Kiwiblog

The Herald reports:

The Government intends imposing a zero alcohol level on drivers under 20, Transport Minister Steven Joyce has confirmed.

He said today it was part of a package aimed at reducing the road death toll, which was 60 per cent per capita higher than Australia’s.

Mr Joyce said the zero alcohol level for drivers under 20 still had to be signed off by the Cabinet.

“I think it is likely to get through,” he said on Radio New Zealand.

Heh, I doubt Steven would be announcing it unless he knew it would get through

“We do need to take a systematic approach to the issues around young people dying on our roads.”

At present teenage drivers have a 30mg alcohol limit.

Mr Joyce said there would also be proposals in the package covering drivers up to age 24.

I am supportive of a zero blood alcohol limit for under 20 year old drivers.

The current limit of 30mg sends out a mixed message. It is close to a de facto zero limit (a couple of quick drinks could put you over) but it means that the message is you can drink a bit and drive.

For teenagers, whose crash stats are appalling, a simple message does better – simply if you are the driver, you should not drink at all.

The Herald reports:

Tertiary students who fail more than half their courses may lose their student loans as the Government moves to crack down on abuse.

Only 50 per cent of domestic students who started studying for bachelor’s degrees in New Zealand in 2004 finished their degrees within five years – suggesting that up to half of the country’s 145,000 bachelor’s students will fail or drop out.

Student allowances are chopped if students failed more than half of their courses in the previous year, but there is no requirement to pass courses to keep getting student loans.

I can see this changing very soon. However I think one will want some ability to access loans if say a student drops out, enters the workforce, but a few years later wants to return to finish their degree.

Mr Joyce pointed to research showing 41.5 per cent of New Zealand’s tertiary education budget went into student loans and allowances, compared with an OECD average of only 17.6 per cent.

He told the Weekend Herald he wanted to shift funding to pay for more tuition places. “I’d like to see more money going into actually training EFTSs (equivalent fulltime students) and I’m looking around for opportunities to deliver that in 2011,” he said.

The budget will be interesting.

I stole this graphic from the Dim-Post who stole it from the Economist.

I think this is the perfect illustration of the impact the artificially high mobile termination rates have had on New Zealanders. We use mobile phones only one quarter as much as Canada and one tenth of the US. In fact we are around the level of Kenya.

The Herald reports:

Mobile phone customers will end up paying the price if the telecommunications industry is not regulated, an industry lobby group says. …

After six years of consultation, even the three commissioners considering the complex subject do not agree.

In the report, Telecommunications Commissioner Dr Ross Patterson recommends the industry regulate itself voluntarily.

Associate commissioner Gowan Pickering agreed but commissioner Anita Mazzoleni was in favour of regulation.

Their report will be considered by Mr Joyce, who is calling for submissions on the topic by March 8.

Consumer NZ chief executive Sue Chetwin said it was disappointing that two of the commissioners had backtracked from their views that termination fees were too high.

“I don’t think they’re coming down far enough or fast enough … [but] it’s not the end of the game yet.”

Sharing her view was Ernie Newman, chief executive of the Telecommunications Users Association of New Zealand (TUANZ), who said the recommendations were “anti-competitive”.

“It very much favours the big established operators and is hugely detrimental to any small player or new entrant,” he said.

“If the minister accepts these recommendations then long term it’s a bad outcome for consumers.

It will be a tough call for Steven Joyce – does he go with the advice of the two Commissioners or the advice of the other Commissioner.

I was rather surprised that two of the Commissioners changed their mind from the draft (no doubt partly due to better undertakings from Vodafone and Telecom), because the last time this happened it was over local loop unbundling, and almost everyone one today says that in hindsight it was a mistake not to do LLU at the earlier opportunity.

I’m also bear in mind that Trevor Mallard went for undertakings over regulation when he was the (Acting) Minister. I’m not sure he is of the view that with hindsight that was the right decision – I note Labour have reserved their position on the issue for now.

I’m just glad I’m not the Minister who has to make the decision!

The Commerce Commission has decided (by a rare 2:1 split) not to recommend regulation of mobile termination rates, as the undertakings by telcos is deemed satisfactory.

The Government is consulting on the recommendation. Regardless of whether it goes with commercial undertakings or regulation, it means prices should drop. The mobile termination rate is the rate charged to receive and terminate a call to a mobile phone, so it acts as a floor on charges.

The mobile termination rate is 17.53c a minute for Telecom and 17.90c for Vodafone. Under the final undertakings these will drop to 10c in 2011, 9c in 2012, 8c in 2013 and 6c in 2014.

That is good for consumers, but not so good for competition as it means it is not until 2014 we get them to 6c. If they recommended regulation then one might get to that level in 2011.

As for text message termination rates, the final undertakings are to move to bill and keep (ie no termination rate) so long as traffic is balanced within 7%.

Reading the executive summary, I was interested to find out that 80% of all voice calls and 90% of all SMS traffic is on the same network. This is much higher than in other OECD countries, and is a result of the high MTRs we have had.

John Key has announced:

Steven Joyce becomes Tertiary Education Minister, allowing Anne Tolley to fully focus her efforts on the Education portfolio, and in particular the implementation of the Government’s national standards policy.

I said almost a year ago that I thought both Education and Tertiary Education was a huge workload, especially with no Associates from your own party.

I will be fascinated as to Steven’s approach to tertiary education. It has quite a few pressure points in it.

Kate Wilkinson becomes Conservation Minister, a portfolio in which she is currently Associate Minister. This change reflects the fact that Tim Groser is frequently out of the country representing New Zealand’s interests in the Trade and Climate Change fields.

In other words Kate has effectively been the Minister, so this makes it official.

Mr Groser, because he has primary ministerial responsibility for the international negotiations aspects of Climate Change, will have a change in title and becomes the Minister Responsible for International Climate Change Negotiations.

That should not take up too much time, as there isn’t much to negotiate. The US, China and India are all running 100 miles an hour away from an agreement.

