Election wish list for a digital economy


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

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

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

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

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

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

Spectrum auction – a bob each way

The government has released information around the make-up
of the 700MHz auction, although the all-important pricing has not yet been

As expected it’ll be a straightforward auction process, with
ownership (well, management rights) kicking in at the start of 2014.

New Zealand will follow the APT band plan with 45MHz of
paired spectrum being made available in 5MHz blocks. That gives us nine
possible pairs to bid for.

The maximum limit will be two lots of 15MHz each – markedly
less than Telstra’s recent acquisition of 2x20MHz in Australia. However,
depending on demand that restriction may be withdrawn during the auction.

Winners will have a “use it or lose it” clause, a “broader
obligation to extend mobile cellular coverage” and in addition, may well be
able to pay off the cost of the spectrum over a longer period of time, rather
than having to plunk down the cash once they’ve won their lot.

This is interesting because there are clearly two competing
forces at work here. On the one hand, Treasury will be very keen to see a huge
windfall for the coffers. It’s budget time and the government will be keen to
reap some reward for flogging off the rights to valuable spectrum.

In Australia the recent auction brought in just on A$2bn
(down from the expected A$3bn) so if we fudge the numbers we could be talking
about $400-$500m for the rights in New Zealand. The Aussie auction was a bit
different (it included another spectrum range as well) so let’s knock that back
a bit further to $300m.

That’s $100m from each telco – Vodafone, Telecom, 2Degrees –
which is money I’d rather see spent on the network deployment itself.

Which leads to the opposing tension – the true economic gain
from deployment. The Crown puts that at about $2.4bn over the next 20 years,
something that will only happen if the telcos actually deploy LTE as quickly as

To my way of thinking it’s important we get on and deploy
the stuff. $300m today versus $2.4bn over the next 20 years seems a no-brainer,
but I’m no politician.

It will be interesting to see what the government means by “broader
obligation to extend … coverage”. I would anticipate some form of rural
deployment requirement, but that could be a double-edged sword. While Telecom
and Vodafone would cheerfully roll out 700MHz LTE in rural New Zealand (they’ve
both said as much already), 2Degrees will want to focus on the cities and major
population centres first. We will have to work out whether we’re happy to have
Vodafone and Telecom dominate the rural space in the short term and whether we
should reward them for that during this process.

2Degrees has brought tremendous competition to the mobile
market and it would be a shame to see that stymied in the rural space. Having
said that, rural New Zealand needs broadband in a hurry and mobile broadband is
the best way to deliver that in many areas. So we have a conundrum.

2Degrees has its own economic study, from Venture
Consulting, that shows the economic gain of having three mobile players is
worth around $12bn over the next nine years. That’s a lot of money to be gained
from very little government spend – none, to be precise – compared with the UFB
which will cost us taxpayers $1.5bn for a supposed $33bn over 30 years.

The government has released information around the make-up
of the 700MHz auction, although the all-important pricing has not yet been

All of this will be put to the test over the next few
months. MBIE will consult on the auction process, these additional requirements
and how the payment mechanism will work. It’s also looking at whether LTE can
sit alongside fixed wireless services in neighbouring bands, which is a very
good idea.

But pricing won’t be included in this round of consultation.
That will have to wait until nearer to the auction date itself. The Aussies set
their reserve too high (Bill Bennett compares previous pricing very nicely
) and it’s important we don’t scare off any potential bidders – most importantly,

 We haven’t addressed
the elephant in the room either. Maori won a major victory at the turn of the
century and ultimately paid for a discounted chunk of spectrum which became the
backbone of 2Degrees’ network. This time round they’ve been told they’re not
getting anything – $30m  (EDIT: not $35m as I had originally) has been set aside for ICT related initiatives instead –
but there’s been no word yet on whether a legal challenge will be mounted. That
could well derail the whole process.

It’s important we get this right. Mobile services really are
the future of telecommunications in many respects and if we stuff this up now
it’ll leave us with an anti-competitive market that won’t deliver on any of the
economic forecasts.


Telecom has announced its plans for a 4G network rollout. Starting in October, the country’s biggest telco will start with the main centres and work its way out to smaller centres, deploying an 1800MHz network similar to Vodafone’s.

I’ve been using the Vodafone 4G network around central Auckland for the past week or so and two things have become apparent – speed tests suggest quite a degree of variability at this stage, and the speed test app uses quite a bit of data. I’ve hit my 1.5GB limit for the first time ever and still have half a month to go to the end of my period.

The variability is a concern. I’ve only tested when my phone says it has an LTE connection but the range extends from 3.3Mbit/s down, 1.39Mbit/s up through to 88.69/47.22, which singed my fingers ever so slightly. I typically see a score in the 20Mbit/s range for download and about 15Mbit/s up.

