committed to participating. The State sector’s main strategic advantage as a buyer is our operational scale; using this to benefit the taxpayer is a key task. The aim is lower cost, higher quality public services. The New Zealand Government recognises that the adoption of IPv6 is issue where it is essential for the private sector to take the lead. New Zealand has established an IPv6 Taskforce with some initial support from the Ministry of Economic Development. The Department of Internal Affairs has set up a demonstration site to show leadership on how NZ government web sites can be accessible to the IPv6 Internet. Conclusion I look forward to discussing these and other topics with my colleagues from Australia and Korea, and taking advantage of this brief visit to Hobart to see something of the developments in Australia with the NBN. I hope that you all will have successful and highly productive meetings over the next two days. Thank you.

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