Kiwiblog

Brian Fallow makes some good points on broadband:

Going further than the current programme of laying fibre to the cabinet, taking fibre to the home is estimated to cost a further $6.2 billion, of which the Government is contemplating stumping up about a quarter.

Brian is quoting the Castalia report, which I covered on Saturday. That estimate is based on using telcos only to do fibre to the home. It has been estimated the cost drops by around $2 billion if you bring utility lines companies into the equation.

But we have something of a tradition of being penny-wise, pound foolish when it comes to infrastructure investment.

We are paying a stiff price for neglecting investment in the national grid.

Auckland would be a better-functioning city right now if it had gone for light rail when Sir Dove-Meyer Robinson advocated it and/or had completed its highway network.

Indeed.

Sceptics of the Government’s plans are on firmer ground perhaps when they question whether they would pay off in lifting the country’s unimpressive productivity levels. Surely fibre to the workplace is what counts there.

However the boundary between home and workplace is becoming fuzzier.

If the aim of this exercise is to deliver infrastructure that will be as important for the coming century as roads and power lines were for the last one, then part of that future-proofing should take account of carbon costs and the gains to be had if telecommunications can be substituted for transport.

When your home Internet connection means you can access the office LAN as quickly as if you were in the office, and when it means you can be video-conferenced to one or more colleagues more quickly that it would take to walk down a corridor, then you will have a significant exodus of people going from work to working from home.

Details about how it will be structured and intersect with existing players are on the non-existent side of scant at this stage but Communications Minister Stephen Joyce is promising more information within a matter of weeks.

“It is a plan to proceed over 10 years, to achieve a step change and do it faster than the market would otherwise do it,” he said.

“The argument is it provides a competitive advantage to New Zealand as a whole to get this infrastructure in ahead of some other countries.”

It is not too much of a simplification to say that, historically, the things which have really propelled the New Zealand economy forward have been technologies which overcome or mitigate the tyranny of distance, like refrigerated shipping in the 1880s or jet travel in the 1960s.

It is hard enough to achieve productivity gains through economies of scale or scope given our small size and remoteness.

We are the only OECD country that is both very remote and very small. To stay competitive we do need to be ahead of the pack when it comes to technologies that, as Steve Joyce said, mitigate the tyranny of distance.

The NZ Herald has an exclusive preview of a report being released at 10 am today, that was commissioned by Telecom, Telstra-Clear and Vodafone.

As readers will know, National was elected on a major promise of spending $1.5 billion to help ensure ultra high speed broadband to 75% of NZ homes.

The three telcos have released a report which basically says the Government should not spend $1.5 billion in this area, because all their existing offerings are adequate. I’ll try not to laugh.

Now you have to consider how unusual it is for the major players in a sector to try and stop the Government spending $1.5 billion in subsidies, rather than try and get some of the $1.5 billion.

So why would the big three be fighting against a huge investment in their sector? Because they are scared shitless that it won’t go to them. They are very worried that electricity lines companies may get to provide most of the infrastructure for fibre to the home. And this means the telcos would have to compete in offering services over that fibre network, plus offer complementary services over mobile and wireless.

Labour have been running what is basically a blatant lie for nine months, about National’s policy. They have been scare mongering that National is just going to give the $1.5 billion to Telecom, which would help perpetuate Telecom’s market dominance. Now ask yourself, would Telecom be partnering up with its two biggest rivals, to fund a report that argues the $1.5 billion should not happen – if Telecom thought there was any liklihood that $1.5 billion would be coming their way?

Now I don’t know what the Government is going to do. I’m not even sure if they have made decisions yet. But I think Liam Dann has it somewhat wrong in this article:

Bill English and John Key will already be having serious doubts about their ability to commit $1.5 billion.

The world has changed dramatically since Maurice Williamson – then opposition spokesman on telecommunications – made the $1.5 billion promise.

It was John Key, not Maurice Williamson, that made the promise. I was there at the speech. John was taking, and Maurice was sitting next to me clapping furiously – like all of us. Now this is not to say that Maurice was not a passionate advocate of the policy – he was, and he helped make it happen. But anyone who suggests John Key is not committed to this policy is wrong (in my opinion). It is no secret that John was a very strong advocate for it.

And while the credit crisis is an issue, the Government has made clear that they are looking to bring forward infrastructure spending, not reduce it.

Dann says the benefits of fibre to the home must be jobs, not just movies on demand. I agree. I think fibre to the home will allow many businesses to reduce costs as staff can work from home, which provides both economic and environmental costs. Dann says:

And cost-benefit debate needs to focus on jobs not, unfortunately, speed for the home user.

Last month a report by the Economist noted two studies which found some evidence of increased broadband spending equating to increased employment.

Washington-based Brookings Institution concluded that for every percentage point increase of broadband penetration, employment increases by 0.2 per cent to 0.3 per cent per year. But that is not huge growth.

Not huge? So if we get 10% more broadband penetration we will have extra employment growth of 2% to 3% a year. That is an extra 40,000 to 60,000 jobs a year.

I look forward to reading the full report. There certainly are difficult issues for the Government to deal with. For example if most of the funding does go to electricity lines companies, it would be desirable for this not to hinder current investment plans by the Telcos. I am sure the Castalia report will be a useful piece of research, as they had access to the telco’s commercial data.

Chris Barton looks at the Government’s fibre plans:

We do know fibre-optic cable is at the centre of Joyce’s rewiring plan and the mechanism to get there is the much-vaunted public-private partnership.