Finally after 60 years of dithering, we have a final decision to proceed with Transmission Gully. Steven Joyce says:

Once complete, the upgraded route from Wellington Airport to Levin is expected to deliver travel time savings of between 23 and 33 minutes during peak times and between 17 and 23 minutes during the day.

Following the 2008 election the Minister said he was not prepared to support funding for the proposal until he had seen a thorough assessment of Transmission Gully alongside the alternative Coastal Route.

Mr Joyce says Transmission Gully has been debated for decades but this is the first time a decision has come with the plan and the funding track to see it through.

If only this decision could have been made a couple of decades ago, when it would have been much cheaper. But better late than never and most Wellingtonians will be very pleased that Steven Joyce and the NZTA has made this decision.

Joyce also announced that his is part of a four lane expressway planned from Wellington Airport to Levin. Yay.  Thi will include duplication of the Mt Vic and Terrace tunnels.

Finally, the route through Kapiti has also been announced, and it is basically along the existing Western Link designation – but four lanes instead of two. The current SH1 will become a local road.

There is finally a long-term co-ordinated plan for greater Wellington region. Again, this will be very popular with everyone but Sue Kedgley.

Audrey Young reports on part of a speech from Steven Joyce:

One of Mr Key’s closest advisers, Transport Minister and first-term MP Stephen Joyce, also spoke to Federated Farmers, telling them how hard it had been getting used to the public service when he took office a year ago.

He would hold meetings with officials sitting around the large table in his office, with reserve officials standing around the walls. When one official left the table, another would slide into his place and even finish his sentences. The officials, he said, held further meetings after their meetings with ministers in order to establish what they thought the minister had been trying to say. Sometimes Mr Joyce had come across those meetings outside his office and added his own contribution as to what he thought he had been trying to say.

Heh.  I can just see Steven doing that.

Tom Pullar-Strecker reviews the fibre investment plan:

Communications Minister Steven Joyce appears genuinely chuffed with the financial model for the ultrafast broadband initiative that he and his team of cerebral but experienced advisers have dreamt up.

The plan released on Wednesday is certainly ingenious.

The fact Steven is one of the very few MPs that has owned and run a major business, made him the ideal Minister for this portfolio.

The Government will, if necessary, foot the entire bill for rolling out fibre-to-the-street, minus any construction overruns, while private investors in local fibre companies (LFCs) will only buy back their share of the infrastructure as they connect up homes and businesses.

That could help nullify the “Catch 22″ that threatened to leave the initiative stillborn – private investors couldn’t guess their return without knowing how ubiquitous the national network would be, which would depend on other investors’ assessment of their likely return.

And Steven has first hand experience of the need for commercial investors to be able to estimate returns.

There is another reason to take the initiative more seriously.

Instead of injecting a “one-off” $1.35 billion into the public-private partnerships in the vain hope that would be enough to garner sufficient private investment to get the whole job done, the Government is now considering investing far more over time. Investment vehicle Crown Fibre Holdings will be to recycle receipts from private investors as they buy shares in LFCs, after the first fibre customers sign up.

The Government’s investment at any one time will be capped at $1.35b, but the total it commits over the life of the scheme could be double or triple that.

“$1.35b is what Crown Fibre Holdings will have access to in order to fund the infrastructure,” says Mr Joyce. “There is certainly the possibility that some or all of the money will be reinvested, but it’s simply too soon to say how much will be reinvested or how many times that might occur.”

Does this mean 75 per cent of people can be assured of getting fibre within 10 years? Hardly. But instead of scuppering the scheme, if $1.35b is not enough to get the job done, it might simply take longer.

This is the most critical part. The big question I, and others, have had, is what if the planned level of investment is not enough to get to 75% of NZ. Do you then scrap the plan, or do you accept a lower coverage target. The answer is neither – you just recycle the crown investment, so you get there eventually, even if it takes a bit longer.

I am going to be fascinated to see what offerings are made by the various telcos, ISPs, lines companies and local government.

As usual, Chris Keall has the best summary of what the offers are on mobile termination rates:

Commerce Commission proposal
Voice calls: immediate halving of MTR on voice calls from 14 cents to 7.5 cents. Glide path to 3.8 cents by 2015.
Txt: immediate cut from 10 cents to 3.8 cents. Further cuts to 0.5 cents by 2015.

Vodafone
Voice: Looking to head off regulation with offer to cut MTR on voice calls to 12 cents per minute from April 2010, with glide path down to 73 cents a minute by 2015.
Txt: 1.2 cents from April 2010.

Telecom
Voice: cut to 12 cents per minute from January 2010. Glide path down to 7 cents per minute by 2015.
Txt: no offer
Expresses support for bill-and-keep, an alternative to MTR that sees the a phone company whose network initiates a call pay all costs.

2degrees
Wants MTR scrapped on all voice calls and txt. Prefers bill-and-keep model (initiating caller’s telco pays all cost). If that’s not possible favours immediate drop to 6.54 cents per minute for voice, falling to 3.45 cents by 2015.

So let us look at voice calls first. In 2010 the rate would be 7.5c under the Commerce Commission proposal, 12c offered by Vodafone, and 12c offered by Telecom.

By 2015, the rate would be 3.8c under the Commerce Commission proposal, 73c offered by Vodafone, and 7c offered by Telecom.

For text messages in 2010 the rate would be 3.8c under the Commerce Commission proposal, 1.2c offered by Vodafone, and 10c offered by Telecom.

By 2015, the rate would be 0.5c under the Commerce Commission proposal, 1.2c offered by Vodafone, and 10c offered by Telecom.

It is good to see Vodafone offering a more tempting package, with the huge drop in termination rates for text messages.

Also interesting to note:

Telecom’s numbers are close to those of its previous submission. More noteably, the telco has also expressed support for bill-and-keep – an alternative to MTR in the US and elsewhere that sees the phone company that initiates a call paying all costs.

