MUSH money not for telcos, says Cunliffe

$24m is for 'open access'

Telco providers won't be eligible for any of the government's $24 million fund for MUSH (municipal, university, school, hospital) networks unless they come up with a "very strong case", says Communications Minister David Cunliffe.

Cunliffe announced the funding and the Government's intention to build 15 MUSH networks to operate on an "open access" model as part of the Digital Strategy this month. MUSH networks are designed to allow a non-profit organisation to become the "hub" of a fibre network which can on-sell capacity on its network for commercial use.

Cunliffe says no decision has yet been made on the allocation process for the funds, but that he doesn't envision the money going to existing telco players.

"We have not excluded the possibility that telcos could play at that stage, but we have signalled that the goal is for open access to broadband," he says. "I guess my starting position is not that they'd be excluded, but that they'd have to put a very strong case for any broadband challenge project to go to a telco."

Cunliffe says one of the objectives of the "broadband challenge" section of the Strategy is "to increase the competitiveness of open access fibre" in the marketplace.

Cunliffe now has to assemble his advisory group to receive submissions on the broadband challenge and the creation of MUSH networks, and that group will consider the matter further.

"An advisory group from the sector and community will be created and that will happen over the next couple of months. They will provide input into policy decisions including the criteria for how to set the broadband challenge funding."

Cunliffe says the other side of the Government's role in ICT in New Zealand is regulatory, and he will be doing all he can from the Government's benches to improve New Zealand's OECD broadband rankings.

Cunliffe has publicly called for New Zealand to reach the top half of the OECD by 2007 and the top quarter by 2010. In OECD figures released last week for the year to December 2004, New Zealand retains its 22 place out of 30 countries with a total of 4.7 broadband subscribers per 100 inhabitants.

To reach the 2007 target, New Zealand would need just over ten subscribers per 100 inhabitants, by today's results. At the current rate of growth, that would be around 20 users per 100 inhabitants by 2007. Both Telecom and the Government claim New Zealand's broadband penetration rate is increasing at around 80% year on year, albeit off a low base.

However, the OECD says New Zealand's net increase between 2003 and 2004 was less than the OECD average at 2.18 subscribers per 100 inhabitants. At that rate, it will take New Zealand more than a decade to reach the 20 subscribers per 100 inhabitants.

Cunliffe says New Zealand has to do better.

"Telecom's directors will do what's in the company's interests and it's Government's job to make sure that interest matches the national interest," he says.

The current Telecommunications Act review will rapidly speed up the decision-making cycle, says Cunliffe.

"There are a number of quite significant regulatory decisions to come before me shortly."

While the Act's review is limited to "implementation issues", and shouldn't revisit past decisions such as rejecting the call for unbundling, the Minister still expects the review to be "significant" in its reach.

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