So far so good. But just who does Joyce plan to partner with? And will he be seduced by Telecom’s wiles?

There’s no doubt Telecom would love to bed Joyce. Such a tryst – Telecom building, operating and no doubt, wanting to own, the new wires – would secure the firm’s monopoly dynasty forever.

I think Mr Barton needs to take less Viagra before he writes his column

But it’s also clear such a dalliance would be a terrible mistake. Not to mention a betrayal of voter trust and a very poor return on taxpayers’ money.

And getting the maximum return on the Government’s investment is crucial.

If Joyce is still uncertain about what to do, he should re-read the very fine piece of analysis prepared for Internet New Zealand by Network Strategies. There, in glorious return on investment detail, is a simple answer to who the Government should partner with instead of Telecom – electricity lines companies.

Why? Because if New Zealand wants to rewire its aged telecommunications to a fibre-optic future, the electricity lines companies are the cheapest, most efficient way to do it.
Plenty of power poles and ducting are already going by our homes, already with resource consent, making it much easier to string or trench fibre to our doorsteps. How much cheaper? Without the lines companies, Network Strategies estimates a fibre network will cost $5 billion.

With the lines companies on board, the cost drops to $3 billion – making the Government’s $1.5 billion investment look like a very realistic sum to fulfil its election promise.

A $2 billion difference is far from insignificant. I am of course on the Board of Internet New Zealand, but we were as surprised as anyone I think that the research turned up such a massive price difference.

There are other reasons why this is very good idea. Most of the 27 lines companies in New Zealand are owned by consumer trusts – an ownership structure that tends to be sympathetic to longer payback periods and fits well with local initiatives that recognise the importance of broadband to a region’s economic and social wellbeing. And some, such as Vector and Counties Power, are already providing fibre to homes or businesses.

And even more importantly, lines companies do not tend to be in the business of providing services over their lines – they are an access provide rather than a service provider. This is actually crucial as you then avoid a vertically integrated monopoly, and then multiple service providers can comptere and offer different packages over the fibre.

But there are two problems. The first is what such a network would do to Telecom’s share price. There’s no doubt it would have an unsettling effect. But if the new wires are “open access”, it’s hard to see how Telecom can complain too much.

Open access means companies get equal access to the infrastructure on non-discriminatory terms and conditions, so all comers are offered the same wholesale products or services at the same price and equivalent conditions. In other words, consumers get choice and Telecom competes for business with everyone else, probably getting a whole lot more efficient in the process.

The impact on Telecom is a real issue – not just in terms of share price, but also their fibre to the cabinet plans. Would they continue? Would they sell Chorus if the line companies get the nod to build the fibre to the home network? Could there be a win-win – maybe some partnership with lines companies and Telecom/Chorus? So many issues, which is why a decision should not be rushed.

The Herald reports on Telecom’s announcement that it will roll out VDSL2 to it cabinets.

If you live within a km of a cabinet in theory you can get 50 Mb/s download speed and 20 Mb/s upload. In reality it will be less than this due to congestion on the backhaul.

It’s good to see Telecom making this available.  The price details will be interesting, once known.

InternetNZ released today the first ever comprehensive costing of options for achieiving ultra high speed broadband to at least 75% of New Zealanders. This was defined as a minimum 100 Mb/s for residences and 1 Gb/s for businesses.

The report is 150 pages of detailed models and costings. It was done by Network Strategies, who are an independent leading firm of telecommunication economists.

There are lots of technical details on whether one should build just layer zero or layer one infrastructure, whether it should be GPON or Ethernet or even peer to peer. The techos will find that part interesting.

But the real “big news” in the report is that it may be billions of dollars cheaper to build a fibre network through existing utility (electricity lines) companies, than through expanding current telco networks.

The major cost of fibre deployment is the cost of placing it. And lines companies already have networks of ducts plus overhead cables, and very importantly resource consents. If 50% of fibre deployment can be done using existing utility infrastructure (and some estimate as much as 70% could be done this way), then the total cost is projected to reduce from $5 billion to $3 billion and the cost to the Government from almost $4 billion to under $2 billion.

Now this is only one report, but hopefully a useful contributor to the debate over how to best achieve the Government’s goal of ultra high-speed broadband to 75% of NZ. But one reason I am quite enthusiatic about the path it suggests, is because it makes vertically integrated monopolies far less likely. You see none of the electricity lines companies offer telco services (such as Internet access, TV, phone). They would operate any fibre network on open access principles to all telco providers at a standard wholesale cost (estimated to be around $40/month). In one sense very similar to how Citylink have operated – they just provide the fibre, and let ISPs offer the services over it.

This actually has the potential to reverse much of the regulation in the telco sector. If there is infrastructure competition or separation, then you probably don’t need Telecom (for example) to be giving competitors access to its networks. Regulation is what I call a necessary evil. If one can get the infrastructure setup in a way so there is less regulation, that is a good thing.

There are literally dozens of big questions facing the industry and the Government, in working out a way foward. This report does not seek to answer them – it is a first step. Issues such as national vs regional, ownership, existing investment plans, the role of Chorus, RMA issues, funding, are all very significant ones.

It is going to be a very exciting time over the next few months, as the Government’s plans get finalised. Some people are sceptics, but I think there will be significant economic and environmental benefits to NZ if we get a fibre network in place ahead of most other countries.