I don’t think that is explained right. With bill and keep there is effectively a zero interconnect fee or termination rate. It is pleasing to see Telecom moot that. I think it is a superior model.

Think how retarded the Internet would be if ISPs charged each other 10c an e-mail?

Also pleasing has been that the Minister has ruled out any last minute negotiations with telcos on the proposed regulation. Trevor Mallard fell into this trap of privately negotiating a deal. Steven Joyce has said that any commercial offers have to go to the Commerce Commission, not him. And then once the Commerce Commission makes a recommendation, he will either accept it or not accept it – but won’t get into a game of considering ever increasing (or decreasing) commercial offers every few days.

It will be interesting to see what the final Commerce Commission recommendation will be.

Note that my company has done some market research for Exceltium Ltd on the issue of mobile termination rates, but all views are my own.

Patrick Gower writes in the NZ Herald on Steven Joyce:

After being ushered in off the street into a top Cabinet role, Joyce’s strategy role makes him one of the Government’s most powerful ministers – with some strikingly similar characteristics to Key.

He has done in an instant what some MPs fail to do in their entire career, making it look all too easy with an accomplished performance in the House and with his portfolios.

Labour gave up targeting Steven as a new Minister quite early in the year.

His seamless move into Parliament may be unparalleled. It surpasses Margaret Wilson, who was similarly parachuted into the Cabinet for Labour and while also steeped in party politics was not a particularly comfortable fit with parliamentary politics.

He has already ridden out his novice stage in the House, rarely being riled by his far more experienced Labour opposite in transport, high-flyer Darren Hughes.

I’ve just taken a look through Hansard. Darren Hughes has only asked one question to Steven Joyce since mid May.

At 46, Joyce has a long way to go should he choose to stick around in politics. Future moves include taking on more challenging portfolios that help him build on his image as an affable and competent public minister rather than just a strategy man. And despite English’s detractors trying to promote a rivalry, much of this may be contrived and Joyce might not want to end up mired in Finance anyway.

Taking an electorate seat would also enhance his public standing.

Another of Joyce’s similarities with Key is that both have the money and skills to simply walk away from politics when they have had enough.

He will know better than anyone that Key may leave before the 2014 election.

The man who built a business empire from nothing and came into Parliament from out of nowhere will not stay in the little house forever.

This is true of both Steven and John. They both want to do well in politics, but politics is not their life. They have both had successful enough careers before politics, that setting longevity records for years in Parliament or even years in office is not a target for them.

I doubt there has ever been a better (or worse) case of unforeseen consequences that the former Telecom Kiwishare, now known as the Telecommunications Service Obligation.

It had the best of motivations – to protect rural New Zealanders whose phone lines could be deemed uneconomic by requiring Telecom to still provide them with flat rate local calling at at an inflation adjusted price cap.

The first failure has been the price cap. The cost of telecommunications has dropped massively over two decades. But guess what happens if you have a law that says Telecom can increase line rentals by no more than the rate of inflation. Well not only do they not drop prices, almost every year without fail they increase line rentals by the rate of inflation. A price cap becomes a price target.

The second failure was its effect on competition. It not only kept competitors from offering services to rural NZ, it made them fund Telecom for its so called “uneconomic” customers. Tens of millions of dollars went from struggling competitors into Telecom.

So after years of discussion, we’ve finally had decisions to make changes, by Steven Joyce. They are:

Currently Telecom receives approximately $70 million per annum largely to compensate it for supplying local service to rural customers.  This money is sourced from the industry via the TSO levy which is paid by market participants (including Telecom which contributes approximately 70%) on a market share basis.

Mr Joyce says he is concerned by the lack of transparency around where this money is spent and whether rural customers are benefiting from it.

“The existing TSO levy has been in place since 2001 and has been a source of considerable controversy within the industry. A recent review of the TSO had identified that the current methodology for assessing how much the TSO commitment was costing Telecom a year was flawed.

The current TSO levy methodology counts the costs Telecom incurs but does not include the full range of benefits Telecom derives from the TSO.

The government is proposing to change the methodology for how much Telecom is compensated for uneconomic customers.  By counting both the costs and the benefits of the TSO it is likely that the TSO levy will reduce to zero for the foreseeable future.”

The non inclusion of benefits was a cause of considerable angst for the competitors who paid $21 million a year to Telecom. This decision has near universal support.

However the telcos are not getting to keep all the money they used to pay:

“We’re proposing to fund the $300 million rural initiative through a combination of direct government funding and revenue from a more transparent and effective industry levy than the current TSO levy.”

The government will provide a direct contribution of $48 million and further interim funding of up to $52 million.  The remaining funding will be sourced by replacing the existing TSO industry funding with a more transparent contestable industry-wide mechanism that focuses on developing rural telecommunications.

The new telecommunications development levy to replace the TSO levy would look to recover around $50 million per annum over the next six years – about $20 million less than is currently the case.

“When the government tenders for the provision of rural broadband it will be an open and competitive process, with full transparency on where the money is spent,” says Mr Joyce.

So around 70% of the old levy will still be collected, and used to fund rural broadband. This part is less than popular with the telcos, but very popular with Federated Farmers.

A more purist model would be to have the Government fund rural broadband development directly (if one accepts there is an economic gain in doing so), but the model announces is quite cunning because competing telcos are still pretty happy to be funding $15 million a year to a fund which is contestable and will actually increase broadband infrastructure, than $21 million a year to Telecom merely to maintain the status quo.

Telecom of course does not do so well as it used to collect $21 million for doing basically nothing, and paid $49 million to itself for the same thing. It will now pay around $35 million to the Government for the contestable fund. Some consolation to Telecom, is that they are in the best position to win most of the tenders for using the funds.

The Herald reports:

Vodafone chief executive Russell Stanners said it was time for reform of the TSO.

“The TSO regulation was introduced with the best intentions but has become a millstone around the neck of the industry.”

Telecom said it had been part of an industry-wide push to secure reform of TSO arrangements.

