Broadband versus the walk on the beach

Bronwyn Howell and John Small both got their points across at live encounter

The live encounter last week between Bronwyn Howell and John Small, with their opposing views on the economics of broadband, was not as direct a sparring bout as some expected.

“I put my own position in a high-level way,” says John Small.

Howell, as in her original submission on the Telco Amendment Bill, used more detailed figures, “so I didn’t answer her as such,” he says.

“I just find you can’t demolish the kind of arguments she’s putting up without seeing them written down, and we’d need a much longer time,” Small says.

Small took the argument back to basics, looking at New Zealand as a small, isolated nation in an era when fuel to run physical transport is becoming much more expensive.

Many of our staple industries are also energy-intensive. “Our entire export sector is at risk,” he says, unless we focus our energy on exports of software and new computing hardware in small packages, such as EFTPOS terminals.

The firms that will take us into a transformed economy use information, either as their product or a crucial input. Our entrepreneurs of the future will work with information from all over the world and hence have a vital need for broadband.

Competition is the engine for a better telco infrastructure and hence a better New Zealand, he argues. Unbundling of the local loop will encourage that competition. Although it does have a downside, he admits, in the cost of regulation and the uncertainty of getting the detail of the regulations right.

“My case centred on explaining that [broadband] is a good idea,” says Small. “[Howell] obviously didn’t think it was such a good idea. She seems to think it’s enough for most people to suck their data through a piece of wet string [a dialup connection] and go for a walk on the beach [if a long wait is involved].”

This is a reference to Howell’s contention that many of New Zealand’s advantages, such as natural beauty, come from areas independent of information, and that there is little demand for broadband; that most New Zealanders will continue to use dial-up until broadband is available at a lower price.

Competition problems are the result of low investment, Howell said in her presentation, and unbundling will not solve this.

“Whilst internet access appears to be an ‘essential good’,” she says, “it is not clear that broadband access and the applications that can only be accessed via broadband are ‘essential’.”

But assuming some great social good will result from broadband, Howell argues, using overseas experience, that unbundling will not have a significant effect on broadband uptake; “the effect of inter-platform competition is much greater.”

Howell was not available last week for further comment, having travelled to Australia immediately following the event. Her colleague, John Boyle, says “They both got their points across in different ways” but there was only “limited “enagagement”.

There was no audience vote at the end, so we don’t know whose argument carried the day — if either did.

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