Paul Winton writes on broadband plans:

In early 2008 both Labour and National admitted that, for communications, ‘the market’ just wasn’t going to get us there. In March, National trumped Labour by announcing an ambitious $1.5 billion investment into fibre-to-the-premise broadband to 75 per cent of premises over the next six years. About a month later, Labour announced a smaller investment of $325 million into broadband infrastructure.

Neither plan is perfect. Relative to National, Labour’s plan lacks scale and clarity of outcomes. Conversely, the National plan could significantly change the landscape if designed well, but equally, if done poorly could scare away investment.

Which is why presumably National has said it will get expert advice on the best way to implement a fibre to the home network.

Telecom’s slow rollout using copper technology is perfectly reasonable for them. They’re going as fast as shareholders will allow them to and there’s no reason for them to accelerate it.

Sadly for New Zealand, if we continue to roll out fibre at this rate we won’t get the sort of capabilities our close Asian neighbours like South Korea have until about 2040. Many in New Zealand think a thirty-year lag is a bit much to swallow.

There is no doubt we will end up with fibre to the home for most of NZ. The question is by when. Do we want to be one of the last OECD countries to have widespread fibre, or one of the first? Will there be economic and environmental benefits from early deployment? I think so obviously.

So what happens first under, say, a National-led government?

The first thing is to get people around the table. Those people would probably be Telecom, perhaps a consortium of lines companies and a group from overseas. There will need to be some form of RFP process, development of a long-term regulatory framework, and finally a clear assessment of what the government dollar is investing in and what returns it will get.

If designed well, with the good of the country in mind, the National programme will launch New Zealand to the front of the pack globally and create a competitive, world-class communications sector.

If done poorly we will continue to lag behind our peers and suffer the consequences of living in a nation with communications asthma.

Not much there I disagree with.

NBR have an NZPA story on National’s policy programme. Details are:

• Tax policy to be released in first week of the campaign – is locked in and takes account of worsening economy
• KiwiSaver policy and Working for Families policies to be released
• These would be minor changes to current settings only
• Planning for a 8 November election
• Would introduce an RMA Amendment Bill within 100 days of office
• Aims to make the Emissions Trading Scheme a priority and pass legislation within nine months of office
• Stressed no change to the $1.5 billion fibre to the home broadband infrastructure proposal

All sounds good.

A very welcome announcement by Vodafone that it will extend its 3G network from 63% of NZ to 97%.

3G gives people broadband speeds of up to 7.6Mb/s.

The next technology step up is HSPA (which I am trialling) which goes up to 28.8Mb/s.

Of interest is the next step after that, and that Vodafone is looking to go with LTE instead of WiMax which has been much hyped. LTE will give speeds of over 100 Mb/s. But note these are connection speeds – very different to actual speeds.

The Commerce Commission report on broadband performance in Q1 of 2008 is here.

The retail market shares are:

1. Telecom 65%
2. TelstraClear 11.5%
3. Vodafone 9.7%
4. Orcon 7.2%
5. Slingshot 6.5%

The best city in terms of broadband performance was Hamilton with Auckland and Dunedin 2nd=, then Wellington and Christchurch. Here are the top five for each city in order:

Auckland

1. TelstraClear DSL
2. MaxNet
3. Kiwi Online
4. Inspire
5. WorldxChange

Hamilton

1. Orcon
2. Compass
3. WorldxChange
4. Telecom
5. Slingshot

Wellington

1. TelstraClear Cable
2. MaxNet
3. Inspire Net
4. TelstraClear DSL
5. Actrix

Christchurch

1. TelstraClear Cable
2. Snap
3. MaxNet
4. WorldxChange
5. Inspire Net

Dunedin

1. Orcon
2. Compass
3. Telecom
4. WorldxChange
5. Vodafone

They do not just mention speed, but a variety of performance indicators.

My home connection in Wellington is with Ihug, now Vodafone. They are third lowest in Wellington and I do have to say since they were taken over I have found the performance disappointing. I love their mobile products, but may look at moving my home connection at some stage.

Peter Griffin blogs:

All up the Government has committed around $500 million today to broadband infrastructure investment most of it to be distributed in the same way past funding in this area has – through contestable grants and through direct funding of hospitals, schools and government departments.

It’s certainly not visionary, ambitious. That level of funding isn’t going to change the broadband landscape. It is incremental change that runs the risk of spawning numerous projects that overlap and don’t share a common outcome. …

Labour never indicated it would try to outspent National on broadband, but surely the government could have come up with something more inspiring to convince us that growth and innovation is actually valued in this country.

Ernie Newman from TUANZ:

The highlight is expenditure of $325 million over five years in the framework of a Broadband Investment Fund based on contestable grants available to any legal entity including local government, power and phone companies, and community groups.

There will be quite a complex application process with a gap of almost year from the time an applicant submits an EoI in August, until the result is known in June 2009. The process for a group wanting to lodge an application embraces applicant support, an EoI, an application, analysis and recommendation within the MED, a recommendation by a group of officials, sign-off by the CEO of the MED, and final sign off by Cabinet. It sounds very much like the “Broadband Challenge of old with significantly more money, but with bit more bureaucracy tacked on.

The handouts included a flow-chart to show how decisions would be made on funding. I joked to Ernie that any process which needs a flow-chart to explain it is too complex!