“This reform is long overdue and needs to be based on principles of contestability, transparency and technology neutrality,” Telecom chief executive Paul Reynolds said.

“It is equally important that any subsidies applied to fund services to uneconomic customers are borne equally by all consumers, and not just Telecom’s.”

Federated Farmers welcomed the plan but said it was approaching it cautiously until more details were known.

Pretty much everyone agreed on the need for reform, and most will say this is going in the right direction.

The Telecommunications Industry Group (TIG) said the plan amounted to a $252 million industry tax.

“The Government has just replaced one form of taxation with another, in an industry where prices are dropping, margins are tight and customer expectations are increasing,” said TIG chief executive Rob Spray.

They are right, except of course it is replacing what was an even higher $350 million industry tax. It is a move in the right direction with both a dropping of the amount levied, and a change in what it is used for.

Economist blog Progressive Turmoil, blogs favourably on the decision, and has a neat little graph too.

Tom Pullar-Strecker misses the point, in my opinion, with his column that the Govt should ban using mobiles for satnav. He wrote:

Last week, The Dominion Post asked the Transport Ministry whether it would illegal from November to use mobile phones as satellite navigation aids in cars.

The initial response from spokesman John Summers was confusing and ambiguous. But pressed for clarification, Mr Summers consulted colleagues and came back with a clear answer:

“You asked whether a driver can look at a navigation system on a mobile phone even it is securely mounted. The answer is to this is no, not while driving.

“Under the Road User Amendment Rule 2009, you can use a mobile phone held in a cradle (including those that double as a GPS device) while driving but only to make, receive or terminate a phone call.  You cannot use them in any other way such as reading a GPS map, reading email, or consulting an electronic diary.”

I would contend that was a sensible and considered position, and that Transport Minister Steven Joyce’s decision yesterday to cave in from pressure from gadget-fans and amend the rule was a mistake.

I contend it was the exact opposite, and the Minister inserting some common sense into the rule making.

Mr Joyce said it was not the intent of the rule to make it illegal for motorists to use the satellite navigation or music functions of their cellphones, “provided these are mounted in the vehicle and are manipulated infrequently”.

He met with officials and instructed them to “amend the rule accordingly”.

Mr Joyce appears to have  thereby explicitly sanctioned people taking their eyes off the road and looking at instructions on their mobile phone, and tinkering with it, while their vehicle is in motion.

That is arguably more dangerous than people using unmounted cellphones to answer calls, the problem the rule change was originally designed to tackle.

Well I’m no fan of the cellphone ban anyway, but there is a big difference between using a device to chat to someone not in the car, and using a device to tell you where to drive.

If Tom thinks there should be no tinkering in cars, will he support banning all car radios?

How long does Mr Joyce believe it would be safe for people to take their eyes off the road? Say it takes 2 seconds to absorb the visual information from a smartphone doubling as a SatNav. In that time a car travelling at 50km will travel 27 metres.

That could be the two seconds during which a child steps out in front of the vehicle.

But here is where Tom misses the point.  The Government has never intended to ban the use of GPS devices in cars. If we did so, we would be the laughing stock of the world as the most common consumer use of GPS is for car navigation. And imagine the impact on tourism as tourists are told they can not use GPS to find their way around – but instead have to use maps.

Incidentally far more dangerous for a driver to be looking at maps while driving, than a GPS device.

You see the stupidity of the draft rule is that using your cellphone for GPS navigation would have been illegal, but using a dedicated GPS navigation device would not be illegal. Now it is, and was, daft to differentiate. An iPhone, for example, has just as large a display screen as some dedicated GPS devices.

This makes as much sense as having a rule saying you can’t use your cellphone to take photos, but you can use a normal camera. Laws and rules should not be based on the technology, but on what it is used for.

Clare Curran has blogged at Red Alert:

Communications and IT Minister Steven Joyce has just told the House in question time that there has been no delay in rolling out ultrafast broadband.

It’s amazing how this government can tell a barefaced lie with a straight face. The election was almost a year ago. The $1.5 billion delivery of broadband to 75% of New Zealand homes was a core election promise. Supposedly ready to go!

If Clare is going to use terms like bare faced lie, I’m going to have to point out how that description is one which better applies to her own blog post.

John Key announced the ultrafast broadband policy in May 2009. I was there when he did it. So was most of the industry. And they know what John Key said. So they get very puzzled when Clare claims the broadband package was supposedly ready to go. Let me quote John Key’s speech:

Delivering on these five principles will require a carefully thought-through and negotiated investment and regulatory model. National will conduct these negotiations in our first year of government.

2009 is the first year of Government. If anything, Steve Joyce is three months ahead of schedule. Everyone in the industry knows that National said the policy was a policy about what they wanted to achieve, and they would take 12 months working out the best way to achieve it.

And frankly it is somewhat bizarre that Clare keeps demanding that decisions should have been made quicker, because she has also blogged what an incredibly complex area this is. If the Government had made decisions more quickly, I suspect Clare would criticise that. Being in Opposition does not mean you have to criticise everything.

Clare then compounds things by claiming:

They axed the previous Government’s programme which was poised to rollout and put everything on hold for months while they recast a plan which now looks remarkedly like the previous government’s. That’s taken all year.

Now I was a big supporter of most of what the previous Government did in the Communications/IT field. But it is not at all correct to claim the previous Broadband Investment Fund is the same as what National is doing. The previous fund was not for a national fibre network reaching 75% of New Zealanders. It was $325 million (compared to $1.5 billion) and was not for fibre to the home. It was for mainly broadband to businesses and MUSH (municipalities, universities, schools and hospitals).

Now that was a good fund and certainly better than doing nothing (from my point of view). But to be blunt National trumped that with a policy that was far more ambitious and with far more funding – around 400% more.

Personally I suspect the former Minister, David Cunliffe, would have loved to have matched or exceeded National’s policy – but the simple fact of the matter is he couldn’t get the extra funding out of Clark and Cullen.