This is only a category three device, of course. The Cat 4s are out later this year and both Vodafone and Telecom say they’ll have them on offer – that raises the lid on theoretical maximums to 150Mbit/s which quite frankly is astonishing.

My usage has changed as a result. If I’ve got downtime somewhere I tend to flip through the news stories and now each one pops as if I were in the newsroom itself. No lag whatsoever. I’ve had to hit refresh a couple of times thinking the Stuff app had stuck again on old news, but no. It was brand new news. Even BBC video clips load with an unheralded ease.

Which of course means I can watch more, and do more, with my phone. Which means I use more data. Which means I will need more data and if Telecom can offer that, I would hope it will see the competitive nature of the telcos brought to the fore, which will be very nice indeed.

Both Telecom and Vodafone have said they will roll out 4G services on the RBI towers and this for me is the best part of the whole launch. Rural New Zealand is poorly served for broadband and mobility – having both delivered in a timely fashion will be great news. Better still, once you’ve got a tower in place with fibre backhaul the speeds per customer off each of these towers should be really quite good. Your rural LTE experience could well be better than the urban equivalent, with its higher density of users per tower.

Because the towers are paid for as part of the RBI programme the cost of rollout is greatly reduced and that means the telcos will be more likely to put kit on those towers.

But both telcos have said they’ll need to wait for the auction of the 700MHz spectrum before they do so. My understanding of radio frequency issues borders on the ignorant (although not as ignorant as those cell tower protestors) but my understanding is that the footprint of each tower at 700MHz is far superior to that of 1800MHz and that the ability to operate over rural landscapes (trees, cliffs, water) is much better.

Vodafone tells me the amount of spectrum available will influence the speed capability. It has a lot of 1800MHz spectrum and will end up with a lesser amount of 700 so that too will impact on the speeds and throughput, but all told whatever the rural user gets it’ll be a lot better than today.

So where are we at with the auction? The minister has said we’ll have one (step one) and that they’ll announce details later on this year (step two) but we’re none the wiser as to how the auction will be run, what size blocks of spectrum will be allocated or what the reserve price will be.

In Australia the reserve price set by government was so high Vodafone Australia pulled out of the auction entirely.

There will be a degree of tension within the government regarding the auction. On the one hand, Treasury will (I’m sure) be pushing the government to maximise its return on investment. That is, make sure the auction brings in as much money as possible. Perhaps we’ll see one block of 20MHz and two of 15MHz (or similar) in order to push bidders towards the bigger block. The more spectrum the more throughput so that will be attractive and that will drive up the bidding.

On the other hand, the economic value of the spectrum lies mostly in its use and the less the telcos spend on spectrum the more they’ll have for network deployment. The cost of spectrum in the UK in 2000 saw BT almost bankrupted and in Europe several telcos did indeed go to the wall. The rollout of 3G was far less aggressive than we’d hoped and the user uptake took several years to get going.

Three equally sized blocks would lead to only a couple rounds of bidding while the three telcos sort out which one is going to buy each block and then they’ll stop bidding. That means less income for the Crown but a faster deployment of network in rural areas.

TUANZ would like to see three equally sized blocks and a reasonably low reserve price to encourage the telcos to deploy. My concern is that 2Degrees be squeezed out of the 4G race with too high a price and that would be a disaster for the industry as a whole, particularly given how much change a truly competitive industry has delivered.

TUANZ calls for a national digital architecture

Telecom is laying off a large percentage of its workforce and as awful as that is for those involved, the company needs to do this to become competitive in the marketplace.

We have the government investing over a billion dollars in the fibre network and a couple of hundred million in rural broadband, matched and exceeded by the industry’s own spend in the area, yet we don’t have any way of articulating just what that will do to the economy of New Zealand as a whole.

We have research which suggests that ICT will overtake tourism in terms of share of the GDP in the near future, yet we’re also told that only 30% of businesses have a website and a large percentage of business owners don’t see the benefits of digitising their companies.

We have some schools making tremendous use of technology in classrooms and other schools where parents lobby to ensure they don’t have to buy iPads for their kids.

We have politicians who still don’t understand the basics of how the internet works and who treat it as some kind of bargaining chip in negotiations with the US over trade access when ICT could become as large and as important to the New Zealand economy as dairying or dead animals.

If New Zealand is to take its place in the global digital economy we need to consider the ICT industry, the investment in infrastructure and in education and how we tie it all together, otherwise we will struggle to keep our heads up. We need to pull in the same direction and that takes coordination, it takes a strategy. It calls for a plan.

In 2008 TUANZ called for a national digital architecture to be formed, providing some kind of cohesion and coordination for the country as a whole and the time has come to revisit the issue. We need a plan to ensure we take advantage of the skills and experience we have, to invest in the areas that will provide a return and will provide growth in the economy. ICT is clearly the rising star, but we have to do more than pay lip service to it.

What would you like to see in such a plan?