There’s also $15 million in there as capital expenditure towards a new trans Tasman cable. On its own that would get the cable about to Somes Island, but obviously it will be leveraged by private sector investment. Its a good signal.

The investment in international connectivity is welcome.

On the positive side, the fact that money has been allocated is a positive sign. What we have now is cross-parliamentary support in concept for significant public money to be spent on telecommunications infrastructure. That is a big breakthrough from a couple of years ago.

But to be honest, I feel a bit underwhelmed. The amount of money is pretty sparse and I guess I was anticipating more. The administrative processes are complex and slow – I foresee rosy times for the burgeoning Consultation Industry with lots people huddled in interminable meetings. By the time the consultation, evaluation and analysis is done, hamlet by hamlet, will the amount of money left to dig trenches through the streets of Waitotara cut the mustard.

My reaction is similar to Ernie’s. I was expecting more vision and more funding. It’s not about this being something “nice” but about the environmental and economic benefits we can gain from widespread fibre deployment.

InternetNZ says:

InternetNZ Executive Director Keith Davidson welcomes any increase in public expenditure on broadband, which he describes as critical infrastructure and essential for ongoing economic growth. The announcement confirms that the debate has moved to decisions on “when” rather than “if” better broadband is required

“A clear difference has emerged between Labour and National as to how they are approaching this policy question, in terms of amounts to invest, pace of rollout and methods of public engagement. Different levels of detail are also available,” says Davidson.

The Dom Post reports:

Technology analyst, author and former AT&T executive David Isenberg says New Zealand needs to forget about tinkering with Telecom’s relatively low-speed copper network and build a high-speed open-access fibre network, one not controlled by telecomms firms.

Where networks were owned by the companies and not open to all service providers, the common message from companies was that bandwidth was scarce and consumers had to pay high prices.

Having a service provider own the network is comparable to having a car manufacturer own the roading network.

Holding up a length of fibre-optic cable, he said if the world’s 6.5 billion people picked up a phone simultaneously, all of the conversations would take up only 88 per cent of the cable’s capacity.

Yes, the capacity for fibre is quite amazing. Few technologies are future proofed, but this as close as it gets.

Mr Isenberg said a full fibre network would also ensure New Zealand maintained a high level of global communications should borders be closed because of a global crisis such as a pandemic, or when oil reserves finally declined to the point where New Zealand was again dependent on shipping as its main international transport.

Our long-term future is as what David Skilling calls a “weightless economy”.

Financing such a network connecting all homes and business, according to his “back of the envelope” calculations, would call for about $4.2 billion, and a new subsea cable with 1000 times the current capacity of the Southern Cross cable, roughly $2 billion.

The result would be fibre-delivered TV and telephone services and 100 Mbps symmetrical broadband that would allow high-quality teleconferencing, which needs about 20 Mbps.

“There’s no reason New Zealand can’t build this network in five years. Japan did it. Amsterdam did it,” he said.

Nice to have an international expert confirm that the estimated cost and time-frame that National is talking about is within the right ballpark.

Have just had my office connected up via Xtreme to Citylink‘s fibre network.

I figured I would do a speed test and see how much better it is than my normal DSL connections which rarely get more than 3 MB/s.

Well the download speed clocked in at 20 Mb/s. Now the test server was also on Citylink so I thought it might be unfair. So I then used the Consumer Speed Test. And that clocked in at 27 Mb/s.  Nice, nice, nice.

Am spending all day at TUANZ’s Telecommunications Day 2008. Heard from all the Telco CEOs in the morning and now the Minister is speaking.

He said the aspiration is to have Fibre to the Home within a decade, which means by 2018. That means both major parties are saying they want fibre to the home with National targeting 2014 and Labour 2018. I personally am not too worried about the time-frames (2014 is very ambitious) so long as there is a co-ordinated plan with open access policies.

There was no funding announcement today, as many expected. But he did say a package will be announced in the near future. There will be great interest in that package – both the funding but also the policy. He was very critical of National’s proposal, so again the details of the Government’s proposals will be interesting.

Steven Price blogs that the headlines regarding the Berrymans bear little resemblance to the reality of what the Judge ruled which was simply to say that the Coroner was wrong to say that the collapse was primarily the Berrymans’ fault but he effectively amended that to partly their fault.

Bryce Edwards blogs on how Matt McCarten deserves his rating by Metro as a “right bastard”.

Cactus Kate blogs that she has managed to restore Deborah Hill Cone.

Fairfacts Media points out the PM is being somewhat economical with the truth when she claims Telecom wrote National’s broadband policy. I guess she believes if you repeat a lie enough times, people may believe it.

The NZ Herald editorial is supportive:

That is capable of delivering only what comparable countries now have, not reaping the benefits of a truly high-speed network. The latter point is important. New Zealand is competing to not only attract but to retain businesses, especially exporters seeking a cost-effective global presence. Matching overseas cities’ infrastructure is pivotal to success. That would not be achieved, in terms of broadband speed or pace of implementation, under Telecom’s present “next generation” network programme. Going straight to fibre seems logical.

Fibre to the cabinet is a good intermediate step but there is no doubt that fibre to the premises is teh inevitable future, and the investment is not about making something happen which never would have happened, but making it happen more quickly, so that we get more benefits from it. Global competition is all about comparative advantage. Being last with communications infrastructure is not an advantage.