So while there are of course some similarities between the former BIF and the current Government’s proposal (mainly that they both use a regional competive process which is hardly surprising) they are in no way the same plan. And again, most people in the industry know this.

This government talks about investing in infrastructure. It seems to think that infrastructure is purely the network of roads, wires or fibre required to create a physical structure. What Mr Joyce, who is also the Associate Minister of Infrastructure, doesn’t seem to get, or pays lipservice to, is that with broadband, you can just invest in the fibre. You’ve got to invest in what will pass through the fibre. Services that will benefit society. And that’s the government’s role.

I’m not sure what Clare is suggesting here but I don’t want the Government competing with telcos, ISPs, Sky TV etc etc as the applications and services level. The infrastructure level, which is inherently non-competitive in most cases, is where I want the investment to happen.

It’s unknown whether the private sector investment required to make up the shortfall between $1.5 b and $6 billion will manifest itself, because its unknown what level of public investment will be made in the health, education and enregy sectors which will stimulate demand. That’s the real question.

No it is not. Expecting the Government to declare today what services it might seek to deliver in ten years time over the network is incredibly naive – especially considering the pace of change in the Internet industry. Any declaration today is likely to be more inaccurate than a Treasury forecast of the deficit!

The private sector will make their investment decisions on the basis of international experience and their own market research. They will not make them on the basis of what the Government may do online in ten years time.

I’m very very happy with today’s announcement from Steven Joyce:

Communications and Information Technology Minister Hon Steven Joyce today released the details of the government’s $1.5 billion ultra-fast broadband investment initiative. …

Key highlights of the proposal include:

• An open, transparent partner selection process, which will be initiated in the next month.




• Government investment directed to an open access, wholesale-only, passive fibre network infrastructure.




• A new Crown-owned investment company (“Crown Fibre Holdings”), which will be operational by October, to carry out the government’s partner selection process and manage the government’s investment in fibre networks.




• Crown Fibre Holdings and each partner establishing a commercial vehicle, a “Local Fibre Company” (LFC), to deploy fibre network infrastructure and provide access to dark fibre products and, optionally, certain active wholesale Layer 2 services.




• Provision for national and regionally-focused proposals, as well as consortium and proposals aggregating any combination of LFC regions.




• Independence, equivalence and transparency requirements for LFCs.




• Expansion to 33 candidate coverage areas based on the largest urban areas (by population in 2021).

What is really good is the commitment to open access to dark fibre, and the regional approach to the issue. The Government has held firm to most of their draft proposal, with the main change being an increase in the number of coverage areas to 33.

Computerworld reports on positive reaction:

“This ushers in the biggest and most fundamental change to telecommunications in New Zealand since the privatisation of Telecom 20 years ago,” TUANZ CEO Ernie Newman said in reaction to the news.

“The paper builds very constructively on the work done previously,” Newman says. “It takes into account most of the key issues raised in submissions, and sets a timetable with milestones. It is an excellent blueprint on which to build.” …

InternetNZ also welcomed the plan, saying it is “delighted” with today’s announcement of a regionally-based approach to investment.

“This is a world-leading programme that can be expected to deliver the infrastructure New Zealand needs,” spokesperson Jordan Carter says.

“Steven Joyce and the Government have put in place a framework that over time can deliver a widespread fibre rollout across urban New Zealand.”

Those unsure about the benefits of ultra-fast broadband, might want to read the guest post from Rod Drury earlier this week.

Chris Keall (and Kelly Gregor) at NBR cover the proposal in detail. Keall highlights a new focus:

In the proposal document released today, the minister also flags that “The capacity and reliability of New Zealand’s international data connectivity will become increasingly important as LFCs’ [local fibre companies'] networks are deployed over the course of the UFB Initiative.”

The Commerce Commission recently identified slow international data as a roadblock to better domestic broadband performance, with testings showing that overseas pages take twice as long to load as those hosted locally – even with our current copper-dominated networks.

International bandwidth and data costs are often cited as a big issue also.

In a fit of good timing, Juha Saarinen has an article in Computeworld on dark fibre, and how you basically can not get it from Telecom or TelstraClear. Have a look at this price comparison and weep:

James Watts, who runs Palmerston North-based ISP Inspire Net, says the reason dark fibre is attractive to his customers is because they can “do whatever the hell they want with it.” Inspire currently charges $595 and $995 for intra-town dark fibre pair leases, depending on contract terms, and double that for inter-town unlit circuits.

To light the circuits, Watts says his company sells Gigabit Ethernet transceivers for $140 each.

A similar 1Gbit/s circuit from Telecom apparently costs $7000 a month, plus installation charges.It’s $69k a year according to Telecom’s pricing book.

Finally a focus on the issue of fibre providers being discouraged from also operating retail telecommunication services, both here and in Australia. Steven Joyce said in a Q&A:

Will Telecom have to structurally separate its network business to participate?

Any such decisions are up to Telecom.  The Government has made it clear that it will only invest money into fibre companies that are not controlled by shareholders who also operate retail telecommunication businesses.  The Government is also clear that potential partners who already own fibre assets can table options that involve those fibre assets being vended into any new fibre companies.

Preventing vertically integrated monopolies is crucial. This basically means Telecom can not be a majority shareholder in any regional fibre company unless they structurally separate (ie sell off Chorus). They can have a minority stake however.

In Australia, the Government has done similiar:

The government could also deny Telstra access to new spectrum for advanced wireless broadband unless the telco sells off its cable network and 50 per cent stake in Foxtel (25 per cent owned by News Corporation, owner of The Australian)

If you want to be part of the future, you need to be separated.

For those who think separation is not a big issue, think what it would be like if Air New Zealand owned the airports and could set access terms for other airlines. Or if Ford owned the roads and set the rules for what other cars could drive on them, and for how much.

So as I said, very pleased with the announcements today, and now working my way through the details.

The Herald reports:

Transport Minister Steven Joyce yesterday described existing legal alcohol limits for drivers as “ridiculous”.

