Fibre to the country

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On Friday I spent the day in Whangarei, visiting NorthPower and having a look at the UFB rollout in the city.

It’s nearly done.

When I say that, I mean the entire city will soon be completely fibred up. Every home and office, school and hospital, everything.

This is an extraordinary achievement, particularly when I look at the Chorus map for my home and see I’m not slated to even see a fibre network for two years or more. It really does mean Whangarei and other regional centres will have stolen a march on the big cities and, as Northpower FIbre CEO Darren Mason says, it gives people a reason to move out of the main centres.

Mason believes Whangarei can become an exemplar of what a fibre-rich city can truly be. Not just an offshoot of the big city but an alternative.

He says families will move to the regions if they can find work, can be assured of good schooling and that employers will find staff more willing to stay for the long term because they have what they need locally.

Whangarei is bustling along if my brief visit is anything to go by. The region’s attractiveness will only increase once the motorway goes through (you can forget the “holiday highway” nonsense – it’s a vital road link that should have been upgraded years ago) and as a place to do business you’d be hard pressed to better it.

This is one of the major advantages of a fibre deployment that runs faster in the regions than it does in the two main centres. Uptake is higher than in Auckland or Wellington (Enable in Christchurch is pushing 6%, Northpower close to 7% and Mason expects to see that hit double figures before too much longer) as residential and business customers feed off each other’s experiences.

We went out on a site visit to see a team in action. Northpower has pioneered a new approach to connecting properties to the network. Instead of digging a trench and putting all the equipment under ground, they put everything in a box on the pole outside the customer’s house. Overhead fibre lines are impossible to tell apart from the power lines and Northpower has designed and built a splitter box that sits on the pole making it both quick to deploy and easy to revisit should the need arise.

Each box serves four households (with another four splitters in place for any future unbundling move) and as a plug and play unit is so simple even I could connect each house, although I’m happy to say I wasn’t allowed to have a go.

The time to connect each property is reduced – on average it takes a couple of hours but the record is just over an hour from the time the team of two arrived on site to fully connected to the house. Mason says the advantage is twofold – a faster deployment and a cheaper one. Much cheaper than digging trenches and laying cable and much less invasive.

I wonder why Chorus doesn’t do this where it’s able – given its cost blowout (the last news story I saw quoted a figure close to $300m) surely this is a viable alternative?

Northpower does trench where it needs to but where it doesn’t the savings are tremendous.

So what’s next for Whangarei and Northpower? Mason would like to see the company deploy fibre further into the surrounding areas, but one thing is holding them up – access.

Access is the 900lb gorilla in the room when it comes to fibre deployment. Costs balloon out of all proportion when the lawyers get involved and working out access rights to drive ways, right of ways and multi-dwelling units makes it almost uneconomic to deploy fibre without a government level investment.

Much better to change the rules to allow fibre deployments along existing utility corridors and to give the network companies the right to connect customers up by default. Opt out if you must but most people adopt the line of least resistance and we would see a much faster, cheaper deployment if we turned the rules around.

Mason has volunteered Whangarei as a test bed. Try it out in Northland, he suggests, and if it works roll it out nationwide. If not, no harm done.

I like that idea. I think we should change the rules and make it easier to deploy networks without having to pay lawyers a fortune to say it’s all OK, and if it works in Northland we should move swiftly to do it for the rest of New Zealand because that would mean phase two of the UFB could be really quite powerful – fibre to the country.

Northpower sees no reason why a combination of cost savings through using overhead lines and having access to properties guaranteed shouldn’t lead to us become a Giga-country, and that’s something TUANZ wholeheartedly supports.

Imagine that – every home and property in the land connected to a fibre network in much the way they are connected today via the power lines.

Now that’s something worth changing the law for.

The fastest auction in the west

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What must surely be the government’s fastest ever auction is over.

In just on a day, Telecom and Vodafone bought the maximum amount of 700MHz spectrum they are allowed currently – two pairs of 15MHz each – and 2Degrees bought two pairs of 10MHz each.

That leaves an additional two pairs of 5MHz unsold.

TUANZ has argued that having an auction is counter productive. We think it would be much better to give the licences for the spectrum to the telcos in exchange for building something we want – rural broadband, for example.