National’s advantage over the Labour Party in this area is likely to be shortlived. Given the work done by the Government, it seems certain to announce something similar, probably in the Budget. Nonetheless, National leader John Key has produced a proposal that adds substance to his frequent talk of Government leadership to lift economic performance and productivity.

I hope Labour do set a similar target.

Bill Ralston writes in the HOS:

Communications Minister David Cunliffe had an instant knee-jerk lame response to Key, claiming the plan lacked detail and credibility and “smacks of opportunism”. As most politicians are opportunists (and Cunliffe is certainly no exception) his cries that the scheme would reinforce Telecom’s monopoly position lacked credibility.

I am one of those who regard Cunliffe as generally having done a very good job in the portfolio. But his response to the plan has almost universally been seen as unwise, and making it harder for Labour to come out with its own response.

Quite how he arrived at the conclusion Telecom would be the big beneficiary of the plan is beyond me as Key had said in the speech that one of the principles guiding his government’s investment would be that there would be open access to the fibre network and none of the current players would be able to line their pockets at the public’s expense.

Indeed, they were critical principles.

New Zealand First blindly followed the anti-Telecom line and Act retreated into some doctrinal babble about how governments should not spend money.

Peter Dunne justifiably spat the dummy at the critics’ “Think Small” approach, saying “Surely the point is that widespread, superfast broadband is a good thing for the New Zealand economy and the only question is how do we get there?”

He went on to wish, without much hope: “It’d be excellent if politicians spent more time working out the answer to that question and not simply whacking each other over the head and feeling they’ve accomplished something”. Fat chance.

It is election year. One party could announce it had found a cure for cancer and the rest of the parties would argue against it.

Oh yes, John Key would then be accused of ignoring AIDS

A typically thoughtful column from Colin James:

So Key wants voters, especially those under 45, to contrast big plans for broadband against buying back the trains. There is a century-and-a-half between the two inventions. …

But that misses the electoral purpose. That is, as one party notable put it, “to establish the character” of Key as bold and imaginative – investing in infrastructure for an unimaginable future – and to contrast that with a business-as-usual Clark. …

Over time, however, National’s general policy thrust presumes Labour has reached a high tide with its redistribution of the fruits of strong economic growth – that there is not much more to do – and that from here on, once the economy gets back to 3 per cent growth after the current slowdown, the fruits should go to tax cuts and investment in innovation and education to lift productivity.

So Key’s tax focus will not just be on cuts but on a bold restructuring of the system. …

This week Key stole a march, and he will now bang away on that drum for the next six months, counting on hard times generating eager and hopeful buyers for his promise – and for the meat in the policy.

Clark and Co will try to get the electoral contest down from Key’s atmospherics to the earthbound realities of experience and knowledge where they claim the advantage as dusk draws in on the economic boom.

For now, however, the window shoppers are quite taken with Key. This week he started the hard sell: come and feel the goods, was the invitation in his big bang.

Peter Dunne makes a useful contribution to the political debate on broadband:

“Everyone agrees that’s a good idea, but all we’ve heard so far is the Minister of Communications carping that National is being opportunistic and handing too much monopoly power to Telecom; New Zealand First is similarly outraged that Telecom is getting too much money; and ACT has delivered the standard libertarian rant that hates the Government collecting or spending any money at all.

“Surely the point is that widespread, superfast broadband is a good thing for the New Zealand economy and the only question is: how do we get there?

“It’d be excellent if politicians spent more time working out the answer to that question and not simply whacking each other over the head and feeling they’ve accomplished something.

“If direct government investment like Mr Key proposes is not the answer, then I’d like to hear two things from the critics – first, what is the alternative, and second, why has it not happened to date,” said Mr Dunne.

A useful challenge.

It has been interesting to see the various posts and press releases on National’s Fibre proposal. I’ll try and cover most of them:

Phil at Whoar labels it as “what could well be an election winning policy.

Bomber at Tumeke calls it a “Bloody good idea”. Heh shouldn’t that be damn good idea

Mike at Morphyoss says:

“good on you National for releasing a good policy that will massively benefit New Zealand should they win the election. Now it is up to Labour to respond, remember fibre is extremely important to our economy and it is important that labour do something about that or they will lose the election”

David Slack at Public Address is unimpressed with some of the arguments against:

Here’s my response to the snide folk who have been saying: faster downloading for your YouTube and your porn and your pirated movies. I spend thousands on hosting in the USA because no-one here can set me up with a fast enough server and a big enough data allowance. That money could be being spent here. Ask Rod Drury what it could mean for the Software As A Service businesses he’s involved in.

It’s becoming trite to say it, but it’s nonetheless true: internet infrastructure is as important to us as roads, railways and refrigerated ships. Why not have it in abundance, rather than relatively scarce and expensive? Let a thousand e-commerce sites bloom!

Business NZ says

National’s plan to speed up provision of broadband to most premises is welcome, says Business NZ.

Chief Executive Phil O’Reilly says a public-private partnership is a logical way to spread the cost of such a huge undertaking.

“The challenge would be in working out just how the partnership would operate to ensure as many investors as possible could contribute, and in finding an appropriate regulatory regime.”

The EPMU is also reasonably supportive:

The Engineering, Printing and Manufacturing Union says John Key’s policy of rolling out fibre optic cable to 75% of New Zealand homes is a step in the right direction, but is concerned the task may be impossible given the current skills shortage.

“We really want to see this sort of project happen as any investment that will increase productivity in New Zealand is good for our members but until we see details on wages and training around this it’s hard to see how fibre roll-out will be possible.”