Speaking to a conference of traffic experts in Auckland, Mr Joyce said he could drink three-quarters of a bottle of wine in 90 minutes yet still have every chance of being under the legal alcohol limit for adult drivers.

Shouldn’t the test be how impaired one would be at a blood alcohol level, as well as what that means in terms of actual drink.

I see this going the same way as the cellphone debate – a kneejerk reaction with little proof it will actually make a difference to crash statistics.

The Dom Post has a story today that quotes overseas reseach suggesting the cellphone ban will not lead to safer roads – it will just lead to people getting fined for continuing to use their cellphones.

I kept asking on this blog if anyone can quote empirical evidence of a cellphone ban actually leading to fewer crashes, rather than greater fines, but no-one has done so.

Anyway back to Steven Joyce:

But he said heavy advertising when the existing adult limit of 80mg of alcohol per 100ml of blood was introduced in 1978 had made it difficult for him to gain popular acceptance for a further cut.

“A huge amount of advertising was done at the time which said it was just a couple of drinks and then one an hour.”

The result was a popular misconception that reducing the limit to 50mg – one of 61 ideas suggested in a Ministry of Transport discussion paper – would restrict motorists to little more than one standard drink if they wanted to drive home.

I don’t think that, but the rough test for me is that a couple should be able to share a bottle of wine over dinner, and not be breaking the law by driving home afterwards.

A bottle is almost eight standard drinks.

The discussion paper gives six drinks as the allowance for a man of average height and weight. For a woman, the limit is four drinks.

It says a limit of 50mg of alcohol, based on Australian guidelines, would allow an average man to have two drinks in the first hour and one an hour thereafter.

And presumably a woman would be two thirds of that. So let us say a man would have five standard drinks and a woman three standard drinks from a bottle of wine. At a 50 mg limit they would be breaking the law unless the dinner lasted four hours.

But that isn’t een the most important test. The question that (in my opinion) the Minister should ask is how many accidents are caused by drivers with blood alcohol between 50 and 80. In other words how many crashes would potentially be prevented if the limit was lowered, and how many people would be criminalised for having a bottle of wine over dinner. Again I’d like non-emotional study of the benefits and costs of any lowering.

This 2007 report from Transport on blood alcohol levels of drivers killed in car crashes finds the following:

• 60 drivers found to have a detectable level of alcohol (above 30), and 137 had under 30
• By far the most common level (36/60) had a level of 200 – 300 – around three times the legal limit
• Only three drivers were marginally above the limit (80-100) and they were all under 25 so in fact they were well over their limit of 30
• Only two drivers were in the 51 – 80 range

So most drunk drivers who end up dead are totally plastered. A lowering of the limit to 50 would possibly result in one less fatal crash every six months.

Steven Joyce has announced:

An $8.7 billion programme of investment in New Zealand’s transport system has been detailed today with the launch of the National Land Transport Programme (NLTP).

Transport Minister Steven Joyce says this is the largest ever investment in the system and represents a 17 percent increase from the previous three-year period.

That’s close to $3 billion a year which is not bad.

The $8.7 billion includes investment of:

• $4.6 billion in the state highway network (up 19%)
• $1.9 billion in local roads (up 14%)
• $900 million in key urban public transport networks (up 21%).

As anyone sane knows, it is not a choice between public transport only or roads only. You need to invest in both.

The $900 million in public transport investment is in addition to the $1.85 billion in capital investment currently being made into the Auckland and Wellington commuter rail networks.

Ouch. Thanks Michael.

As widely expected, the Government has announced it will be an offence to use a handheld cellphone while driving. I’m disappointed by this decision, especially by the lack of evidence it will be effective.

From November 1 it will be against the road rules for drivers to text or talk on a handheld cell phone while driving.

The change is part of the Land Transport (Road User) Amendment Rule and will see drivers using handheld mobile phones receive an infringement notice consisting of an $80 fine and 20 demerit points.

So answer five phone calls while driving, and your license may be gone. I’ve not got anything to worry about as my car stereo uses bluetooth to operate as a hands free device, but I can see a lot of people getting pinged. Ironically people will probably get pinged when it is safest to talk on the phone – waiting at the lights, rather than on a motorway, as the latter is hard to detect.

Transport Minister Steven Joyce says that driver distraction – particularly through the use of cell phones – is a real issue on our roads.

“There are a lot of other distractions while driving but handheld mobile phone use has grown to become a significant problem. The reality is we need to send a strong signal to all road users that it’s not on.

But why not action on the other distractions? Why not ban smoking in cars? Why not make it compulsory to have radio controls on the steering wheel to minimise the distraction of tuning the radio?

“Texting and driving, in particular, is a total no brainer.

Agreed and anyone seen texting while driving should be charged under the existing law.

Mr Joyce says allowing hands-free recognises that many business and trades people depend on being available on their cell phones for their livelihood, and that hands-free phones are less distracting to operate than handheld phones.

A number of studies dispute hands-free phones are less distracting. It is pleasing to see some recognition of the costs of banning some cellphone use in cars, but what we have not seen is a full cost benefit of banning hand helds only.

What I would like to see is projected benefits (lives saved and fewer crashes) vs projected costs (people having to buy hands free kits, fines, enforcement, costs to business of employees less contactable).

And for projected benefits I do not mean just an assumption that crashes where cellphone use was a factor will go from the current level to zero. I’d like to see the overseas evidence that a ban of the nature actually reduces the number of crashes where cellphone use was a factor – and by how much. Has the Government got this info? If not, why not?

Between 2003 and 2008, there were 482 injury crashes and 25 fatal crashes in New Zealand where the use of a mobile phone or other telecommunications device was identified as a contributing factor.

25 fatal crashes over six years is a fatal crash every three months on average. Now as I said above one can not assume that volume of fatal crashes will reduce to zero just because of this new law. I suspect most people will still answer their phone if it rings and is important. And many may just swap to handsfree phones also.