This is the model the government controversially chose for its Sky City convention centre deal. Rather than taking the money for an extension to its gaming licence, the government got Sky City to agree to build infrastructure (a conference centre) in exchange for an extension of its licence.

The parallels are obvious, although the government didn’t like the suggestion, so went ahead with an auction anyway.

Instead of investing money in the networks, the telcos have paid for pieces of paper that give them the right to build in certain 700MHz spectrum ranges. Telecom and Vodafone have each paid $66m while 2Degrees has paid $44m. That means the remaining lot is worth $22m on the same scale.

The government now has to figure out what to do next. Both Telecom and Vodafone have bought as much as they’re allowed, but the government has built in something of a back door. It has asked if they’d like to buy more than they’re allowed on the basis that it hasn’t been sold.

That must be quite tempting for both telcos and for the government, but I’d argue that this would be a very bad outcome for customers. I’d like to see all three telcos with the same amount of spectrum each. That way we can avoid the game playing around “my network is better than your network” and all the rest of the noise that goes with one player having more spectrum than the others.

In Australia, Telstra has bought two lots of 20MHz, Optus has bought two lots of 10MHz and nobody else bothered to bid because the price was so high.

This means Telstra can either offer double the speed that Optus can offer, or keep the speed the same but service double the customer base.

The 4G war in Australia is over before anyone has built a 4G tower. Telstra won.

We would do well to avoid that here. By ensuring all three players have the same amount we can ensure a level playing field when it comes to spectrum at the least.

There are a couple of ways to do that. First, the government can sit on the spectrum until 2Degrees has some funding available.

Given the spectrum can’t be deployed for a couple of years, there’s no rush to hand out the licences right now, so why not wait it out?

The second way would be to give the spectrum to the Hautaki Spectrum Trust. The Trust, you may recall, launched a bid to see the whole auction process and the government’s right to sell off radio waves taken before the Waitangi Tribunal.

That bid failed but the government has agreed to give Maori interests $30m worth of funding for ICT related activities.

If it handed over $20m worth of spectrum instead, the Trust could take that to 2Degrees and increase its shareholding in the company in exchange for the use of that spectrum.

It’s what the Trust did in the first place to get 2Degrees into the market and it makes a lot of sense for all players.

What the government shouldn’t do is rush into a sale to the highest bidder.

Telecom has already come out and said it thinks the spectrum should be shelved – as has 2Degrees, funnily enough – but of course if the government moves to sell it off, Telecom will have to compete for it or see the extra spectrum go to Vodafone for a song.

When you look at 700MHz spectrum in isolation it’s clear we want to see all three telcos on a level playing field. When you look at the sub-1000MHz range in its entirety, it’s clear 2Degrees is well behind the others in terms of spectrum resources. It needs the spectrum so it can compete in terms of pure bandwidth in the 4G world.

We need a strong third player in the market. The changes we’ve seen since 2Degrees launched have been tremendous and to the betterment of the customers. TUANZ wants to see that continue in the 4G world.

Unintended Consequences

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Content is king, and
will be the driving force behind any significant uptake of the UFB.

It’s a given – certainly among users – that without the
content there can be no success story for UFB. Why would mums and dads in
middle New Zealand bother upgrading given the current state of access to
content?

Certainly in the UK the pressure for content has seen some
remarkable changes to the telco landscape.

BskyB, the UK’s leading cable TV provider, has bought
its way to number two in the ISP market and is now growing at an astonishing
rate.

To compete, BT has acquired rights to major sporting events
and given them away to fibre customers for free.  In less than a year it has added 1 million
customers to its subscriber base.

Clearly, content is what will drive demand and if buying
rights to the footy (or local variant thereof) brings in the punters, that’s
the way to go about business.

But the flip side of this story is quite sobering.

I was at a Commerce Commission conference on Friday on a
panel with Telecom CEO Simon Moutter when this issue came up. Moutter pointed
out the big difference between BT and any telco in New Zealand – we have
dis-integrated the telcos and in the UK they have not.

BT is a fully integrated player. It owns networks, it
wholesales and it retails directly to customers, in competition with its own
customer ISPs.

No telco in New Zealand in the fixed-line space can lay
claim to that.

