Should rural broadband be funded by taxpayers or telcos?

August 29th, 2014 at 4:00 pm by David Farrar

National announced this week a further $100 million for regional . I certainly welcome the investment, as I have welcomed the investment in fibre to 75% of NZ. I think there are overall benefits to NZ by having a fast connected country.

But there is one part of National’s policy I am not so comfortable with. The fibre to the home initiative is funded by the NZ Government, ie taxpayers. As I said, confortable to have some taxpayer investment in infrastructure.

But the $100 million for rural broadband will be funded by extending a levy on telecommunications companies. And this money will go from them, to possibly their competitors. I’m not so keen on this.

If there is a case for better rural broadband (and there is), then it should be funded by the Government (taxpayers), not by a levy on telcos.

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27 Responses to “Should rural broadband be funded by taxpayers or telcos?”

  1. Black with a Vengeance (1,867 comments) says:

    Subsidise satellite boradband for rural customers. Buy our own satellite if needs be. What’ll 100 mill get ?

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  2. georgebolwing (1,011 comments) says:

    The Australian Government has just released its independent cost-benefit analysis of the Australian broadband rollout. http://www.communications.gov.au/broadband/national_broadband_network/cost-benefit_analysis_and_review_of_regulation/independent_cba_of_broadband

    The Cost-Benefit Analysis compares four different scenarios for the future of fast broadband in Australia: doing nothing, an unsubsidised rollout, rolling out optic fibre to the premises, or using a multi-technology mix. The report found that unsubsidised high speed broadband would deliver the most net benefit to the economy ($24 billion), followed by the multi-technology mix ($18 billion) and then fibre to the premises ($2 billion). The comparative speed of rollout of the multi-technology mix network was taken into account.

    While I have yet to review in detail, I am pretty sure that iot will find that providing broadband to people who actually want it and are prepare to pay the cost is going to the best option, as opposed to the current New Zealand approach of running fibre past lamost every building in the cities, regardless of whether people want to connect or not.

    As far as I am aware, there has never been a CBA of the UFB project in New Zealand. If there was, i would suspect that it would show a similar result to the Australian study: letting the private sector do what it does best is the best apporach.

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  3. redqueen (595 comments) says:

    And by Telco levy we mean an indirect levy on Telco users. So it’s a distribution by existing users, not really companies. How is it really different from other taxes (beyond being limited telecom users)?

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  4. deadrightkev (606 comments) says:

    Telco’s.

    Get satellite internet.

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

    And the levy doesn’t relate to those who actually have rural customers and therefore receive a financial benefit.

    You could be a service provider only selling to metro customers and have to pay, yet a small company focused on rural only pays nothing

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  6. tom hunter (5,130 comments) says:

    Hey, here’s a thought.

    Why not get the farmers and other rural folk to pay for it????

    And I say that as one who will benefit from the proposed Telco/Taxpayer largesse.

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  7. nasska (12,076 comments) says:

    Satellite broadband is offered by Farmside & it’s an option that many farmers & rural dwellers living in the back of beyond have taken up. It’s certainly better than nothing but it’s slow, expensive, subject to weather conditions & requires a clear line of sight to the NW horizon.

    While slow ADSL is an unwelcome fact of life where I live, I agree with commenters above who can’t see why they should pay to fix my communication problems.

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  8. ShawnLH (6,551 comments) says:

    Both.

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  9. JMS (367 comments) says:

    I suspect Farmer Bill is behind this.
    He will leave no stone unturned to redistribute wealth from the urban to the rural sector.
    Farmers already vote National, and we unfortunately live in an MMP environment.
    It’s strategic idiocy. Does he want National to end up in opposition?!

    Best would be not to spend the money at all, but if you’re going to spend it, then at least spend it
    where it’s going to get you some more votes.

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  10. peterwn (3,332 comments) says:

    Correction – ‘should rural broadband be funded by taxpayers or users’. And if the latter, this leads to a supplementary question – ‘should urban broadband users subsidise rural users.

    The correct ‘economic’ answer is that costs should lie where they fall. If as a matter of public policy, the rural community (especially schools) need to be given a ‘leg up’, then perhaps the cost should fall on the taxpayer.

    Interestingly years ago, all electricity customers were levied to provide a fund to extend electricity into rural areas, and all telecommunication users were effectively levied to provide a decent rural phone service (elimination of part time exchange service, wind up (magneto) telephones, party lines and lousy connections – Great Barrier Island being the last upgraded).

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  11. Colville (2,318 comments) says:

    Broadband to farmers is pure bullshit.

    A lamb isnt worth more because a farmer in whykikamoocow can check his internet banking faster.

    There would be a few hundred sites in all of NZ that a case could be piut forward for really fast broadband and those sites should be paying for it themselves. Vineyards? a few tourism sites? what else?

    Its a total waste of $100mil of tax.

    (sorry nasska :-) )

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  12. nasska (12,076 comments) says:

    Colville

    I agree that while traditional sheep & beef farmers find the internet a valuable source of info, the download speed isn’t critical.

