Can the most rural 25% of NZ really get fibre for $200 million

May 19th, 2014 at 2:00 pm by David Farrar

The Internet Party has a policy to extend from the current proposed 75% of NZ homes to 97.8% of NZ homes. They claims this can be done for a Government investment of $200 million.

I am a supporter of getting faster broadband out to rural NZers. Fibre is the best broadband technology, and is the preferred option – if affordable. But I have very significant doubts that you can connect up most of rural NZ for anything close to a $200 million subsidy.

First of all consider that $1.5 billion is barely enough to subsidise fibre to the most urban 75% of NZ. So if the most urban 75% needs $20 million per 1%, it defies belief that the rural 23% could be done with $8.7 million per 1%.

Most reports say rural fibre costs six times as much as urban fibre.

How much would it cost? This would mean laying fibre down almost every road in NZ. We have over 93,000 kms of road. Fibre was estimated to cost by the NZ Institute in 2007 to be around $150,000 per km.

A report by Dr Murray Milner on fibre costs also estimated open trenching costs of $120,000 to $150,000 per km (and up to $600,000 per km in very difficult areas)

That would be be a cost of $14 billion to get fibre down every road in NZ. Now I know the policy is only 97.8% but you get the general feeling that a $200 million subsidy will not get you anywhere near 97.8% coverage.

I think fibre can be extended out beyond 75%. But there comes a point at which the cost is too prohibitive, and satellite and wireless technologies are a better investment.

The 75% target for fibre is (from what I can tell) the most advanced in the world. When complete in a few years, I don’t think any other country will have fibre available to such a high percentage of the population. So lets not think 75% is bad – it is top of the class. Now again, I think we should debate what to do with the remaining 25%. But a policy that says you can get 98% of the population connected up to fibre for a mere $200 million extra subsidy is not credible – by a long shot. You can’t just wave a wand.

If the did want to credibly contribute to the debate, then maybe they could fund an independent study of what the costs are of various broadband technologies to the most rural 25%, and then we could focus on what is the best solution.

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37 Responses to “Can the most rural 25% of NZ really get fibre for $200 million”

  1. David Garrett (7,702 comments) says:

    Call me an idiot (I have certainly been called worse) but can someone explain to this 55 year old male with a couple of degrees ( I say that just to indicate I am not stupid) just why “ultra fast broadband” is such a wonderful boon to the economy?

    I run a small 1.5 man business…my clients are mostly overseas…I receive 99% of my work by e-mail.. “add value” and then send documents on to Tonga by e-mail, for humans to do old fashioned things with those documents.

    I live in the country, and so have “ultra slow” broadband (slower when everyone else is working, faster at night and in the early hours)

    Can someone explain in words of two syllables or less how having “ultra fast broadband” will benefit me? Or businesses like mine?

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  2. tvb (4,561 comments) says:

    A cheaper option may be a cellular service rather than Under ground. Maybe VDSL might do in some cases

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  3. lolitasbrother (774 comments) says:

    More crap from Farrar NZ Nat party weak.
    I pay $130 to Vodafone NZ, and $12 to Thailand for the same one month , all over the world Internet its dropping like the drongo Farrar.
    Go on Farrar edit here confused man, get head out of clouds

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  4. tas (655 comments) says:

    After living in the US, I appreciate how nice fast internet is (I get 20Mb/s at home and 800Mb/s at work, both effectively unlimited). Streaming movies, using servers remotely, cloud storage, and nice clear video calls are great. I’m sure more and more applications will be found — we never knew we needed them until we realise we can’t live without them.

    But I wonder why NZ is investing billions in fibre between your home and the exchange, when it seems the bottleneck is getting data in and out of the country. In most places ADSL is fast enough, but the data cap is tiny. That’s because ISPs pay a lot for using the two cables that connect NZ. NZ users are paying over $1 per GB, while wholesale rates in the US are $0.05 per GB.

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  5. Matt Long (90 comments) says:

    Actually fiber can be strung on power poles for a tiny fraction of that cost. Work by North power on the issue of acces for stringing fiber on their rural network has been stalled in Wellington for a number of years now.

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  6. David Garrett (7,702 comments) says:

    lolita: Please say you are on something right now…otherwise we might really start to worry on your behalf…

    ….and some moron gives my first comment a downtick…

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  7. igm (1,413 comments) says:

    The only policy of the Internet Party is for their obese criminal leader to dodge extradition for dishonest behaviour, and I would be interested why the sudden parting of the ways with his dial-a-bride . . . bet they are covering bases in case he can’t influence a politician to block proceedings. See ya fat boy!

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  8. Redbaiter (10,481 comments) says:

    Hey Dave, who is the whole man you have working with you?

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  9. MarkF (102 comments) says:

    @Matt I was thinking exactly the same thing as I read the item. Stringing fibre on power poles couldn’t be much more than twice the price of the fibre itself, surely.

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  10. David Garrett (7,702 comments) says:

    Russell: That’s a good one old boy! Always the funny man…how many people in your Party now old chap?

