Report - utility expansion for broadband future

Report proposes utility expansion for broadband future

Media Release - 15 December 2008

Groundbreaking research released today by InternetNZ (Internet New Zealand Inc) concludes that utility expansion provides the best opportunity for dramatic improvement of New Zealand's broadband infrastructure.

The final report Broadband Strategy Options for New Zealand has been prepared by independent consultancy Network Strategies as the second part of a research project initiated in June. It investigates the investment required under differing scenarios to introduce real high-speed broadband with at least 100Mbit/s for domestic users and 1Gbit/s for commercial users for 75% of the population within 10 years.

InternetNZ Executive Director Keith Davidson hails the document as a serious contribution to the debate that will provide valuable input for Government, local body and industry discussion. "This report provides the first publicly-released comprehensive costing model for a fibre network in New Zealand. It is very timely as the Government prepares its infrastructure plans for the New Year and beyond."

Dr Suella Hansen, Director of Network Strategies, commented that the consulting team had applied a techno-economic modeling approach to investigate in detail different technology, business and market scenarios.

“Public sector participation will be important as our modeling shows that the levels of required investment are beyond that of a commercial operator’s typical payback expectations,” says Hansen.

InternetNZ commissioned Network Strategies to independently investigate workable models for a New Zealand Broadband Infrastructure, applying six principles around fair competition, affordability, timeliness, high-speeds, independence, and avoiding of excessive duplication. Business models considered included lit Fibre-to-the-Premises, Open Access Ducting, unlit Fibre, and utility expansion. An extension of Telecom's cabinetisation rollout using VDSL was also considered.

Davidson says the model of utility expansion hasn't been visible in the ongoing public debate in respect to broadband infrastructure and now must be seriously considered. "The potential cost benefits of using utilities for broadband expansion cannot be ignored."

He says the Government recognises that New Zealand needs a step up in broadband infrastructure in order to compete globally. "Given the current economic environment it is even more crucial that money is spent wisely and in ways that will enhance our competitiveness and address our geographic isolation. We trust this report will assist in the Government's considerations."

A PDF copy of the report is available at: www.internetnz.net.nz/issues/newzealand/broadband-strategy-options-for-new-zealand

ENDS

Background:
In April 2008, The New Zealand Institute released a discussion document (Delivering on the Broadband Aspiration: A Recommended Pathway to Fibre in New Zealand) containing a considered and costed roadmap as the first part of a proposed project for New Zealand to “develop a fast path to fibre to capture the economic benefits”.

National Party leader John Key’s Leader’s Speech (Achieving a Step Change: Better Broadband for New Zealand) of 22nd April 2008 flagged a political intention to invest “up to $1.5 billion of Crown capital over six years to accelerate the roll-out of a fibre-to-the-home network for New Zealand”.

The previous Government’s Broadband Investment Fund was released as part of the budget on 22 May 2008, pledging $325m of operating spending to support rollout of broadband Internet infrastructure on a contestable, technology-neutral basis. The Fund includes $75m specifically set aside for rural broadband issues.

InternetNZ released its RFP for the Research and Analysis of Broadband Strategy Options for New Zealand at the end of June. Network Strategies was selected from 10 respondents.

Phase One of the report was released in September.

National won the General Election and reaffirmed its commitment to rolling out national broadband infrastructure.

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Q&A

Q: Why did you commission this report?

A: InternetNZ was concerned at the absence of any costed, detailed proposals for rollout of broadband infrastructure that could deliver fast speeds to households. We commissioned a report that would look at both the cost of such infrastructure, and the business models that could support its rollout. The report provides both, and we think it is an important contribution to the debate about broadband.

Q: Is this “just another report”?

A: No. This is the first New Zealand report which publishes a comprehensive cost analysis for the rollout of fibre optic broadband infrastructure. It is also the first report for New Zealand which sets out some specific suggestions of business models for the rollout of this infrastructure.

Q: How does this report affect National’s broadband plans?

A: This report provides useful information for the new Government to consider as it decides how to turn its high level direction into detailed policy. The utility expansion model the report recommends could make a significant difference to the affordability of rollout out broadband infrastructure, and we expect that the Government will welcome this input as it develops its plans.

Q: Why 100mbps/1gbps and 75% of households?

A: We wanted to set targets that would end the bandwidth constraint to households and small businesses, and ensure reasonably widespread availability of the infrastructure. The targets were chosen on that basis and were part of the RFP that commissioned the report.

Q: Why didn’t you consider wireless solutions?

A: Wireless solutions cannot meet the speed and stability characteristics of a fibre optic wired network, or the targeted speeds required by InternetNZ for the report. As such, the services they offer are not a substitute for the infrastructure described in this report. Wireless solutions are complementary to high speed fixed access networks, and offer much-needed characteristics such as mobility which people want and need.

Q: What about Chorus (Telecom’s network division)?

A: The modelling in the report anticipates that Chorus could either compete with the new broadband infrastructure, or be part of the build to roll it out. Chorus’s participation in any build of new network infrastructure, or cooperation with others’ plans, would be up to Telecom and any other parties to decide.

Q: Who have you given the report to?

A: So far we have circulated it to ministers in the new government, officials, and opposition ICT spokespeople. The report will be published to media and on our website following this media conference, and we will be promoting it across the industry.

Q: How did you select Network Strategies?

A: InternetNZ issued a public RFC earlier this year, and received a number of proposals. Network Strategies’ proposal best fit the requirements of the RFP.

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