Let us be generous and assume the new law will cut the number of fatal crashes by 25%, where cellphone use is a factor. There is still the weighing up of whether it is appropriate to penalise three million drivers who have cars and cellphones for one less fatal crash every year. Is a reduction in the road toll of 0.25% worth the inconvience and costs of this law?

Maybe it is. I’m not 100% opposed. But I would like to see a proper cost/benefit analysis of the new law. I especially would like to see what the actual fall in crashes has been in overseas countries with similar laws. Does it actually decrease the road toll or does it just lead to lots of fines and demerits?

A very good blog by Colin Espiner:

Why is Steven Joyce banning handheld cellphones in cars?

I remember his predecessor, transport safety minister Harry Duynhoven, agonising over this one. First he was for the idea, then he wasn’t, then he was again. In the end he never got around to it.

Joyce has picked this one up, however, and appears ready to push it through into law. The only debate seems to be over the size of the penalty. A $50 fine or $100? Demerit points as well? That could lead to loss of licence.

And the question I have is whether the banning of handheld cellphones in car has ever been proven to reduce the number of crashes? Does it actually lead to less use of cellphones or does it just criminalise hundreds of thousands of people and results in lots of fines? Or does everyone just swap to hands free cellphones which are reputed to be as distracting?

I hope the Government has some good research to back up their decision. I remain far from convinced.

But the fact remains that handheld phones are no more dangerous than talking on a hands-free. And, according to the research, less dangerous than turning to talk to passengers in the back seat, fiddling with the stereo, or eating in the car – all of which cause more accidents.

Surely some common sense is required here. You don’t (or at least you shouldn’t) reach for a cup of coffee while overtaking on the open road. You don’t turn to yell at the kids while turning at an intersection. And you wouldn’t pick up the phone while completing a bit of tricky driving or trying to park.

On the other hand, on a straight piece of road with little traffic or while chugging along in rush hour, it might be safe to make a quick call. It’s all a matter of judgment, which is surely what driving – and many other things – is all about.

Exactly. Even with a hands free phone I will often stop talking to someone while reversing. Or if the weather is really bad. Or the traffic difficult. But sometimes it is quite safe to talk on the phone. Encourage safer use of phones rather than try to ban handheld phones.

My fear is that by banning handheld cellphones the Government is treating the public like idiots who can’t be trusted to know when it is reasonable to use one. Speed limits and alcohol bans are one thing. Handheld phones are quite another.

If you are pissed, you are pissed for the entire trip. Most people only use the phone for a few minutes on a trip, and do judge when it is safe to do so. For example a quick call at the lights to say you are running late. That will now be illegal if done on a hand held.

I guess National must have polled on this issue, and maybe there isn’t much public outrage. Certainly I think most agree that texting while driving is pretty silly. But I would have thought Joyce would have bigger issues to deal with in his portfolio than banning something for marginal, and probably debatable, safety gains.

Given National was once lukewarm on this idea, I can only conclude a bit of official capture has gone on here, a bit like Kate Wilkinson over the folic acid in bread debate.

In the wake of any skillful public relations campaign, however, I guess it will be pushed through. I wonder, though, whether public resentment might start building once the fines start rolling in.

Public polls have (sadly) shown strong support for such a measure. But I think the Government should be careful here. No-one will vote for a party because they banned handheld cellphones in cars . But if tens of thousands of NZers get fined for receiving a phone call, let alone lose their license then they could well vote against the party that did it.

Very disappointed to read in the Herald that Steven Joyce is set to ban hand held cellphone use in cars.

This does not affect me personally as my cellphone uses bluetooth to operate the stereo as a hands-free device. But regardless I think it is a bad decision, based on emotion and the need to be seen to do something – rather than than logicial analysis.

Why is this is bad move?

• Research shows that hands free cellphone use is just as distracting as hand held use.
• Research shows other distractions are more of a hazard – such as smoking while driving
• We already have a law that deals with distractions while driving
• Any law change should target all distractions – not just pick one out
• Most research on the benefits of banning cellphone use in cars fails to scrutinise the costs of such a ban
• The Government is moving straight to regulation without trying education first

The last one is one I have pushed for some time. Before they ban something, try education. Just as we have drink driving ads, have cellphone in cars ads showing accidents by gettign distracted and maybe giving some advice to drivers such as “Have a passenger answer the phone”, “Pull over to talk if the conversation is more than a minute”, “Never text while driving”.

The proposed ban will not make roads safer. It will just force people to buy hands free kits, and result in fines for those who don’t.

Also the proposed rules wil ban voice calls and texting. How about twittering? How abotu checking email on the Blackberry? This is the problem of having a specific rule targeting cellphones rather than improving a general rule about distractions.

Thanks goodness for common sense. The Government has declined to extend security screening to small regional flights (personally I think they a nonsense on all but international flights) and instead will focus on improving flight deck security.

Extending screening would have cost $160 million over ten years, and that is before even looking at costs to passengers in delays.

Talking of Government announcements – I have heard a whisper that the Government will shortly announce its support for the UN Declaration on the Rights of Indigenous Peoples – this will be a major win for the Maori Party, as Labour refused to support it.

Steven Joyce has just announced a new preferred route for the Waterview connection – one that is $1.4 billion cheaper than Labour’s tunnel. Labour are campaigning now to spend $1.4 billion just so they can win a by-election, or as ACT calls it a buy-election.

The tunnel will cost:

The $2.77 billion figure was made up of $1.98 billion  for construction of the tunnels, $240 million for associated work on State Highway 16 and $550 million for finance costs during the project construction period.

And the new preferred route:

“The NZ Transport Agency has reviewed all options and has found that the Waterview Connection, together with the same amount of associated work on State Highway 16, can be built for considerably less, at an expected cost of between $1 billion and $1.4 billion, depending which of the options is taken,” says Mr Joyce.

And the cost savings get better:

“In addition, all of the options being considered by the NZ Transport Agency would be built with wide enough shoulders to allow for easy widening to three lanes in each direction.