In terms of the issues the EPMU raises about skills and capacity, I don’t think it will be a major barrier (but certainly is a factor). When InternetNZ met with David Skilling of the NZ Institute last week to discuss his fibre proposal, one of the issues we raised was whether there was enough capacity to physically get fibre laid out by 2018 (note National is proposing 2014 as a target). Off memory Skilling indicated that they had talked to two separate engineering firms and their advice was there was enough people and and capacity to do it within 10 years, and even within five years if you really pushed it.

Now that is second or third hand so it doesn’t mean there may not be issues, but it does show some work has already been done looking at the capacity issue. One reason it is important is if supply can not meet the demand, prices could go up significantly. This has been an issue in the roading sector.

Jordan Carter is also pleased:

I am pleased that with John Key’s policy proposal, launched yesterday at a Chamber of Commerce lunch in Wellington, the debate about New Zealand’s broadband future has shifted from “whether” to do fibre to the home, to “how and how soon” to do it.

Professionally speaking, I am pleased there is now a political commitment from one major party to putting money into this. I am looking forward to assessing the various plans that come forward, and I’m sure that InternetNZ will be looking to persuade all parties to invest in this critical infrastructure.

As a Labour person I am quite sure the Nats’ proposal can be bettered, and that Labour will do so. David Cunliffe’s comments have critiqued what the Nats have proposed – the specifics of it, such as they are – but he has not criticised the goal. That’s good, because it is important for New Zealand to get on with it.

As Jordan says, the ball is in Labour’s court. A win-win will be as many parties as possible commited to the goal.

Final point, I ended up next to Williamson at the launch lunch. His zeal for this is impressive, given his record in government. It’s nice to see a genuine change of view and broad, cross-party acknowledgement of the importance of this kind of technology.

I was at the same table, and it is generous of Jordan to note Maurice’s enthusiastic advocacy of this proposal. Some have suggested he would have problems with it, but far from that – he has helped John Key with a fair bit of the research going into this.

In fact I joked to one person, that Maurice was now so enthusiastic about this type of intervention, it was a bit like how a smoker who gives up smoking becomes the most passionate anti-smoker

Also somewhat amusing was that a fellow guest at our table (not knowing Jordan’s political background I think) stated his view that Labour had done an awful job in this area. Now the last thing one wants is a big political debate over lunch, so Jordan was being very tactful with his response. I actually interjected into the conversation and praised most of what Labour and David Cunliffe has done in this area, and said the work they had done to date built a good base, but this was really about taking a big step up from that base.

Anyway I found it amusing to be defending Labour’s record in this area, in front of National’s IT/Comms spokesperson. I must say though I was disappointed with Cunliffe’s response to the policy, but I suppose he didn’t have much choice unless he could convince Michael Cullen to lend him a quick $1.5 billion

Finally on the luke-warm but positive side we have Russell Brown at Public Address:

National’s new $1.5 billion broadband spending proposal — it’s a bit soon to be calling it a “plan” — is nothing if not ambitious: 75% of homes with fibre connectivity in by 2014 is not a goal that has been envisaged as realistic before.

It is ambitious.

The initial step is a doubled of the Broadband Challenge Fund to $48 million, and there’s a very welcome commitment to “open access” (whether that means dark fibre or open access on the operator’s terms isn’t clear). There’s no indication as to whether National is talking about a monolithic FibreCo-style operator, or multiple providers whose interconnection is subject to regulation.

They are critical details, and that is why it is not planned any actual digging and laying will start until 2010. One has to get the structure and policy right and you really need time to do that. However while those details are being worked out there are things one can do in the very short-term which will make the task easier – such as ensuring duct or fibe is laid every time a current road is dug up. Some firm guidance (or instructions!) to local government can help reduce the cost a lot, as can environmental regulations.

What benefits would this massive investment bring over new DSL technologies via the existing residential copper network? For a start, it would work as advertised: 24Mbit/s DSL is more a theory than a reality for most users (although Telecom’s programme to bring the fibre closer via cabinetisation will help) and it’s extremely asymmetric — much fast down than back up. The problem of long cable runs basically disappears when you install fibre. You’d be doing it eventually anyway: when the existing copper expires, there’s no point in replacing it with more copper.

Absolutely. Fibre to the Home is inevitable. It is just a matter of timing – do we want to wait until 2040 and be last in the OECD, or try and secure some advantages by being early, to counteract our geographical disadvantage.

Russell also points some credit my way for “tireless advocacy”. While obviously I am an advocate, and have been for some time, I don’t think anyone should doubt this came about because of John Key’s personal belief and commitment to this infrastructure investment. I understand he has spent scores of hours in talks and discussions on the issue, and probably knows the ins and outs better than most industry specialists now.

Two others who are influential and helped make it happen were Maurice WIlliamson and Bill English. Jordan Carter has already noted Maurice’s passion for this plan. Bill has had a bit of stick for his comments a year ago which were sceptical of crown investment. The role of the Shadow Minister of Finance is to be sceptical and hard nosed on colleagues spending ambitions. I wouldn’t quite say his or her initial response should always be no, but hey it’s a reasonable negotiating position to start from

I am not Bill’s spokesperson (for which we are both grateful ) but I think people will find he is fully behind the initiative (in fact I understand all of Caucus is quite wildly enthusiastic about it) and his job is to help make it happen as Minister of Finance. If anyone thinks there is some violent behind the scenes struggle about this policy, I think they will be sadly disappointed.