Moutter pointed out that BT offset the cost of buying the
content against the profits it makes from the sunk-cost network, and that New
Zealand telcos don’t have the same ability. Profitability in the fixed-line
broadband market in New Zealand (let’s talk fibre as that’s the direct
comparison with the UK) amount to only a couple of dollars per line, after you
take into account call centre staff, buying backhaul and international capacity
and so on.

But these are high value customers, right? They’re the
future of the network, and BT was right to entice them over.

BT spent GBP1 billion on the rights to various sporting
events and has given those rights away for free to its retail customers. Sure,
it won 1 million new subscribers as a result, but that’s a purchase price of
GBP1000 per customer. The payback period at even $10 a month is not
insubstantial, let alone at the lower profit margins the telcos in New Zealand expect
to make.

If we look at the landscape in New Zealand there isn’t a
single fixed-line operator that could do to our market what BT has done in the
UK. Instead, all our telcos can do really is look to partnerships with content
providers in order to offer more to customers, and even then it’s more likely
that the ‘over the top’ (OTT) providers will sweep in with a more comprehensive
offer and scoop up most of the revenue that might be on offer.

This is one of those unintended consequences of market
intervention. By splitting Telecom into two parts, we secured a more level
playing field for the future, but the downside is a lack of cross-subsidisation
for the telcos.

On the plus side, that’s probably a good thing for
customers. I don’t want to find my content locked to a particular provider, and
I’m ever hopeful that the whole model of distribution that the content makers
are forcing on is eventually goes away. I don’t want to have to sign up to
Telecom in order to get rugby but Vodafone in order to get rugby league, for
example. Much better to sign up to the internet and get whatever sport or other
entertainment I require when I require it.

But his does pose a problem for New Zealand UFB retailers.
How will they entice customers to the shiny new network if sports and
entertainment content are out of reach?

It could well be that the only telco able to deliver the
content needed is already in the market today. It’s Chorus, the owner of the
copper network.

It’s an interesting old world, isn’t it?

 

Coalition stands by claims Chorus is at no risk of insolvency

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COALITION FOR FAIR INTERNET PRICING

MEDIA RELEASE

FRIDAY 11 OCTOBER 2013

COALITION STANDS BY CLAIMS CHORUS IS AT NO RISK OF INSOLVENCY

The Coalition for Fair Internet Pricing stands by its opinion that the communications it has received from the Australian Stock Exchange (ASX) and New Zealand Stock Exchange (NZX) indicate than neither exchange holds evidence to support New Zealand prime minister John Key’s assertion that Chorus Ltd (CNU) could become insolvent if a December 2012 Commerce Commission recommendation on copper broadband and voice services pricing is implemented.

The coalition also accepts that NZX does not directly comment on individual issuers or their financial positions.  The NZX has made an announcement to this effect today.  The ASX has made no comment at this time.

Yesterday the coalition released communications from both the NZX and the ASX on whether or not Chorus was in breach of its continuous disclosure obligations.

The coalition had asked the exchanges to investigate Chorus’s continuous disclosure compliance after Mr Key told national television on Friday 13 September that the copper network monopolist could go broke were the Commerce Commission draft determination implemented.

The ASX advised the coalition that it had reviewed the matter but “has not formed the view … that there is, or is likely to be, a false market in [Chorus]’s securities”.  It advised: “If you do not see a market announcement about the issues you have raised, you should assume either that our investigation has concluded that there was no breach of the Listing Rules or, if there was, it has been dealt with to our satisfaction on a confidential basis.”

The NZX advised that it “has no reason to challenge [Chorus]’s view that it remains in compliance with its continuous disclosure obligations under the NZSX Listing Rules”.

The coalition acknowledges that Chorus made a disclosure to the market on 3 December 2012 in which it said “the collective impact of these two changes [the UBA decision becoming final] … could require Chorus to fundamentally rethink its business model, capital structure and approach to dividends”.

However, the coalition does not believe this represents a disclosure of a risk that Chorus could become insolvent.  This is confirmed by the fact the monopolist’s share price fell only about 15% to NZ$2.91 after the Commerce Commission report was released, which is not an indication the market believed it had been advised of an insolvency risk.

Moreover, the following day, on 4 December 2012, Chorus announced that Standard & Poor’s had made no change to the company’s credit rating.  

