NZ Government on track with UFB initiative - OECD

The broadband plans of the New Zealand and Australian Governments are among the most cohesive and forward looking in the OECD.

That is the word from OECD economist Taylor Reynolds, who has endorsed New Zealand’s focus on fibre, national connectivity and open access as the foundations of future networks.

Following a whirlwind visit to New Zealand, Mr Reynolds says broadband networks are increasingly recognised as fundamental for economic and social development, while also noting that it is going to be a foundation for economic growth in the country for 50 years.

“They serve as a communication and transaction platform for the entire economy and can improve productivity across all sectors. Advanced communication networks are a key component of innovative ecosystems and support economic growth,” says Mr Reynolds, while also labelling broadband the new electricity.

“Governments recognise that competitive broadband communication networks are increasingly fundamental to economic and social development. They are viewed as a general purpose technology that will not only support critical services but are required for innovation, competitiveness and growth across economies.

“Broadband networks also increase the impact and efficiency of public and private investments which depend on high-speed communications. Broadband is needed as a complementary investment to other infrastructure such as buildings, roads, transportation systems, health and electricity grids, allowing them to be ‘smart’ and save energy, assist the aging, improve safety and adapt to new ideas.

Some governments, citing the importance of broadband, have recently invested public funds to address important communication market limitations. These investments fall into two general categories: extending access to un-served/underserved communities and upgrading networks with very-high-speed lines capable of supporting competitive services in regions and municipalities, reports Mr Reynolds.

Government stimulus spending on communication infrastructure will largely target these two types of investment.

Telecommunication operators historically have had strong cash flow positions during economic downturns but may face increasing difficulties raising sufficient capital to extend and upgrade their networks.

Many policy makers in OECD countries are currently considering fiscal policies to help return their economies to growth. Most of these plans involve large government expenditures to support demand for goods and services while simultaneously increasing the longer-term productive capacity of the economy.

“Investments in network infrastructures such as electricity, gas, water, transportation and communications are key elements of most packages due to their immediate impacts on demand and employment as well as their strong potential to expand future supply,” says Mr Reynolds.

“Broadband infrastructure, in particular, can be a good target for economic stimulus spending because many projects can be initiated relatively quickly, are labour-intensive, can minimise economic leakages, and may promise stronger marginal impacts on supply and productivity than investing in established networks such as electricity, gas, water and transportation.

“Broadband networks are already an important foundation for innovation and growth in the OECD area in an increasingly competitive global marketplace. Communication networks help improve the efficiency of all sectors in the economy and new investments can potentially improve innovation and growth.”

Mr Reynolds believes policy makers need to evaluate the costs and benefits of any public investment in telecommunication infrastructure and select projects which can deliver both strong immediate aggregate demand effects. Employment created by rolling out the networks, and strong longer term aggregate supply-side effects, which can improve the productive capacity of the entire economy as an improved foundation for commerce and communication are such examples.

Importantly, he says when the public pays for broadband investment they should expect to benefit from improved service and greater choice in the market place.

“One means to accomplish this is to ensure that networks built or augmented using any public funding are available via ‘open access’ rules, meaning network providers offer access or capacity to all market participants on cost-based, non-discriminatory terms.”

To read more from Taylor Reynolds go to:

http://www.oecd.org/dataoecd/4/43/42799709.pdf

Scoop Copy:
http://img.scoop.co.nz/media/pdfs/1005/OecdBroadbandReport42799709.pdf

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