St Arnaud: Come over to the dark side

Canadian expert says NZ has to decide whether how to encourage competition

Bill St Arnaud says the answer to New Zealand's woeful broadband ranking is to either encourage the building of fibre networks or to break up Telecom.

"Telecom is the last infrastructure bastion where the same company owns the infrastructure as well as provides the service", he told the Govis conference in Wellington this month.

St Arnaud, who presented to the conference via video conference link from Canada, says New Zealand is lagging behind the rest of the world for one simple reason: a lack of competition.

"Look at the PC market. Every year PCs have new applications, but the biggest driver for widespread PC adoption is cost and the key to low cost is competition."

St Arnaud says New Zealand telcos charge three times as much as Canadian telcos to deliver the same amount of traffic, despite similar levels of urban density, cultural and social factors.

"Canada has five times the penetration [of broadband] and one-third the price."

For St Arnaud the answer is simple: introduce structural separation within the telco world or start building networks that aren't run by the telcos.

"In Canada the government actively encouraged fibre build outs by the cable industry by only allowing capital expenditure and very small operating expenditure rate increases." By structuring the tax system in this way, St Arnaud says fibre laying companies had to increase the amount of lines they laid to increase revenue.

"From the 1970s to 1995 the [Canadian] government protected the cable industry from telcos. They weren't allowed to offer video and they couldn't buy cable companies. That means we have a strong cable industry here to counterbalance the telcos."

Conversely, New Zealand has almost no cable infrastructure and St Arnaud says that leaves us at the mercy of existing telcos with their pricing structure.

Dark fibre, says St Arnaud, is the answer. Dark fibre — fibre optic cable laid by a company but not in use — is sold as a commodity and allows new business models to emerge.

St Arnaud says for a large company or business, laying fibre is often cheaper and better future-proofed than buying services from a telco. Carmaker Ford is one such company, along with Boeing, which lays its own fibre in the US.

"Lighting up fibre used to be technically difficult, but [Coarse Wave Division Multiplexing] has made it a 'no-brainer'," he says. CWDM is the new method for splitting the beam of light in a fibre into various wavelengths which can each be used to carry traffic. St Arnaud says this allows for huge leaps in the carrying capacity of fibre optic cable every year.

"Governments can help by encouraging the building of condo fibre and by making it easier for companies to lay fibre in the first place."

The New Zealand Government is to spend $24 million on 15 condo fibre — also known as MUSH (municipal, university, school, hospital) networks — around New Zealand in the next four years.

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