Since then, the chief executive of Chorus, Mark Ratcliffe, has consistently refused to agree that his company could go broke or that the roll-out of ultra-fast broadand (UFB) is at any risk, including in interviews with Radio New Zealand and TV3’s The Nation.

 A spokeswoman for the coalition, Sue Chetwin, also chief executive of Consumer NZ, said the prime minister and other opinion leaders should desist from claiming Chorus was at risk of insolvency.

“Chorus is an important part of our economy,” she said.  “It is part of the NZX15 index, has a market capitalisation of over NZ$1 billion, is rolling out ultra-fast broadband (UFB), made a profit of NZ$171 million last year and paid NZ$95 million in dividends to its shareholders.  It will remain profitable under all pricing scenarios and any suggestion it is at risk of going broke is absurd.”

The Coalition for Fair Internet Pricing was founded by Consumer NZ, InternetNZ, and the Telecommunication Users Association of New Zealand (TUANZ) and is supported by CallPlus and Slingshot, the Federation of Maori Authorities, Greypower, Hautaki Trust, KiwiBlog, KLR Holdings, National Urban Maori Authorities, New Zealand Union of Students’ Associations, Orcon, Rural Women, Te Huarahi Tika Trust and the Unite Union.

A Covec study for the coalition, which has been peer reviewed by Network Strategies and found to be conservative, concluded that the government’s proposed copper tax would cost Kiwi households and businesses between $390 million and $449 million between 1 January 2015 and 31 December 2019 over the price for copper broadband and voice services that Commerce Commission work indicates is fair.  The latest demands by Chorus would take this cost to Kiwi households and businesses to $979 million.

ENDS

No evidence Chorus could become insolvent

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COALITION FOR FAIR INTERNET PRICING

MEDIA RELEASE

THURSDAY 10 OCTOBER 2013 

ASX & NZX FIND NO EVIDENCE CHORUS COULD BECOME INSOLVENT

The Australian and New Zealand stock exchanges (ASX and NZX) have reported to the Coalition for Fair Internet Pricing indicating that they have found no evidence to support New Zealand prime minister John Key’s assertion that Chorus Ltd could become insolvent if his government’s proposed copper tax is not introduced.

“We are pleased with the ASX and NZX conclusions because they confirm that there is absolutely no risk of insolvency under any of the copper pricing scenarios put forward by the Commerce Commission as the independent regulator.  This means that the roll-out of the Ultra-Fast broadband can proceed as planned,” a spokeswoman for the coalition, Sue Chetwin, also chief executive of Consumer NZ, said today.

Chorus is part of the NZX15 index, has a market capitalisation of over NZ$1 billion, made a profit of NZ$171 million last year and paid NZ$95 million in dividends to its shareholders.

“Given Chorus’ financial security, we call on the government to withdraw its proposal to over-ride the Commerce Commission and impose a copper tax on Kiwi households and businesses – a tax which will benefit no one except support the profits of the copper lines monopoly,” Ms Chetwin said.

“There is no reason at all for Kiwi households and businesses to pay a dollar more for copper broadband and voice services than the Commerce Commission says is fair.

“There is no threat to Chorus’s solvency and no threat to the roll-out of Ultra-Fast Broadband.  Chorus should simply be told to get on with the job.”

Mr Key made his insolvency claims on national television on Friday 13 September, saying: “If the Commerce Commision ruling stands there’s a chance Chorus will go broke, in which case the Ultra Fast Broadband (UFB) won’t be rolled out.”  He later advised media and the New Zealand Parliament that he stood by these comments.

Asked whether his view that Chorus could become insolvent was based on information not in the public domain, Mr Key told Parliament it was “based on commercial-in-confidence discussions between Chorus and Ministry of Business, Innovation and Employment (MBIE) officials” and a private telephone conservation he had with the chair of Chorus, Sue Sheldon, in December 2012.

Following the prime minister’s comments, the coalition asked the ASX and the NZX to investigate why Chorus had made no disclosure to the market about any insolvency risk as it would be required to do under both exchange’s listing rules.

On Friday 4 October, the ASX advised the coalition it had reviewed the matter but “has not formed the view … that there is, or is likely to be, a false market in [Chorus]’s securities”.  It advised: “If you do not see a market announcement about the issues you have raised, you should assume either that our investigation has concluded that there was no breach of the Listing Rules or, if there was, it has been dealt with to our satisfaction on a confidential basis.”