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  11. Redbaiter (10,481 comments) says:

    $150,000 per kilometre?

    Thats with govt compliance and iwi consent costs built in.

    Without that its about $10,000/ kilometre.

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  12. Kea (13,580 comments) says:

    “Most reports say rural fibre costs six times as much as urban fibre.”

    No problem. Put the cost up for Aucklanders to cover it.. The rest of the country has to pay a tax on fuel to pay for Aucklands roads, and billions are spent on rugby piss ups and boat races to benefit Auckland.

    So why not subsidise the most productive sector of NZ. Cow cockies.

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  13. anonymouse (705 comments) says:

    Given that the RBI contact was for $300 million to get faster B/Band out to cover an addional 252,000 households ( 14% of total dwellings) – and it was mostly done with wireless

    To come out and say they can fibre connect all these homes + another 150,000 homes for only $200 million is totally fantasy

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  14. freethinker (677 comments) says:

    Has anybody asked the Internet party for a breakdown of their figures and if they are talking fibre to the door or another technology.

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  15. martinh (1,272 comments) says:

    Are foreigners buyers really only 11% max of auckland including ex pats?
    Why dont you do some balance for once

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  16. David Garrett (7,702 comments) says:

    So…15 comments on this thread and no-one can tell me exactly how ultra fast broadband will be the best thing for the economy since the telephone….interesting…

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  17. Ed Snack (1,941 comments) says:

    Answer, No. Next question ?

    $200M wouldn’t even cover, say, Hawke’s Bay.

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  18. burt (7,440 comments) says:

    Obviously we need to increase the cost of broadband in cities so that people who have decided to live miles from a city are not impacted by their lifestyle choices.

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  19. ross411 (906 comments) says:

    David Garrett (5,356 comments) says:
    May 19th, 2014 at 3:03 pm
    So…15 comments on this thread and no-one can tell me exactly how ultra fast broadband will be the best thing for the economy since the telephone….interesting…

    Your original question was how it would benefit you, or people in _your_ situation. It is another thing whether it is the best thing for the economy.

    Look at the telephone. Look at the older cell phones that could only take calls. Look at the more recent ones that download maps and stream video to and from the user. Look at the millions and billions that are made from building on the opportunities that the functionality of modern technology combined with modern internet usability has enabled. As the usability increases and resources become more available to build on…

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  20. Kea (13,580 comments) says:

    burt (7,207 comments) says:
    May 19th, 2014 at 3:23 pm
    Obviously we need to increase the cost of broadband in cities so that people who have decided to live miles from a city are not impacted by their lifestyle choices.

    Any comment on the billions funneled into Auckland transport to fund their lifestyle choices ?

    Nah, didn’t think so.

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  21. Viking2 (11,686 comments) says:

    In rural east Papamoa they are stringing glass between poles as they have done in central Tga.
    Why do we always choose the expensive option?

    DG. How about if you could talk face to face with your customers?
    Up to 8 at a time and all on the same page and participating and have another 50 listening in.
    Now I know that Tonga is not a large metropolis but there are other places in the world.

    I have Software that does that. And it can share a white board, share documents with different people working on the document, and a few other bits like up to 10k email postings a day. Oh and video’s.

    Sort of software companies big and small can use.
    Cheap as chips as well. Bloody good stuff.

    Want to know more pm me at vikingonmars@gmail.com

    You can even use it on broadband with reasonable success if your downloads are 5 upwards.

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  22. burt (7,440 comments) says:

    Kea

    I’ve not made comment here in this thread about the socialist mentality of using other peoples money to deliver things to “special” groups identified as unlikely to vote for you.

    But rest assured – I don’t support the entire country funding transport in Auckland. It’s an Auckland problem and only gets made into a national problem when a self serving political party isn’t polling well in say … Auckland.

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  23. Monique Angel (297 comments) says:

    It’s depressing that the so called “Internet Party” proposes trenching fibre to the door of everyone in a clutch of sparsely populated islands. A much cheaper and more suitable solution would be the provision of a Wireless Internet service from central “nodes” which would capture 100% of the population. This already happens in alpine townships where trenching fibre to the door is nigh on impossible without excessive capital outlay.

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  24. burt (7,440 comments) says:

    Monique

    Nothing is impossible when campaigning to win an election.

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  25. Monique Angel (297 comments) says:

    In that case Burt, I propose a top up to family incomes and tax free state loans to fund higher education

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  26. burt (7,440 comments) says:

    Monique

    I think the idea tax free state loans has already been trump’d by Labour who are going to give free houses and overseas holidays instead of KFC vouchers this year.

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  27. Dave_1924 (121 comments) says:

    @ DG – the business case for Ultra Fast Broadband is in my mind a bit dubious. There are claims it will lift productive by making email, files and web pages move around much quicker. Claims it will promote new business ventures through the power of lightening connectivity etc etc.

    I’m a fence sitter on it – I argued a more rational thing to do was extend the Chorus Cabinetisation program so no urban house was more than 300 metres from a cabinet and then install VDSL modules in the cabinets and hey presto pretty quick broadband without having to lay a lot of fibre as it uses the existing copper. then wait 5 years to see if wireless throughput takes another big step forward and then look at Wimax type distribution….