Now of course not everyone has been positive, and for those who want a libertarian critique I refer you to Liberty Scott who labels it as Think Big Mark II and argues in favour of leaving it to the market.

Also against is NZ First (they just whine about Telecom) and Kiwiblogblog which claims it will be wasteful government spending as we will never need home Internet speeds faster than Telecom’s ADSL2+ rollout.

Sounds to me a bit like the infamous “640K ought to be enough for anybody” statement in 1981, attributed to (and denied by) Bill Gates. I am very confident they will be wrong by similar levels of magnitude!

UPDATE: The Standard has also come out against it.

I think it is has been extremely enlightening that basically all the left wing blogs where the authors use their real names have been supportive of the policy, while the left wing blogs where the authors are anonymous are against. I’ll leave it to others to draw conclusions on whether this is a coincidence or not, and what this may indicate about who the authors are.

UPDATE2: I missed a couple of comments. No Right Turn labels the policy as good at first glance. And since I wrote the blog post, Dancer at The Standard has labelled the policy as a good thing.

Lots of stories on this, so just a bit from each. First Mike Houlahan writes the main story for the Herald:

National’s ambitious billion-dollar-plus plan to bring faster internet access to three-quarters of New Zealand homes and companies has been hailed by business and internet groups.

But the Government says it is extravagant and opportunistic.

The partisan side of me is delighted to have Labour saying it won’t match the commitment. The non-partisan side hopes that they will make a similar commitment before the election.

Peter Griffin blogs:

A year has obviously changed a lot. The broadband debate has stepped up a notch and National’s play here with a sizeable amount of funding shows how seriously it now considers broadband to improving our productivity and growing the economy.

“National’s medium to long-term vision is for a fibre connection to almost every home, supported by satellite and mobile solutions where it makes sense,” says Key.

Paula Oliver looks at the politics of it:

The broadband announcement is all about Key showing he has a wider plan – outside that old chestnut of tax cuts – to lift New Zealand’s future economic performance, productivity and wages. …

In New Zealand, the political positions are reversed, with Key on Rudd’s side of the argument and Labour sounding more like Howard. …

Communications Minister David Cunliffe says the Rudd/Key idea would put Telecom back into a monopoly position and pour taxpayer money into the pockets of that company’s shareholders.

But it was difficult yesterday to find too many people close to the issue willing to rip into Key’s move.

To avoid Key wrestling the issue away from Labour and in public minds making it his own, Labour needs to reveal – and soon – more of its big plan for broadband.

National is very aware of the need not to have a vertically integrated monopoly over fibre instead of copper. One of the key principles that industry people have noted is that any such network will need to be open access.

Jon Hoyle in the Dominion Post reviews the announcement also:

Business New Zealand chief executive Phil O’Reilly said such a network would especially help small to medium exporters gain a cost-effective global presence.

It would also be a plus for multi-national companies considering setting up in New Zealand, and a reason for those already here to invest further. But even with the right regulatory settings, it would be hard to get the private sector to invest several billion dollars, Mr O’Reilly said.

Tuanz, an advocacy group for business telecommunications customers, said the policy would receive strong support from its members. .

Tuanz chief executive Ernie Newman said the Labour-led Government’s strategy had been too short-sighted and National’s policy could prove cost-effective in the long run.

Finally Vernon Small also covers it in the Dom Post:

Mr Key said yesterday that the “fibre to the home” funding, spread over six years, would lift productivity and wages, and help deliver a “step-change” for the economy.

A week after ruling out asset sales under National in its next term, he said a National government would keep a stake in the joint venture, which would require up to $3.5 billion of private sector money.

It would not replace other planned investment, would increase broadband services and must not “line the pockets of incumbents”. …

The Government is likely to announce its own broadband investment plan in the May 22 Budget.

Telecom welcomed Mr Key’s plan, saying it saw a big role for public-private partnerships and that it would work with whoever was in government.

It is good to see Telecom supportive in principle. If fibre is laid down to 75% of homes, then the demand for both domestic and international backhaul will be massive, and there will be significant opportunities for bandwidth and service providers to offer competing products over the fibre network.

Obviously the details of how investment in and construction of the fibre network would occur will be a major issue. There is one proposal on the table at the moment from David Skilling for a Fibre Co, which would have government, local government, telco and other private capital shareholding. I personally regard that as a workable model, but not necessarily the best model. The challenge will be to see if people can put up superior models.

I have just returned from a Wellington Chamber of Commerce lunch at Te Papa where John Key announced the next National Government will invest $1.5 billion into extending our current fibre network, with the aim of having 75% of homes in NZ having fibre to the home by 2014. It got a very warm reception from the business audience

I am delighted, in fact beyond delighted. I’m thrilled. This is a stunning bold initiative, and one that I think is great wearing all my different hats.

Having served as the Public Policy Chair for InternetNZ (Internet Society of NZ) for the last five years, this is a massive step towards the vision we have of a high speed connected nation. And the level of funding and target timeframe is almost better than could be expected.

Fibre is to today’s economy what roads and rail were to us 100 years ago. One has to invest in the infrastructure before you get a return on it, from the services that can be delivered over it. This is why there is a legitimate role for the Government – there is a timing mismatch if you do not have the state invest capital in infrastructure development.