Yesterday, Wednesday 9 October, the NZX also advised that it “has no reason to challenge [Chorus]’s view that it remains in compliance with its continuous disclosure obligations under the NZSX Listing Rules”.

The ASX and NZX communications are available to media on request.

The Coalition for Fair Internet Pricing was founded by Consumer NZ, InternetNZ, and the Telecommunication Users Association of New Zealand (TUANZ) and is supported by CallPlus and Slingshot, the Federation of Maori Authorities, Greypower, Hautaki Trust, KiwiBlog, KLR Holdings, National Urban Maori Authorities, New Zealand Union of Students’ Associations, Orcon, Rural Women, Te Huarahi Tika Trust and the Unite Union.

A Covec study for the coalition, which has been peer reviewed by Network Strategies and found to be conservative, concluded that the government’s proposed copper tax would cost Kiwi households and businesses between $390 million and $449 million between 1 January 2015 and 31 December 2019 over the price for copper broadband and voice services that Commerce Commission work indicates is fair.  The latest demands by Chorus would take this cost to Kiwi households and businesses to $979 million.

 

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Discuss

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The telecommunications review discussion document has lead to quite a bit of, shall we say “discussion” about the review and what it all means. 

As you’ll have seen, TUANZ is part of the “Axe the Tax” campaign as we strongly believe that taking money that was long promised to customers and giving it to Chorus shareholders is simply wrong.

But what do others think? What submissions were received? 

If this was a Commerce Commission process, we’d have a full list of submissions (and cross-submissions) to look at and pick through. We’d see the economic analysis, the legal justifications and the rhetoric from all parties.

Sadly, MBIE tells me they haven’t decided yet on when or even if they’ll put those submissions online.  Given we’re still waiting for the TSO submissions to go public, we could be waiting a long time.

It’s good to have all the submissions in one place and it’s good to have them out there in public. We need to have access to them so we can work out what rationale is being used and why for each position.

So on that score, I invite any and all submitters on the telco review discussion document to send me a copy of their submissions and we’ll make them all public here at TUANZ. 

I’ll email all those I can think of directly seeking a copy but there are bound to be some who have submitted that I don’t know about. It’s a shame – I would have thought the ultimate outcome of calling for submissions on a discussion document would be to have a discussion. 

It seems to be something of an old-fashioned approach these days. 

If you’ve got a submission you want included, send it to: paul@tuanz.org.nz and I’ll add it to the list. If it’s already online, send me the URL (or add it in the comments below) and we’ll save on bandwidth.

 

Is our telecommunications industry really competitive?

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 One of the
main goals of TUANZ is to encourage competition in the market place. Why?
Because more competition means more choice, a better range of products and
services and better prices.

So how do we
measure competition? The Commerce Commission measures it by looking at the
number of customers each provider has.

That’s OK
but doesn’t really tell the whole story. Better to look at the revenue share
each company has to determine just how the market is shaking out.

In mobile,
that means we have two giants (Vodafone and Telecom) and a minnow (2Degrees)
and a raft of also ran virtual operators that have a minute market share.

In landline
broadband, that means we have two giants (Vodafone and Telecom) a small number
of minnows (Orcon, CallPlus and Snap) and then the rest, mostly niche players
and resellers of service.

IDC Research
has released its annual telco report (oddly not available online in any form
that I can find) which shows a flat to slightly declining market across the
board with no sign of relief for many years to come.

In addition,
despite increased demand for broadband services, revenue shrank slightly and
looks set to continue on that path for some time.

In the
mobile space there’s little better news for telcos. Telecom’s shut down of the
CDMA network, says IDC, means it is now the third place mobile operator by
number of customers, but still number two in terms of revenue.

Yet the
telco market is as vibrant as we’ve seen in many years. Multiple players,
differentiation, all the things that appeal to a wider range of customers and
prices to match.

So is the
market working or isn’t it?

In mobile we
are starting to see competition at its finest. Infrastructure-based competition
is the best we, as customers, can ask for and we have two national networks and
a third on the way.

