Rural broadband scheme ‘destructive’, Adam Gifford Opinion, NZHerald

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Adam Gifford asks why so much cash been given to two telcos with a record of failure?

http://www.nzherald.co.nz/opinion/news/article.cfm?c_id=466&objectid=10706443

John Key says he wants to “streamline and improve” bureaucracy.

Bill English says the country can’t afford waffly policy.

Great. They can do away with the Ministry of Economic Development. That should save billions and get rid of policy that is not only waffly but downright destructive.

The decision to start commercial negotiations with Telecom and Vodafone about handing over $285 million to improve rural broadband services is a case in point.

Either the ministry supplied bad advice to Communications and Information Technology Minister Steven Joyce, or it is shielding a decision he made for his own political or philosophical reasons.

Because be in no doubt, this is a bad decision that will not only saddle rural areas with sub-standard service, it will entrench existing monopolies and blight international standing as a place to invest or do business.

The group which may have the biggest stake in improved rural broadband, Federated Farmers, isn’t happy.

It’s trying to get Joyce along to a “solutions summit” with the successful and unsuccessful bidders, industry experts and other stakeholders, to thrash out the issues under Chatham House rules.

The most positive thing the Feds drew from the announcement was the promise to retender if the contracts can’t be finalised by the end of March.

The successful plan will extend Telecom’s fibre network to 719 rural schools and to 154 new cellphone towers that Vodafone will build.

Apart from the schools, the other 250,000 potential customers will have to connect through either ADSL on Telecom’s copper network, or through wireless connections.

Joyce is promising at least 5 megabits per second to 86 per cent of rural homes and businesses.

Federated Farmers wants at least double that speed, for around $60 a month retail.

In reality the proposed solution may deliver 1 mbps.

Joyce says the joint Vodafone/Telecom proposal is based on proven, existing technology, giving the government confidence it will work.

He says it will ensure serious competition in the last mile, giving many customers a choice of fixed wireless, ADSL2+ or mobile broadband, and was the only one that increases mobile coverage.

Joyce said it with a straight face, although he does have a tendency to smirk when he’s putting across something particularly outrageous. But he didn’t make his fortune in radio by relying on outdated technology.

The unsuccessful bids, from the OpenGate consortium with Kordia, Woosh and FX Networks and from the Maori-backed Torotoro Waea group, were based on deploying 4th generation technology called TD-LTE.

Joyce says it’s risky, while giving his preferred partners five years to roll out more of the old 3G kit that has so far failed to do the job.

A generational step in technology is exponential rather than incremental. LTE stands for long term evolution – this stuff has been a decade in development, so the bugs have been worked out of it.

TD, or time division, is a variant on LTE developed by China Mobile that runs on cheaper spectrum bands.

LTE has much faster speeds than the solution Joyce wants to lumber farmers with – easily 50 to 100 times faster – and it has a larger coverage area, with a single cell tower covering up to 100km. It can also support more users in an area.

One of the reasons it took so long to develop was future proofing. Networks were designed so it can be easily upgraded in future.

The equipment is cheaper, it works better, and it uses less power.

OpenGate would have its network complete in two years, not five, delivering more than Federated Farmers was asking for at the price it was seeking.

So why give a mountain of cash to two transnational companies with a record of failure in rural New Zealand?

Telecom has been subsidised for years through the Kiwishare to supply rural service, and has done the least it could get away with to keep the 111 service going.

Vodafone hasn’t invested any fresh capital in New Zealand since it bought Bellsouth’s network, merely reinvesting some profits and taking advantage of poor regulation to lock in customers.

The big loser in this, apart from rural New Zealanders, is 2Degrees.

Its investors have sunk close to half a billion dollars creating a mobile network, despite an extraordinary unwillingness on the part of the politicians to address barriers to competition that would be considered illegal in other countries.

Now Joyce is offering a dollar for dollar subsidy – to the multinationals using anticompetitive tactics to lock it out.

Call in the World Trade Organisation.

adamgifford5@gmail.com

1 COMMENT

  1. Here's another opinion: NZ Government rushes Telco Act rewrite

    One-week consultation slammed.

    New Zealand Communications Minister Steven Joyce has given industry just one week to respond to an unprecedented 77-page document that sets out proposed legislative changes to the country's telecommunications sector.

    The notice period drew sharp rebukes from the Opposition and industry groups who have sought an immediate extension to the submission deadline.

    Opposition Labour ICT spokesman Clare Curran called the consultation period an "outrageous abuse of process", given the standard period for a Senate committee to give was six weeks.

    "The government is disregarding democratic process and rushing through its law changes with scant regard to community reaction and involvement," Curran said.

    Telecommunications Users Association of New Zealand (TUANZ) chief Paul Brislen said the proposed law changes represented "a radical overhaul of the telco industry" and as such needed to be treated with care rather than rushed through in a week.

    TUANZ and lobby group InternetNZ were both asking for an extension for deadline for submissions on the new bill.

    InternetNZ chief executive Vikram Kumar told iTnews an additional two weeks would be required to digest the two hundred pages of "complex, detailed material" that the government released.

    According to the Joyce's offices, the bill and accompanying documents contained measures to support the implementation of the Government's Ultra-Fast Broadband (UFB) and Rural Broadband Initiative (RBI) schemes.

    The UFB would see up to NZ$1.5 billion invested in an open-access, dark-fibre network to support broadband services to 75 percent of New Zealanders, while the $285m RBI project would be built by a consortium of Telecom NZ and Vodafone.

    The Government's supplementary order paper, released yesterday, set out proposed legislative changes for the structural separation of Telecom New Zealand, in case the incumbent was selected as the Government's UFB network partner.

    It also proposed tax law changes to ensure that Telecom shareholders weren't penalised financially if the company de-merged into a retail unit (ServiceTel) and infrastructure unit (Chorus2).

    Telecom New Zealand was presently operationally separated into three units: Retail, Wholesale and Chorus. Chorus2 would include the current wholesale unit, should a de-merger go ahead.

    However, TUANZ and InternetNZ claimed the proposals went much further than just providing a legislative framework for Telecom's structural separation.

    The organisations claimed the proposals effectively rewrote the entire New Zealand Telecommunication Act as it stood today, making it necessary for more time to be provided for industry to properly digest the information.

    http://www.itnews.com.au/News/248474,nz-governmen

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