Especially pleasing was seeing a reference to the fact that the fibre network will need to be open access, and also done in such a way not to crowd out existing fibre plans. If implemented, this will be a public/private partnership with the public capital allowing the private sector to invest more.

As a National Party supporter, I’m also very pleased. I think it positions John Key and National as having an economic development plan which is focused on infrastructure investment. At a time when the Government has no real answers to the economic challenges facing NZ (except to say we can’t control petrol prices of food prices or house prices), and is mired in the repercussions from some silly stunts, National has seized the policy initiative.

What is good about today’s announcement is it is not in an area you normally expect National to lead. Everyone expects National to be tougher on law & order, and everyone expects National to cut taxes more than Labour. But this has been about showing a future looking vision of where New Zealand is heading.

Finally I’m just pleased as a New Zealander. The future of NZ does worry me. Seeing so many people leave for overseas, seeing our national income fail to keep up with Australia paints a gloomy picture for the future.

We have real challenges ahead of us – both economically, and environmentally. And the sad reality is that there are relatively few policies which are good for economic growth but also good for the environment. It can be a delicate balancing act.

But rollout of fibre to the home will, I believe, has significant benefits for us economically, environmentally, and in quality of life. What David Skilling calls the weightless economy, where our remoteness is less of an issue, will be a big part of our future. And having ultra-high speed broadband everyone will position us well to compete globally. No it is not guaranteed – few things are. But I think it is an investment very much worth taking – and for less than the cost of Dr Cullen’s cancelled chewing gum tax cuts.

The challenge now is for other parties to rise to the challenge set by John Key. For as much as it would be electorally advantageous to National for Labour not to make a similar commitment, I hope they do show similar ambition.

Very welcome news on Monday that Kordia is going to invest in a new fibre cable between New Zealand and Australia. Initially it will have 240 Gb/s of capacity. But it it not just the capacity that is welcpome, but the competition it will provide to Southern Cross Cable and Telstra who have pretty much all the international bandwidth.

Southern Cross Cable has also announced a boost in capacity to 860 Gb/s so we will in a few years have 1 Tb/s capacity. But that only allows 125,000 to be using the Internet at the same time at 8 Mb/s or 1 MB/s.  The SCC has 2.5Tb/s maximum capacity but new technology may push this even further.

The other fibre that has been in the news had been the NZ Institute’s proposal for how to get fibre rolled out to 75% of premises by 2018.  Basically they propose the creation of a dedicated fibe company which will do the last mile fibre to homes, and provide open access to all providers at a regulated price. They estimate this will cost between $4 and $5 billion based on 25,000 kms of fibre duct at $150,000 per km.

They also estimate that $3 to $4 billion of that can be met by private investment and that a Government commitment of $1 billion over ten years ($100 million a year) is needed to reach 75% of the population.

Bernard Hickey supports the plan and says:

The goverment has already posted a budget surplus before accounting gains and losses of $3.649 billion in the seven months to the end of January. That’s an average of $521 million a month.

Meanwhile our productivity growth keeps slowing, as this chart on the left shows. Just imagine if many of us could work from home with much faster connections and we could access overseas markets more easily.

Surely it’s time our government did something useful with that money to invest in the nation’s future. I can think of nothing better than spending $1 billion of public money to build a broadband network that would generate around $4 billion a year in economic benefits. It would pay for itself in extra tax revenues within a year or two. Just imagine if the government had done this three years ago instead of wasting money with its nutty free student loans (bribe).

I’ve yet to fully get to grip with the pros and cons of the NZ Institute proposal, but I think it is an excellent contribution to the debate, and am trying to learn more about it.

Rod Drury has also blogged in support of it:

The FibreCo solution is very logical and I think takes into account the concerns of the many stakeholders around this issue. Some very smart people took the time to really think about this.

I like that it balances private and public sector needs. It builds on what we learned as a country in the 70’s, 80’s and 90’s. It is a savvy financial solution.

I think there is going to be a lot of discussion this year on fibre.

I am now a beta tester for Vodafone’s new high speed mobile data cards. I have to say so far so good.

The old data card had a maximum download speed of around 350 kb/s. These can go around 20 times as fast, and I routinely get over 2 Mb/s down and around 1 Mb/s up.

Giving up the DSL connection one day is not an impossibility.

Installing the new card was pretty simple. Step 1 is insert CD and install latest software. Step 2 is transfer sim card, and you are done.

While I am a big advocate for fibre to the home, mobile broadband is just as important – both for rural areas, but also for those like me who travel around. It really is so good being able to connect up, in most places in NZ.

Telstra-Clear has launched a warp-speed Internet offering – 25 Mb/s download, 2 Mb/s upload and a monthly 120 GB cap.

The cost is $230 a month which rules it out for most people, but it is good to have the option there, and over time prices should drop.

Vodafone has also announced they will allow customers to go on VDSL2, as well as ADSL2+. VDSL2 can do speeds of up to 50 Mb/s down and 30 Mb/s up – but only if within 1 km of a exchange.

The pricing is not specified, but the story says “VDSL2 connections could be bought by anyone who wants to pay for it”. Does that mean you pay one off for the connection or a higher monthly fee?

NZPA reports on Orcon’s new package, only made possible thanks to local loop unbundling.

For $99 a month, people who live in range of their initial Auckland exchanges can for $100 a month get line rental, free national toll calls and Internet at up to 24 Mb/s download and 1 Mb/s upload.