What’s
important in this space is that we make sure we continue to have three viable
networks, which is why the idea that the government can settle for only two
players in the 700MHz auction is unacceptable to us. We need three or we settle
back into a cosy duopoly with all that entails.

Currently
the mobile market isn’t working quite as well as we’d like. New entrant
2Degrees is still fighting for revenue market share and the dominant players are
learning to respond more rapidly to the changing nature of the market. The new
$19 price point is a great example of this – unthinkable a few years ago and
now hotly contested.

In the
fixed-line market we really do see very little differentiation between ISPs.
Certainly there is some – mostly relating to the thorny issue of content
provision – but for the most part we have monthly plans with an “all your line
can handle” speed and a relatively low data cap. You can find some competition
at a structural level with Vodafone’s recently purchased cable network and from
the fixed-wireless providers and unbundlers, but for the most part it’s any
colour you like so long as it’s black.

That’s only
going to get worse as we move to the UFB, where all inputs are more or less
identical, unless the retail service providers recognise the problem and go out
of their way to shake things up.

As we’ve
said before, telcos spend a huge amount of money on central city offices, on
marketing teams and sales managers and on retail outlets. You’d think they were
selling high-end cars, yet their business model will shortly be closer to that
of the electricity companies and their business costs should move in that
direction as well.

The trick for
customers will be to shop around. I know that sounds easy but the inertia that
we see all too often in the market is an ugly and pervasive thing.

Don’t just
settle for what’s familiar, really consider your needs and what you want from a
telco and see what else there is in the market.

We need to
support and encourage those players that are dynamic, that are offering new and
interesting choices and are really trying to win our business. They tend to be
the smaller players (they’re far more willing to try something new in this industry)
and oddly, they’re the very ones that are most at risk from the copper tax.
They’ve invested in new technology, they’ve tried to shake things up and now
they’re facing increased input costs at a time when they’re yet to reap the
rewards of increased revenue.

Without them
in the industry we’ll all be worse off.

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After Fives after match report

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Enable put on a great After Five session last night in
Christchurch.

As you know, Enable is building the UFB in Christchurch but
what I didn’t know is it’s also responsible for another area around the main
city – in effect the satellite towns that feed Christchurch.

The project is going well. I went out on a site visit and
saw a crew drilling along a 30m driveway to reach the property at the back.
Even though the other two residents hadn’t signed up for UFB at this point, the
team were laying in the spurs ready to hook them up should the need arise and,
given the rest of the street’s willingness to swap to fibre (there were four
connections being put in on that street alone) it’s surely only a matter of
time before they put in the call.

What interested me most about the deployment is the uptake
rate – Enable is running at over double the national average at 6% uptake.

That may seem like peanuts but don’t forget the main
residential build doesn’t start for another couple of years yet so to see such
good numbers come in when the country as a whole is barely hitting 3% means
it’s worth taking a second look at Enable’s model.

Enable is co-marketing the fibre deployment alongside its
Retail Service Providers (RSPs) and even without the two big names in the fixed
line broadband world – Telecom and Vodafone – it’s still signing up a
tremendous number of new connections each month.

In addition, word of mouth is strong and that’s in no small
part because of the excellent clean-up job the crews do when laying the fibre.
Instead of the nightmare of trenches, refurbishments, multiple holes in walls,
delays and the like, the teams make sure they clean up after themselves, that
reinstatements of driveways and footpaths are of a top-notch nature and that
they are constantly communicating with both residents and RSP partners. It’s
clearly paying dividends.

Enable has all but completed deployment in some of the
smaller dormitory townships outside Christchurch proper, which means those
people who do live outside the city bounds will find they can work remotely via
fibre instead of driving in and out of the city every day. Enable CEO Steve
Fuller says that’s important to his team as the company is mostly owned by the
council which also needs to consider usage of the roads. If only other councils
were so engaged in the UFB’s potential.

We didn’t agree entirely on the government’s review of the
telco act but I can see where Enable is coming from with its views on investor
certainty and I hope they can see what we’re talking about when I say I don’t
want the Commerce Commission sidelined as regulator.