“An appropriate comparison, therefore, is between the top cost of $1.4 billion and the $3.16 billion price of the previous government’s twin three lane tunnel option.

People will quibble over the numbers, but there is such a huge gulf between them, it is clear Labour’s tunnel is a vote buying extravagance that would cost every household around $2,000.

Also from the Q&A:

This review identified several options that are cost effective, allow for future growth and balance the strategic need to complete the Western Ring Route with concerns about local impacts. As well as costing significantly less, they could also be built 12-18 months earlier than the twin tunnel option.

And the route:

“The NZ Transport Agency’s Board is meeting today to consider the three alternative options and will announce its preference tomorrow, once it has had the opportunity to make first contact with those directly affected.

“A thorough consultation process on the form of the selected option will then commence before a final decision is made.”

I’m looking forward for Labour to keep campaigning for their pet tunnel. They may win the by-election but it will make great campaign ads in 2011.

By coincidence Matthew Hooton’s column in NBR today (print edition only) is also focused on the successful Steven Joyce. I’ve stolen a couple of paragraphs to blog here:

Steven Joyce first became prominent when he helped pick up the pieces after National’s 2002 disaster but was not embroiled in any of the infighting that followed. Many, including me, doubted the wisdom of his appointment to Cabinet before he had even been sworn in as an MP, but Mr Joyce has met Mr Key’s expectations and exceeded those of everyone else.

In Mr Joyce, Mr Key has entrusted his personal priorities of sorting out New Zealand’s shocking transport and IT&T infrastructure, and he is deeply involved in decisions about Auckland governance.

Associate to Bill English in Finance and Infrastructure, it is to Mr Joyce that the prime minister will turn when the government hits a major crisis.

Key and Joyce have a number of similiarities – in that they both have 20 years or more of commercial experience, and both very sucessful when in business.

The NZ Herald editorial approves:

Preventing a repetition of the vertically integrated monopoly enjoyed by Telecom’s copper network was always going to be a cardinal requirement of the Government’s $1.5 billion investment in an ultra-fast broadband infrastructure. …

Commendably, Mr Joyce has stuck to his guns despite pressure from the country’s three biggest broadband providers – Telecom, Vodafone and TelstraClear. In public, this took the form of a report that questioned the economic benefit of the Government’s plan, and suggested their own long-term network improvements would deliver broadband speeds adequate for the needs of everyday internet users.

In private, there must have been sustained lobbying, given the delay in confirming the Government’s plan. The minister has demonstrated a resolve that deserted several of his predecessors. In addition, he has signalled a welcome willingness to look at codes of practice, regulation or legislative changes if this is required to ensure good practice.

Incidentially I am on TV3 Sunrise at 7.15 a discussing the policy.

Steven Joyce has released details of the Government’s $1,500 million investment into ultra fast broadband so that it reaches 75% of NZers within a decade. Key details:

• A Crown-owned investment company called Crown Fibre Investment Co or CFIC will be established.
• CFIC will invest alongside private sector co-investors in regional fibre companies that will deploy and provide access to fibre optic network infrastructure in the 25 towns and cities covered by the initiative.
• CFIC will select local partners based on the amount of additional fibre coverage being proposed, the proposed capital structure, the commercial viability of the proposal, consistency with government objectives and the track-record of the partner.
• It will be an open infrastructure model that will ensure all telecommunications companies have the option of using the fibre.

The Govt also has a Q&A.

This looks a very good process. Most people in the industry thought a regional approach was preferable to a national approach. So there will be up to 25 local fibre companies that are part owned by the Crown and part-owned by private operators.

A key aspect will be the market structure:

It is expected that ISPs, network providers or other service providers will purchase access to dark fibre and install their own active electronics.  Local Fibre Cos themselves will have a limited ability to install their own active electronics as well, subject to Crown Fibre Investment Company approval.

In turn, these parties (except the Local Fibre Cos) may use these elements to produce a retail broadband (or other) service, which is sold to end-users.  The Local Fibre Cos cannot do this due to their restriction on selling retail services.

These parties may alternatively use these elements to produce a wholesale “bitstream” type of service, which is sold to ISPs or other service providers (Local Fibre Cos can undertake this activity, but as noted above this is subject to Crown Fibre Investment Company approval).  The parties that purchase these wholesale services will then use them to provide a retail service.

So generally the local fibre cos will provide access to dark fibre only. In some areas they may be allowed to provide wholesale bitstream services, but only if needed by the market. And in no circujstances can they provide retail services. Joyce is clearly motivated to avoid the vertically integrated monopoly legacy we have over the copper lines.

Also good to see focus on regulatory issues:

In addition, the government will assess how best to facilitate access to and use of fibre cable deployment on telephone and electricity poles, local authority-owned passive infrastructure such as ducts, micro-trenching and fibre-optic cable “drops” from the street-side into customer premises.  This may involve codes of practice or regulatory or legislative amendments.

And for those outside the 75%:

The government made a pre-election commitment to provide $48 million to improve rural broadband.  The Minister for Communications and Information Technology is currently developing options around this commitment and expects to make announcements regarding the direction of the government’s rural telecommunications policy in the near future.

The framework looks very good to me. The hard part will be evaluating the competing bids – a top class selection criteria, process and panel will be needed.

I like many were wondering what the likely cancelling of the regional fuel tax would mean for projects like the electrification of Auckland’s suburban rail network.

Transport Minister Steven Joyce has not been idle. The regional petrol tax funding method was set up when Toll was in private hands. He is now proposing that rather than have central Govt hand over petrol tax money to the Regional Council for them to buy the trains, they do it directly through KiwiRail.

This means Auckland gets electric trains, yet no hike in petrol tax. It means the cost is funded by taxpayers rather than motorists.

As I said at the weekend, I think public transport should not be funded from petrol tax – but directly by the Crown as a competing public good. So this looks good to me.

In theory the left should love this, as it is increasing the fiscal stimulus they care so much about.