    Might be different for dairy although as apparently Fonterra send their suppliers an incredible volume of daily analysis that would choke a slow connection.

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  13. Black with a Vengeance (1,867 comments) says:

    Its more about the farmers kids who want to suck down bandwidth, on social media, streaming movies and whtever the fuck else they want to do as fast as their city slicker cousins can.

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  14. ross411 (902 comments) says:

    Black with a Vengeance (1,624 comments) says:
    August 29th, 2014 at 6:08 pm
    Its more about the farmers kids who want to suck down bandwidth, on social media, streaming movies and whtever the fuck else they want to do as fast as their city slicker cousins can.

    Yes, heaven forbid they get the chance to do the same as you – that is, go onto web sites and write negative opinions as if they were facts. How much worse would we be off then???

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  15. nasska (12,076 comments) says:

    I’m actually a bit concerned about one or two of the cockies further up the valley Sootie.

    With the variation in speed I get throughout various parts of the day I suspect they might have HD porn habits. :)

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  16. Black with a Vengeance (1,867 comments) says:

    ^^^Surely not with all those pretty sheep at their disposal.

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  17. Ed Snack (1,936 comments) says:

    False dichotomy, users or everyone else. And that’s dead simple, users. If they can’t pay there’s no economic case to install it. If Dairy farms need it, they typically turn over millions and can tax deduct the cost. Leave us poor bloody users out of it, why should be subsidising wealthy farmers.

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  18. Black with a Vengeance (1,867 comments) says:

    How much worse would we be off then???

    We’d be way better off i reckon.

    Make a nice change from all these inbred, redneck bluebloods clogging up cyberspace with their mindless chatter.

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  19. nasska (12,076 comments) says:

    It seems that some of the sick bastards want to try something different. :)

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  20. Black with a Vengeance (1,867 comments) says:

    Not everyone who lives in the country is a wealthy farmer Ed.

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  21. Slipster (197 comments) says:

    And they keep on talking about the rest of the country subsidsing Auckland!

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

    The vast majority of people who live outside of ADSL coverage are farmers. Farms are businesses. These businesses generate some very nice profits.

    Why should a farmer expect to be able to buy a new falcon or commodore every second year when townies don’t, but expect that a business essential is subsidised?

    If farmers were prepared to pay $250 per month (which is fuck all in the scheme of things) they would get very good fixed wireless or satellite services with reasonable data caps.

    Hell there is 6 lane motorways in Auckland so why should they be available all through the back blocks of Taranaki?

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  23. Ed Snack (1,936 comments) says:

    BWAV, reference was to dairy farmers as per above comment. Farmers can tax deduct the cost, general users excluding businesses can’t.

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  24. GJM (65 comments) says:

    Not everyone who lives in the country is a farmer. I have a 1 man consulting engineering company. The internet is my lifeline, with everything on line – i have delivered 2 projects in the last year with printed plans – everything else is electronic.
    I am lucky to have Wimax wifi, whcih is usually ok, although my internet bill last month was $600.
    ADSL is a non starter, even though I can see the skytower from my office, and the exchange 4kam away, we have a 1930s phone line whcih is 20km long. Telecom have no intention of upgrading it – so claims of “user pays” is not an option when the only supplier isn’t interested.

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  25. libertyscott (344 comments) says:

    Typical National Party, it took Labour (with Roger Douglas) to end the ag subsidy rorts, now it’s new ones.

    NZ slipping back into the pre 1980s mould of Muldoonist pork barrel politics.

    Here’s an idea, if you choose to live in a remote area, where it costs a fortune to supply infrastructure (but the land cost per acre is low) maybe you should pay for it, like people in urban areas pay for the high cost of land, car parking and tolerate the externalities from higher density living.

    There is no more reason to subsidise this than to provide subsidised bus services to every rural community (as some on the left advocate).

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  26. Tauhei Notts (1,687 comments) says:

    It has always astounded me that a social welfare beneficiary in Clendon can get much faster internet access than a cow cocky in Opunake.
    I think the Opunake cow cocky does more for our country than the Clendon bludger.
    But, I might be wrong.
    I mention this because of an Opunake cocky who visited a cyber cafe in Prague, to see how things were going back on the farm. The speed of that cyber cafe, when accessing his farm’s production figures, blew the cocky away. Her never ever realised that the internet could be so quick!

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  27. Gravelroad (162 comments) says:

    There are many instances where cross subsidisation occurs.

    Most of my considerable road user and petrol tax is used to subsidise motorways in Auckland and Wellington. I don’t have a problem with that. My use of those citizen-good services will be minimal, but at least the opportunity is provided.

    Some of the above comments smack of “old school” resentment towards rural-based, tax contributing families and businesses. Not exactly 21st century thinking is it?
    Oh well, back outside to earn an export dollar off “our farm land” for the benefit of all.

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  28. KiwiGreg (3,278 comments) says:

    Jeez DPF, only two options. How about rural consumers pay?

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