What must be a concern for both LFCs and customers is that
the move to allow Chorus to pocket price its copper lines in areas where it
doesn’t have the UFB contract is unfair and unacceptable. Quite why MBIE
included the concept in its discussion document is beyond me but the idea that
Chorus will be allowed to keep copper prices high unless it faces competition
is bizarre at best and anti-competitive at worst. I’d hate to see Enable and
the other LFCs go to the wall because Chorus can lower its copper prices and
block migration to the UFB (to follow the government’s own logic), especially
given the stark differences in deployment results.

Thanks again to Enable for a great day and a great After
Five.

Next up for the After Five sequence we have a change of
pace. ASB’s chief economist Nick Tuffley will be talking about the state of the
economy and ICT’s role in it and ASB is hosting it at its new building in
Auckland’s Wynyard Quarter.

After that we have Network 4 Learning talking about its role
in education and what N4L hopes to achieve in the coming years once all the
schools in the country have access to high-speed broadband.

Times and dates and places will be posted on the website on
Monday.

 

NB – the newsletter version of this post differs somewhat owing to my poor handwriting skills. 

 

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Election wish list for a digital economy

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Dear politicians,

You’re heading into an election cycle (actually, if I think
about it, you’re always in an election cycle) so here are some things we at
TUANZ would like to see in your policy portfolio.

They’re in no particular order and we’ve mentioned some of
them before but it’s worth getting them all in one list for you to peruse.

1: International cable made a priority

Let’s be blunt – there’s no capacity problem on the Southern
Cross cable, and as a user of international capacity New Zealand isn’t that big
a customer. But we’d like to see the next government offer a significant amount
of support for any new cable operator because more cables mean more choice and
more opportunity for the broader ICT industry.

We’d like to see New Zealand become a regional hub for
content and in order to do that we need to have more cables. NZ to Sydney, NZ
to LA, NZ to Japan, NZ to South Africa, anywhere and everywhere. That all costs
money and it’s the sort of “roads of future significance” spend that only a
government can drive.

Our potential in the digital economy can only be achieved if
we have the connections to the rest of the world and that means stepping up.
I’d be looking for at least $100m of commitment in one form or another to make
a second and third cables a reality.

2: Commerce Commission given back its role as regulator

This is essential. Stuffing about with our regulator means a
lack of investor confidence and that means we as an economy stall in the
market.

An independent regulator, working to a set of rules that we
all know about in advance is the only way to achieve investor confidence in the
sector. You mess with that role at your peril – customers don’t like it,
investors don’t like it and the participants in the industry don’t like it at
all. It’s poor practice and should be shunned.

3: ICT training emphasis increased – ICT courses added to
schedule of those we value

We need to encourage our youth to take up the ICT skills
we’ll need to build this digital economy. At the moment there is little
emphasis placed on any of the IT or telco related disciplines and that has to
change. Government needs to signal that it wants more computer science
students, but also designers, network managers, even cable layers and jointers.
We don’t have the resources in New Zealand today to roll out the UFB
efficiently, if Chorus’s costs are anything to go by, and part of that is
because of the lack of emphasis on this sector in the education market.

Government should make it easy for the kids to pick up these
skills and to realise that ICT is a viable career choice for them.

4: : Support for Pt England/Manaiakalani Trust deployment on
broad scale

All of which starts at a much earlier point in the education
system than we have today.

One Google software engineer discovered Vietnamese primary
school children learning the basics of coding at age nine. The story of
Vietnam’s move into ICT is a compelling one and while we’d probably struggle to
reach the level they have today, we have a tremendous opportunity to learn from
both the Vietnamese example and from our own Pt England Primary School.

As you know, Pt England equips its older children with
netbooks and ensures that all classes make use of these devices as an
integrated part of the curriculum. The results are astonishing, yet we still
have not rolled out a national programme to encourage this kind of thinking.

That is the role for the Ministry of Education and I’d like
to see the next government take the Pt England model and roll it out nationwide.

Don’t forget, Pt England is a Decile 1 school – its parents
are among some of the poorest in New Zealand, yet they realise the benefits of
these devices and can see the improvement in their children’s education. It’s
time we all got on board.

5: Government as the country’s largest buyer of ICT

No other sector buys as much technology as the government,
in all its forms. Why aren’t we encouraging small New Zealand businesses to bid
for contracts? Why isn’t there a clause in every government tender that says
New Zealand companies get priority? Everyone else favours their own products,
why are we so shy about it?