    But rolling out Fibre is not a dumb thing to do I just thought we could have sweated the copper asset a bit more is all.

    And as for 200 million to take fibre to rural NZ? Really!!!RBI is primarily Wireless technology because neither Voda or Telecom thought rolling fibre to locations far and wide stacked up – too expensive.

    And re the comment above above Broadband in NZ v rest of the world – its getting cheaper and cheaper in NZ over copper measured by $$$ per GB…. and comparing to Thailand were you have millions and millions of people living in big cities like Bangkok is a joke, the economics are completely different

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  28. nasska (12,111 comments) says:

    I don’t claim to speak for all other rural dwellers but neither I nor my neighbours see how fibre is going to make a great deal of difference to our businesses. What would be a game changer would be a reliable source of electricity to run the bloody computer with but so long as Powerco own our distribution network I see little hope of that.

    They would be the best example available on this planet to show that capitalism only works where there is competition.

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  29. Colville (2,319 comments) says:

    $150,000 per kilometre?

    Thats with govt compliance and iwi consent costs built in.

    Without that its about $10,000/ kilometre.

    Wrong.

    The ducting for the fiber is more than $10K/km even before you start up a digger or grundomat.

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  30. David Garrett (7,702 comments) says:

    Viking: thank you for that answer…while that sort of capability wouldnt make a lot of difference to me, I can see how it would for other businesses..

    Nasska: You and I are both rural dwellers I think…I smiled when I read your post. When I came out here eight years ago power cuts were an almost weekly occurrence…and then of course it doesnt matter how fast your broadband is, all capability to work ceases (at least for a lawyer; not so much for a farmer who can go and do something else)

    I have to say I am still not wholly convinced of the supposed “game changer” ultra fast broadband is….While Viking’s example is amazing, I wonder how many business could make use of such capability…

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  31. Colville (2,319 comments) says:

    nasska.
    If you love Powerco so much move to HawkesBay and you will get Unison.
    A bigger bunch of useless cnuts never did grace this earth.

    Oh and yes…another monopoly position!

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  32. OneTrack (3,377 comments) says:

    dg – “I have to say I am still not wholly convinced of the supposed “game changer” ultra fast broadband is…”

    Truth be told nobody else is either. That’s why everybody? went out of their way to support the Commerce Commision in their bid to chop the legs out from under Chorus and help stall their Fibre rollout, in their rush to get a few dollars off copper broadband (which probably wont be passed on to end users anyway).

    But, but, everybody wants fibre, blah, blah. No they dont, they want cheap stuff, and what they have is enough to check their facebook pages with. The (lack of) user takeup of fibre is just proving the point.

    This is what happens when big government interferes in the market.

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  33. Southern Raider (1,777 comments) says:

    A fixed LTE network could easily deliver 20M down and 10M up which is just below the entry level Bitstream 2 UFB service and could be done for $200M.

    Fibre is $1,500/m and not many people to share this cost across in the country. There is many farms 10km plus off the main road. Just what business case is the Internet Party looking at that justifies spending $1.5M to connect one farm for a return of maybe $50 per month.

    These guys make the Green Party look financially literate

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  34. Tauhei Notts (1,688 comments) says:

    The slowness of rural internet.
    I recall the story of a cow cocky from near Opunake who was in Europe a few years ago.
    He went into a cyber cafe in Prague; I’ll just check what the farm is doing!
    He was astonished at the ease and speed of the computer getting his farm’s production figures off the Fonterra web site.
    What was an eight minute exercise at home was done in seconds.
    I explained to him that welfare beneficiaries in Mangere have much faster internet access than do Okato gumboot dancers. And John Key’s government is not keen on changing that scenario. For there are many more votes in Mangere than there are productive dairy farmers in the environs of Opunake.
    Am I the only person who thinks that a dairy farmer from Taranaki does more for our country’s prosperity than does a sickness beneficiary from Manurewa.

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  35. Colville (2,319 comments) says:

    Souther Raider.
    $1500 per meter?

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  36. burt (7,440 comments) says:

    Tauhei Notts

    Am I the only person who thinks that a dairy farmer from Taranaki does more for our country’s prosperity than does a sickness beneficiary from Manurewa.

    Undoubtably, they pay tax for a start.

    However should we subsidise them because they pay tax ? How about the tax payers pickup the tab for transporting their milk to the processing factories as well eh. I mean really it’s not fair that farmers need to pay for their product to be transported a fair distance from their farm. Their farm, their centre of the universe, the one that all of us should dip into our pockets for to make sure they don’t suffer any penalty getting online because they’ve chosen to live a distance from a city. Perhaps they would like some city property rates to go with the farm ? If they pay city rates on their land we can be sure to afford the cost of piping them city speed broadband.

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  37. Southern Raider (1,777 comments) says:

    Yes Colville that’s a standard industry rate for new trenching fibre. More if you have harsh terrain like volcanic rock.

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