Virtual telco best for far north, report says

A virtual telco is the best way to deliver broadband to the far north, according to a report commissioned by the Ministry of Economic Development.

A virtual telco is the best way to deliver broadband to the far north, according to a report commissioned by the Ministry of Economic Development.

In the report, publicly released earlier this month, consultants Arrus Knoble outline three possible ways of getting providers to take broadband to the region, one of New Zealand’s poorest.

First, there’s the status quo, whereby far north interests would work with telco providers to build demand and push the business case for rolling out broadband services.

Second, there’s the community-owned network model, under which community interests would invest, perhaps as part of a joint venture, in a regional network.

Third is the virtual telco model, under which a community-owned telco business rents existing infrastructure and services from several providers at wholesale rates and then resells them “in ways that support the district’s development objectives”.

The report concludes that the Far North Development Trust, in co-operation with the Far North District Council and Top Energy, the region’s power retailer, should opt for the third option and form a “community-owned, far north-branded, full service virtual telco”.

“The telco will comprise a strategic alliance between community owner-investors and commercial providers of infrastructure and services that share a commitment to achieving improved economic growth and social well-being in the far north.”

The alliance should include the trust and the council, Telecom and BCL as network owner-operators, Telecom, Vodafone, Clear, Ihug and others as potential providers and Top Energy and Far North Holdings, the Far North District Council’s local authority trading enterprise, as investors and perhaps also as providers of services such as billing and customer support, the report says.

Among the consultants’ visions are “links with other regions to bulk purchase the required technologies, aggressive demand aggregation, building strategic relationships with the tourism and farming sectors, cross-subsidisation, inviting other tells to co-locate on new or existing sites, increasing the availability of hardware through sponsorship grants and so on” and “developing a range of community interest options, for example, subscription, sponsorship, contribution in kind”.

Also mentioned is “forming capacity-building relationships with capacity-building operations, that is, Te Rarawara’s Maraenet”. Farnet, the project launched last month in which 10 Far North high schools pool their IT educational resources, is likely to also fall into that category.

The area has made some steps to put the theory into practice. Far North Development Trust chairman Chris Mathews says the trust, an offshoot of the Far North District Council, has drawn up a virtual telco-based business case. He wouldn’t elaborate on the time frame, “but we plan to have it up and running well before 2003,” the date set by the government for all regions to have two-way high speed internet access.

Talks with providers haven’t yet begun, Matthews says, but when the Far North Telco is in operation, it will be a whole-of-community one, with access for all and key planks will include demand aggregation and cross-subsidisation of services.

“Some of the services will make losses but will be funded by those that make money — that approach doesn’t exist among too many telco players.”

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