One.Govt is the government project to streamline the
tendering process, yet all too often I hear horror stories of local developers
being shut out of the process.

Take the IRD computer system as an example. The figure of
$1.5bn has been bandied about – an astonishing figure – but imagine what that
spend could do to the local software industry if it was spent on New Zealand
owned and operated companies. Wouldn’t that give us a kick start like nothing
we’ve ever seen? Start talking to the NZ Rise guys to find out how to encourage their members.

6: Content inquiry

It’s high time the government of the day realise the
elephant in the UFB room isn’t the price of copper but the lack of high
bandwidth services that consumers want.

Currently we have two or three relatively small players
offering content locally and that’s not enough to drive demand. We need to see
if there are any impediments to providing content online, and we need
government to get in behind this key driver for uptake.

6: UFB review

We need to understand whether this project is working as it
should, whether the right governance structure is in place and whether the
whole project is being gamed. Currently we face cost blow-outs, low uptake,
expensive and unpleasant installation processes and a raft of other issues that
limit both consumer and retail providers’ interest in the UFB.

It’s too important a project to be allowed to glide gently
off the rails like this – we need to make sure the UFB delivers on its
potential.

7: RBI review

Similarly, we cannot allow rural New Zealand to become a
backwater. It’s high time we started talking about RBI 2.0 and what that means.

Under today’s regime fully one quarter of the population
won’t ever get fibre to the home. Of all the countries in the world –  dependent as we are on the primary sector for
our income – we need to solve this problem. Cost is a major issue, naturally,
but we can’t rest on our laurels with a two-tier internet where I can get
100Mbit/s symmetrical but the backbone of the economy has to make do with a
peak speed of 5Mbit/s.

89: Regional economic development plan off back of UFB and
RBI

We need to encourage people to move to New Zealand and we
need to encourage more New Zealanders to live anywhere but Auckland.

I say this as a JAFA and as an import. I’m here in the city
of sails (don’t mention the sailing) because that’s where the work is, but for
most of us knowledge workers we could and should be based elsewhere.

The UFB and RBI should mean we can all work from Hamilton,
Whangarei, Whanganui, Invercargil or just about anywhere else we care to name.
Coromandel springs to mind. Let us dream of what might be seen in Johnsonville
and Geraldine, because we run the risk of becoming a giant version of the
smaller Pacific Island nations – one city and a collection of under-resourced
villages.

10: Reform of infrastructure consent process

To build this shiny future we need a shiny network and all
too often I hear about projects being delayed because of problems with the
consent process.

Roads are supposed to be utility corridors, yet all too
often the roads get dug up and re-laid without any thought given to UFB
deployment.

Cellphone towers are in desperate short supply in rural New
Zealand yet in urban centres deployment can be held up by local NIMBYs and
their unsupported science of fear.

We need to grow up, realise the benefits these technologies
bring, and make them a priority.

Ten items designed to raise our standard of living and to
ensure you get at least one more vote (mine) if not a few more besides.

What else would you like to see in a political party’s ICT
policy?

The political agenda

/in /by

So David
Cunliffe has taken the ICT portfolio for himself.

This is
quite significant – I can’t recall any other party leader paying this much
attention to the portfolio or the sector itself before.

Cunliffe of
course was Minister of Communications and IT during the previous Labour
government and so is very familiar with the industry, the regulation and the
potential of the sector.

All too
often in the past decade we’ve seen politicians pay lip-service to the idea of New
Zealand being a digital economy. All too often we’ve seen them utter pat
phrases about New Zealand’s potential and how we are standing on the cusp of a
new era.

TUANZ
strongly supports any move to promote New Zealand’s digital capabilities. We’ve
worked alongside organisations like the IITP and NZ Rise to promote New Zealand
companies and New Zealand innovation and we’d love to see our next government
get in behind as well.

We need to
encourage youth into the industry. We need to encourage investors to spend
their money on New Zealand ICT companies. We need to build the infrastructure
to deliver on those services.

ICT has huge
potential for the New Zealand economy and a renewed focus on the sector will be
very timely. If nothing else, Cunliffe’s decision to take on the portfolio
himself will bring the sector into sharp relief and hopefully it will make the
other parties sit up and pay attention.

If nothing
else, it’s put ICT firmly on the political agenda for the year ahead and that’s
great news.